02 December 2005
The details of the revenue support grant settlement, expected next week, remain cloaked in mystery although local government is hopeful that ministers will have found some extra cash to alleviate pressures.
Last year, central government came up with a £1bn funding package to relieve pressure on council tax.
But this year, the Local Government Association is warning that council tax could rise by as much as 10% unless ministers fill a £2.2bn black hole in council finances.
Senior local government sources told Public Finance that they were expecting the government to come up with some extra funds.
'It's certainly clear that the Office of the Deputy Prime Minister and the Treasury are scratching around the spending departments to see if there are any underspends to put into the settlement,' one said.
Steve Lord, director of local government finance at the Association of London Government, said it was very difficult to have any sense of what was going on in Whitehall.
'This is a particularly difficult settlement to assess, either in terms of the overall level of support or in terms of how it will be distributed,' he told PF.
A survey conducted by IPF and published last week, found that one in ten authorities was forecasting council tax rises of more than 5% – the threshold at which councils have been capped in the past two years.
IPF statistical researcher Chris Greene said: 'With the message from government that they are again ready to cap what they consider to be “unreasonable” council tax increases, more than a few councils would appear to be at risk.'
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