By Nick Mann | 8 December 2011
Councils’ spending power will be cut again this year, by an average of 3.3%, Communities Secretary Eric Pickles announced today.
Under the provisional Local Government Finance Settlement
for 2012/13, councils in England will have an average spending power of £2,186 per
household at their disposal.
Spending power is made up of the formula grant, other government grants, NHS support for health and social care and council tax receipts. A spokesman for the Department for Communities and Local Government said that, in formula grant terms alone, the average cut would be 7.3%.
The settlement, which Pickles labelled ‘fair and sustainable’, follows the 4.5% reduction in spending power contained in the 2011/12 settlement.
The total Formula Grant for council in 2012/13 will be
£27.8bn, of which an estimated £23.1bn will be redistributed business rates,
£477m will be Revenue Support and £4.2bn will be the Police Grant.
Pickles said: ‘The second year of our fair and sustainable settlement will mean councils still have on average £2,186 for every household they serve, enough to safeguard the most vulnerable and protect taxpayers' interests and the frontline services they rely on.
‘New financial incentives and powers for councils will mean they are well placed to find the necessary savings without salami-slicing services – they have already started to show what can be done to increase efficiency, reduce overheads, shop smarter and fight fraud.’
Among the incentives highlighted by the DCLG are the New Homes Bonus, the Community Infrastructure Levy and the General Power of Competence.
The department said councils could also benefit from the £2.4bn Regional Growth Fund, the £500m Growing Places Fund and investment in social housing announced in last month’s Housing Strategy.
Pickles also announced the thresholds for council tax increases that will trigger referendums next year under powers enshrined in the Localism Act.
Councils wanting to increase their council tax by more than 3.5% will have to hold a referendum on the increase. For the City of London, the threshold is 3.75%, and for the Greater London Authority 4%.
Pickles said: ‘Councils have a moral obligation to help hard-working families and pensioners with the cost of living. If they want to hike taxes on their local residents above 3.5% they'll now need to get a direct democratic mandate to do it.’
At this year’s Conservative Party conference, Chancellor George Osborne announced £805m in funding for local authorities to freeze their council tax in 2012/13. However, some councils have revealed concerns over whether the freeze could lead to a future budget shortfall.
