Councils to get an extra £35m

27 Jan 00
Labour is due to give local authorities an extra £35m in this year's finance settlement but with a warning from ministers that it should be used to curb council tax increases.

28 January 2000

Local Government minister Hilary Armstrong was set to unveil the new money as part of the local government finance settlement in the House of Commons on January 27.

Although the money will undoubtedly be welcomed by authorities, it is clear that the government will keep a close eye on tax rises. It believes the extra £35m, along with the rest of the settlement, should be enough to head off steep rises and avoid political embarrassment over taxation.

'The settlement will allow local authorities to concentrate on priorities and make improvements people wish to see to education and social services. But it will allow them to improve services without burdening hard-pressed council tax payers,' said Armstrong.

Underspending on council reorganisation – changing councils from multi-tiered to unitary authorities – has led to the mini-windfall.

The government remains sensitive to large council tax rises. Average increases for the current financial year were almost 7%. But 12 councils were 'yellow carded' after imposing more than 9%. They were warned they could be capped this year if tax rises were excessive for 2000/01.

One local government source hinted this week that ministers may be on a collision course with some county councils which are planning 'double-digit increases'.

Authorities will receive about £54bn in Total Standard Spending, an increase of almost 6% on the current financial year.

Councils also look set to be disappointed on education funding and the issue of council tax benefit limitation subsidy. The extra £50m announced by Education Secretary David Blunkett at the time of the provisional settlement in November looks likely to be ring-fenced for schools, disappointing those who wanted the money put in the general Revenue Support Grant pot.

Benefit subsidy costs will increasingly be met by councils. Currently the government picks up the bill for those needing help in paying council tax. But ministers want to move the burden to local rather than national taxpayers.


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