Councils get 7% grant rise

22 Nov 01
English councils are set to receive an increase of around 7% in grant when ministers unveil the provisional 2002/03 finance settlement next week, Public Finance can reveal.

23 November 2001

The rise will match this year's 7.2% increase and allay fears that councils were going to lose out in grant.

Education authorities, such as those run by unitary councils and London boroughs, are predicted to be the beneficiaries of the largest increases, although there are unlikely to be wide discrepancies between different types of authorities.

The figures, which will give English councils an annual settlement of almost £48bn, will be announced by ministers in the House of Commons.

This has been scheduled for November 29, two days after Chancellor Gordon Brown's annual pre-budget statement, although the Department for Transport, Local Government and the Regions said this week that the date could change.

A rise of this order will not disappoint councils, although many fear that education and social services could receive extra funding at the expense of other services.

'This is another relatively good settlement,' said Stephen Lord, head of grant distribution at the Local Government Association. 'Spending Review 2000 has led to an increase in real terms in local authority spending for the past three years.'

Frances Foster, chief policy and research officer at the special interest group of metropolitan authorities, said the group was hoping for a similar level of funding as last year. But the real test, she added, was whether ministers would neglect local priority services while focusing on putting more cash into national objectives such as education.

One major announcement the government will make is the extension of spending 'floors' and 'ceilings' to all town halls and bodies such as fire authorities.

This is a device which sets a minimum and maximum spend on services and is seen by ministers as a way both of ensuring there are not massive grant discrepancies among councils, a major bone of contention in the past decade, and of keeping a central government check on spending.

Currently it applies to the 150 education and social service authorities – metropolitan and London boroughs, unitaries and county councils. The 'floor' is 3.2% and the 'ceiling' 6.5%.

This has proved unpopular with some councils in the Southeast who believe they should be allowed to spend more on certain services in areas where incomes are higher than the national average.

A spokesman for the DTLR said this year's grant allocation would be 'a very good settlement'.

Earlier this week the Welsh Assembly announced that the 22 Welsh councils would share an increase of nearly 9% next year.


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