01 February 2002
Mike Heiser, the LGA's senior project officer, told Public Finance that ministers had failed to do anything to help the district councils affected by a mistake in the Office for National Statistics' earnings survey.
The survey data feeds directly into the Area Cost Adjustment. It had to be hastily recalculated just before the provisional settlement was announced in December, after the ONS left out many high earners in London.
Authorities had generated initial figures based on the original data and, as a result, received a smaller settlement than they were expecting.
Heiser said: 'There is no more money available for authorities affected by the changes to the Area Cost Adjustment. We called for a "disappointment grant" but it has not happened,' he said.
Local government minister Nick Raynsford announced an overall increase of £62m on January 28. Over half of this was in the form of ring-fenced education grants, including £18.6m for the standards fund.
District councils, police and fire authorities received an extra £15m under the floors and ceilings mechanism, to guarantee a 2.3% minimum grant increase. A further £12m went to top-tier local authorities under the same scheme.
But LGA chair Sir Jeremy Beecham criticised ministers for not plugging a '£1bn funding gap' in social services. He warned that hard-pressed authorities had a stark choice between cutting services or hiking up council tax.
'Vital services need vital cash, and local authorities faced with cutting services will be under more pressure to raise their council tax, to plug the ever-increasing gap between what the government gives councils and what they need to spend,' he said.
PFfeb2002
