12 July 2002
The long-awaited consultation document, which was published after months of discussions between local and central government officials, sets out between four and six options for each of the block grants distributed under the SSA system.
Each option is based on the finance settlement for 2002/03, so individual authorities can see whether they stand to lose or gain.
Initial assessments suggest that the biggest losers are likely to be the shire counties, with central government funds being shifted away from them towards the metropolitan authorities serving cities in the north.
John Sellgren, director of the County Councils Network, told Public Finance that counties were much more likely to lose than to gain under the proposals. 'Our initial reading of the figures are that on a worst-case scenario counties would lose £800m, while at best they would gain £100m,' he said. 'It looks as if there will be a redistributive effect away from the counties and, if this is the case, we will be lobbying the government very hard to make sure it doesn't happen.'
The new system is intended to be simpler and more transparent. Launching the document, local government minister Nick Raynsford said the replacement formulas would have three elements: a basic amount per head of population, top-up funding to take account of deprivation, and consideration of the varying staff costs.
Raynsford admitted that 'some northern authorities' would do well under the plans. 'This is not about shifting resources one way or the other,' he said. 'We do not believe that the SSA system reflects the current spending pressures and needs in all parts of the country.'
He said he did 'not expect' that any authority would find itself worse off because of the reforms. A system of floors and ceilings will ensure that all authorities receive a minimum increase in their central government grant.
Authorities have until September 30 to give their responses. The government is committed to introducing the reformed system in time for the 2003/04 financial year.
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