13 December 2002
It proved to be rather less radical than had been hoped, or feared (depending on where in the country you lived).
The reforms made to the Standard Spending Assessment, the notoriously complex system by which authorities get their central government grant, did not achieve the great shift of resources from south to north that many suspected was the reason for the government's overhaul.
Instead, in the financial settlement announced on December 5, all councils were given an above-inflation increase in their SSA – or formula spending share (FSS) as it is now to be called. This will be at least 3% for districts and 3.5% for top-tier authorities, with ceilings of 12.5% and 8% respectively.
Although some councils, notably the southern shires, are still complaining loudly at their misfortune, it is fair to say that if the government ever had plans for a radical redistribution of funds, it shelved them before finalising the details of the new system.
When local government minister Nick Raynsford unveiled the reform consultation document on July 8, setting out options for calculating the service block grants, the London boroughs faced losing up to £600m.
As it is, they have received an average increase of 5.3%, with some getting as much as 8.5%. Overall, this has added £442m to the capital's coffers.
The relief among members of the Association of London Government at this government about-face was palpable. Chair Sir Robin Wales said they were pleased with the results. 'This is a better settlement than we expected in the summer when the government consulted on changes to the formula,' he said. 'We are pleased the government has listened to our call for a fairer funding deal for the capital.'
But Kent and Surrey county councils, which received increases of 3.9% and 4.6% respectively, have both warned that they will face difficult budget decisions.
And Eric Pickles, the Conservatives' local government spokesman, accused Labour of 'mugging middle England' in an attempt to woo its urban heartlands in the north.
While it is certainly true that these areas have seen the biggest increases in grant, the results for the different regions do not add up to a game of winners and losers.
Under the settlement, total Whitehall spending on local government rises by 8% to £51.2bn in 2003/04. Of this, £39.9bn is made up of revenue support grant and business rates, while the rest comprises direct grants.
The FSS is made up of a basic amount reflecting an authority's population. This is topped up in some areas to cover any extra expenses associated with: deprivation; staffing pressures; and/or services, such as provision in remote areas.
Most of the major authority groupings have been able to identify areas of service provision where they will benefit from the settlement.
The East and West Midlands come out on top: authorities in these areas will get an average increase of 7.1%. The Northwest gets 6.6%; Yorkshire 6.3%; the Northeast 6%; the Southwest 5.8%; the East 5.4%; and the Southeast, excluding London, 4.5%.
Announcing the settlement, Raynsford told MPs that all councils would gain from the reformed system. 'Some authorities have been predicting a settlement under which councils will have to introduce cutbacks or impose significant council tax increases,' he said.
'However, there is no reason why councils cannot continue to improve services while sticking to reasonable council tax increases.'
The Local Government Association has sounded a note of caution over the increase in specific grants contained in this year's settlement. The proportion has risen by 16.5% to £11.3bn, despite the government's pledge to reduce the level of funding already allocated in this way.
But, overall, it has enthusiastically welcomed the funding increase in the settlement.
Raynsford insisted in July that the government had no hidden agenda to give northern Labour authorities more money. The results of the distribution reforms bear this out.
Ministers were clearly aware that clobbering the Southeast would have repercussions for Labour MPs defending marginal seats in those areas: taking money away would do little to keep middle England onside.
Instead, they have shied away from a wholesale reform of government funding for local authority services and instead gone for a system that offers something for, almost, everyone.
PFdec2002
