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Standard Spending Assessments

Volume 164: debated on Thursday 11 January 1990

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To ask the Secretary of State for the Environment if he will list in rank order those local authorities whose 1990–91 standard spending assessments are less than 5 per cent. more than their 1989–90 grant-related expenditure assessments, showing their standard spending assessment, grant-related expenditure assessment and the percentage variation.

I have today laid before the House the population report (England), the revenue support grant report (England) 1990–91, the revenue support grant distribution report (England) and the revenue support grant transition report (England). I have also laid the special grant report which makes provision for paying three special grants: towards community charge preparation costs in 1989–90; for areas of low rateable values for 1990–91 and for inner London education, also for 1990–91. Together these form the basis of the local authority grant settlement for 1990–91.In all, local authorities will receive £23·1 billion of external support in 1990–91, an increase of 8·5 per cent. over the comparable figure for 1989–90. Of this, £9·490 billion will be revenue support grant. In order to ensure that authorities have adequate cash flow at the start of the new system, I propose to pay £2·373 billion (25 per cent) of this grant in April and May. This is about £800 million more than they might have expected to receive in these two months—a considerable cash flow advantage.I have considered carefully the representations made to me about the consultation proposals issued in November. I have decided to confirm, and to embody in these reports, the main the proposals which I described in my statement on 6 November and put forward in the consultation paper. These proposals were the result of extensive work and discussions with the local authority associations. They are based on total standard spending of £32·8 billion and aggregate exchequer finance of £23·1 billion. This gives a community charge for standard spending of £278.The standard spending assessment (SSA) methodology set out in the distribution report is substantively the same as that in the draft report issued on 6 November. I have, however, incorporated a revised formula for the highways maintenance SSA which properly reflects my desired treatment of winter maintenance.As I proposed in November, there will be an area safety net giving protection against losses of more than £25 per adult, measured on the basis of various assumptions and definitions set out in the transition report. This will be paid for by gaining areas deferring part of their gain for a year.I have placed in the Library a revised version of the exemplifications issued on 6 November.The community charge figure shown in table 2 of the exemplifications is not a prediction of what the community charge will be in each area. It is my calculation of what the charge would be if each authority sought to raise from its residents an amount consistent with its behaviour in 1989–90 and with total standard spending of £32·8 billion for 1990–91. I intend that this assumed charge will also be used for the purposes of the transitional relief scheme.There are a number of reasons for the differences between these figures and those published on 6 November. I have made a charge to the highways maintenance SSA; I have also been able to incorporate later figures for 1990–91 credit approvals in the capital financing SSA; I have also incorporated a better figure for budgeted expenditure by the receiver for the Metropolitan police district. There have been a few other minor changes to SSA data.As I foreshadowed in November, grant entitlements, business rate income, safety nets and charge levels have been affected by the replacement of the population figures used earlier, based on data from the registrar general, by figures based on information from authorities' own charge registers, in accordance with the population report.Authorities will now have all the information they need to press ahead with their budget setting and charge setting. These tables show that with the amount of external finance available to them the average community charge need be no more than £278, although of course charges will vary around that figure, as table 2 shows. The actual charge levels will depend on authorities' own decisions on spending and service provision.I firmly believe that authorities should be able to keep their spending down in line with TSS of £32·8 billion. If they do not, the extra spending will fall on community charge payers and will have to be justified to them. I hope that charge payers will take the opportunity of the introduction of this much more accountable system to take a good look at what their authorities are spending. It is right that where this is more than the SSA, charge payers should be able to seek an explanation. And it is right that authorities should bear in mind the effects on charge payers when they make their budget decisions.I will write to my hon. Friend.