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Local Government Finance

Volume 405: debated on Wednesday 21 May 2003

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To ask the Deputy Prime Minister how much (a) revenue support grant and (b) formula spending share/standard spending assessment was given to local authorities (i) in total and (ii) in each English region in (A) 2001–02, (B) 2002–03 and (C) 2003–04 (estimated). [113213]

Information on Formula Grant and Standard Spending Assessments/Formula Spending Shares is given in the following table. The total of Revenue Support Grant depends in part on early estimates of the National Non-Domestic Rate yield, which is particularly variable. The total of Formula Grant has been quoted instead, the total general funding provided to local authorities and the basis of the "floor and ceiling" limitations on grant changes. Formula Grant consists of Revenue Support Grant, National Non-Domestic Rates and Police Grant.

Formual GrantSSA/FSS
East Midlands2,7732,7853,0823,7473,8144,523
West Midlands3,9303,9664,3675,1765,2786,222
Yorkshire and Humber3,8013,8304,1874,9325,0195,832


These data are not adjusted for changes in local authority functions.

To ask the Deputy Prime Minister what the percentage increase was in (a) rate support and (b) NNDR to local authorities in 2003; what percentage of such increases will be taken up by (i) increases in national insurance, (ii) increased pension contributions, (iii) under funded public sector pay settlements and (iv) other duties and powers imposed but not funded by Government. [114545]

Under the Local Government Finance Settlement for 2003–04, Revenue Support Grant (RSG) increased by 15.3 per cent. and the National Non Domestic Rates (NNDR) Distributable Amount decreased by 6.2 per cent. NNDR and RSCl (along with Principal Formula Police Grant) are part of general grant which increased by 5.9 per cent. or £2.249 billion overall on a like for like basis.The Office of the Deputy Prime Minister estimate the change in national insurance contributions will increase local authorities' pay costs on average by some £250 million. It is estimated that the 0.4 per cent. increase in employers contributions to the Teacher's Pension Scheme which local authorities have had to fund from within the 5.9 per cent. increase in general grant will add some £54 million to local authorities' revenue expenditure. These pressures add 0.73 per cent. to the 2002–03 adjusted baseline of £41.445 billion. If both are excluded, the increase in general grant would be 5.17 per cent. or £2.145 billion.The Spending Review 2000 took into account the results of the 1998 Local Government Pension Scheme valuation exercise and the forthcoming 2004 valuation exercise will inform SR2004. Pay settlements for local government staff are a matter for local authorities and the pay review bodies. It is expected that awards which take into account the overall increase in funding available to councils while reflecting the need to recruit and retain staff.The Government funds all new burdens placed on local authorities under the principle of New Burdens which requires Government to reimburse local authorities for any additional costs they face as a result of the imposition of new powers or duties. For example, the Spending Review made clear for the first time the burdens funded in the environmental, protective and cultural services and provided £82 million in year one for burdens such as the changes affecting the disposal of fridges. Following the Spending Review, we transferred funds into the settlement for burdens which could not be agreed at the time, such as an additional £50 million a year over the next three years for the implications for age-equalisation on the mandatory concessionary fares scheme.