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Local Government Funding

Volume 407: debated on Wednesday 25 June 2003

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To ask the Deputy Prime Minister (1) what the Government's policy is on ring-fenced funding for local government; [121107](2) what target he has for reducing the amount of local government funding which is ring-fenced. [121108]

The Government's policy on ring-fencing of grant to local authorities was set out in the White Paper, Strong Local Leadership—Quality Public Services of December 2001 (Ref: CM5237). While recognising that ring-fencing can be an important tool for bringing about change, we are aware that a proliferation of ring-fenced grants erodes local discretion and diverts resources on bureaucracy. So our policy is to reduce the total of ring-fenced grants.In the 'Freedoms and Flexibilities' paper of 26 November 2002 we made it clear that for revenue funding councils awarded 'excellent' and for capital funding councils awarded 'excellent' or 'good' would receive all funding as unfenced grants, except for those grants passported to schools.On current plans, revenue ring-fencing will be less than 10 per cent. by the financial year 2005–06. For capital funding, the target is to increase the level of resources funded through the unfenced Single Capital Pot to two thirds of relevant finance.