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Finance Settlement (England) 2010-11

Volume 501: debated on Thursday 26 November 2009

I am today publishing the Government’s formal proposals on distribution of formula grant to English local authorities for 2010-11, together with information on the allocations of all specific and special grants that can be announced in advance.

The proposed figures for formula grant allocations that I am publishing today are unchanged from those that were first proposed in January 2008. That is in line with the Government’s policy on three year settlements, which is that we will not change the proposals for formula grant first published in January 2008, except in entirely exceptional circumstances.

The importance of maintaining that commitment is twofold. First, central and local government work together, with other local partners, in service delivery. It is vital to give local government a settled financial platform on which to build those relations and those services. Secondly, this is continued recognition of the importance of the services delivered by local authorities and the pressures on those services, such as social care and waste management.

Total formula grant for 2010-11 will be £29 billion, of which redistributed business rates will be £21.5 billion, RSG £3.1 billion and police grant, £4.4 billion. Formula grant will be £747 million or 2.6 per cent. higher than in 2009-10 on a like for like basis.

In addition, specific grants, which include the dedicated schools grant, will total £47.2 billion and will bring the overall Government grant increase to 4 per cent. in 2010-11.

In the 10 years up to 2007-08 we increased total Government grant to English local authorities by 39 per cent. in real terms, with an above inflation increase for local government in each year. There will be a further total increase over this three-year settlement of £8.6 billion.

I am pleased that the average band D council tax increase this year was 3.0 per cent.—the Government expect to see it fall further next year while authorities protect and improve front line services.

We expect the average band D council tax increase in England to fall to a 16-year low in 2010-11. We remain prepared to take capping action against excessive increases set by individual authorities and requiring them to rebill for a lower council tax if necessary. We are already capping the police authorities of Cheshire, Leicestershire and Warwickshire in advance of 2010-11 because of previous excessive increases set by these authorities. My officials are today writing to the three police authorities setting out their proposed maximum budget requirements for 2010-11.

Today’s announcement on the final year of the first ever three-year settlement delivers on the Government’s promise to provide financial stability to local government and recognises the important role of councils in providing real help now to communities in the current economic climate.

Today also marks the start of a period of statutory consultation with local government on formula grant distribution and I welcome their responses. Consultation closes on 6 January 2010.

I will be making available full supporting information on the Communities and Local Government website at:

I have placed copies of the consultation paper, tables of formula grant allocation by local authority and other supporting material in the Vote Office and the Library of the House.