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Local Government Finance

Volume 584: debated on Tuesday 22 July 2014

I am today announcing the start of a technical consultation setting out proposals on the distribution of revenue support grant to local authorities in 2015-16 in order to deliver the local government finance settlement in the autumn. These proposals affect around half of total revenue spending power for councils in England but make only minor changes to the illustrative figures for 2015-16 that were set out in the course of last year’s local government finance settlement. All the proposals are in line with previous commitments, ensuring continued protection for authorities and consolidating previous reforms.

These minor changes to previous proposals set out in the attached consultation document ensure:

continued compensation for the reduced income from business rates as a result of the 2% cap on the small business multiplier announced at spending review 2013;

continued protection for authorities which froze council tax in 2014-15;

continued efficiency support grant funding for the small number of local authorities with the highest spending power reductions in 2014-15;

continued rural services delivery grant funding for the most rural authorities.

The proposed 2015-16 settlement continues to deliver protection for funding to local authorities for learning disability, early intervention, homelessness and flooding, included in the settlement from April 2013, as set out in the summer 2013 consultation.

The settlement covers only around half of the substantial funding available to councils and the Government are balancing the reductions with a progressive package of incentives that will help deliver better outcomes for less money. We have recently announced the first instalment of plans to invest at least £12 billion in local economies in a series of growth deals. This money will go towards providing support for local businesses to train young people, create thousands of new jobs, unlock thousands of new homes and start hundreds of infrastructure projects including transport improvements and superfast broadband networks. We are also making available £15 million funding for 2014-15 and £305 million for 2015-16 through the transformation challenge award which is intended to encourage councils to achieve savings through joint working and efficiencies.

I have placed copies of the consultation document in the Library of the House, and the consultation document and a draft equality statement for the 2015-16 settlement are also available at: publication_filter_option=consultations.

I have also made available today “The Pooling Prospectus” which sets out the benefits and procedures of pooling for those local authorities who wish to do so in 2015-16.

We look forward to receiving views on our proposals. The consultation period will close on 24 September 2014. We will then put forward our proposals for local government funding for 2015-16 to the usual local government finance settlement timetable.