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Local Government: Finance

Volume 694: debated on Tuesday 17 July 2007

My honourable friend the Minister for Local Government (John Healey) has made the following Written Ministerial Statement.

I am today publishing a consultation document looking at proposals for reviewing the formulae used to distribute formula grant to local authorities. Formula grant underpins the provision of a wide range of local services.

The formula grant distribution system was last reviewed following the introduction of multi-year settlements. This first multi-year settlement round covering 2006-07 and 2007-08 is now coming to an end and we have taken the opportunity to consider updating and modifying some of the formulae to be used in the distribution system for the proposed three-year settlement covering 2008-09, 2009-10 and 2010-11.

Following the last review of grant distribution formulae, the Government have been working with local government and other interested parties to explore possible ways of updating the formulae where necessary and fine-tuning some of the elements of the distribution mechanisms.

Over the last five months, the official-level settlement working group, consisting of representatives from all types of local authority in England along with interested parties from central government, has considered some 53 technical papers and reports looking at options for changes to the distribution formulae. A separate technical group has examined the formulae for the police.

Following the work of this settlement working group, the Government are now publishing this consultation on options for updating the formula grant distribution system. I have placed copies in the Library of the House and in the Vote Office. The consultation document is also available today on the Communities and Local Government website at:

We look forward to receiving views on our proposals. The consultation period will close on 10 October 2007 and the Government will then decide on the formula grant distribution system for the next three years.