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Written - Provisional Local Government Revenue And Capital Settlements 2008-09
Today I am announcing the details of the provisional 2008-09 revenue and capital settlements for the 22 unitary authorities in Wales along with allocations for 2009-10 and 2010-11.
The Revenue Settlement
Overall local authorities in Wales can expect an increase in revenue funding next year through the main settlement and specific grants of approximately 3%.
After adjusting for the transfer of some specific grant funding into the unhypothecated settlement, the increase will be 2.3%. For the following two years, the increases are 2.6% and 2.8% respectively.
This represents an additional £85 million in 2008-09 rising to an additional £296 million per annum in 2010-2011. This is a realistic settlement in what is a tight three year Assembly Government settlement.
Local authorities will also continue to benefit from additional £53 million non- hypothecated funding provided through the Deprivation Grant and the Performance Incentive Grant.
In addition to the non-hypothecated funding, local authorities will receive significant additional revenue funding through specific grants. In particular an additional £20 million per annum next year rising to an additional £43 million in support of waste management activities; an additional £15 million per annum for foundation phase – with extra funding in future years depending on actual delivery costs – and an additional £7 million rising to £12 million in 2010-2011 for Concessionary Fares. An additional £2 million for the Supporting People Grant, and a similar amount for post sixteen education.
Included in the Revenue Support Grant is £17 million previously provided as a specific grant for early years education, £6 million previously provided through the Cymorth Grant to support childcare activities and £2 million previously provided as Civil Contingencies Grant. These transfers will produce a total unadjusted RSG increase of 3%.
As previously indicated, I am also providing local authorities with current estimates of the other specific grants they can expect to receive over the next three financial years. In order to provide a comprehensive picture of the funding the Assembly Government will provide in 2008-09, and to allow authorities to budget effectively. Major additional funding elements provided through specific grant include over £100 million for post 16 education in Wales, over £70 million to support vulnerable sectors of the population, nearly £60 million to provide a network of targeted support for disadvantaged children and young people in order to improve their life chances and £40 million to fund free bus travel for older adults and the disabled. The Joint Working Grant Scheme will continue, providing £10 million each year to support collaborative working between health and social care. The Fair Charging Grant will continue at current levels and the Strategy for Older People Grant Scheme will provide tapered support over the three year period to support local authorities’ work on implementing the second phase of the strategy..
Making The Connections
Welsh local government, in common with the rest of the Welsh Public sector, is expected to make efficiency gains on their annual expenditure.
The Welsh Assembly Government will continue to support local government through the Excellence Wales scheme to promote and transfer good practice, through “Value Wales”, a cross-public sector source of expertise assisting in smarter procurement, improvements in public buildings and the development of collaborative shared services. Local Government will again have access to the Making the Connections Improvement Fund which will provide a further £3 million in 2008-09 to support improvement activities.
Distribution between Authorities
The implications of the overall settlement for individual authorities are dependent on the standard spending assessment (SSA) formula. A table setting out the details of the settlement for each authority accompanies this statement. The details of the increases in the allocations of the revenue settlement for each unitary authority are expressed after adjusting for transfers. Further detailed tables including individual allocations of the capital settlement will be available on the Welsh Assembly Government’s internet site.
It is important that the formula is updated to reflect as accurately as possible each authority’s need to spend to meet its responsibilities. I also recognise that authorities need to have a degree of stability in their funding to manage service delivery and avoid putting undue pressure on council tax rises. Therefore I have agreed that for the next two years there should be a phasing in of new formula changes These phasing arrangements have been agreed with local government through the Welsh Local Government Association. Phasing arrangements agreed as part of the 2007-08 settlement will continue unchanged.
Other reasons for the range of increases across authorities largely reflects the changes in each authority’s relative share of the overall population in Wales and specific groupings such as pupil numbers.
Three Year Settlements
For 2009-2010 and 2010-2011 we have published indicative SSA and Aggregate External Finance allocations. These allocations will be updated when the up-to-date information for individual authorities for the relevant years becomes available. This is in line with the agreed arrangements for the first cycle of three year settlements. While these allocations are indicative, by publishing this information now this provides local authorities with a more comprehensive basis for planning their financial and strategic planning over the next three years.
With regard to the capital settlement, the capital allocation for 2008-09, including specific capital grants, will amount to £637 million.
The General Capital Fund totals £217 million. This is unhypothecated capital funding of which £54 million is paid as capital grant, the remainder, around £163 million, is provided as support for borrowing.
In respect of specific capital grants there is additional funding of £18 million for local roads and transport and an additional £11 million for school buildings improvement and early years education provision.
In addition local authorities will have the ability to access other capital funding within the Assembly Government’s budget. This includes:
- the new targeted match funding budget for the 2007-2013 EU Structural Funds programme, which will provide the same level of match funding for the current programme as was available for the 2000-2006 programme; and
- the £400m available over the next three years to the Assembly Government’s new Strategic Capital Investment Board to fund strategic, mission critical capital projects.
In conclusion, I have made all this information available now in order that authorities are able to plan their budgets knowing what they can expect to receive from the Welsh Assembly Government. I believe this provides local authorities with a reasonable financial response to the pressures they face. I expect Councils to take this into account when they determine their budgets and council tax levels for next year.
The announcement today commences the formal consultation with local authorities on the provisional settlement. I look forward to considering the responses that are received.