Council guaranteed grant increase despite downturn

Rochdale Council has been guaranteed a funding increase by Government.

The Local Government Department has will provide £73.1bn for English councils next year, guaranteeing a 4.2 per cent funding increase, despite the economic downturn.

Details of the 2009-10 council finance grants, year two of the first ever three year settlement giving Local Government an extra £8.9 billion, were laid before Parliament today (Wednesday 21 January). Overall this means local government has had above-inflation grants every year since 1997.

The Government expects the average council tax increase to be substantially below five per cent. Local Government Minister John Healey has written to councils warning that Government stands ready to take capping action against any excessive increases, as it did in 2008-09.

The Government has also removed the ring fences from 29 funding streams - leaving councils free to spend that money as they see fit to meet local needs and priorities.

In addition government guidance rules out the false equation that efficiency means service cuts, so councils cannot count or report efficiencies to the government or the public if changes mean services suffer.

Mr Healey said: "Today's settlement gives councils a healthy 4.2 per cent increase in funding next year, despite the economic downturn, so just like last year every council will get an increase in grant.

"Councils are facing tough budget decisions like the rest of Government but people rightly expect us all to tighten our belts.

"However any steps to make efficiency savings must maintain or improve vital local services that communities need."

"This balanced settlement confirms the provisional figures set out in last years three year settlement which has given councils the stability, flexibility and financial certainty to manage their budgets effectively.

"Council taxpayers have a right to know how councils are ensuring value for money on services, so this year - for the first time - councils will be required to include efficiency information on council tax bills.

"I expect next year's average council tax rise to be substantially below 5 per cent - I will not hesitate to help people by capping any excessive increase if I have to."

In a downturn the public expect every tax penny to be focused on service delivery. Local government like the rest of the public sector is expected to make 3% annual efficiency improvements. This means councils need to save £1.5bn a year, which is equivalent to £90 off the average council tax bill.

Last month, the Audit Commission's report, Crunch Time, confirmed that councils are generally prepared for the impact this downturn will have on local services, and that their efforts to find efficiency savings will ensure value for money and minimise the impact on their budgets and communities.