Provisional Local Government Funding Announcement
The finance settlement announcement was made by John Prescott, Deputy Prime Minister
and Secretary of State for the Environment, on 2 December 1998. This years
settlement is different from previous years in two important respects it marks the
end of "crude and universal capping" and it is intended to cover a three year
period rather than the traditional one year period. That said, at this stage, we have yet
to see any detailed figures for 2000/02 and 2001/02.
The Key Headlines of this years settlement are:
- Warwickshire County Councils overall SSA is set to increase by 5.7%;
- For council tax benefit subsidy purposes the Government have set a guideline tax
increase of 4.5%;
- Special Transitional Grant for Community Care has been discontinued. The service is now
expected to be funded wholly from the Councils mainstream budgets;
- A number of SSA methodology changes have been made, principally in relation to Social
Services. Significantly there are no methodology changes in relation to the Area Cost
Adjustment, the controversial mechanism which provides extra resources to meet the assumed
higher costs of authorities in the South East.
Standard Spending Assessments
The SSA is the Governments guideline to the cost of a standard service. For
Warwickshire County Council the SSA for 1999/2000 is £315.611 million, representing an
increase of 5.7% over 1998/99. Locally there are significant increases for Education,
5.4%, Personal Social Services*, 8.2%, and Highways, 6.3%. Detailed SSA changes summarised
|Personal Social Services*
|Environment, Protective & Cultural Services
*In 1998/99 the County received £3.045 million of Special Transitional Grant. This has
been discontinued and is assumed to be included within the 1999/2000 SSA figures.
Therefore on a like-for-like basis the Personal Social Services increase is approximately
Changes in SSA calculation
In total, methodology changes account for only 0.2% of Warwickshires 5.7% SSA
increase. The main changes compared to 1998/99 are:
- Elderly Residential and Domiciliary Social Services SSA changes which recognise
the additional cost in rural areas of providing social services for elderly people in
their own homes. A positive change from Warwickshires perspective;
- Childrens Social Services SSA technical changes made to reflect work
carried out by the University of York (multi-level modelling) and higher allowances for
the costs of foster care. A positive change from Warwickshires perspective;
- Environmental, Protective and Cultural Services SSA a deprivation index has been
introduced which has a negative impact from Warwickshires perspective.
SSA formulae are now expected to be frozen for the next three years.
If the County Council spent at SSA its council tax for a Band D property would be
£530.75 (using the Governments assessment of the local taxbase). In addition
taxpayers would also meet the District, Parish and Police Authority council tax charges.
If each of these authorities also spent at SSA the overall council tax for a Band D
property would be £663.50.
In the absence of universal capping the County Council has slightly more flexibility in
relation to the setting of its budget. In exercising this discretion, however, it will
wish to have particular regard to the impact of its decisions on local tax payers. The
table below illustrates the likely impact of different spending assumptions on the element
of the local council tax which relates to County Council services. The figures are
approximate at this stage.
|County Council Budget Increased by %
||Approximate Increase in County Council
element of local council tax %
In practice a number of factors will influence the final level of the
local council tax including:
- The Governments final settlement decisions;
- The County Councils own budget decisions;
- The budget decisions of the Police Authority and District and Parish Councils;
- The District Councils assessment of the local tax base;
- Any surplus or deficit on council tax collection in 1998/99;
- The impact of new arrangements in relation to council tax benefit subsidy (see below).
New Arrangements for Council Tax Benefit Subsidy
In the White Paper "Modern Local Government: In Touch with the People" the
Government outlined its plans to make councils locally pay a share of the costs of council
tax benefit. Previously, the national exchequer met the costs of council tax benefit as it
did for most other social security benefits. The Government have now indicated that they
will introduce a scheme along the following lines:
- Each year a guideline increase in council tax will be set. Government will continue to
meet the costs of benefit for those concerned, up to the guideline;
- If an authority increases it council tax above the guideline level, part of the costs of
council tax benefit which arise will be borne locally;
- Councils with above average proportions of residents receiving council tax benefit will
not be adversely affected compared to those which are closer to the norm;
- People who receive benefit will not be penalised in any way.
For 1999/2000 the Government has set guideline level at the higher of;
- And increase in council tax of 4.5%; or
- The increase necessary to allow the authority to increase its budget requirement by the
cash increase in it SSA.
The Local Government Association has consistently opposed these proposals.