News story

Final local government settlement a fair deal for communities

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Local Government Finance Settlement for 2011 to 2012.

Final arrangements for a fair and progressive funding settlement for councils that protect front-line services and shield the most vulnerable have been published by Local Government Minister Bob Neill.

Councils will only see an average 4.4% reduction in revenue spending power and the grant has been adjusted so none will now face more than an 8.8% fall.

This settlement reflects the desire to support areas with the most need and the urgent obligation to bring the country’s public finances back in order, keep interest rates down and prevent the national debt escalating beyond £1.4 trillion of taxpayers’ money.

Ministers have consulted widely with the Local Government Association, London councils and many individual local authorities, listening to concerns raised. Having considered all views, ministers have today (31 January 2011) confirmed the proposals for the distribution of formula grant for 2011 to 2012 as announced in December.

Mr Neill said:

“We urgently need to reduce the country’s public spending and local government accounts for around a quarter of all public expenditure so councils have a big part to play.

“We have listened to views and looked hard at the figures and have pushed more money to those most dependent on grant so now no council will face a reduction of more than 8.8% and shire districts will get £10 million to compensate for the loss of concessionary bus travel funding.

“These extra steps once again show we have worked to deliver a fair and progressive approach that directs grant to where it is most needed - the vulnerable and needy - whilst protecting taxpayers.”

Local Government Secretary Eric Pickles added:

“This goes hand in hand with the new localism powers and spending freedoms we are handing councils so they can be as efficient and effective as possible with public funds, rooting out waste and focusing on frontline public services.”

The final settlement:

  • allocates a total Government Revenue Grant of £72.7 billion to Local Authorities in 2011 to 2012
  • distributes £29.4 billion in formula grant in 2011 to 2012 and £27.1 billion for 2012 to 2013
  • keeps the average revenue spending power reduction for 2011 to 2012 at only 4.4% and reduces the upper limit from 8.9% to 8.8%
  • increases Transitional Grant to £96 million in 2011 to 2012 and £21 million in 2012 to 2013
  • makes a further £10 million available through Formula Grant to compensate Shire Districts for the loss of concessionary travel funding in 2011 to 2012
  • ensures a fair distribution between different parts of the country - north and south, rural and urban, metropolitan and shire
  • creates 4 new grant bands or ‘floors’ with different limits that protect those most dependent on grant against potentially steeper reductions

The Coalition government remains committed to protecting local taxpayers. A growing number of councils have already indicated that they will be taking up the government offer to fund a Council Tax freeze in April through its £650 million fund. Authorities who do not increase their Council Tax are eligible for a grant worth 2.5% of their Council Tax.

Formula Grant per head: 2011 to 2012

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