Local government’s contribution to 2 billion efficiencies in 2010-11 Introduction and overview



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LOCAL GOVERNMENT’S CONTRIBUTION TO £6.2 BILLION EFFICIENCIES IN 2010-11
Introduction and overview


  1. This note sets out the basis on which the Government will implement reductions to individual local authority grant allocations for 2010-11. The note does not cover funding to police authorities. The Minister of State for Policing and Criminal Justice announced his proposals for police authorities on 27 May.




  1. The Government has made clear that its most urgent priority is to tackle the UK's record deficit in order to restore confidence in our economy and support the recovery. On Monday, 24 May, the Chancellor of the Exchequer and Chief Secretary to the Treasury announced the first step in tackling the deficit, setting out how the Government intends to save over £6 billion from spending in 2010-11.




  1. Included in that savings package was an expectation that savings of over £1 billion would be delivered by local government. The Government recognises that it will be challenging for local authorities (along with other parts of the public sector) to make these reductions in-year. However, the Government is clear that these reductions are necessary for the reasons set out above. It is for local authorities to decide where their priorities and opportunities for efficiencies lie across the totality of their responsibilities




  1. To support local authorities to re-shape their budgets, the Government aims to give authorities certainty about their grant reductions as a matter of urgency, so that they can make the necessary decisions as quickly as possible. The Government has also received representations from local government to provide certainty urgently.




  1. The Government will not be consulting authorities on the reductions to grants or funding streams. However, in relation to those grant streams where reductions are necessary, the Government considers it prudent to publish amended allocations and to allow local authorities to comment on the accuracy of the figures before they are implemented. This note does that.


The case for a reduction


  1. As set out above, the Government’s most urgent priority is to tackle the UK's record deficit. The Government believes that it is better to start to make reductions in the current financial year. Ministers consider that not making these reductions now will simply delay the need for savings in future years, therefore compounding the impact on local authorities and other parts of the public sector in the future.




  1. Ministers believe that it is fair that local authorities make a contribution to the savings in 2010-11. As with central departments, the Government expects local authorities will be able to make savings from efficiency measures, eliminating waste and, where necessary, reducing spending in areas that are lower priority for their communities. The fact that certain grants have been chosen for reduction over others does not mean that the Government expects there to be a direct correlation between grant reductions and local authority budget changes.




  1. Government Departments have had to make difficult decisions about reducing grants paid to local government, but delay in providing this certainty will make it more difficult for authorities to manage their finances in 2010-11.




  1. The Government therefore wishes to provide as much clarity and flexibility to local authorities and other public bodies as quickly as possible so that they can best handle the changes proposed without an impact on key frontline services.




  1. In considering grant and funding streams, the Government has:




    • given priority to protecting the funding for schools and Surestart and 16-19 year olds;

    • not reduced funding in the specific grants and/or funding streams for adult social care, housing benefit administration, main programme funding for Supporting People and for the fire service




  1. The Government has examined whether it would be possible to focus the reductions on grants which have not been included in grant determinations, or grants which are not subject to statutory restrictions. This has been possible to some extent. Some of the reductions occur in grants where there are underspends, where the money has yet to be allocated, or where a grant determination has not yet been made. However, it has been necessary to reduce some grant allocations included in grant determinations.




  1. The Government is clear that local government needs increased flexibility to take decisions locally. This means retaining the most flexible funding (formula grant) at the level approved by Parliament (£29 billion). It also means lifting restrictions on how local government spends its money by removing ringfences. This gives councils extra flexibility to make decisions about where savings are found, although this is subject to the usual rules which ensure that capital funding is used on capital expenditure.




  1. In addition, the Government believes that the abolition of CAA (saving Government £10m in 10-11) will reduce direct and indirect costs on local authorities




  1. Local authorities will have to make difficult decisions, and increase the drive for efficiency, but in the context of the need to tackle the budget deficit, it is right that all parts of the public sector prioritise. The reductions announced by departments therefore take these factors into account.




  1. The distribution and level of grants from 2011-12 onwards will be considered in the autumn Spending Review




  1. Information on the grants which will be reduced in 2010-11 is attached at Annex A.




  1. A list of contacts in the relevant government departments is at Annex B.




  1. Precise information on the changes, by department and for each funding stream or grant, is attached at Annex C. Reductions to individual grants/funding streams have been made, in the main, on a pro-rata basis, so that every authority is affected to the same proportionate extent in relation to that grant stream. In each case, the Government is satisfied that it has adopted a fair approach to making the necessary reductions.




  1. Annex D of this document provides details of the revised allocations for individual authorities. The table sets out the changes for each grant stream by individual local authority.




  1. A revised list of all revenue and capital grants, and whether they are ringfenced, is at Annex E.




  1. Authorities should let the Department know by 5pm on Thursday 24 June if they believe that there are errors in the figures. Information should be sent to:

Becca Taber

Communities and Local Government

Local Government Finance.- Strategy, Revenue and Capital

5/H1

Eland House



Bressenden Place,

London, SW1E 5DU


Or by e-mail to becca.taber@communities.gsi.gov.uk


  1. For further detail see the Treasury Press Notice at http://www.hm-treasury.gov.uk/d/press_04_10.pdf


Annex A
Reductions in specific grants/funding streams within Area Based Grant
All figures are rounded to the nearest £0.1m.
Department for Education
There will be a £311 million reduction in the overall amount available to local authorities through Area Based Grant (ABG) from DfE.
Department for Transport
There will be a £309 million reduction from the following DfT grants:

£m

Integrated Transport Block

-150.8

Major Projects

-61.4

Yorkshire and Humber ITB transfer

-23.5

Capital detrunking

-6.8

PRN networking funding

-5.9

Urban congestion fund

-7.9

Smaller grants, of which:

-15.0

Kickstart 2009

-5.0

Other funding support, as yet unallocated

-10.0

Road Safety capital grant

-17.2

Reductions for the following funding streams within Area Based Grant




Road Safety revenue grant

-20.6


DfT Total -309

Communities and Local Government
Reductions for the following specific grants:

£m

Housing Market Renewal

-50.0

Gypsy & Traveller site grant

-30.0

Housing and Planning Delivery Grant

-146.0

Connecting Communities

-19.1

Other cohesion funding

-5.0

LAA Reward

-125.0

Local Authority Business Growth Incentives scheme

-50.0

Reductions for the following funding streams within Area Based Grant:




Supporting People admin

-30.0

Working Neighbourhood Fund

-49.9

Local Enterprise Growth Initiative

-17.5

Prevent

-7.0

Cohesion

-4.0


CLG Total -533.5

Department for Environment, Food and Rural Affairs
Reduction for the following specific grant:

£m

Contaminated Land

-7.5



Defra Total -7.5

Home Office

£m

Reduction in total Area Based Grant -6.0



Home Office Total -6.0

Adjustment grant1 +1.0
OVERALL TOTAL -1,165.9

Annex B

Details on contacts for grant streams to be reduced
DfE

Area Based Grant

Brian Blagbrough

brian.blagbrough@education.gsi.gov.uk 0207 3407 453


DfT

All Queries

Chris Maddocks

chris.maddocks@dft.gsi.gov.uk 0207 944 3252.


Defra

Contaminated Land Grant

Sima Parmar

sima.parmar@defra.gsi.gov.uk 0207 238 1542


CLG

Housing Market Renewal

David Waterhouse

david.waterhouse@communities.gsi.gov.uk 030344 43817
Tim Hayward

tim.hayward@communities.gsi.gov.uk 0303 444 3820

Gypsy & Traveller Site Grant

Stan Neil

stan.neil@communities.gsi.gov.uk 0303 444 2080

Housing and Planning Delivery Grant

Junaid Azam

junaid.azam@communities.gsi.gov.uk 0303 444 3598

Connecting Communities

Anton Draper

anton.draper@communities.gsi.gov.uk 0303 444 1404

Supporting People Admin

Shehla Husain

shehla.husain@communities.gsi.gov.uk 0303 444 3672

Working Neighbourhood Fund

Alun Hughes

alun.hughes@communities.gsi.gov.uk 030344 43104

Local Enterprise Growth Initiative

Stuart Meiklejohn

stuart.meiklejohn@communities.gsi.gov.uk 0303 444 3108

Prevent

Nick Nash

nick.nash@communities.gsi.gov.uk 0303 444 1364

Cohesion

Lucy Bolton

lucy.bolton@communities.gsi.gov.uk 0303 444 1326

LAA Reward

Mike McGrath

mike.mcgrath@communities.gsi.gov.uk 0303 444 2560

Local Authority Business Growth Incentive scheme

Kenneth Cameron

kenneth.cameron@communities.gsi.gov.uk 0303 444 2091


Home Office

Area Based Grant

Toby Nation

toby.nation2@homeoffice.gsi.gov.uk 020 7035 3832




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