NOTE ON LOCAL GOVERNMENT’S CONTRIBUTION TO £6.2BN PUBLIC
SPENDING SAVINGS IN 2010/11
In May the Treasury announced the Coalition Government’s intention to secure
savings of £6.2bn in the current financial year. Local government, excluding police
authorities, has a target of £1.2bn in-year savings within this total. In addition, the
Home Office has allocated savings of £135m to police authorities which will affect
the finances of the City Police. Further information has been provided recently.
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.
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. It also means lifting restrictions on how local
government spends its money by removing ringfencing from other specific grants.
Capital grants, however, will still need to be used for capital expenditure.
In addition, the Government believes that the abolition of Comprehensive Area
Assessment, saving the CLG £10m in 2010/11, will reduce direct and indirect costs
on local authorities.
The distribution and level of grants from 2011/12 onwards will be considered in the
autumn Spending Review.
Reductions to individual revenue grants/funding streams have been made mainly on a
pro rata basis and the implications for the City
for those that have been allocated to
date by the Government are shown in the table below:-
Programme
National Total
City’s Share
(£000’s)
(£’s)
Revenue & Area Based Grants
Dept. for Education
311,000
111,360
Supporting People Admin.
30,000
34,500
Working Neighbourhood Fund
49,930
0
Local Enterprise Growth Initiative
17,500
0
Prevent 7,000
0
Cohesion 4,000
0
Road Safety
20,592
0
DfT Kickstart 2009
4,999
0
Home Office
6,000
9,237
Sub-Total 451,021
155,097
Police Rule 2 Grant
115,000
917,064
Totals 566,021
1,072,161
The above allocations only relate to part of the overall savings. In addition, £212m
reductions in capital grants have been allocated by the Department for Transport but
the City is unaffected by these reductions. It does, however, face a reduction of
£100,000 in Police capital grant in 2010/11 as part of their £10m reduction nationally.
Also the Home Office will cut £10m from police counter terrorism grants but this has
yet to be allocated.
Other savings in grants affecting the City relate to the abolition of the Housing and
Planning Delivery Grant of £146m for the current year. The City’s share of this grant
was £151,922 in 2009/10 but no allocations had been made for 2010/11. The Local
Authority Business Growth Incentives (LABGI) scheme has also been abolished
saving £50m and the City’s provisional allocation for 2010/11 was £12,829. The
LAA Reward arrangements have been reduced by £125m which broadly will reduce
rewards by 50% to local authorities in the current year, and will have implications for
the City’s potential financial reward under the scheme.
There are other programmes where grants to local authorities will be reduced but I am
not aware that these have financial implications for the City and the national
reductions are as follows:-
• Housing Market Renewal (CLG)(-£50m)
• Gypsy & Traveller site grant (CLG)(-£30m)
• Connecting Communities (CLG)(-£19m)
• Other Cohesion funding (CLG)(-£5m)
• Contaminated Land (DEFRA)(-£8m)
• Major Transport projects & smaller grants (DfT)(-£71m)
