Local Government Settlement and how it impacts on Cornwall
The first blog of the year starts off with news from last year and the announcement made on the 18th of December, when the Government released details of the draft figures of the Local Government Settlement for 2015/16. In other words, the amount of funding the Government will give to Local Authorities. Note this is a draft statement and the final settlement will not be finalised till February 2015. So lets not count our chickens just yet.
In the Autumn Statement, the Government has committed to continue with a 2% cap on Business Rate increases for 2015/16. Under normal circumstances Business Rates would be increased by inflation – circa 2.3% – and this cap, all things being equal, would consequently reduce the amount of funding received by the Council through Business Rate Retention. The Government has promised to fund any losses as a result of this cap through additional grant. Lets hope te Government keeps this promise.
The statement reaffirmed the Government’s commitment to the doubling of the Small Business Rate Relief by extending the scheme for a further year until 31 March 2016. In addition, it also announced that the discount that was introduced in 2014/15 for small retail premises would be increased to £1,500 in 2015/16 (previously £1,000). The Government has again indicated that it will fund the cost of these proposals through grant, as in 2014/15.
Every year there is the worry the Government would reduce the cap on Council Tax increases – currently set at 2% without the need for a referendum. The good news is there will be no decrease – or increase – on the cap. However, the announcement also made reference to significant precept increases in recent years by Town and Parish Councils. Luckily the Government stopped short of introducing the referendum principles to this tier of local government at this time. I do fear it will not be long until such caps are imposed on Town and Parish Councils.
The Government in the statement has also offered Local authorities a Council Tax freeze funding for 2014/15 and 2015/16 equivalent to a 1% increase on Council Tax and that this would be made permanent and incorporated into the baseline expenditure totals.
The existing Rural Services Delivery funding that is paid to the most rural authorities is being increased by £4m nationally and rolled into the settlement. For Cornwall, our total rural funding is now £0.755m. The outcomes of the recent Government review into the costs of urban and rural authorities can be found at: https://www.gov.uk/government/publications/costs-of-service-delivery-in-rural-areas
For Cornwall’s world of education, the Education Services Grant for 2015/16 will be £4.250m. This is broadly in line with the Council’s own estimates and this also takes into account anticipated Academy transfers during 2015/16. Indicative allocations of Dedicated Schools Grant (DSG) funding have been announced. For Cornwall this is broadly as expected at £339m and will be an increase on the previous year’s funding. In 2015/16 sees the first step towards a harmonisation of funding rates by the Department for Education (DfE), the benefit of which is an increase in the per pupil funding rate applied in Cornwall resulting in an uplift of funding for Schools in Cornwall of £4.9m.
The DFE plans to announce the funding allocation for 2 year olds after the census data has been collected in January 2015. It is anticipated that this funding will reduce slightly in comparison to the 2014/2015 allocation as the grant will be based on participation in future.
Finally the DfE published ‘Basic Need’ capital allocations for 2014/15 to 2016/17 in last year’s settlement, which for Cornwall amounted to £32.3m, the majority of which is allocated to 2015/16 and 2016/17. How this money will be spent is currently being worked on.
The Housing & Council Tax Support Administration Subsidy provisional grant allocations were announced before the finance settlement. The Housing Benefit Admin Subsidy which is allocated by the Department for Work and Pensions is £2.309m. The Council Tax Admin Subsidy is £0.684m – giving an overall total of £2.993m. This is £0.556m lower than the overall grant received in 2014/15, but £0.259m of this is due to the transfer of funding to the Department for Work and Pensions for the Single Fraud Investigation Service.
The Government had previously indicated that the Local Welfare Provision Grant would be withdrawn from 2015/16. However it has now decided to continue funding after all, at a national value of £129.9m (£172.1m 14/15). This is now included within the Revenue Support Grant element of the settlement but does not represent new funding. Cornwall’s allocation of this funding is £0.885m. This means that we will be able to continue to deliver a valuable service in 2015/16 to some of our most vulnerable residents. Which is very good news.
All in all the settlement is inline with the expectations of the Council. So there has been no real shockers contained in the draft statement.