Briefing on the provisional Local Government Finance Settlements for 2009/10 to 2010/11

Provisional local government finance settlements for 2009/10 and 2010/11 were announced in the House of Commons today. The briefing available below summarises the main points of the provisional settlements.

The 2009/10 provisional local government finance settlement and an indicative 2010/11 settlement were announced on 26 November 2008 by John Healey MP, Minister for Local Government.

There have been changes to grants to specified bodies, the level of specific and special grants, the split between National Non-Domestic Rates and Revenue Support Grant, due to local government restructuring, and transfers of function from formula grant.  These changes have not affected the boroughs’ formula grant figures for 2009/10 or 2010/11 which have not changed since January 2008.  This attached briefing provides a brief overview of some of the key headline figures from the provisional settlement.

In summary:

Headline Aggregate External Finance (the total level of support the Government provides to local authorities) will increase by 4.2% in 2009/10 and 4.4% in 2010/11.

Increases in average formula grant (revenue support grant, police grant and redistributed business rate) for the two years are set out in Table 1 below.  Further details by area are set out in Annex 2 and for individual boroughs in Annex 3 of the attached briefing.

Table 1: Change in Formula Grant %

	2009/10	2010/11
London boroughs	2.0%	1.8%
London inc. GLA	2.1%	2.0%
England	2.8%	2.6%

 

Grant floors have been set to provide a minimum increase in formula grant.  These floors are paid for by 'scaling back' grant increases above the floor.  Table 2 summarises the position for London boroughs.  Details of the grant allocations for each London authority are set out in Annex 3 of the attached briefing.

Table 2: Grant Floors for Authorities Providing Education and Social Services

	2008/09 comparison	2009/10	2010/11
Grant Floor	2.0%	1.75%	1.5%
Scaling factor	67.0%	72.9%	71.7%
No. of boroughs on grant floor	29	24	24

 

The government reiterated the expectation that average council tax increases in 2009/10 should be substantially below 5%, and that they will not hesitate to use capping powers to protect council tax payers from excessive increases.