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Written Statement - 2014-15 Final Local Government Revenue and Capital Settlements

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These documents set out details of the final distribution of public funds to the 22 Welsh Local Authorities.
Lesley Griffiths AM, Minister for Local Government and Government Business
Today I am announcing the details of the Final Revenue and Capital Settlements for the 22 Unitary Authorities in Wales for 2014-15.

The Overall Settlement

In preparing the Final Settlement, I have given careful consideration to the responses I received to the consultation on the Provisional Settlement.  

Next year, after accounting for transfers, Local Authorities in Wales will receive £4.264 billion in general revenue funding, a decrease of 3.4% compared with 2013-14.  The overall change is slightly better than I announced at the Provisional Settlement, following my decision to dehypothecate £4 million of funding previously identified for the Council Tax Reduction Scheme Pensioner Grant.  Whilst today’s settlement represents a reduction in funding, it still reflects a balanced outcome for Local Government in Wales, given cuts imposed by the UK Government which will total a £1.7 billion reduction in the Welsh Budget by 2015-16. This Final Settlement demonstrates my commitment to increase flexibility, achieve fairness and provide additional support.

The Settlement includes £244 million for the Council Tax Reduction Scheme. It also includes £5.2 million of additional funding for the Council Tax Reduction Scheme Administration Subsidy, which was previously provided to Local Authorities by the Department for Work and Pensions and has been passported into the Settlement.  

Distribution between Authorities

Table 1 details the relative annual change in the revenue settlement for each of the 22 Authorities after adjusting for transfers.

Specific Revenue Grants

I am also providing Local Authorities with information on the specific grants they can expect to receive in 2014-15.  Taken together, the information on Revenue Support Grant and specific grants provides Local Authorities with a comprehensive picture of the funding from the Welsh Government for 2014 15, and allows them to budget effectively.  In addition to the funding, Local Authorities will receive through the Settlement, they will also receive over £700 million in specific grants.

Included within the RSG for 2014-15, is £39.3 million of funding previously provided through specific grants.  From my own portfolio, I have decided to dehypothecate over £30 million previously identified for Private Finance Initiative (PFI) and the Public Facilities Grant.  Also transferring into the Settlement for 2014-15, is an additional £3.2 million in relation to the First Steps Improvement Package and £5.2 million for the administration of Council Tax Reduction Schemes.  

For the Final Settlement, I have also taken the decision to provide the funding previously identified for the Council Tax Reduction Scheme Pensioner Grant (£4 million) within the RSG instead of a specific grant.     

Alongside the Settlement, additional £3.5 million which will be paid out in 2014-15 under a new Local Government Borrowing Initiative to part fund the Welsh Government element of the 21st School Programme. This will be provided outside of the settlement as a separate grant in 2014-15 as the distribution has not been finalised but will transfer into the RSG for 2015-16.

Protection for Schools

The Settlement reflects the Welsh Government’s commitment to protect schools funding to ensure the delivery of the best outcomes for Welsh children.  Together with an element of the Pupil Deprivation Grant, the settlement includes the resources necessary to protect funding for schools at 1% above the overall change in the Welsh Budget.  

Damping

To mitigate the year-on-year impact on any individual Authority, I am implementing my proposal announced as part of the Provisional Settlement to apply a damping mechanism.  After reviewing the consultation responses and the impact of recent data updates, I have taken the decision to maintain the damping threshold I set at the Provisional Settlement.  This will mean no Authority will experience a reduction of more than 4.75% compared with their 2013-14 allocations when adjusted for transfers.  In addition to this threshold, funding for the Local Government Borrowing Initiative for Highways and the Public Finance Initiative Grant are also being provided to Authorities in their RSG allocations.  Overall, this means no Authority will experience a reduction of more than 4.6%, when adjusted for transfers.

Capital Settlement

The capital allocation for 2014-15, including specific capital grants will be £406.3 million, which represents a significantly better Settlement for Local Authorities than the indications provided last year.

The General Capital Fund totals some £143 million.  This is unhypothecated capital funding, of which £54 million is paid as capital grant with the remainder, some £89 million, being provided as support for borrowing.

Further information

Further detailed tables will be published on the Welsh Government’s website.

The motion for the National Assembly for Wales to approve the Local Government Finance Report for 2014-15 is scheduled for debate on 14 January 2014.

The information will provide authorities with the information they need to set their budgets and council taxes for the next financial year.  I have set out clear expectations to Local Authorities regarding Council Tax increases and will be monitoring the situation closely.  I remain willing to use the capping powers available to me if necessary.