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Written Statement - The Local Government Settlement and Damping

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Leighton Andrews, Minister for Public Services

I am publishing today figures showing the effect of applying damping to the Local Government Revenue Settlements between 2011-12 and 2015-16.

Table 1 shows how funding has been redistributed between Local Authorities as a result of damping.  

Damping – or floor funding – was applied in 2011-12, 2014-15 and 2015 16.  Any decision to apply damping is made on a yearly basis.  We must not lose sight of the fact that this year, through careful prioritisation, the Welsh Government is providing a much better Settlement than expected.  Damping is a temporary measure to moderate the effect of changes in individual years.  It is not intended to be used every year.  The long-standing core principle for distributing funding to Local Authorities through the annual Settlements is that the allocations are based on relative need.  

The relative need is calculated through a detailed formula which takes account of the demographic, social, economic and physical characteristics of each Authority.  This formula is reviewed and agreed each year with Local Government.  Applying damping year-on-year would erode the link between funding and the relative need to spend, moving funding from those Authorities assessed as having the greatest relative need to other Authorities.  

The table shows which Authorities have been net contributors to and beneficiaries of damping. The biggest contributor has been Cardiff, the greatest beneficiary has been Powys and the figures show the mix of Authorities in between.  This provides further evidence that the underlying funding formula does not favour any individual Authority or particular types of Authorities.