Written Statement - Provisional Local Government Settlement 2017-18

Following my announcement yesterday of a one-year revenue budget for 2017-18 and four-year indicative capital budget, I am today publishing my proposals for local government funding in 2017-18.  These include the provisional allocations of core revenue funding for each of the 22 county and county borough councils.

These allocations may be revised for the final settlement.  However, I am confident they provide a robust basis for local authorities to plan their budgets for the next financial year.

I propose to set local government revenue funding for 2017-18 at £4.107 billion.  This represents an increase of £3.8 million compared to 2016-17.  This takes account of our agreement with Plaid Cymru to provide local government with an additional £25 million through the settlement to support the delivery of vital services. In addition, we are providing £1 million for school transport and £3 million to support town centre car parking.

This is a good settlement for local government, particularly given the many competing pressures on the Welsh Budget.  It constitutes the first increase in the settlement for local government since 2013-14 and is considerably better than most in local government have been expecting.

Also, through this settlement I am providing an additional £25 million in recognition of the importance of strong local social services to the long term success of the health service in Wales and in recognition of the growing pressures which social services face.

This settlement delivers the funding towards our commitments in Taking Wales Forward.  Firstly, the settlement includes £4.5 million to fund the commitment to increase the capital limit used by local authorities who charge for residential care from £24,000 to £30,000.  This is the first step in the delivery of our commitment to have a limit of £50,000.  Secondly, the settlement provides £0.3 million to fund the commitment to introduce a full disregard of the War Disablement Pension in financial assessments for charging for social care.  Thirdly, I am providing £2.3 million of additional funding outside the settlement to ensure that no authority sees a reduction of greater than 0.5% compared to its 2016 17 settlement allocation and, where relevant, top-up funding.

Capital funding for 2017-18 amounts to £442 million.  Within this, General Capital Funding for 2017-18 is unchanged at £143 million.

In setting their budgets and council tax levels for next year, I expect every authority to take account of all the funding streams available to them and to consider carefully how to secure best value for Welsh taxpayers through effective and efficient service provision.  We offer considerable flexibility to authorities in Wales, which is not available to their counterparts in England, to exercise autonomy and responsibility in managing their finances.

I am proud of our commitment to, once again, maintain full entitlements for eligible applicants under the Council Tax Reduction Scheme, and I am supporting local government to deliver the scheme in 2017-18 by distributing £244 million within the settlement.  Local authorities must take account of the scheme when making their decisions about council tax levels.

Transfers and revenue grants

Included within the provisional RSG for 2017-18 is £3.1 million of funding previously provided through specific grants.  This includes £2.85 million of funding previously provided via the social services delivering transformation grant; £184 thousand to support deprivation of liberty safeguards; £57 thousand to deliver the food hygiene rating scheme; and £21 thousand additional funding for the blue badge scheme.

In total, this means that annual funding of over £194 million has been transferred into the settlement since 2011-12.

The change in arrangements for the registration of the education workforce has resulted in a transfer out of the settlement of £1 million formerly provided in respect of teacher registration fee subsidies.

Alongside the settlement, I am publishing as much information as possible about other Welsh Government grant schemes planned for 2017 18.  This will assist local authorities in preparing their budgets for next year.  A further update will be included with the final settlement in December.

My Ministerial colleagues and I are considering whether further flexibility might be offered in relation to certain grant funding for 2017-18 and beyond.  Our conclusions will be published as part of the information accompanying the final settlement.

Individual authority allocations

Table 1 sets out the proposed distribution of Aggregate External Finance (comprising Revenue Support Grant and redistributed Non-Domestic Rates) between the 22 authorities for 2017-18.

In proposing the allocations for individual authorities, I have listened to the advice of the Distribution Sub Group (DSG) and Finance Sub Group.  I am implementing the recommendations set out in the DSG annual report, phasing in the agreed changes to the social services formulae over two years, to help smooth the re-distributional effect of these changes.

This distribution reflects our most up-to-date assessment of relative need, based on a wealth of information about the demographic, physical, economic and social characteristics of every authority in Wales.

In line with the Welsh Government Draft Budget, I am unable to provide indications beyond 2017-18.

Conclusion

Today’s announcement marks the start of a six-week consultation period which ends on 30 November 2016.  After this, I will consider whether further amendments are to be made before making my final determination in December.