2004 Spending Review

PN A5

12 July 2004

Investing in better and more efficient local services

Local government services received a boost today as the Chancellor announced average increases in the resources for local government of 2.7 per cent a year in real terms over the next three years, an increase of £7.2 billion by 2007-08, supporting the further delivery of improved schools, better care for the elderly and help the fight against crime and anti-social behaviour.

Additional front line resources will be released through the delivery of £6.45 billion of efficiency savings and productivity improvements by 2007-08. Local Authorities will also receive three-year funding settlements to offer greater certainty and capacity for longer-term financial planning.

The Deputy Prime Minister, John Prescott, said:

“We have the extra resources we need to continue building dynamic local authorities, improving the quality of life for all, delivering the ambitious long-term program of reform we launched in 2001, and enabling significant improvements in service delivery without the need for excessive council tax rises. This is good news for Local Authorities and local communities.”

Details

  • Annual average real increases of 4.8% in the already record levels of Local Authority investment in schools, housing and other key services through capital support and PFI over the three years to 2007-08;
  • Strengthening links between central and local government through local PSAs, pooling existing funds into a Safer and Stronger Communities Fund and piloting Local Area Agreements to provide a common framework for departments to deliver additional funding and devolve decision making;
  • Barry Quirk, Chief Executive of Lewisham, has been appointed to work with local authorities, government departments and other partners on the efficiency agenda to share and promote best practice on the ground.
  • £25 million is available over 2004-05 and 2005-06 to support innovative programmes and Regional Centres of Excellence to promote best practice in procurement and achieve efficiency savings by streamlining back office functions and transactional services. A further £20 million will be available over 2006-07 and 2007-08 through the Capacity Building Fund.

Notes for editors

1. Plans for Formula Spending Shares in 2005-06 to 2007-08 are below.

Table 1: Formula Spending Shares, 2005-06 to 2007-08 (£million)
FSS blockPlansBaselineAdditions
2004-052005-062006-072007-08
Education26,40227,9631,9003,700
Children’s services3,7374,016300500
Adult services8,6909,553380820
Police4,3554,553215440
Fire1,8481,89863137
Highway Maintenance2,0042,05400
EPCS11,15211,217389823
Capital Financing*2,8023,269330 655
TOTAL60,99064,5223,5777,075

*Includes PFI Special Grant

2. Grant support is provided through the ODPM as Net Aggregate External Finance (AEF), the major constituent of Local Government DEL, which also covers the Neighbourhood Renewal Fund, Valuation Office Agency, the Capacity Building Fund and resource and capital funds to pump-prime and reward authorities that achieve targets within local PSAs. The vast majority of local authority capital investment is provided to local government though other departmental programmes.

Table 2: Local Government DEL, 2005-06 to 2007-08 (£million)
ProgrammePlansBaselineAdditions
2004-052005-062006-072007-08
Resource43,34845,8252,5054,942
Of which: Net AEF42,42144,7062,4784,902
Capital324349 100*-100*
TOTAL43,67246,1742,4054,842

*Capital reductions in 2006-07/2007-08 due to end of Local Government online programme

Table 3: PFI credit allocations by department, 2005-06 to 2007-08 (£million)
DepartmentBaselineAdditions
2005-062006-072007-08
DfES1,20050100
Home Office110010
Health902545
DCMS6500
DfT50060420
Transport for London600200
DEFRA130125150
ODPM (housing)360250250
ODPM (fire)501525
ODPM (other)6500
TOTAL2,6305251200

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