SIGOMA Technical Consultation: Financial Settlement and New Homes Bonus. Briefing Note. The Special Interest Group Of Municipal Authorities

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1 The Special Interest Group Of Municipal Authorities 2013 Technical Consultation: Financial Settlement and New Homes Bonus August

2 Contents SIGOMA Summary... 3 Background... 4 Financial Settlement Consultation... 6 Unexplained Difference from June Settlement... 6 A 2.3% reduction in Spending Power?... 8 Safety Net Holdbacks Capitalisation The Health and Social Care Integration Transformation Fund (ITF) The Impact on Local Authorities Reduction in Revenue Support Grant Distributional Impact Timing and Communication of the Consultation New Homes Bonus and the Local Growth Fund Consultation Related Briefings and Useful Documents

3 Summary SIGOMA On 25 th July DCLG opened a technical consultation on the Local Government Financial Settlement for and The consultation is open to all and closes on 2 October 2013 The information included in the consultation shows changes to the settlement and provides further details on the settlement. The consultation shows a 0.83% reduction in Settlement Funding Assessment (SFA) for as a result of the 2013 Budget. This amounts to a reduction of 198 million than previously stated in the 2012 settlement. Of most significance is the reduction in SFA for The reduction in is shown in the consultation as 3.1bn. This is a difference of 695 million from previous information provided by Government. This difference is to be made up by topslicing from RSG for separate funding pots. These include funding new social care burdens as a result of the Care Bill, the Independent Living Fund and funding for capitalisation and an increased safety net. In the settlement will be paid as 12.4bn RSG and 11.3bn business rates. In the settlement will be paid as 8.9bn RSG and 11.6bn business rates. RSG will make up less than half of the settlement for the first time. The percentage change for England in total Settlement in is 15.8% in real terms The percentage change for England in Spending Power in is estimated as 9.45% in real terms. SIGOMA authorities receive a 9.3% reduction in revenue spending power compared to a national average of 6.9% in cash terms. In addition, a consultation on the New Homes Bonus and Single Local Growth Fund has been published. This consultation closes on 19 September It is proposed that authorities will pool New Homes Bonus funding within Local Enterprise Partnership areas to a total of 400m nationally. This is made up of a 250m government contribution and 150m reduction from NHB allocations. There are two proposals for the pooling mechanism of New Homes Bonus for two tier authorities. 3

4 Background The Spending Round On 26 June the Chancellor of the Exchequer announced the spending plans for government until The Spending Round document is available here. The headline cut for local government was 2.1bn, or 10% in real terms. This was announced by government as a 2.3% reduction in local government spending power. The allocation for local government in the review appeared in tables on page 10 and 37 of the Spending Round document. A combination of the tables shows the following: Resource Departmental Expenditure Limit for Local Government Baseline bn Plans bn Year on year real growth % Resource DEL % Local Government Spending Further detail included in the document stated that the settlement was to include: 3.8 billion of pooled funding between the NHS and local authorities to support and reward the delivery of integrated services and better, more efficient care; making funding available, in addition to the settlement, in and for local authorities who choose to freeze their council tax; 330 million to support transformation of local services including a 200 million extension of the Troubled Families programme and a 100 million collaboration and efficiency fund to enable the re-engineering of service delivery and the realisation of efficiencies; a reduction in overall local government spending of 2.3 per cent; Establishing a 30 million fund to help meet the upfront costs of transforming the fire service; Creating a 45 million Fire Efficiency Incentive Fund to invest capital in ensuring that fire service assets such as fire stations are appropriately located to ensure efficient and effective service delivery; 335 million provided to local authorities in to prepare for delivery of the capped care costs system from April 2016; Table 1 of the report noted that Council Tax freeze for and to be paid in was not included in the DEL total for local government. 1 Notes of some of the amounts included in spend were provided but these could not be reconciled to the total 4

5 Estimated Impact SIGOMA The impact on as a result of the Spending Round was uncertain because the comparative figure for had been adjusted to reflect grants rolled in. DCLG either could not or would not reconcile the previous DEL with the restated one. It was unclear how the figure for had been arrived at, so assessing the impact on local authority budgets was difficult. The most pessimistic predictions from SIGOMA were reductions in RSG ranging from 19% to 22%. The most common worst case assessment was that the whole 2.1 billion reduction would impact on RSG and that a further 300m would be top sliced for New Homes Bonus. The bonus would then be distributed on a reduced basis following the 400m topslice for Single Local Growth. During his speech, the Chancellor of the Exchequer quoted a figure of a reduction in local government spending power of 2.3%. This figure has since been quoted in documents from DCLG. It is unclear how this figure has been arrived at and there is no indication as yet from government as to an explanation of this figure. SIGOMA and other interested parties would benefit from an explanation of this figure, as all analysis completed to date suggests a much larger figure. 5

6 Financial Settlement Consultation Following the Spending Round, DCLG released a Technical Consultations on the Local Government Finance Settlement and The consultation documents announce further detail and more reductions for local authorities. Unexplained Difference from June Settlement The tables on pages 10 and 37 in the consultation document exposed a large unexplained gap in Settlement Funding Assessment announced in the Spending Round and that outlined in the technical consultation. This gap amounts to 695 million and is illustrated in the table below: Comparison of estimated allocation to DCLG consultation tables Total million allocation at 2012 settlement 23,857 Changes for 2013 budget -219 Changes in business rate estimates 21 Other adjustments Restated for 2013 Budget 23,614 Adjustments in Reduction in DEL per Spending Review -2,100 Estimated Settlement (Spending Round) Proposed increase in NHB Topslice 21, Expected Settlement ,214 Estimated Settlement (Technical Consultation) 20,519 Unexplained difference 695 This unexplained difference amounts to a third of the total reduction in allocations to local government. Since the consultation document was issued, the DCLG have met with representatives of the LGA. The result of this was a briefing by the LGA on the settlement consultation. The first was to leaders and senior officers. The second was to finance officers. These briefings revealed that much of the new burden money created by the government was to be financed from topslice of local government Revenue Support Grant. An extract of the LGA Table shows the main topslice items as: Topslice or withheld funding million Source explanation Collaboration & efficiency fund 100 Spending review page 37 Fire transformation fund 30 Spending review page 23 Social care new burdens 285 Spending review page 23 Independent Living Fund 188 One off costs associated with the transfer of 6

7 Decrease in safety net and capitalisation holdbacks in 15/16 Remaining unexplained Total SIGOMA ILF programme to authorities from DWP -120 Changes to capitalisation (- 50m) and safety net holdbacks (- 70m) 212 To be determined. Some will relate to troubled families funding 695 Equates to estimate of the unexplained cut In the Spending Round much of these funds were described as being made available to local government to fulfil the responsibilities that come with the funding. It is clear that these are being funded directly by a transfer from RSG. Even pessimistic predictions did not estimate this amount of damage to formula funding. The largest part of this additional cut from RSG is from the funding for new burdens for social care as a result of the Dilnot recommendations. This effectively means that local authorities are being asked to do more with the same money they had previously, but allocated in a different way. As local authority costs rise, funding stays the same. This disconnect between funding and business costs amounts to a reduction in overall funds available to local authorities to meet need for services. It is our reading of the figures that the changes in funding amount to a significant reduction for local government on top of the 10% announced as part of the Spending Round. The complexity of the system and subsequent difficulty in making comparative assessments means that it is impossible to produce a figure of the actual amount that has been cut from local government. However, local authorities do know that budgets will be reduced further than previously anticipated only a month earlier. In effect, a political announcement has been made in a technical consultation document. This difference in funding predictions is shown in the table below: Difference in Local Authority Estimations of RSG reduction between the Spending Round and the Technical Consultation 7

8 A 2.3% reduction in Spending Power? Calculating a 2.3% Reduction In the Chancellor of the Exchequer s speech and the subsequent Spending Round documentation, a figure of 2.3% was quoted as a total reduction in local government spending power. This figure has not been verified by government and the local government sector has questioned how such a low figure has been calculated against the backdrop of such large reductions. It has continued to be referenced by government. So how have government arrived at the 2.3% figure? Since the workings are not available from government, we have to make some assumptions to undertake an equivalent analysis. However, the information released to date gives a fair indication of where a 2.3% reduction in spending power comes from. SIGOMA can produce a calculation equating to a 2.35% cut in spending power in The estimated revenue spending power is billion. In , RSG is reduced by 22.6%. However, an extra 2.7 billion of pooled NHS funding and the 652 million topslice for new burdens on social care and Independent Living Fund, amongst others, are added. This amounts to an estimated revenue spending power of billion in This means a cash increase of 180 million but a real terms loss of 2.35%. This may give some indication of how government have arrived at their 2.3% figure. If government are using this figure in political announcements, then SIGOMA and others would consider it appropriate and useful for the calculations to be published. SIGOMA calculations are shown in the tables below. The tables in Appendix B provide a more detailed account of the funding streams into local authorities. The calculations make some assumptions in the absence of definitive information from government and assume an indexation of 2.8% (Settlement Data) Council Tax Requirement minus Council Tax Support Funding Estimated income from Business Rates Retention million (Government Calculation?) 20, Council Tax Requirement minus Council Tax Support Funding 11, Estimated income from Business Rates Retention million 20, , Estimated RSG 12, Estimated RSG 8,

9 3, NHS funding to 1, NHS funding to support social care support social care 2 Other funds 1, Other funds topslices Estimated Revenue Spending Power 46, Estimated Revenue Spending Power 47, real term value The Technical Consultation 48, Spending Power Reduction The information released since in the Technical Consultation suggests a different funding outlook for local authorities % It is difficult for local authorities to take account of the additional 2.7 billion for pooled health and social care funding because there is not yet a clear indication of the control, conditions, new burdens and payment schedule of this funding. Within this pooled budget, the topslices from revenue support grant to support transformation funding, the Independent Living Fund and the new burdens on social care as a result of the Care Bill do not represent extra additional funding for the budgets of local authorities. These monies come with new responsibilities and are therefore not an overall funding increase. To present new burdens funding as a real terms growth is misleading. A summary of the composition of this pooled budget is given later in this briefing. The local authority perspective is shown below, again referenced in Appendix B and using some assumptions, but based on all data available from government: (Government million million Calculation?) (SIGOMA Calculation) Council Tax 20, Council Tax 20, Requirement minus Council Tax Support Funding Requirement minus Council Tax Support Funding Estimated income from 11, Estimated income from 11, Business Rates Retention Business Rates Retention 3 Estimated RSG 8, Estimated RSG 8, NHS funding to support 3, NHS funding to support 1, social care social care Other funds (NHB, specific grants) Other funds(nhb, specific grants) Previously, government have used Spending Power calculations to arrive at Efficiency Support Grant allocations. Here, they have stated that capital spending and new burdens are not included in spending power calculations. Capital funding accounts for at least 400m of this pooled budget. However, it is anticipated that government have used capital and revenue monies to arrive at their 2.3% spending power figure in this instance. 3 Our SIGOMA calculation is a lower figure due to levy deductions exceeding saftey net payments in our modelling exercise. 9

10 topslices topslices - Estimated , Estimated , Revenue Spending Power Revenue Spending Power Spending Power -2.35% Spending Power -9.45% Reduction Reduction Real Term Cut in -15.8% settlement Real Term Cut in RSG -29.6% Safety Net Holdbacks The technical consultation included a reduction of 95m to be used for safety net hold backs. The rates retention system includes a safety net to protect local authorities from significant negative shocks to their income by guaranteeing that no authority will see its income from business rates fall below 7.5% of their individual baseline funding level. The safety net is funded by a levy on the disproportionate financial benefits that some authorities will experience as a result of business rates growth, caused by the uneven distribution of business rates bases and the different spending needs of local authorities. Local authorities have submitted forecasts of the income that they expect to receive from business rates income. These estimates indicate that the 25 million previously held back by government will not be sufficient to meet all the demands on the safety net in DCLG will need to hold back an additional 95 million in (i.e. a total of 120 million). These resources will only be used as needed and any funding not used will be returned to authorities in year in proportion to their Start-Up Funding Assessment. The funds for this hold back are taken from those previously allocated according to need in RSG. Recipients of safety net payments are almost certain to be tariff authorities, whose business rates income is higher than their level of assessed need. The threshold for qualifying for safety net payments is dependent on the ratio of business rates to baseline funding needs; if an authority has lower needs then its 7.5% threshold for safety net will be triggered by a smaller reduction in business rates income than an authority with high baseline funding. What is more, the majority of the additional 95m allocated to fund the safety net holdback is used for a small number of authorities. According to SIGOMA calculations, 10

11 Westminster Council, who have by far the highest business rates income nationally, account for 52 million of the need for safety net in The adjusted historic business rate data for Westminster indicates a consistent upward trend in rates for the Council from 1.39 billion in to 1.69 billion in Westminster s estimates for , however, were pegged back to 1.57 billion. This generates a real term shortfall and triggers the potential for a safety net payment representing two thirds of a national 79 million safety net payment, as shown in the table below. Estimated Safety Net Payment for Westminster Council million Estimated Business Rates Aggregate Rates estimate with RPI Tariff Estimated retained Business Rates Safety net threshold Estimated Safety net payment Whilst the surplus from safety net payments will ultimately be paid back to local authorities according to formula, the safety net mechanism identifies an immediate problem in the system which is unfair to authorities who are most reliant on grant funding. One authority s business rates income heavily distorts the system and it is the view of SIGOMA that a more even and considered solution should be provided by DCLG to address this anomaly. Capitalisation The capitalisation directive is another mechanism that takes money away from needsbased funding. The Government announced as part of the Local Government Finance Settlement for that 100 million would be made available for capitalisation in and It was announced that the amount held back for capitalisation would reduce funding within Revenue Support Grant, with any provision not allocated to be distributed in accordance with the authorities share of the Start-Up Funding Assessment. The consultation document has proposed that 50 million would be made available in for capitalisation. This leaves 50 million to be used for the business rates safety net holdback. 11

12 The Health and Social Care Integration Transformation Fund (ITF) The Spending Round announced 3.8 billion funding as a single pooled budget between NHS and local authorities. The Local Government Association and NHS England have since published a joint document which provides details on the funding and a roadmap for local areas to plan in the run up to the fund taking full effect from 2015/16. This document can be found here. The funding pooled budget is split in half between existing funding and additional allocations. Existing Funding 1.9 billion existing funding continued from 14/15 this money will already have been allocated across the NHS and social care to support integration. Funding Description Revenue or Capital? 1.1 billion Existing transfer from health Revenue to social care 130 million Carers Breaks funding Revenue 134 million Community Capacity Grant Capital 220 million Disabled Facilities Grant Capital 300 million CCG reablement funding Revenue 1.9 billion Total existing funding Additional Funding The pooled budget includes an additional 1.9 billion from NHS allocations, identified in the Spending Review as Department of Health DEL. This includes funding to cover demographic pressures in adult social care and some of the costs associated with the Care Bill. It is expected that much of the 2 billion will be largely redeployed from existing CCG budgets for existing NHS services and there will have to be flexibility for offsetting overall reductions in budgets. Payment Schedule 1 billion will be performance related, with half paid on 1 April 2015 (which is anticipated will be based on performance in the previous year) and half paid in the second half of 2015/16 (which could be based on in year performance). Conditions There are conditions in place that must be met in local plans in order to access the funding. These conditions include: 12

13 Joint plans between LAs and CCG, signed off by Health and Well Being Boards Protection for social care services 7 day working for health and social care Data sharing standards Joint approach to assessment and care planning Allocation dependent on agreement regarding the potential impact on acute services Further details are due to be released between now and October. The local plans will have to be submitted in March

14 The Impact on Local Authorities Reduction in Revenue Support Grant Since the introduction of business rate retention in 2013, the settlement is now split. Part is used to finance the retention of business rates with the remainder being paid as RSG. In just over half of settlement was paid as RSG: During consultation in 2012, DCLG stated that setting central and local shares enables both risk and reward to be shared between central and local government. At the individual authority level, the local share percentage of any growth in business rates will be retained by the authority 4 For this to have any real meaning, growth in local share of business rates must not be deducted from settlement. Otherwise authorities simply pay for local share with less RSG. Yet despite assurances that this would not happen, the government is deducting inflationary growth in rates from settlement, with the result seen below. 4 Business Rate working sub-group paper AISG

15 In , inflating business rates has cost local government over 300 million in lost Revenue Support Grant. In RSG is the minority value for the first time. This has been predicted by SIGOMA. Baseline funding for business rates is locked until 2020, which means that the bulk of cuts have come from reducing revenue support grant. As the cuts have deepened we have seen an ever reducing role of needs assessment in the allocation of funding. For local authorities, the only way to improve their funding outlook is to increase business rates income locally. The overall impact on Revenue Support Grant in is therefore: Revenue Support Grant ,360 Indexation for inflation at 1.028% 12,706 Cut announced in 2013 spending revue -2,100 Expected topslices for NHB and others -300 Further cut not explained by DCLG -695 Cut for inflating Rate Retention -315 Revenue Support Grant , % Distributional Impact SIGOMA has modelled the impact of the changes announced in the Spending Round and the Technical Consultation. To do so we have made the following assumptions: Across the board inflationary growth in real rate income forecast for and of 5.277%; Inflationary indexation where appropriate at 2.8% in line with government estimates; 15

16 SIGOMA Actual business rate income will start off in at the amount stated in NNDR1 forms and not the amount stated as EBRA; Every local authority will take Council Tax Freeze Grant and no authority has a Council Tax increase; Any distribution of New Homes Bonus will be in proportion to the allocations to date; No allocation of the difference between the proposed topslice and the proposed distribution of New Homes Bonus, ignoring 210m of the government s 250m contribution; Available funds from pooled NHS budget for revenue spending power stays at the equivalent of the allocation The primary purpose of this modelling is to provide distributional comparisons. The more detailed and long term the analysis, the more exaggerated effect of the assumptions made. As a result, the figures produced are used to provide first and foremost a distributional analysis and a general impact rather than an indicative calculation of the impact on individual authorities. The average of a 29.6% cut in Revenue Support Grant in does not apply equally to all authorities. This leads to an unequal impact on the Revenue Spending Power for local authorities. There is also some protection for Fire and Rescue authorities and transport funding. The cut in Revenue Spending Power by authority type is as follows: Authority Type Change in Revenue Spending Power Shire Districts -8.1% City of London -17.0% Inner London -11.2% Outer London -7.3% Metropolitan Districts -9.3% Unitary Authorities -7.4% Fire Authorities -5.0% Shire Fire Authorities -3.3% Shire Counties -4.6% Within these reductions, there are disparities between individual authorities. It is not yet possible to provide a fully accurate reflection of the impact by authority type because of the uncertainties surrounding New Homes Bonus payments and the allocation of social care funding announced in the Spending Round. However, we do have more indication of the regional effect. 16

17 Because the burden for cuts have fallen on Revenue Support Grant, the more reliant an authority is on grant funding, the greater the impact of the cut. Initial estimations are that SIGOMA authorities receive a 9.3% change in spending power compared to a national average of 6.9%. These figures are in cash terms, so the real terms impact could be greater. Change in Revenue Spending Power This modelling exercise shows that the revenue budgets of local authorities will be hit much harder than the 2.3% reduction quoted by the Chancellor as part of the Spending Round. Timing and Communication of the Consultation The timing the consultation in July is, in itself, unusual. No forewarning of such a consultation had been given. Usually settlement information emerges around December following the budget and earlier in the month Eric Pickles had stated at a conference that authorities would "hear Santa s sleigh bells before they heard any settlement information". SIGOMA have raised some objections to government about the level of ambiguity within the spending review documents themselves, the subsequent manner in which consultation documents were released by DCLG and the lack of engagement by DCLG in helping Councils to understand the apparent discrepancy between the information in the spending review and the consultation documents. The spending review document, released on 26 June, was described by one leading commentator as "an illustration of the Art of obfuscation". Paragraphs such as the following; In addition, the Government will provide a 100 million collaboration and efficiency fund to help local authorities to cover the upfront costs of working with each other 17

18 and encourage better ways of operating. 200 million will also be made available to extend the Troubled Families programme. [para 2.23] can, at best, be described as confusing in terms of whether such funds are additional to Settlement Funding Assessment (SFA) or a topslice from it. Where the intention is to top slice existing local authority funds, this should have been made clear in appendices to the review document at the time. The LGA have stated, SIGOMA believes correctly, that to include funding for new burdens with an overall decrease, thus reducing the apparent cut, is to mislead the public about the proportional reduction in services that will result. To correct this, an official correcting statement should be made regarding the percentage cuts in funding. The timing and manner of this release was, to say the least, unfortunate. The release of the document was not notified in advance. Usually settlement information emerges around December following the budget. The parliamentary term had ended and many Council finance officers had, predictably, commenced annual leave. It was released as a technical consultation and as a consequence was not drawn to the attention of senior officers and Members at once. Yet the serious implications of the disclosure for individual Council budgets cannot have been lost on experienced DCLG staff. It is our understanding that the details of the consultation are not just for technical consideration, but have significant political implications. Even when the local government community raised their concerns, the response of DCLG to queries from SIGOMA, the LGA and others suggested a complacency on the part of DCLG with a near 1 billion unexplained gap (between the spending review reduction and the reduction in SFA). It is only following clarification by the LGA that local government have an understanding of the way in which SFA has been used to fund additional burdens arising from Government policy. 18

19 New Homes Bonus and the Local Growth Fund Consultation A second consultation has been issued in respect of New Homes Bonus (NHB). This concerns the proposal to use 400m of NHB funds to part finance the Single Local Growth fund by maintaining the topslice but reducing funds distributed to authorities and passing the equivalent amount to the LEP in the authority s area. The consultation runs for 8 weeks and closes on 19th September. Contents of the Consultation It is proposed that authorities would be required, via a condition placed on their Section 31 grant, to pool funding within Local Enterprise Partnership areas to a total of 400m nationally, with the lead authority for each Local Enterprise Partnership holding the funding. The total of 400 million to be collected will be ensured by setting nationally the proportion of New Homes Bonus to be pooled by each local authority. One proposal is for all authorities to pool an equal proportion of their NHB payments. All authorities thus would pay the same percentage of their NHB allocations. For 2015/16 the forecast for NHB value is 1140 million. 400 million would require a 35% contribution from authorities. An alternative mechanism for two-tier authorities is proposed in the consultation. Upper-tier authorities would contibute 100% of their NHB payment, with the lower-tier contirubting the remainder. County councils will submit opposition to this alternative mechanism. The resources for LEPs from NHB will not be ringfenced for any particular use. It is proposed that existing accountability arrangements for Local Enterprise Partnerships should apply to pooled funding. Impact of NHB topslice on local authority revenue budgets New Homes Bonus is the grant payment that councils receive as a reward/incentive payment based on the Council Tax value of new houses that are built each year, with an additional lump sum of 350 for each affordable home that is built. The payment is a revenue grant which is payable to each council for a period of six years. As a result, each year the amount of New Homes Bonus increases until the end of the six years. The New Homes Bonus scheme has resulted in a huge redistribution of funding away from the most deprived areas of the country, to the South East and London because of the way in which the scheme operates. This is because councils with high needs, low taxbase and high levels of council tax benefit costs have a bigger cash topslice from their 19

20 revenue grant. They are also likely to receive less money back as the New Homes Bonus relates to housing growth, which in some areas is constrained by lower market demand and to lower council tax values. This is shown in our 2013 lobbying document A Fair Future?. The initial funding was provided by central government with an annual grant of 250m. All of the funding for the New Homes Bonus after that is funded by a top-slice from council's core revenue budgets. By 2014/15 the top-slice from council budgets amounted to 654m and the increase in the top-slice is determined by the number of houses built each year. DCLG expected this top-slice to grow by over 300m a year to around 2,000m by 2018/19. The Spending Round announced the continuation of the 250m annual grant from central government. The funding for the New Homes Bonus in is shown below: New Homes Bonus million Projected topslice per settlement consultation 1,100 Government contribution 250 Overall available funds 1,350 Value of Bonus per NHB consultation 1,140 Implied amount withheld above estimated need 210 To date, the NHB has been paid directly into local authority revenue budgets. The 400m NHB contribution to the Singe Local Growth Fund constitutes a 35% reduction in payments to local authorities. It is therefore a cash cut to local authority revenue budgets in 2015/16. The chart below shows the regional impact of this cash cut for local authorities. New Homes Bonus Estimated Loss by Region, - 400m transferred to LEPs (in per Dwelling) 20

21 This chart does not show a true distributional impact because of the distorting effects of the NHB scheme, with London and the South East amongst those benefiting from the scheme compared to previous funding allocations according to need. However, it provides some indication of the effects of topslicing from revenue budgets and provides a basis against which to compare future allocations of LEP funding. 21

22 Appendix A Movement in Spending Power (Indexation Assumption of 2.8%) million Council Tax Requirement excluding parish precepts 23, minus Council Tax Support Funding , Estimated income from Business Rates Retention 11, The Government calculation? million % Change Council Tax Requirement excluding parish precepts 23, % minus Council Tax Support Funding , % Estimated income from Business Rates Retention 11, The picture from a local authority perspective million % Council Tax Requirement excluding parish precepts 23, minus Council Tax Support Funding , Estimated income from Business Rates Retention 11, Estimated RSG 12, Estimated RSG 8, Estimated RSG 8, Start-up Funding Assessment (amended to deduct Budget reductions) 23, Start-up Funding Assessment , % Start-up Funding Assessment , % Commons Pioneer Authorities Commons Pioneer Authorities % Commons Pioneer Authorities % Inshore Fisheries Conservation Authorities Inshore Fisheries Conservation Authorities % Inshore Fisheries Conservation Authorities % Lead Local Flood Authorities Lead Local Flood Authorities % Lead Local Flood Authorities % Social Fund Admin Grant Social Fund Admin Grant % Social Fund Admin Grant % Fire Revenue Grant (FireLink and New Dimension elements) Fire Revenue Grant (FireLink and New Dimension elements) % Change Fire Revenue Grant (FireLink and New Dimension elements) % Community Right to Challenge Community Right to Challenge % Community Right to Challenge % Community Right to Bid Community Right to Bid % Community Right to Bid % CT Freeze (includes grant now in baseline) CT Freeze % CT Freeze % New Homes Bonus (adjusted) New Homes Bonus (adjusted) % New Homes Bonus (adjusted) % New Homes Bonus Adjustment (estimate) Local Reform and Community Voices DH revenue grant New Homes Bonus Adjustment % Local Reform and Community Voices DH revenue grant % New Homes Bonus Adjustment Local Reform and Community Voices DH revenue grant %

23 NHS funding to support social care and benefit health NHS funding to support social care and benefit health 3, % NHS funding to support social care and benefit health % NHS funding, announced increase NHS funding, announced increase % NHS funding, announced increase % Efficiency Support Grant - cost of bringing reduction to 8.8% in Efficiency Support Grant 300% Efficiency Support Grant Estimated Revenue Spending Power 46, topslices (Collaboration Fire, Social care ILF) Estimated Revenue Spending Power 47, % topslices (Collaboration Fire, Social care ILF) Estimated Revenue Spending Power 43, % REAL TERM EFFECT Index assumption at 2.8% RT value Cut % RT value Cut % Real Term spending power , % Real Term cut in spending power , % Real term value in RSG , Real term cut in RSG , % Real term value in settlement , Real term cut in settlement % 23

24 Appendix B Reductions in Spending Power and RSG by region and authority in cash terms Estimated Revenue Spending Power (adjusted) Estimated Revenue Spending Power Change in Revenue spending power Change in Revenue Spending Power Cut in Estimated Settlemen t Funding Cut in Settleme nt Funding Cut in Revenue Support Grant Cut in RSG as % of Spending Power million million million million million By Authority type Shire Districts 2,566 2, % % % City of London % % % Inner London 3,092 2, % % % Outer London 4,198 3, % % % Metropolitan Districts 9,967 9, % % % Unitary Authorities 9,736 9, % % % Fire Authorities % % % Shire Fire Authorities % % % Shire Counties 13,845 13, % % % GLA 2,075 2, % % % Isle of Scilly % % % TOTAL of authority types 46,954 44,360-3, % - 3, % - 3, % By Region London 9,404 8, % % % North West 6,325 5, % % % Y & H 4,380 4, % % % North East 2,464 2, % % % West Midlands 4,785 4, % % % South West 4,353 4, % % % East of England 4,760 4, % % % South East 6,890 6, % % % East Midlands 3,594 3, % % % TOTAL of Regions 46,954 44,360-3, % - 3, % - 3, % SIGOMA 11,111 10,235-1, % - 1, % -1, % 24

25 Related Briefings and Useful Documents Local Government Finance Settlement and : Technical Consultation _LGFS_ _and_ _Technical_Consultation_FINAL.pdf New Homes Bonus and the Local Growth Fund Consultation w_homes_bonus_and_the_local_growth_fund_technical_consultation.pdf LGA Technical Briefing (31 July 2013) e685bd233e0b&groupid=10171 LGA Briefing for Leaders, Lead Members and Chief Executives (31 Jul 2013) ac58e4f1a4eb&groupid=10171 DCLG Technical Consultation Supporting Documents LGA and NHS England Statement on the health and social care Integration Transformation Fund e43959bcb3db&groupid=10171 Government Impact Assessments from Care Bill