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Scottish Office

Answer

Mr. Ernie Ross: To ask the Secretary of State for Scotland if he will announce his plans for allocating total expenditure within his responsibility for 1998-99 including details of the 1998-99 Local Government Finance Settlement. [19298] Mr. Dewar: The attached table outlines my plans for allocating the total expenditure for Scotland within my responsibility. I have been able to improve significantly on the plans for the local government settlement. Following extensive consultation with the Convention of Scottish Local Authorities, I propose to increase the level of Government Supported Expenditure by 2.2 per cent. over £133 million, and the level of Aggregate External Finance by 0.6 per cent. or £33.1 million, in both cases after adjustments for the transfer of responsibility for funding nursery education and the additional resources provided in the current year for policing the Commonwealth Heads of Government meeting. Next year, Scottish local authorities will receive Government support through AEF of nearly £5.3 billion, £91 million greater than the published plans, which represents over 37 per cent. of the total Scottish Office budget. On top of that local authorities will receive a further £75 million of support to fund pre-school education, £9 million more than the published plans, £7 million for Early Intervention and £1 million for Alternatives to Exclusion, plus £325 million of non-housing capital allocations. I am also announcing today provisional capping principles which will allow local authorities to increase their capped expenditure by 3.4 per cent. or £191 million, almost £150 million more than the inherited plans. The proposed regime is tiered to allow councils spending close to GAE a greater increase in expenditure than those spending well above GAE. Government Supported Expenditure I propose that Government Supported Expenditure (GSE) for 1998-99 should be set at £6,223.9 million. This compares with previous plans of £6,132 million. Grant Aided Expenditure Local authorities will incur an estimated £728.8 million on loan and leasing charges in 1998-99. After deducting this sum from the GSE total, £5,495.1 million is available for allocation as Grant Aided Expenditure (GAE). This GAE amount is 3.7 per cent. or almost £198 million higher than that for the current year (after making the above adjustments). I shall announce GAE figures for individual local authorities as soon as possible. Aggregate External Finance I further propose that Government support for local authority current expenditure-that is, Aggregte External Finance (AEF) which consists of Revenue Support Grant, Specific Grants and Non-Domestic Rate Income--for 1998-99 should be set at £5,271.3 million, which compares with the previous plans of £5,180 million. Proposals for the distribution of AEF to individual local authorities are likely to be isued to councils before Christmas. I announced yesterday that the National Non-Domestic Rate poundage would be 47.4p, the same as in England. Capping I have the power to cap a local authority either where I consider that its planned expenditure is excessive or where there is an excessive increase in its planned expenditure as compared with the previous year. My provisional capping principles for 1998-99 are: any increase in budget between 1997-98 and 1998-99 of more than 1.75 per cent. will be an excessive increase if the resulting budget is above the council's GAE for 1998-99; any increase in budget between 1997-98 and 1998-99 of more than 1.25 per cent. will be an excessive increase if the resulting budget is more than 2 per cent. above the council's GAE for 1998-99; any increase in budget between 1997-98 and 1998-99 of more than 0.75 per cent. will be an excessive increase if the resulting budget is more than 4 per cent. above the council's GAE for 1998-99; any budget for 1998-99 more than 12.5 per cent. above the Council's GAE assessment (as admusted if necessary) will be excessive save that if that budget is no greater than the budget set by that council for 1997-98, the council will not be capped. The Scottish Office public expenditure plans: Allocations for 1998-99 £ million _________________________________________________________________________________________________. 1997-98 Estimated 1997-98 Planned 1998-99 Planned Changes 1998-99 Revised outturn Provision Provision Provision Central government expenditure (including public corporations other than nationalised industries) Agriculture, Fisheries and 565 565 538 4.0 542 Food Industry, enterprise and 592 591 584 -1.3 583 training Roads and transport 284 282 300 -22.8 277 Housing 268 268 261 39.0 300 Scottish Homes loan book -80 -80 0 -- 0 sale{1} Scottish Homes debt -59 -59 -48 -- -48 repayment {2} Other environmental 325 325 321 5.6 327 services Law, order and protective 479 479 465 -4.4 461 services{3} Education 1,221 1,219 1,245 5.9 1,251 Arts and libraries 81 81 77 0.3 77 Health 4,393 4,376 4,475 106.6 4,581 Social Work services 61 61 61 3.0 64 Other public services{3} 158 158 146 17.5 163 Total central government 8,289 8,267 8,424 153.4 8,578 expenditure Local authority capital 568 568 552 -- 552 expenditure (excluding Water) of which: 342 342 325 -- 325 Single allocation 180 180 180 -- 180 HRA Other 45 45 47 -- 47 Provision to match receipts 155 160 176 -52.9 123 from European Social Fund and European Regional Development Fund Central government support 5,255 5,255 5,172 85.6 5,257 to local authorities' current expenditure{4} of which: AEF {5} 5,220 5,220 5,165 87.6 5,252 of which: Specific grants{6} 412 412 420 -4.0 416 Nationalised industries' 22 22 17 9.5 26 financing limits{7} Non-Control Total 21 -- -- 74 74 Expenditure from Windfall Tax of which: New Deal for Schools 9 -- -- 27 27 Housing capital receipts 12 -- -- 44 44 initiative Childcare -- -- -- 3 3 Total expenditure within 14,309 14,271 14,341 269 14,610 the Secretary of State's responsibilities{8} of which, the Scottish 13,702 13,685 13,786 182 13,968 Block {9} _________________________________________________________________________________________________. {1} Reflects the repayment of loans to the National Loans Fund which will fall due in 1997-98 following the delayed disposal of Scottish Homes portfolio of loans to housing associations. {2} Scottish Homes' repayment of debt from capital receipts. {3} From 1998-99 departments will take on responsibility from PRS for the buildings which the government owns and occupies. From 1998-99 they will no longer pay rents to PRS, but will pay capital charges on the value of the property. This has resulted in a reduction in planned expenditure for 1998-99 of some £10 million on the LOPS programme, relating to the Scottish Courts estate, and £10 million on Other Public Services, relating to the Scottish Office, GRO(S) and SRO estates. {4} Includes Housing Support Grant of £15 million/5 million. {5} AEF comprises revenue support grant, income from non-domestic rates (NDRI) and grants to local authorities for specific purposes. {6} Specific grants include-police £334 million/£339 million, urban £45 million/£43 million, mental illness £13 million/£13 million. {7} Includes Caledonian MacBrayne and Highlands and Islands Airports Ltd. {8} As a result of rounding, the figures may not sum to the totals shown. {9} The Scottish Block comprises all expenditure within the responsibility of the Secretary of State with the exception of Agriculture, Fisheries and Food, and nationalised industries' external financing requirements.

Secondary information

Type

Written question

Reference

19298; 302 c215-8W

Session

1997-98

Subjects

Central government Expenditure Grants Local government Local government finance Rate limitation Scotland Revenue support grant Scottish Office

Contains statistics

Yes