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Local Government: Finance

My Lords, the noble Lord, Lord Shipley, asked three clear questions. Is it a progressive settlement and reallocation? I think that we will take it year by year. This is a two-year settlement; whether it progresses on, I do not know. Whether it progresses in terms of how the grant is dealt with, we will have to wait and see. The £650 million is the repayment for 2.5 per cent of council tax if it is frozen. The question of whether that will be carried on next year will have to be decided. If it is, that will determine whether it is part and parcel of the baseline. As the noble Lord knows, capitalisation is treated as revenue by the Treasury, so whatever is spent goes back on to the revenue expectation. If that proves not to be sufficient, it will be a matter for each local authority to deal with.