Fears of service cuts overshadow finance settlement

The government has finalised the funding settlement for local
authorities for 2004-5 amid growing concerns that it will force
many councils to cut services, writes Derren
Hayes.

Despite councils receiving an average grant increase of 7.3 per
cent next year, many fear it will not be enough because of tougher
rules forcing councils to pass all of their education grant
increase on to schools.

To maintain other services, some councils want to increase
council taxes. But the government has already warned 56 authorities
that “excessive” rises will not be allowed.

The increase will mean authorities receive an extra £340
million of grants bringing the total to £3.7 billion next
year, of which £2.4 billion is formula grant from the Office
of the Deputy Prime Minister and the remaining £1.3 billion
ringfenced for specific grants from other government
departments.