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Friday, December 03, 2004

Loadsa money?

The Western Mail reports that the Chancellor's pre-budget report means that Council Tax increases in Wales next April will be cushioned by a £40m package designed to bring bills down. In fact only about £8 million of the consequential coming to Wales relates to the money allocated by the Chancellor towards mitigating Council Tax bills.

The total package is worth £40 million to the Welsh Assembly but if we were to follow the pattern of spending adopted by the Chancellor this would be spread over a number of service areas. We should beware of the spin therefore and wait for the Assembly Finance Minister to make her decision as to how to spend the cash. After all it is up to the Assembly to say how this little windfall is allocated.

Judging by this report of a growing funding gap between schools in Wales and England, and my own knowledge of the problems facing local Councils this year in making ends meet, I would hope that the Finance Minister does give a large chunk of the £40 million to local government. If we are to keep Council Tax increases at a reasonable level and preserve services then more grant is needed in the final revenue settlement on 12 January 2005.

Update: As the Government spinning frenzy gets underway in the wake of the Chancellor's pre-budget report it becomes clear that claims by the Secretary of State for Wales that this is a package that will help keep Council Tax bills down are far wide of the mark. In the Western Mail Mr. Hain identifies a total of £20 million that will assist local Councils in this task. As I have mentioned above £7.4 million of this is new money. In the case of Swansea that will give us about £500,000 extra, the equivalent of roughly £6 off a band D Council Tax or a 1% cut in bills. More likely it will mean £500,000 less that we will have to cut to achieve a reasonable tax bill.

Mr. Hain then goes on to list other money that local government will be getting. This includes £11 million to ensure that no household in Wales moves up more than one band following revaluation and an extra £1.8m to give Welsh councils an overall budget rise of 5%. Well, the £11 million has already been announced and will not go anywhere near services, nor will it be available to help cut bills. Instead it will be used to mitigate the impact of Labour's disastrous re-banding exercise, an exercise that has consolidated the unfair nature of Council Tax. Not sure what the £1.8m is but I assume it is part of the existing settlement and in any case it will have a minimal impact on Council's budgets.

Mr. Hain's article sets out for the Assembly how it should spend the extra money it is getting but then concludes that there is £40.2m available to cut Council Tax bills. As some of this involves the double counting I have already referred to above, this claim is dubious. Equally, if all the money is spent in that way then the benefits for childcare and training the Secretary of State has claimed credit for will not emerge.

He is trying to have his cake and eat it, whilst telling the Assembly Government how to go about its business. Perhaps he would be better to butt out for a while and let us decide what exactly this pre-budget report means for Wales and how it can be translated into improved funding for local councils and other services.

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