New Model LAAs – Finance

1. New Model LAAs – Finance Pamela Fawkes Area Based Grant Team Telephone: 020 7944 4030 Email: pamela.fawkes@communities.gsi.gov.uk

2. Key facts on new funding • To provide maximum flexibility for local authorities to target resources on what matters most to their communities, we will allocate funding through: • Revenue Support Grant wherever possible; • Area Based Grant - a new non-ringfenced general grant – where funding needs to be allocated using specific policy criteria; and, • Specific Grants where necessary – our presumption is against this. • At least £5 billion of specific grants moving into non-ringfenced general grants - around £1 billion into RSG and over £4 billion into ABG. • Intend to announce individual allocations of ABG on a three year basis as part of the local government finance settlement – maximising stability and certainty of funding for local government.

3. Hierarchy of Funding (Outlined in White Paper)

4. Benefits of Area Based Grant (ABG) • ABG as a General Grant supports the Government’s commitment to reduce the administrative burden on authorities through: • providing additional funding flexibility and stability enabling LAs to adapt their funding to suit local priorities; • providing a single grant where there once were many; • a single ‘contract’ with CLG instead of many across different departments; and • doing away with separate reporting mechanisms for each grant by managing performance through the National Performance Indicator Set rather than grant conditions and monitoring requirements.

5. Sustainable Community Strategy National Indicator Set Local Area Agreement Up to 35 targets, DCSF Statutory targets & local targets Funding supports delivery of national and local priorities for the area area Local income (e.g. council tax, capital receipts) Formula Grant (RSG & NNDR) Area Based Grant Specific Grants Revenue Capital Single Capital Pot Supported Borrowing Non-ringfenced capital grants New Funding Model

6. Grant Negotiations Key aim • To identify with Government Departments as many specific grants as possible that can be moved into following grant hierarchy: • unringfenced (formula) general grant (RSG/NNDR/Police Grant etc), or single Capital Pot; • ABG, general grant – distribution decided by departments; • where none of above suitable, specific ringfenced grant; and, • capital funding – will be paid through Single Capital Pot (ABG will be revenue only).

7. Forthcoming Funding Timetable • December 2007 • Provisional Local Government Finance Settlement announcement, to include the contributions to ABG from Government Departments. • January 2008 • Final Local Government Finance Settlement. • April 2008 • First payments of ABG made.

8. Payments • ABG will be allocated as three year grant funding. • Individual monthly payment schedules for authorities will be set out in annual grant determinations. • Over the CSR period over £5bn of previously specific grants will be un-ringfenced.

9. Reporting Requirements • Authorities will not be required to make any separate financial returns detailing how they have spent their ABG allocation. • The Audit Commission will assess whether authorities have used their resources effectively as part of the use of resources element of the Comprehensive Area Assessment.

10. New Model LAAs – Finance Pamela Fawkes Area Based Grant Team Telephone: 020 7944 4030 Email: pamela.fawkes@communities.gsi.gov.uk