Provisional 2011-12 financial settlement

I've just had the email through from CLG and our settlements for next year are. On the government's figures

Breckland £9.247 million  a reduction of 13.8 % from last year

South Holland £7.347 million a reduction of 13.8% from last year

This is for what's called formula grant and accepts the Government's "recalculation" of what we got this year. There are other grants which we're not yet clear on and finance colleagues tell me the nett reduction in government grant could be much worse than this.


The BBC web site says Secretary of State announced an average reduction of 4.4% and no Council would undergo a decrease of more than 8.9% as a result of grant reductions  ................ if so it looks as if his cheque for the balance must be in the post to me !!

So why is there this discrepancy?  Well it's complicated but several people have asked that I have a go at explaining - so here goes.

The answer is that whilst the government grant has been cut by 13.8% the Secretary of State has introduced a new concept called "spending power" in which he adds other income the Council gets from sources other than the Government. And so he cuts the grant by 13.8% but doesn't clearly say this instead he refers to the cut in spending power.

Another example may help. If you are a retired person your income may come from the state pension, a work pension and interest on your savings. The Secretary of State cuts the state pension by 13.8% but tells you its OK because your "spending power" has only reduced by 9% because you're still getting your work pension and interest on savings.