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The Rt Hon Eric Pickles MP Secretary of State for Communities and Local Government

Department for Communities and Local Government Eland House Bressenden Place London SW1E 5DU

Leaders of Local Authorities in England

Tel: 0303 444 3450 Fax: 0303 444 3289 E-Mail: eric.pickles@communities.gsi.gov.uk

www.communities.gov.uk

20 October 2010

Dear colleagues,

LOCAL GOVERNMENT AND THE SPENDING REVIEW

The Coalition Government’s Spending Review set out today provides a fair though challenging settlement for local government. It reflects the clear priorities for the Spending Review as a whole: to bring down the massive budget deficit and drive economic growth, while protecting the interests of hardworking families and the most vulnerable in society.

The review also provides significant new powers for local government. Councils have long argued that with more freedom and flexibility, they would be much better equipped to become more efficient and effective in delivering local public services. This settlement delivers that freedom and flexibility, as part of the new Government’s decentralisation agenda.

Councils will face an average loss of grant of 7.25%, in real terms, in each of the next four years. However, this will be accompanied by new financial freedoms and flexibility.

Local flexibility on local spending

Today’s settlement:

  • tackles the principal pressure on social services by providing an additional £2 billion to support adult social care by 2014-15;

  • commits £6.5 billion to affordable housing and Decent Homes over four years;

  • offers help to the vulnerable with £6.5 billion to Supporting People over the Spending Review period;

  • offers more flexibility to councils by ending ring-fencing of all revenue grants from next year, except for simplified school grants and the new public health grant which will be introduced in 2013. In total, local authorities will have greater control over more than £7 billion of funding from 2011-12 which is moving into formula grant, being unringfenced or is new funding for the SR10 period;

  • protects council tax payers by offering, in partnership with local authorities, a council tax freeze;

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