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Will spending settlement allow councils to pay rising waste bills?

Concerns about funding prior to the announcement of the comprehensive spending review (CSR) have not eased with its release ( October 4 2007). The Local Government Association (LGA) has called it "the worst financial settlement for councils in a decade". LGA research submitted to the Government before the CSR said that an extra £1.182 billion would be needed to deal with increased costs of waste management and additional recycling over the three year CSR period. But following the announcement of funding allocation the LGA claims that the Government has not provided enough funds. It says that the 1% increase in real terms funding will not enable councils to deliver the new services promised by Government, and it will not meet the increasing cost of waste management. It added that councils will be left with no choice but to raise council taxes by more than inflation to meet the cost of these services. However, local government minister John Healey responded: "This is a fair and affordable settlement for local government in a tight spending round, providing a real terms increase in core grant resources of 1% over the next three years. Councils will also receive further investment through area based and specific funding which will be announced by the end of the year." With a rise in funding from £280 million in 2007-08 to £700 million in 2010-11, cash for sustainable waste management options will be available through Private Finance Initiatives (PFI), and the Department for Environment, Food and Rural Affairs' (Defra) own funding has increased in real terms by 1.4%. Referring to it as "a tight but fair settlement", Healey said: "This will build on the 39% real terms increase in local government funding since 1997. So there is no excuse for excessive council tax rises or a reduction in the quality of the services." He also reaffirmed that the responsibility for setting the rate of council was that of local government and added that Government "expects to see an average council tax increase of substantially below 5%". With further details on waste funding to be announced at "the end of the year", the LGA said it will have more to say at that time. However, it did say, that the Government squeeze on general revenue funding, as demonstrated by the 1.4% real terms increase for Defra, takes no account of the pressures identified by their own officials. This shows that waste spending will need to rise by 10% a year over the next three years to meet rising landfill targets and avoid escalating landfill tax and fines. LGA chairman Sir Simon Milton commented: "The substantial increase in funding for new facilities through the PFI that the Government has announced may be very helpful for the longer term, but is unlikely to alleviate cost pressures significantly in the short term." While the increased PFI funding for waste management facilities was welcomed by the LGA, it added that the long lead in times and the complexity of developing them means that this could have little or no impact on waste cost pressures during the CSR period. In the meantime, the LGA said it will work with ministers and lobby Government departments to ensure that local government receives a fair share of the funding increases awarded in the CSR. This is particularly important as the Government will receive an additional £150m extra income in 2008-09 as a result of the rise in landfill tax. It had said that this money would be returned to local government. But according to the LGA, it was not clear from the settlement where this money has been returned to councils. So the CSR announcement didn't bring all the answers, but instead raised more questions. Local government will be hoping that all will become clear in December.

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