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Local Government Secretary Eric Pickles spelled out 50 sensible savings, a Council Tax freeze and a fair funding deal as the 鈥渞ight road鈥� for councils to protect residents and local services, as a major shake up of local finance was initiated today.

The minister signalled the watershed moment for councils as he unveiled a new look local government finance settlement that will reward councils that strive to improve their communities.

A dramatic shift in spending power from Whitehall to the town hall means an estimated 70% of council income will now be raised locally compared to 56% under the centrally distributed 鈥榖egging-bowl鈥� formula grant system.

From April 2013 councils can channel this greater local control into encouraging local jobs and local firms via a new business rate retention incentive that rewards them for growth. It could potentially add 拢10 billion to the economy by 2020.

However, councils account for a quarter of all public spending - with English councils still spending 拢114 billion - so it is vital they continue to play their part tackling the inherited budget deficit by making sensible savings.

To help councils in that regard a document containing 50 practical ways to make sensible savings was published today. It shows how a culture change by councils can unearth significantly more taxpayer savings and help make services more efficient.

Local Government Secretary Eric Pickles said:

鈥淐ouncils must keep doing their bit to tackle the inherited budget deficit because they account for a quarter of all public spending and still get through over 拢114 billion of taxpayers money each year.

鈥淭oday鈥檚 announcement is a fair funding deal that will reward councils ready to strive for their communities and gives them another year to get their house in order.

鈥淐ouncils must do 3 things to get on the right road for their residents: put our fair funding deal to work; do every single one of our 50 ways to save; and accept our Council Tax freeze offer. Councils that cry wolf without having done all of this are letting their residents down.

鈥淐ouncils that put their thinking caps on now can save precious taxpayer pennies next year by cutting out waste and transforming frontline services that vulnerable people rely on.鈥�

Today鈥檚 fair funding deal arms councils with an average spending power of 拢2,240 per household. Local authorities have been protected from further spending reductions for 2013 to 2014. Overall the average spending power reduction for councils in 2013 to 2014 is expected to be limited to just 1.7% per household, less than last year鈥檚 comparable figure of 3.3%.

Ministers believe this important concession gives councils the time they need to transform service delivery, build up their local business rate income, improve procurement and comprehensively complete the suggested 50 savings.

The total start-up funding assessment for councils 2013 to 2014 apportions 拢26 billion in a fair and sustainable way that ensures the smallest reductions for the councils most reliant on government support. More weighting has been given to areas with the highest levels of assessed need. For example, Newcastle has a spending power per household of 拢2,522 which is over 拢700 more than the 拢1,814 per household in Wokingham.

The government is setting aside an extra 拢450 million over the next 2 years to help local government in England to freeze their Council Tax, equivalent to a 1% rise. A third year鈥檚 combined Council Tax freeze is potentially worth over 拢200 to band D residents.

The government confirmed today that where a council rejects the freeze, the majority will have to secure electoral agreement through a 鈥榣ocal tax lock鈥� referendum to hike band D bills by more than 2%. Smaller authorities with a track record of low Council Tax will be given slightly more flexibility.

Further information

The 鈥�50 ways to save鈥� include:

• sharing back offices
• adopting Community Budgets to bring staff and money together
• using transparency to cut waste
• clamping down on corporate charge cards
• setting special spending controls
• tackling the 拢2 billion of local fraud
• utilising 拢16 billion of non-school reserves creatively
• improve collection rates to reduce the 拢2.4 billion of uncollected Council Tax across England
• encourage direct debit and e-billing
• improve property management
• close subsidised council canteens
• reducing senior pay and posts
• cut spending on consultants and agency staff which had risen to 拢4.5 billion
• stop translating documents into foreign languages
• cut expensive travel
• reduce printing costs
• hire out the town hall

See the guide for the full list.

On Thursday 20 December 2012, the day after the provisional Local Government Finance Settlement, Local Government Minister Brandon Lewis MP hosted a teleconference call for local authorities and fire & rescue services, fielding more than 25 questions from 200 callers. You can listen to the call .

The 2013 to 2014 spending power calculation includes:

• 拢26.07 billion start up funding assessment (which includes 拢10.9 billion of locally retained business rates)
• 拢23.9 billion in Council Tax
• 拢859 million for NHS funding to support social care
• 拢661 million via New Homes Bonus
• 拢240 million for 2013 to 2014 Council Tax freeze grant

In addition local authorities will also benefit from:

• 拢112 million via the Weekly Collection Support Scheme
• 拢33.5 million via New Burdens for Council Tax Support in 2013 to 2014

Spending power:

• Spending power data by local authority for 2013 to 2014

No authority will see a spending power reduction of more than 8.8% because of decisions taken by ministers to make an efficiency support grant available. The 鈥榩er household鈥� figures are calculated using total spending power a combination of the new start up funding assessment and Council Tax, and the number of dwellings by Council Tax band for each administrative area in England. The counts are calculated from data for England extracted from the Valuation Office Agency鈥檚 database on 12 September 2011.

A plain English guide to cut through Whitehall jargon and explain the new settlement system is also available.

There will now be a period of statutory consultation on the settlement which runs to 15 January 2013. Ministers will then finalise their proposals and the settlement for 2013 to 2014 will be debated in Parliament in February in time for councils to set their budgets for next year.

The Coalition Agreement committed the government to relinquishing control over excessive Council Tax increases and giving that democratic power directly to local communities. This was legislated for through the Localism Act. The government has today published the Council Tax principles it is proposing for 2013 to 2014. Council Tax increases would trigger a referendum, if they exceed:

• 2% for most principal authorities; or
• 拢5 (which ever is higher) in the case of shire district councils, police and crime commissioners and fire and rescue authorities that set the lowest quartile of Council Tax in their class

The final principles for 2013 to 2014 will be set out in a report for the approval of the House of Commons early next year, at the same time as the final report on the local government finance settlement. No equivalent principles are being proposed for town and parish councils for 2013 to 2014, although they may in future years.

Technical data for the 2013-14 Local Government Finance Settlement can be found on the .

Fire and rescue authorities have been protected with savings back loaded to allow time for sensible savings; they have also benefited from the protection to local government in 2013 to 2014. In addition the outgoing Chief Fire and Rescue Adviser, Sir Ken Knight, has been asked to carry out a review to pinpoint ways to help fire and rescue authorities save money. The government intends to announce the breakdown of 拢140 million of capital grant money to fire and rescue authorities. The money for 2013 to 2015 will be distributed by a combination of formula and for projects to fire and rescue authorities that have been successful through bidding. All fire and rescue authorities will receive some capital funding.