Meeting documents

Appendix 2: Annex 2

Overview of Area Based Grant (ABG):

To facilitate area based working an Area Based Grant (ABG) has been introduced as part of Local Authority funding from 2008/09.

Extract from "Development of the new LAA framework - Operational Guidance" - HM Government publication November 2007:

"Government has significantly increased local authorities' flexibility over the use of their mainstream resources by moving at least £5 billion into non-ring fenced general grants over the CSR period. Over £4 billion will be moved into the new Area Based Grant and nearly £1 billion moved into Revenue Support Grant. This will minimise the barriers to local authorities using their mainstream resources to support LAA priorities where they wish to do so. From April 2008, all general grants (RSG and ABG) will be allocated on a three year basis to maximise stability and certainty. Local authorities should pass on the stability of their three-year financial settlements to the Third sector. All non-ring fenced capital grant will fall under the umbrella of the Single Capital Pot"

ABG is a "non-ring fenced" revenue grant. This increases local flexibility over use of funding as there are no conditions attached to its use (LAA pooled grant in 2007/08 was ring-fenced for purposes of supporting the achievement of LAA targets).

Although there is more freedom over use of funding at a local level it may take time to facilitate a change in current spending patterns. This may be required to adjust spending to new spending priorities that meet LAA outcomes rather than the previous priorities that were set out by Central Government Departments for reclaiming these grants. Changing the use of these grants could have implications for clients, staff, and contractors and so on. Hence any transition will need to be planned and managed. Transition is likely to be more difficult in a time of relatively low year on year increases in central government funding.

The Audit Commission will assess whether authorities have used resources effectively as part of the use of resources element of the Comprehensive Area Assessment.

The LSP considered the Area Based Grant settlement at its meeting in January and its allocation for 2008/09 is based on the historic pattern, but this will be reviewed over the period of the 3 year settlement.