Dáil Éireann debate -
Wednesday, 28 Jan 1998

Vol. 486 No. 1

Written Answers. - Local Authority Funding.

David Stanton

Question:

86 Mr. Stanton asked the Minister for Finance the impact of the proposed new mechanism for the funding of local authorities on the projected gross non capital supply services and the capital services for 1999 originally published with his Budget Statement; and if he will make a statement on the matter. [1914/98]

Minister for Finance (Mr. McCreevy):

I would point out at the outset that the figures for non-capital supply services published with the 1998 budget were net figures, not gross figures.

The Government's Action Programme for the Millennium includes a commitment to limit the growth in net current spending to 4 per cent and capital spending growth to 5 per cent on average up to 1999. Net current spending for this purpose is defined as net non-capital supply services and central fund services.

The projections as published showed an increase in total net current spending in 1999 of 4.8 per cent and an annual average increase of 3.8 per cent in the period 1998 to 2000 on a "no-policy-change" basis. In the light of the actual 1997 outturn, the annual average increase in the period 1998-2000 is now 3.43 per cent. The 1999 figure is now 4.6 per cent. Capital spending in 1999 is projected to decrease by 1.5 per cent.

The new local authority financing arrangements which will come into effect in 1999 will result in an increase of £224 million in the published projection for net non-capital supply services and a reduction of £178 million in the projection for capital expenditure in that year. The net increase in Exchequer spending will be £46 million which is small in the context of total projected Exchequer spending in 1999 of about £17,000 million. Moreover, the net Exchequer impact of the new arrangements can be accommodated within the general contingency provision of £180 million included in the projections of the 1999 budgetary position published with my budget.

The adjustments would mean that the increase in net current expenditure in 1999 would rise to 6.2 per cent and the annual average increase in such expenditure in the period 1998-2000 would rise to 3.95 per cent. The projected reduction in Exchequer capital expenditure in 1999 would increase to 10.4 per cent.