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Paper 9 - 30 January 1998 Meeting

ASSOCIATION OF HAMPSHIRE AND ISLE OF WIGHT LOCAL AUTHORITIES

30 January 1998

AREA COST ADJUSTMENT

Paper by the Policy Officer

RECOMMENDATION

That the sum of 3,000 be raised from Hampshire and Isle of Wight Authorities to contribute to research into the funding of the Area Cost Adjustment.

1.The Area Cost Adjustment (ACA) to the Government Revenue Support Grant for Local Authorities compensates South East England authorities for the higher labour costs incurred in the area. The Government is commissioning research on the ACA from Price Waterhouse and a report is expected in May 1998. The research will focus on the "specific cost" approach. At its worst, this approach would recognise only actual adjustments to pay such as London weighting.

2. The South East Regional Forum (SERF) has objected to the Government research exercise on the basis that a major independent review in 1996 fully examined the specific cost approach and rejected it in favour of the General Labour Market approach which is used at present. In order to negotiate successfully with Government officials, SERF is commissioning its own research jointly with the Association of London Government. Hitherto South East County Councils have paid for this kind of research, which is regarded as essential. SERF no longer sees this as appropriate because the benefits are shared with district and unitary authorities, particularly the latter, and with Police Authorities.

3. Up to 3,000 may be required for each county area in the South East. Although this is a comparatively small amount of money for Hampshire and the Isle of Wight with its three unitary, one police, one county and 11 district authorities, it would make severe inroads into the very limited resources of this Association. Moreover:-

* Southampton City Council and the Hampshire and Isle of Wight Police Authority have not contributed.

* Portsmouth City Council as an Associate Member has contributed a relatively small amount compared to the Isle of Wight and Hampshire County Councils (see budget item on the agenda).

4. SERF will require payment for the ACA research in the current year of the Association when our reserves consist only of 2,400 contributed by the former ADC branch. It is suggested that the beneficiaries of the research be asked to contribute 500 each as follows:-

Hampshire County Council
Isle of Wight Council
Portsmouth City Council
Southampton City Council
Hampshire and Isle of Wight Police Authority
Hampshire District Councils

The contribution of the district councils to be taken from HIOW reserves.

NICK GOULDER
Policy Officer

Last update: 06/09/2000
Author: Nick Goulder, Policy Manager

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