JUDGING by your leader on next year's council tax (LET, January 9), the thing we had all "better be careful" about is explaining the true situation. It is not as you describe - perhaps understandably, as local government finance is a very complex area.

Basically, the differences in the council taxes to be levied next year in the Lancashire area are not about different levels of efficiency and expenditure, but about different amounts of grant income from central government.

The three authorities in the area negotiated a settlement which, all agreed, represented a fair split of the existing county council expenditure in 1997/98. Government then agreed increases in that settlement for each authority in 1998/99; just under five per cent both for the new county council and for Blackburn with Darwen; and around 10 per cent for Blackpool.

Because the county council has "downsized" its expenditure to stay within this 1998/99 permitted increase, it has absorbed within the figure (not without pain) the additional costs caused by reorganisation. So if both county and Blackburn are increasing their expenditure by almost exactly the same amount in 1998/99, how come that the council tax increases are so different?

Simply because government grant is matching more of Blackburn's increase than it is of the county's.

The grant is dictated by a national formula for "standard spending assessments" (SSAs). At county, we estimate that the failure of the government's SSA formula to match the county's agreed expenditure increase has lost us some £13 million grant. This is what directly causes the above average council tax in the new county.

The final thing is that all this is a "zero sum game." In other words, one authority's grant gain is another authority's loss. Any further reorganisation in the county area would therefore simply compound the problem by throwing up a new pattern of above and below average council tax increases in the area.

Within that, there would also be the inevitable additional costs of another reorganisation to be absorbed. Not an attractive prospect, in my view.

COUNTY COUNCILLOR JOHN WEST, leader, Lancashire County Council

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