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Year 2 UK Politics > Economy and local gov finance > Flashcards

Economy and local gov finance Flashcards

1
Q

What is The Treasury?

A
  • The Whitehall department that controls the nation’s “purse strings”
  • The developer and guardian of gov spending
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2
Q

Who is in charge of The Treasury?

A

-Rishi Sunak- Chief Finance Minister is Chancellor of the Exchequer

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3
Q

Who is the Chief Sec of the Treasury?

A

Simon Clarke MP

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4
Q

What is the OBR? (Office for Budget Responsibility)

A
  • Independent of the Treasury
  • Provides independent economic data on the state of the economy
  • Gives an independent view on whether the gov’s economic plans will achieve their aims
  • Ensures gov budget figures are accurate and not being manipulated for political ends
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5
Q

What is the Bank of England?

A
  • Britain’s central bank
  • Manages money supply- quantitative easing
  • Sets interest rates
  • Governor- Andrew Bailey
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6
Q

What are the gov’s responsibilities when it comes to the economy?

A
  • Taxation
  • Manages national debt and deficit
  • Promoting economic growth
  • Controlling domestic inflation and unemployment
  • Allocating cash to spend on services the government is responsible
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7
Q

What did the Chancellor say he wanted to do in the new budget?

A
  • To finalise spending plans, a review of the economic policy, medium-term forecasts as well as gov spending plans and taxation changes
  • Aims to control inflation, reduce unemployment, stimulate growth and encourage exports in investment
  • Presented in parliament and passed Finance Act
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8
Q

What are direct taxes?

A

They are levied on the income and earnings of individuals and companies

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9
Q

What are indirect taxes?

A

Paid on expenditure when buying goods and services e.g VAT or alcohol

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10
Q

What is the spending review?

A

Sets out the total amount of money the gov plans to spend on departments and public services over three years- 2021 budget also included a spending review

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11
Q

What is inflation?

A

The rate at which prices of a given basket of good rise

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12
Q

What is GDP? (Gross Domestic Product)

A

Value of goods and services produced in the UK

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13
Q

What is GNP? (Gross National Product)

A

Value of goods and service produces by UK firms

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14
Q

What is National Debt?

A

How much the nation owes to creditors

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15
Q

What is the deficit?

A

Difference between cash raised by gov and cash spent on services and interest on borrowing

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16
Q

How much of all public spending is spent by local gov?

A

A quarter

17
Q

Where does the money for local councils come from?

A
  • Roughly half of the money comes from grants

- Half comes from money raised locally by the council

18
Q

How much was the reduction in “core gov funding” from 2010-15 according to the LGA?

A

40%

Local Gov Association

LGA welcomed new grant funding in the 2021 spending review but says more is needed for adult social care and public health

19
Q

What are the two types of council spending?

A

Capital and revenue

20
Q

What is capital spending?

A
  • For buildings and other long-term projects

- For this councils borrow money

21
Q

What is revenue spending?

A

-Spending on day-to-day expenditure- salaries, maintenance, and upkeep of property and services etc

22
Q

What are the current revenue sources?

A
  • Council tax
  • Formula grants
  • Non-domestic rates
23
Q

What is council tax?

A

Contains a mixture of charges on the market value of the property AND on the no. of people living in it

24
Q

Who is council tax levied by?

A

Charging authorities- District Councils, Met Districts, London Boroughs and Unitaries

25
Q

Who’s exempt from council tax?-

A
  • Children under 18
  • People on some apprentice schemes
  • 18 and 19-year-olds in full-time education
  • Full time college and uni students
  • Student nurses
  • People with a severe mental impairment
  • Live-in carers who look after someone who isn’t their partner, spouse or child
  • Diplomats
26
Q

Describe formula grants

A
  • These are administered by the Department for Local Communities and Local Gov (DCLG)
  • There are no restrictions on what local gov can spend this on
  • Specific grants aren’t part of the annual settlement, but are usually announced by the DCLG at about the same time
  • This does NOT include the Dedicated Schools Grant, which is the main funding for schools
27
Q

How do councils set council tax?

A
  • To spend more money on services a council can raise its council tax
  • But if it wants to raise council tax by more than 2% its required to hold a local referendum
  • On top of that councils are allowed to increase council tax by up to 3% to pay for social care
28
Q

What are non-domestic rates?

A

Property tax paid by the occupiers of commercial and industrial properties, is set by central gov and collected by local council

29
Q

Which non-domestic properties don’t pay the business rates?

A
  • Agricultural land and buildings
  • Fish farms
  • Churches
30
Q

Sunak announced business rate discounts up to 50% up to a max of 100k, who benefited?

A
  • Pubs
  • Music venues
  • Cinemas
  • Restaurants
  • Hotels
  • Theatres
  • Gyms
31
Q

How else do local authorities also raise money for services?

A
  • Rent
  • Planning/building permission
  • Recreation/leisure facilities
  • Burials
  • Car parking
  • They may also be earning interest on balances and reserves
32
Q

What is capital expenditure?

A

Spending on items which will last a long time

33
Q

What is capital expenditure?

A

Spending on items which will last a long time

34
Q

What are sources of capital funding?

A
  • Capital receipts (money raised from selling other assets)
  • Capital grants (from central gov) e.g Neighbourhood Renewal Fund (from Europe) e.g European Regional Development Fund
  • Private sector money e.g Private Finance Initiative
35
Q

When did funding to local gov by central gov start to reduce?

A

2011

Year 2 UK Politics (10 decks)

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