Local Gov Finance Flashcards
In what two ways to local authorities spend money?
Capital and revenue
What is capital spending?
Concerns big building projects such as new housing estate and schools
Capital = long term buildings costs
What is Revenue spending?
The day to day running costs of these projects after they have been built, utility bills, minor maintenance etc
Revenue = Short term running costs
Where does money from revenue spending come from?
Two types of governemnt grants
1) Governments grants
General government grants - sum of money that gov gives to local authorities and then local politicians decide what to spend it on (Revenue Support Grant)
Specific gov grants - called passport grants - money passed to local authorities that may only be spent on specific things - ministers in London decide where this will be spent not local councillors
Where does money form revenue spending come from 2?
1) Council tax income - taxes on domestic property
2) Council tax rental income
3) Other fees (parking changes, leisure centres m, library fees)
4) Buisiness rates - property taxes on commercial property, known as the National Non Domestic Rates (NNDR) or Uniform Busineees rates (UBR)
How much money comes from go. Grants and Council tax
75% Gov grants
25% Council tax
What was previous trend under Labour Gov?
Increase number of pasported grants that local authorities could only spend on things specified by central gov
What did coalition gov do with grants?
More money now being delivered in unpassported grants that local authorities can spend as they see fit
How much have grants been cut back by gov?
40% or more
How is money collected from businesses?
According to its rateable value (ie what the rent would be)
Not based off profits of business, which seen as controversial because highly profitable companions occupying small premises pay relatively little
How did coalition gov repatriate NNDR and UNR?
Used to be NNDR and UBR collected locally but pooled by central government and redistributed by WestMinister politicians
Now government repatriating it so local authorities get to keep more of business rates collected in there patch - about half is retained by local authority
How are business rates calculated?
Using a multiplier which is 49.3p x the rateable value of that property
What is Council Tax
Property tax with a personal element
Households taxed according to notional value last calculated in 1991
Houses put into one of eight bands - A-H- depending on notional value and charged accordingly
Council taxes are cheap to administer and collect and difficult to avoid
Who collects council tax
Billing authority (distict councils in two-tier authorities and unitary)
Preventing authorities can claim some of money (Police, Fire and Rescue, County and Parish Councils)
Central gov can control how much local authorities get from council tax by capping increases
People living along get discount, students exempt
What is Adult Social Care Precept?
Government introduced ASCP on council tax in 2015 to help pay for the service
Why did gov bring in Adult Social Care Precept in 2015?
Cuts to local authority grants and an ageing population created crisis
What did Gov announce in Dec 2020 for ASCP?
That local authorities could raise council tax by 4.99% - 2.99% for general services and 2% for adult social care
What has to happen if a local authority proposes an increase of more than 4.99%?
They have to get the backing of residents in a referendum
What can Police and Crime Commisoners raise their council tax precept to?
£12 per household
Where does the money from capital spending come from?
1) Capital Grants from central gov (eg City Challenge money)
2) EU grants and loans (European Reigonal Development fund)
3) Capital receipts - money raised through sales of council assetss
4) Prudential borrowing - councils can borrow money according to limits set by central gov
5) Private Finance Initiative and Public Private Partnerships - private companies provide capital investment and is paid back by local authority over years.
Why is Private Finance Initiative and Public-Private partnerships controversial?
The capital spending does not appear on the local authority as balance sheet. Controversial as over years councils could end up paying much more on new projects
What does Sheff City council spend its money on
£1,382m in total
Education
Adult social care
Children’s social care
Housing
Emptying bins/ recycling
Environmental health
Public health
Planning and transport
Leisure and culture
Debt
Where does Sheff council get money from?
Revenue support grant
Other specific gov grants
Dedicated school grants
Locally retained business rates
Fees and charges
Council tax
Council house rents
Adult social care precept
