LOCAL GOV FINANCE

What are the two different types of council budgets?

Capital and revenue

What’s the difference between capital and revenue budgets?

Capital budget is for significant long term assets e.g: roads, houses, schools

Revenue budgets are for day to day spending to run services e.g: staff salaries, heating and lighting costs repayment of borrowing with interest

What are the sources of capital budget?

3rd - Borrowing

3rd - Capital grants

3rd - Capital receipts, Private Public Partnerships, reserves and the national lottery

What are the sources of revenue?

Funded by local and central gov

local gov - council tax, reserves funds and locally chargeable services ( main sou

central gov - Grants

What is council tax?

• Domestic property tax charged to households based on a banding system ranging from A-H

• D is the average band

• set by local authority

• Assumes 2 or more adults live in a household

• Single ppl get 25% discount

Who is exempt from paying council tax?

Full time students

Full time nurses

severely mentally impaired individuals

members of religious orders

By how much can council tax be raised by the council?

Can be raised by 4.99% any higher and a local referendum would need to be called

What are business rates?

• a tax for non-domestic properties ( businesses)

• set by central gov but collected by local authorities - can keep some of the money but must give some to central gov

• gov will often adjust to either raise money or help businesses (e.g.: Rachel Reeves cut business rates earlier this year)

What is the council cash crisis?

• since 2018 over a dozen local councils have issued section 114 notices signalling they’re in crisis

What caused the council cash crisis?

• Austerity

• The rise in SEND spending for children

• The rise is social care costs for the elderly

How are councils dealing with the cash crisis?

• raising council tax to the max they can without calling an election ( 4.99%) - contributes to the cozy liv for ppl

• cutting non-essential services ( youth centres and libraries) , selling more local assets and borrowing more