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On 19 October 2017, the House is due to debate a motion moved by Lord Greaves (Liberal Democrat) that this House takes note of the “future availability of resources for the provision of District Council services in two-tier areas”. This short briefing provides an overview of how local government is structured and funded, and includes information on recent funding levels.

The structure of local government in England varies from area to area. The majority of the country operates a two-tier system of local government, made up of county councils and district councils which split responsibility for council services. County councils cover a wide area, and administer services such as education, waste disposal and social services. A number of district councils then operate in the county council areas, and operate services including: building regulation, burials/cremations, community safety, administration of council tax and business rates, environmental health, electoral administration, licensing, sports facilities, housing, street cleaning and rubbish collection. Out of 353 local authorities in England, 201 are district councils.

Local authority funding comes from four main sources: government grants, council tax, business rates and fees/charges (such as parking charges). These can then be considered to fall into two overlapping categories: grants from central government and locally raised funding (including council tax and retained income under the business rates retention scheme). Council tax and business rates are usually collected by district councils, with any finances to be retained split between themselves and their county council.

In 2017/18, the “total revenue expenditure by all local authorities in England is budgeted to be £94.5 billion. This is an increase of 0.4 percent from £94.1 billion budgeted for 2016/17”. Of this, around £3.1 billion is budgeted under district councils, a reduction of 0.6 percent from the previous year.

Regarding how the money is being used by local authorities, the National Audit Office reported that around 49.3 percent of authorities’ non-schools expenditure (ie money going directly to schools) was budgeted to be spent on adult social care or children’s social care in 2016/17. It also reported a real-terms budgeted increase, from 2010/11 to 2015/16, of 5.7 in children’s social care, in contrast to decreases of:

  • 8.6 percent for adult social care.
  • 36.0 percent for cultural services.
  • 47.1 percent for housing services (excluding housing revenue account spend).
  • 53.1 percent for planning and development.

In a press release issued on 25 September 2017, the District Councils’ Network called for the Government to allow district councils to introduce a new 2 percent council tax ‘prevention’ precept for the purposes of maintaining and investing in “prevention services such as improving housing, providing leisure and recreational facilities, offering debt advice, tackling homelessness, supporting troubled families and improving air quality all of which help reduce demand on social care and health services”.

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