Snapshot: Local government finance

Posted on August 4, 2015 · Posted in Accounting & Business

Local government finance

English local authorities’ spending per person fell by almost a quarter – 23.4% – in the course of the last Parliament. Deprived inner city areas reduced spending the most, while rural areas suffered less. Westminster City Council cut its spending by 46.3%, whereas North East Lincolnshire reduced expenditure by just 6.2%.

Central government grant to local authorities was cut by 38.7% per person in real terms over the course of the Parliament. Councils increased reserves over the period, at the expense of tougher service cuts.

Total council tax revenues rose by 3.2%, but fell slightly on a per person basis. Local authorities’ total revenues fell by 22.9% per person in real terms. Cuts in grant for 2015/16 will hit hardest those councils that have already been hit worst. London boroughs face cuts of 6.3% on average, compared with 1.9% for shire counties.

Reductions in local government grant are proportionate with those across central government departments, excluding protected spending areas of the NHS, schools and overseas aid.

Spending on planning and development was cut on average by more than 50%; transport, housing, culture, libraries and regulation were cut by more than 30%; social care was cut by 16.7%; and environmental and refuse services by 10.7%.

Source: Central cuts, local decision-making: changes in local government spending and revenues in England, 2009-10 to 2014-15, published by the Institute for Fiscal Studies.