4. Cuts, cuts, cuts – the issues
Spending squeeze on public sector means council grants from Govt. being cut by 28% over four years
Public angry over cuts to services and closures of facilities and job losses
“Democracy dodgers” – councils defying Govt. call to freeze council tax
Demand for many council services increasing putting extra pressure on budgets
People on benefits now having to pay council tax for first time

5. Revenue expenditure
Essentially, a council’s day-to-day running costs necessary to provide services
It covers:
Employees pay
Repair and maintenance of land and buildings
Payments to contractors or suppliers
Grants to organisations

6. Capital expenditure Spending on building things like:
Building new schools
Roads
Facilities like sports centres/libraries
Major items of equipment (eg IT)
Large capital projects usually cover three to five year periods – spread the costs

7. The Council Tax (funds revenue expenditure)
A hybrid tax based on property element and personal element
How much you pay is based on:
i) Property bands: Band D (£68,000-£88,000) is the average (middle band) – Band H (more than £320,000 is the highest)
ii) Two adults occupying property
Decisions on bands are based on property valuations as assessed by Inland Revenue Valuation Office Agency – based on property prices in 1991

8. The council tax A council tax is set by each council
Resident (over age of 18) with strongest legal interest is liable to pay
In two-tier areas, districts/boroughs are responsible for sending out bills and collecting payments
Council tax levels must be set by full council

9. Council tax bands Band A - <under £40,000
Band B - £40,001 to £52,000
Band C - £52,001 to £68,000
Band D - £68,001 to £88,000 (the average)
Band E - £88,001 to £120,000
Band F - £120,001 to £160,000
Band G - £160,001 to £320,000
Band H – more than £320,000

10. Discount and exemptions
Single person households discounted by 25%
Those on low incomes or benefits receive rebates
Full-time students in student accommodation; those in care homes and homeless in hostels do not pay
Bills for second home owners may be discounted (10 to 50 per cent - at council’s discretion)

11. Exemptions Properties are exempt where:
They are empty and unfurnished for more than 6 months
Empty and where person is in hospital or long-term care
Empty and where person is in prison

12. Council tax bills
Bills are made up of different “precepts” - another word for the council tax sum being levied - of the different charging authorities:
In two-tier areas:
County council precept (the highest amount)
District/borough council precept
In unitary areas: The unitary precept

13. Council tax bills All council tax bills also include:
Police And Crime Commissioner precept
Fire authority precept
And if there is one:
Parish or town council precept

14. How council tax has risen
Average bill 1995: £609
Average bill 2012: £1,201
Kent County Council bill 2014: £1,133.55
Medway Council average bill: £1,113

15. Is it fair?
Regressive: unrelated to ability to pay; those in lower bands pay proportionately more
Tougher on those on fixed incomes (pensioners)
Valuations out of date – wide regional variations
Bills have increased above rate of inflation
Does not give councils financial autonomy or enhance accountability

16. New – local council tax benefit schemes
Govt. says councils must now arrange council tax benefit schemes
But councils say Govt. has not given enough money to do so – grant has been cut by 10%
Pensioners continue to be protected
But others on welfare benefits being asked to pay council tax for first time
Typically, about 8.5% of average bill

17. Referendums…
Govt. says any increase in council tax of 2% or more should be subject to public vote
Most councils evading this by increasing by less than 2%
Leading to “democracy dodgers” complaint by Mr Pickles

18. New...the “social care” precept
Government allowing councils to increase council tax by additional 2% for care costs
Aimed at easing pressure on rising costs of adult social care [NOT children]
Extra money must be used only for care – accountability?
Means many councils are raising bills by 4%

21. Where the money comes from
Central government provides the lion’s share of council money (approx 75 per cent) – controls of purse strings
Money from Government comes in the form of different grants (called ‘specific’ and ‘general’ grants)
Spending framework for all public services set over three year period
More specific figures come via the yearly Local Government Finance Settlement (usually November)

22. Government grants for revenue expenditure
Formula Grants
Block grants that can be spent by council as it sees fit on revenue expenditure
Take into account council tax base (ie how much can be raised) and how many people rely on services

23. Specific grants Grants paid for particular services
Includes bulk of money for schools (Dedicated Schools Grant - DSG)
Some specific grants are ring-fenced (money comes with conditions)
Some are unfenced/targeted (no restrictions)

24. Uniform business rates
Paid by occupiers of commercial and industrial properties (shops, factories, businesses)
Based on rateable value of property x national multiplier (set by Government)
Collected by district councils but passed to Government for redistribution (based on ‘need’)
Also know as National Non-Domestic Rate

25. Relief/discounts on UBR
Small business rate relief (<£50,000 = 50% discount)
Lower multiplier for those with rateable values between £10,000 - £14,999
Empty properties
Charities and charity shops
Non-profit organisations
Agricultural land

26. Uniform business rates
How formula is calculated:
Rateable value of property x National Multiplier
For eg, where premises have rateable value of £50,000 and multiplier is 50 pence, the UBR is £25,000

27. New...business rates
Government to allow councils to keep all the business rates (currently 50%)
Will be able to cut rates (incentive to businesses)
And....also be able to raise rates
Elected mayors to be allowed to raise more through a premium to pay for big infrastructure costs

28. Fees and charges Parking Planning application fees Allotments
Libraries
Leisure centres
Social care
+ others specific to councils, (eg Kent Freedom Pass fee rising to £100 in 2011)

29. Capital funding – how it works
Borrowing to pay for capital schemes operates under “prudential borrowing regime”
Councils decide how much they can afford to pay, taking into account how much they need to repay (impact on council taxpayers)
Money may be borrowed from various sources

30. Ways of funding: The Private Finance Initiative - PFI
Private consortium pays upfront for project in a contract with council
Building/facility is leased back to council
Costs paid off by council over period of between years (plus interest) after which council retains ownership

31. PFI – advantages/disadvantages
Good:
Risks taken by private contractor
Enables council to get scheme built more quickly
Less good:
Risk of contractors underbidding for contracts and then folding
Interest costs hike up eventual overall bill
Council ends up after agreement period with relatively old asset

33. Public Works Loan Board
Executive arm of the Treasury
Enables councils to borrow money more cheaply than if they went to the City or banking institutions
Board approves loans only if satisfied loans can be repaid
Collects the repayments, which include interest (usually lower than elsewhere)

34. Capital receipts Sale of assets, eg land, buildings, housing
One-off money: once spent, it’s gone!
Some money from any sale must be “pooled” – given to the government, which redistributes it
How much is pooled varies according to how much is raised – can be 50 per cent
Can prove controversial (eg playing fields, allotments to developers)

35. Other capital sources
Money from income raised by rents, fees and charges (eg leisure centres; library charges; fees for planning applications; parking; school meals)
Councils raised £10.8billion from charges in – equal to £210 per person
Income from fees/charges usually relatively small when compared with other sources

36. Other capital grants
Central govt - through national schemes, such as Single Regeneration Budget, Sure Start
European Union – via structural funds (usually to deprived/disadvantaged regions) – Objective One and Objective Two status
National Lottery