Pay online
Find a form
Bin & Wheelie collections
Find your councillor
Council meetings & agenda
Compliment or complain
Garden waste collection
Licence applications
Planning Applications
Publications
Clubs & Organisations
The cost of local authority services such as those provided by Thanet District Council are funded primarily from fees and charges for services, General Government Grant, the Council Tax and other grants.
The Council is able to generate a substantial amount of income from charging for a range of discretionary services, however the ability to raise revenues through this route is limited, due to the constraints that are placed on the Council through a variety of different pieces of legislation.
The General Government Grant is allocated by a complex model which amongst other things takes account of the relative need of an area and the ability to raise taxes locally (based on an area’s council tax base). Typically district council services have not fared well in the allocation of the General Government Grant, with services such as Education and Health having received the lion’s share in recent years. To give some degree of consistency from year to year, the Government sets a minimum level of grant increase, known as ‘a floor’, for different types of service which guarantees all local authorities will at least receive some grant. The floor for District Councils has been set at only 0.5% for 2010/11. However, there are no additional funds to pay for this guaranteed minimum and so those authorities that receive more than this minimum have their grants reduced in proportion to how much over the minimum they are to cover it, known as ‘scaling back’. Thanet District Council falls into this category and therefore the grant has been reduced by £111.3k in 2010/11. This means that the increase in the Formula Grant for 2010/11 after the scaling back is only 1.1%. For the purposes of this MTFP, it has been assumed that the Formula Grant will be cut by 3% in each year from 2011/12 to 2014/15. This assumption is based on views expressed by commentators, whose predictions range from an optimistic 0% increase to a pessimistic cut of 8%.
The Council Tax system requires local householders to contribute directly to the cost of local service provision. The collection of the Council Tax is administered by Thanet District Council on behalf of itself, Thanet Parish and Town Councils, Kent County Council, the Kent and Medway Fire and Rescue Authority and Kent Police Authority. The element of Council Tax that relates specifically to Thanet District Council is calculated after having taken into account the expenditure needs of the Council and its ability to fund this from charges for services, General Government Grants, the use of reserves and other grant streams. However, the Council is restricted in how much of its funding can be raised from Council Tax due to ‘capping’.
Capping – for some years Local Authorities have had to operate within what is referred to as a ‘capping regime’. Capping powers are used by the Secretary of State to enforce local authorities to set Council Tax increases which don’t exceed Government expectations. Each year, as part of the finance settlement, the Government announces its limits for Council Tax increases. The Parliamentary Under Secretary of State has stated, in her written statement:
“I am pleased that the average band D council tax increase this year was 3.0% - the Government expects to see it fall further next year while authorities protect and improve front line services.
We expect the average Band D council tax increase in England to fall to a 16 year low in 2010-11. We remain prepared to take capping action against excessive increases set by individual authorities and requiring them to re-bill for a lower council tax if necessary.”
It is reasonable therefore to expect that the actual 2010/11 Council Tax capping criteria, for individual authorities, will be reduced from the 5% absolute limit used in previous years, possibly to even below 3%, although this has not yet been confirmed. The Medium Term Financial Strategy has been developed to give Council Tax rises of 2.5% so as to accord with this.
Although the Council is also responsible for collecting business rates across the District, these are paid over to Government and the Council is not able to use any of this to fund its services directly (although an element of business rates does form part of the Formula Grant).
As a result of the dependence upon Central Government funding and the raising of revenues from its communities, the development of the Council’s budget and Medium Term Financial Plans can not be undertaken in isolation. They must take into account the national economic context as it affects the Local Government Settlement and the ability to increase revenues locally.
Next: The Local Government Act 2007
Back: Executive summary
Financial Services
E-mail:
accountancy@ thanet.gov.uk
Tel: 01843 577000