Local Government Financial Statistics England No.26 2016 
 
 Department for Communities and Local Government logoNational Statistics logo


Local Government  
Financial Statistics England  
No.26 2016 
 
 
Presented to Parliament pursuant to  
Section 168(4) of the Local Government Act, 1972  
Elizabeth II, c70 
 
Department for Communities and Local Government: London 


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## Preface



This is the 26th edition of *Local Government Financial Statistics (LGFS) England*, providing a summary of financial data from local authorities with links to the statistical releases that contain the full set of data. The previous 25 editions have provided more context and commentary on the data, and earlier versions of *LGFS* have been published and presented to Parliament since the 1930s. A separate document containing background to local government structures and definitions will be available on-line, and will be updated as necessary. Links have been provided to the relevant statistical releases within chapters, and these may contain more up to date statistics.  Most of the information comes from forms sent to the Department for Communities and Local Government by all local authorities in England. 



Local government expenditure represents nearly a quarter of all public expenditure, and the data are used in the monitoring of public expenditure and the compilation of the National Accounts.  Local government finance data are also used by the Government to inform the allocation of resources to local government and the development and monitoring of local government finance policy, and more widely, by local authorities, businesses and members of the public. 


 
 
This volume contains outturn summaries of local government expenditure and income for years up to 2014-15, the latest year for which complete information is available, and estimates for 2015-16.  Data are published throughout the year in statistical releases and live tables. These are all available on the Department's website. Therefore more up to date data will be available before the next edition of *LGFS*. 



Some of the data within this publication are published as National Statistics and as such have been produced to the high professional standards set out in the National Statistics Code of Practice. Most of the information in this publication is based on data supplied by local authorities to the Department for Communities and Local Government in statutory statistical returns. Due to the statutory nature of the returns, response rates are normally 
100%. Figures are subject to rigorous pre-defined validation tests both within the form itself and also within DCLG as the forms are received and stored. The publication itself, once prepared, is also subject to intensive peer review before being cleared as fit for the purposes of publication. 

 
 
Local government finance statistics publications and other detailed data can be found online at: https://www.gov.uk/government/organisations/department-for-communities-and-local­ government/about/statistics 


Further information on data quality, methodology and the uses of the data can be found on these releases, as well as a more detailed look at the statistical outputs. If you cannot locate the data you require please use the contact details below. The key purpose of the 
 *LGFS* compendium is to present a copy to parliament every year as required by law. However, it is also used by a variety of different users and has been 
 
developed through time to be accessible to a wider audience. Users include local authorities (including fire, police, transport and waste authorities), central government colleagues, libraries, schools, contacts in government or local government organisations 
 
and the private sector. 

 
 
Unlike previous years, this year's *LGFS* has been streamlined to present only an overview 
 
of all the data collected on local government finance by DCLG. This follows a consultation which showed that limited use was made of t he *LGFS* as all the information collected is published online. Users who want detailed commentary of the data are advised to refer to previous versions of the LGFS, or to refer to the definitions document published separately. 

  
 
As there have been no recent changes to local government's structure, maps and lists of 
 
all local authorities as well as any significant changes to the functions and structure of local government since the 1970s can be found in the 2014 LGFS publication, which can be found online at https://www.gov.uk/government/statistics/local-government-financial-statistics-england­
2014 
 
 
We welcome comments and suggestions for further improvement or about your experiences with this product. This may include comments on data quality, timing and the format of the statistics. In addition local authority level data are available upon request. 

  
 
Please contact us at: lgfstats@communities.gsi.gov.uk Responsible Statistician: Jo Coleman 

## Symbols And Conventions

 
Tab le

## Rounding

 
Where figures have been rounded, there may be a slight discrepancy between the total and the sum of constituent items. 


## Chapter 1 Local Government 1.1 What Is Local Government?

1.1.1  Local government is one way in which the country's governance, 
administration and public service delivery is carried out. Two key features of local authorities are that they tend to have elected representatives and 
the ability to raise taxes locally. 
1.1.2  Local authorities are statutory bodies created by Acts of Parliament. They 
are not accountable to Parliament as they are directly elected by their local communities. Local government is a devolved responsibility in Scotland, Wales and Northern Ireland. 

 


1.1.3 Local authorities, their members and the administrative units supporting 
them have a number of objectives, the key one being the delivery of services. They deliver services in line with national objectives, and in a manner that meets the diverse requirements of different neighbourhoods and communities. Services are delivered directly through their employees 
and indirectly through other bodies. More recently, outside agencies have played an increasing role in service delivery. 

 

## 1.2  Local Government Structure And Services

1.2.1  This document covers local government in England in 2014-15. The 
structure of local government varies across the country. The structure of 
local authorities takes one of six forms: 


- Metropolitan Districts - London Boroughs 
 
- Unitary Authorities 
 
 
- Shire Counties - Shire Districts 
 
- Single Purpose Authorities 


1.2.2  In the six metropolitan areas (Greater Manchester, Merseyside, South 
Yorkshire, Tyne and Wear, West Midlands and West Yorkshire), most 
services are run by metropolitan districts.  
1.2.3  In London, the London boroughs and the City of London deliver most of 
the functions. The Greater London Authority (GLA) comprises a directly elected Mayor and a separately elected Assembly. The GLA group consists of the following four functional bodies: 


- 
 Mayor's Office for Policing and Crime (MOPAC) 
 
- 
 London Fire and Emergency Planning Authority (LFEPA) 
 
- 
 Transport for London (TfL) 
 
- 
 GLA Land and Property (GLAP). 1.2.4  In most of the rest of England, called the shire areas, there are two main 
tiers of local authorities: shire counties and shire districts. However, in 
 
some parts of 
 the country, a single unitary authority carries out shire 
county and shire district responsibilities. Since 1995, 56 single unitary 
 
authorities have 
 been 
 created.  
 
1.2.5  
 Fire & rescue and passenger transport are typically the responsibility of 
 
single purpose authorities, which usually share the same 
 boundaries. 
 
Single purpose authorities also extend to National Parks and some waste disposal services. There is also a Police and Crime Commissioner for 
each constabulary 
 which cover each metropolitan area and shire county 
 
(sometimes combinations of these). 
 
1.2.6  
 Additionally, Parishes and Charter Trustees represent the third tier of local 
government, the most local level of government in England. They typically 
 
fund their activities by charging an additional cost known as a "precept" to each householder's council tax bill. There are more than 10,000 local parishes in England. Of 
 these, 8,800 charge a precept, which is collected 
by the local billing authority on their 
 behalf.  Further details on geographies 
 
can be found online at https://www.ons.gov.uk/methodology/geography . 
Table 1.2a shows details on the number of authorities in England. 
 



Parishes (c) 
8,580 
230 
3 
8,813 
Local authority level 
Parish Level 
Billing 
authorities 
Major precepting 
authorities (a) 
Other 
authorities(b) 
All authorities 
Shire areas 
257 
82 
10 
349 
Metropolitan areas 
36 
12 
8 
56 
London 
33 
1 
5 
39 
Engla 
nd 
326 
95 
23 
444 

(a) The count of precepting authorities excludes parish councils. (b) Other authorities are parks, w aste and passenger transport authorities (c) includes non-zero precepting authorities only 


1.2.7  
 Local authority spending can be divided into revenue expenditure and 
capital expenditure. On the whole, revenue expenditure (see Chapter 3) is financed through 
 a balance of central government grant, retained nondomestic rates and the locally raised council tax (see Chapter 2). Capital 
expenditure is principally financed through central government grants, 
borrowing and capital receipts (see Chapter 4). 
 

 
 
1.2.8  Local authorities are required by law to secure the necessary funds to 
finance their operations, to provide an accurate account of where the money goes and to provide accounts which balance. 


1.2.9  Only some of the local authorities may collect money directly through 
council tax. These are called billing authorities. Others receive funds indirectly, either by precepting on a billing authority or by other channels, such as levies. In shire areas, county councils are precepting authorities, 
as district councils are the billing authorities. Police and fire and rescue authorities are also precepting authorities. Of the 444 local authorities in 
England, 326 are billing authorities, who raise money via council tax, and 95 are major precepting authorities. Additionally, there are 8,800 parishes 
that charge a precept, and these are situated in 241 billing authorities 

## Chapter 2 How Is The Money Found? 2.1. Summary Of Sources Of Local Government Income

2.1.1.  The main sources of income for local government in England are council 
tax, retained non-domestic rates, other government grants (including specific government grants), borrowing and investments, interest receipts, capital receipts, sales, fees and charges and council rents. 
2.1.2.  **Table 2.1a** provides details of how much income has been raised through 
these funding streams. 

## 2.2. Revenue Grants



2.2.1.  Funding distributed through the local government finance settlement plus 
certain non-housing revenue specific grants are known as Aggregate External Finance (AEF). AEF includes Revenue Support Grant (RSG), redistributed non-domestic rates and certain specific grants. AEF does 
not include housing subsidy1, which until its cessation at the end of 2011­
12 was administered and recorded separately, as part of the Housing 
Revenue Account (HRA).   
 
 
2.2.2.  Prior to 2014-15, the funding distributed through the local government 
finance settlement was distributed based on the socio-economic and demographic characteristics of authorities, together with a measure of the authority's ability to raise council tax locally i.e. the number of Band-D equivalent properties within its area. 

 


2.2.3.  The business rate retention scheme, introduced in April 2013 has 
reformed the way in which local government is funded. It provides a direct 
link between business rates growth and the amount of money available to local authorities to spend on local people and services. Under the business rates retention scheme, authorities overall keep half of the local business rates revenue as well as the growth on their share. A system of tariffs and top-ups provides a one-off rebalancing of resources at the outset in order to ensure that no authority loses out in its ability to meet 
local service needs as a result of their business rates tax base. 


2.2.4.  The other half of business rates revenue is used to fund the majority of 
Revenue Support Grant provided to local authorities. Revenue Support Grant is a central government grant given to local authorities which can 
be used to finance revenue expenditure on any service. 

## 2.3. Sales, Fees And Charges

2.3.1. 
 Sales, fees and charges are the amounts received by local government 
as a result of providing a service. They vary 
 widely between services in 
both the amount of 
 money involved, and their nature, for example library 
 
fines and planning application fees. Local authorities receive income from 
sales fees and charges from 
 over 100 service areas. 
 **Table 2.3a** shows 
 
sales, fees and charges by service area from 2010-11 to 
 2014-15. 
 
2.4. 
Council tax 
 
2.4.1. 
 Council tax is the main source of locally-raised income 
 for many local 
authorities. It is therefore an important 
 source of 
 funding used for meeting 
 
the difference between the amount a local authority w
 ishes to spend and 
the amount it receives from other sources such as government grants. The amount of council 
 tax payable on a property depends in part on the 
valuation band to which it is allocated and in part on the number of 
 
occupants that live in the property.  


2.4.2.  **Table 2.4a** provides figures for the total number of domestic dwellings in 
England in September each year from 2011 to 2015, those that are liable for council tax i.e. chargeable dwellings, those that are exempt from council tax, those that receive discount on their council tax and those that 
are required to pay a premium on their council tax. 
 
2.4.3.  Band D council tax is the usual standard measure of council tax and is 
the council tax payable on a Band D dwelling occupied as a main residence by at least two adults, before any reductions due to discounts, exemptions or local council tax support schemes. This definition is widely regarded as a benchmark when comparing council tax levels in different areas or over time. 
  
 
2.4.4.  The council tax paid by a dwelling may be made up of several elements. 
Depending on its location, in addition to the council tax for the local authority responsible for the area, it may consist of council tax that will be 
redistributed to some or all of the following: county council (the Greater London Authority in London), fire and rescue authority, police & crime commissioner. Dwellings may also be liable for council tax to fund their 
local parish council activities. 

## Council Tax Levels

2.4.5. 
 **Table 2.4b** gives figures for levels of, and changes in, the average Band D 
council tax for England for 2010-11 to 2015-16. These figures include parish 
 
precepts. 
2.4.6.  
 Between 2011-12 and 2015-16 a grant was offered to those authorities 
that set their average Band D council tax (excluding parish precepts) either at or below the level for the previous year. As a result there was no 
increase in the average band D figure for England in 2011-12.  
 

## Parishes And Other Local Precepting Authorities In England

2.4.7.  
 **Table 2.4c** shows information relating to parishes and other local 
precepting aut
 
horities and the precepts they raise.   
2.4.8. 
 Further details about council tax, parishes and other local precepting 
 
authorities and collection rates can be 
 found via 
https://www.gov.uk/government/organisations/department-for­ communities-and-local-government/series/council-tax-statistics 

## 2.5. Non-Domestic Rates



2.5.1.  Non domestic rates, also known as business rates, are collected by 
billing authorities and are the way in which those that occupy a nondomestic property (or hereditament) contribute towards the funding of 
local services. The introduction of the business rates retention scheme in 2013-14 allows local authorities to retain a proportion of the revenue that is generated in their area. 


2.5.2.  Each hereditament has a rateable value that is based, broadly, on the 
annual rent that the property could have been let for on the open market 
at a particular date (currently 1 April 2008, using a list compiled for 1 April 2010). Details of the hereditaments are recorded on rating lists that are compiled and maintained by the Valuation Office Agency (VOA), an agency of HM Revenue and Customs. The total number of hereditaments in England and their rateable value for 2011-12 to 2015-16 are shown in 
Table 2.5a. 


2.5.3.  Generally, the rates bill for a property is the product of its rateable value 
and the relevant national non-domestic rating multiplier and billing authorities work out the rates liability for every hereditament by multiplying the rateable value of the property by the appropriate multiplier. There are two multipliers, the non-domestic multiplier and the small business non domestic rate multiplier. The former is higher because it includes a supplement which is used to fund the Small Business Rate Relief scheme, which is designed to help small businesses meet the cost 
of their business rates. 


2.5.4.  The Government sets the multipliers for each financial year for England 
according to formulae set by legislation. Generally, the multipliers increase in line with the Retail Price Index in September of the preceding year. However in 2014-15, the Government capped the increase in the multiplier for that year at 2% to provide business rate payers with 
additional support. The multipliers for 2011-12 to 2015-16 are shown in 
Table 2.5a. 
2.5.5.  Since the introduction of the business rates retention scheme, the local 
government sector (local authorities and fire and rescue authorities) are 
now able to benefit directly from supporting local business growth as they are allowed to keep half of any increases in business rates revenue to 
invest in local services. 

 


2.5.6.  In addition, safety net payments are available if a council's business rates 
income falls by a certain amount. This safety net is be funded by a levy paid by those councils whose business rates revenue increases by a disproportionate amount compared to their needs. The levy is designed to ensure that the more councils grow their business rates, the more they benefit. 


2.5.7.  **Table 2.5b** shows details of the amount of non-domestic rates that local 
authorities collected in 2013-14 and 2014-15 and their forecasts for 2015­ 16. It does not show information prior to 2013-14 as this was under the old non-domestic rates system and so is not strictly comparable. 

 
 
 
2.5.8.  There are a number of rate reliefs that can be granted in certain 
circumstances by local authorities. **Table 2.5c** provides details of these 
reliefs. In addition to the Small Business Rate Relief scheme which, as its 
name suggests, is targeted at small businesses there are mandatory reliefs which are automatic entitlements in any local authority area, and 
discretionary reliefs which are granted at a local authority's discretion. An example of these two types of relief is properties held by charities, which are automatically entitled to mandatory relief of 80 per cent, and local authorities then have the discretion to top that up to 100 per cent. The cost of both mandatory and discretionary relief is borne by both central 
and local government. 


2.5.9.  In addition, at a revaluation, transitional arrangements are introduced 
which cap significant increases and decreases in bills. The transitional 
scheme introduced from April 2010 aims to be revenue neutral by 
phasing in both increases and decreases over five years, instead of all 
ratepayers receiving the full impact of the changes immediately on 1 April 2010. 


2.5.10. Information for the amounts of non-domestic rates collected prior to 2013­
14 and further details on data in this table are available via https://www.gov.uk/government/collections/national-non-domestic-rates­
collected-by-councils 

## Council Tax And Non Domestic Rates Collection

2.5.11. 
 The collection of council tax 
 and non-domestic rates doesn't stop at 
 the 
end of March; authorities will continue to attempt to collect the 
outstanding amounts until such times that they make a decision that it is 
no longer practical, or cost effective to try to collect it. **Table 2.5d** shows 
 
the amount of council tax and non-domestic rates collected in 2010-11 to 
2014-15 irrespective of the year to which it relates. 
2.5.12. The in-year collection rate is the amount received by 31 March of the 
 
year in question of that financial year's council tax and non-domestic 
 
rates shown as a percentage of the net collectable debit in respect of that year's council tax or non-domestic rates.  In other words it is how much the local authority collected by 31 March of the local tax they would have collected if everyone liable had paid what they 
 were supposed to. 
 Table 
2.5e shows the in-year collection rates for England since 2010-11. 
2.5.13. It includes prepayments made in the previous year in respect of 
 the 
 
current year but it does not include prepayments made in the current year 
in respect of 
 future years nor does it include the payment of 
 any arrears. 
The collection of council tax and non-domestic rates continue 
 once the 
financial year to which they relate has ended; this means 
 that the final 
collection rate achieved is somewhere between the figures shown and 100 per cent. 

## Chapter 3 How Is The Money Spent? - Revenue Expenditure 3.1. Summary Of Revenue Expenditure

 
3.1.1.  Revenue spending by local authorities is mainly for meeting employee 
costs, such as the salaries of staff; procurement costs, such as transport, 
fuel and building maintenance; levies paid to other local authorities which provide a service (for example, a metropolitan district pays a waste 
disposal authority); payment of awards/benefits on behalf of central 
government (for example, mandatory rent allowances) and recharges to 
other accounts 


3.1.2.  Such spending is often referred to as current or revenue expenditure, in 
order to distinguish it from capital spending. However, the terms current expenditure and revenue expenditure also have particular meanings in the context of local government finance 


3.1.3.  Further statistics about revenue expenditure in England that is 
summarised in this chapter can be found via https://www.gov.uk/government/collections/local-authority-revenue­ expenditure-and-financing 

## 3.2. General Fund Revenue Account Expenditure Definitions

3.2.1.  **Total current expenditure** is the cost of running local authority services 
within the financial year. This expenditure is offset by income from sales, 
fees and charges and other (non-grant) income, which gives total net 
current expenditure. Net current expenditure includes that expenditure 
financed by specific government grants within and outside Aggregate External Finance (AEF). 


3.2.2.  **Revenue expenditure** is equal to net current expenditure plus capital 
financing costs and a few minor adjustments, but excluding expenditure funded by grants outside AEF and income from interest receipts. The 
sum of government grants, redistributed non-domestic rates, and council tax does not normally exactly equal revenue expenditure because of the use of reserves. 
 
 
3.2.3.  **Net revenue expenditure** is revenue expenditure, excluding that funded 
by all specific grants inside AEF, and excluding the Local Services Support Grant. Police Grant is not included in this. This represents an 
authority's budget requirement and use of reserves. 


3.2.4. Changes and comparisons over time can be misleading owing to changes 
in functions that are the responsibilities of local government and the definition of service lines, but these discontinuities have been highlighted in the tables. For example, education expenditure by local authorities has 
decreased because of the increase in the number of academy schools, 
which are centrally funded rather than funded by the local authorities. 
These discontinuities have a knock on effect for comparing the total net current expenditure over time. Recent trends in revenue spending by broad service group and how it has been financed are shown in summary 
form in Table 3.2a 

## 3.3. Labour, Goods And Services Purchased

3.3.1.  Revenue expenditure can also be analysed in terms of the labour, goods and 
services purchased by local authorities. 

 


3.3.2.  A sample of local authorities completes the Subjective Analysis Return (SAR). 
This is a more detailed return showing how net current expenditure is broken down 
between pay and the procurement of goods and services. Pay is analysed to show the major pay negotiating groups (see Chapter 6). Procurement of goods and services is analysed to show goods and services purchased directly and services provided by external contractors or internal trading services. 


3.3.3  **Table 3.3a** shows this analysis from 2010-11 onwards. Total expenditure on pay 
and the procurement of goods and services is consistent with Revenue Outturn 
data, but has been adjusted to exclude double counting of expenditure that has been recharged between service blocks within the General Fund Revenue Account, or between one local authority and another. Discretionary transfer payments have also been excluded. 
 

## 3.4. Revenue Reserves

3.4.1.  Revenue reserves are an accumulation of income, which can be used to finance 
future spending and to provide working balances. Authorities hold reserves for a 
variety of reasons including: 


-  to meet unexpected calls on their resources, like the consequences of flooding 
or of snow and ice on roads, 
-  to act as a cushion against uneven cash flows, 


-  to avoid the need for temporary borrowing, 


-  to build up resources to cover certain or probable future liabilities. 


3.4.2.  Planning for unexpected expenditure is an important element of authorities' risk 
management strategies, and decisions on the amount held for this reason should follow a careful assessment of risks faced by an authority and other means by 
which the risks can be mitigated. **Table 3.4a** shows the level and use of revenue 
reserves. 
 
3.4.3.  There are four main types of revenue reserves: 


-  **schools' reserves**, which represent amounts retained by schools out of their 
delegated budgets; schools hold these reserves for the same reasons as local authorities, 


-  **public health reserves**, which represent amount retained by local authorities 
out of their public health budgets and can only be used for public health expenditure, 
 
-  **other earmarked reserves**, which have been set aside for other particular 
purposes, 
 
 
-  **unallocated reserves**, which are intended for general contingencies. 


3.4.4.  In presenting how much finance a local authority has in reserve at any point in 
time it is normal to exclude schools' reserves as they are not immediately available to a local authority. 

## 3.5 External Trading Services

3.5.1 
 
Local authorities operate a variety of trading services, which are either defined 
under general or local Acts of Parliament or by custom. 
 They are services of 
 a 
commercial nature which are substantially 
 financed by charges made to recipients 
 
of the services. 
 **Table 3.5a** shows details of the internal and external trading 
accounts. 
3.5.2  External trading services are typically organisations funded 
 mainly by sales outside 
 
the authority. These include civic halls and theatres, markets, industrial estates, 
 
tolled bridges, roads, ferries and tunnels. Their receipts are conditional on actual work done. They differ from 
 public corporations in that they do not have a full 
 
commercial style set of accounts, or autonomy from 
 the local authority in day to day 
business operations in their legal identity and financial transactions. An operating 
profit on the Trading Accounts Services (TSR) return is shown as a negative on the expenditure form. 

## 3.6 Housing Revenue Account (Hra)

3.6.1  The Housing Revenue Account (HRA) is a record of revenue expenditure and 
income relating to an authority's own housing stock and dates back to the Housing 
Act 1935. 
  
 
3.6.2  Most other local authority services are funded through council tax and central 
government support for the benefit of all local taxpayers. However housing is provided directly to a relatively small sub-group of local residents and council tenants and funded by the rents they pay and by central government subsidy. 


3.6.3  The HRA is a ring-fenced account. The ring-fence, introduced in the Local 
Government and Housing Act 1989, ensures that rents paid by local authority 
tenants make a fair contribution to the cost of providing the housing service. Rent 
levels can therefore not be subsidised by increases in the council tax and equally, local authorities are prevented from increasing rents in order to keep council tax levels down. 


3.6.1  In March 2012 the HRA subsidy system was abolished and replaced with a selffinancing system. This involved transfers of assets and liabilities between central and local government. The net result of these transactions was that local government borrowing increased by approximately £8.1 billion in March 2012 to cover the housing stock they took over. 
  


3.6.2  Details of the income and expenditure on the HRA since 2010-11 can be found in 
Table 3.6a. 
 

## Chapter 4 How Is The Money Spent? - Capital Expenditure 4.1. Capital Spending And Receipts

4.1.1.  Capital spending by local authorities is mainly for buying, constructing or improving 
physical assets such as - buildings - schools, houses, libraries, museums, police and fire stations etc.; land - for development, roads, playing fields etc.; and vehicles, plant and machinery - including street lighting, road signs etc. 
 
  


4.1.2.  It also includes grants and advances made to the private sector or the rest of the 
public sector for capital purposes, such as advances to Registered Social Landlords. 
 
 
4.1.3.  
Authorities finance this spending in a number of ways, including use of their own 
revenue funds, capital receipts, borrowing or grants and contributions from 
elsewhere. 
4.1.4.  
Authorities do not need prior government approval to finance capital spending by 
borrowing or credit. They operate under the prudential capital finance system and, although they receive central government support for a major part of their capital programmes, are free to borrow to fund additional investment as long as they can prudently afford to service the debt. 
4.1.5. 
 A **capital receipt** is the money received by a local authority from the sale of a 
capital asset, such as a council house, or from the repayment of a grant or loan 
made by the authority to someone else to use for capital spending. 


4.1.6.  Local authorities are required to set aside any part of a receipt, though authorities 
are still free to earmark all or some of their receipts for debt redemption if they wish. However, a pooling system is in place requiring authorities to pay to the government a proportion of their capital receipts from the sale of housing land and dwellings. Large and Small Scale Voluntary Transfers are excluded from this 
scheme. 
4.1.7.  Further statistics on capital expen diture can be found on-line at 


https://www.gov.uk/government/collections/local-authority-capital-expenditure­ receipts-and-financing 
4.1.8.  Recent trends in capital expenditure by type of spending are shown in Table 4.1a. 
Table 4.1b provides details of capital expenditure by service. 


T
 

## 4.2. Capital Financing

4.2.1. 
 Capital spending 
 is financed by:  
 
-  
 grants received from government departments for any purpose, but mainly 
 
given for schools, transport, housing or regeneration work; contributions or 
grants from 
 elsewhere, including the National Lottery and Non-Departmental 
Public Bodies such as Sports England, 
 English Heritage and Natural England. 
These can also come 
 from private sector partners, for example 
 for access roads 
 
or traffic management schemes;  
 
-  
 capital receipts (that is proceeds from the sale of land, buildings or other fixed 
assets); 
 
 
-  
 revenue resources - either the General Fund Revenue Account, the Housing 
 
Revenue Account (HRA) or the Major Repairs Reserve although an authority 
 
cannot charge council tenants for spending on general services, or spending on council houses to local taxpayers; 
  
 
- self
 
-financed borrowing within limits of 
 affordability, having regard to the 2003 
 
Act and the CIPFA Prudential Code. 
 
 
4.2.2. 
 **Table 4.2a** provides details of capital expenditure financing from 2010-11 
 to 2015­
16. 
 

## Chapter 5 Borrowing And Investments 5.1. Outstanding Debt And Holdings Of Investments

5.1.1.  Local authorities have the power to determine how much debt they can take on to 
deliver services.  Each local authority sets its own debt limit.  In doing so, the 
authority will need to be confident that it can service the debt, without the costs of doing so adversely impacting on service delivery. 
5.1.2.  
Outstanding debt includes temporary borrowing, issued with a term of less than 
one year, for the purpose of managing cash flow, and longer-term borrowing, issued with a term greater than one year, taken out to finance capital projects. 


5.1.3.  **Table 5.1a** outlines the total borrowing figures across the past five years from 
2010-11 to 2014-15. These are broken down by borrowing source. Separate totals 
for Transport for London (TFL) and the Greater London Authority (GLA) have been provided as these two authorities manage funds for some of the largest capital investment programmes in the country, such as Crossrail. Borrowing to finance these projects contributes significantly to UK borrowing trends. 
5.1.4.  **Table 5.1b** shows the local authority investment levels as at the 31st March from 
2010-11 to 2014-15. 


5.1.5.  Local authorities are permitted to invest their surplus funds to generate a return. 
However, certain types of investments that are considered too risky are prohibited. 
5.1.6.  The stock of local authority investments is the financial representation of local 
authorities' reserves, unused capital receipts and cash flow surpluses. Authorities that are net borrowers may use such resources to reduce their borrowing rather than hold them as investments. 
5.1.7.  Further statistics on Borrowing and Investments can be found on-line at 


https://www.gov.uk/government/collections/borrowing-and-investments-by-uk­ local-authorities 
 
  

## 5.2. Borrowing And Investment Transactions

5.2.1.  New borrowing and drawing down of investments are ways of accessing funds. 
New borrowing is a major way of financing capital spending. Funds that are 
received as income or capital receipts, but are not needed for immediate 
expenditure, may be invested or used to redeem debt. 
5.2.2.  Local government Net Cash Requirement summarises changes in local authority 
borrowing less change in investments. When Net Cash Requirement is positive, local authorities are increasing their borrowing and/or reducing their investments. 
When Net Cash Requirement is negative, local authorities are reducing their borrowing and/or increasing their investments. 
5.2.3.  **Table 5.2a** shows the change in borrowing, investments and net cash requirement 
across local government from 2010-11 to 2014-15. 
  

## Chapter 6 Local Government Pay And Pensions 6.1. Local Government Employment

 
6.1.1.  Local government is collectively one of the largest employers in England, 
employing over 1 million full time equivalent staff (FTEs).  Pay negotiating groups are responsible for negotiating, amongst other aspects, the pay rewards for employees in their group and cover the majority of local government employees. These groups are Teachers, Police, Police Support Staff, Firefighters; and Other 
Local Government Staff.  For the purposes of this publication, police and police support staff are treated as one group. 


6.1.2.  The group classified as 'Other Local Government Staff' is covered by a number of 
separate negotiating bodies and includes fire support staff, all non-teachers working in education including teaching assistants, and all other local government 
employees such as social workers, planners, chief executives, chief officers and other administrative staff. 

## 6.2. Local Government Pay Expenditure

6.2.1.  In 2014-15, local government employee expenditure accounted for 45 per cent of 
all local government service expenditure (gross of income) and was the single 
largest area of spending for local government. Employee expenditure includes 
pay, employers' National Insurance and pension contributions, location allowances 
and other employee related costs such as training and recruitment. Table 6.2a 
illustrates levels of local government pay since 2010-11 for each of the main pay 
negotiating groups, and **Table 6.2b** shows employee expenditure as a proportion of 
service expenditure for each of the service areas for 2014-15. 
 
6.2.2  
Further statistics on local government pay expenditure can be found via 
https://www.gov.uk/government/collections/local-authority-revenue-expenditure­ and-financing 
 

## 6.3. Local Authority Pension Funds The Local Government Pension Scheme



6.3.1.  The Local Government Pension Scheme is operated in England via 81 
administering authorities, typically at county council or London borough local 
authority level. The Scheme provides pensions for most local authority employees, 
as well as some staff working in the wider public sector such as academies, and 
certain individuals employed by private and voluntary sector organisations that 
deliver services for local government. 
 
  


6.3.2.  These authorities have the responsibility to meet pension liabilities as and when 
they arise. The administering authorities hold assets which they invest to help ensure that liabilities can be paid and to stabilise employer contribution rates to the Scheme over the medium and long term. The assets of the administering authorities are part of the financial corporations sector in the National Accounts, not part of the local government sector.  


6.3.3.  Although pensions are paid out under the scheme by local authorities in their 
capacity as administering authorities, this does not count as expenditure of the local authorities themselves.  Employers' contributions, part of the income of the funds, are recorded as expenditure by local authorities in their revenue accounts, either directly or indirectly under employees' expenses. 
6.3.4.  Separate arrangements apply for the pensions of the police, fire fighters and 
teachers. The police and fire fighters' pensions are provided through unfunded 


schemes administered locally, and the cost of police and fire fighters' pensions are therefore included in local authority expenditure. Teachers' pensions are provided through a notionally funded scheme administered by the Department for Education (DfE). There is no fund of assets, and teachers' pensions are paid by the DfE. 

Employers' contributions are paid by local authorities to the DfE and are recorded as expenditure in their revenue accounts. 


6.3.5.  Income into the LGPS is sourced from employee and employer contributions, 
investment income, the value of transfers between pension schemes plus other 
income. **Table 6.3a** show much income comes from each of these sources 
between 2010-11 and 2014-15. 
 
 
6.3.6.  The majority of LGPS' expenditure is on benefits, either as pensions or lump sums 
on the retirement or the death of members. **Table 6.3b** shows how the LGPS 
expenditure is divided between each of the categories between 2010-11 and 2014-15. 
 
6.3.7. 
 Table 6.3c 
 shows the types of retirements from the LGPS between 
 2010-11 and 
2014-15. 
6.3.8.  Further statistics about the Local Government Pension schemes in England can 
be found via https://www.gov.uk/government/collections/local-government­
pension-scheme 
The Firefighters' Pension Schemes 
 
6.3.9.  Two firefighter pension schemes were operating in England on 31 March 2014: the 
Firefighters' Pension Scheme (FPS or 1992 scheme), which was available to 
 
regular firefighters and which closed to new 
 membership on 5 April 2006, and the 
 
New Firefighters' Pension Scheme (NFPS or 2006 Scheme), which was available for both regular and retained firefighters employed after 5 April 2006. 


6.3.10. Both the employer and employee pension contributions together with other 
sources of pension income, including transfer-in payments and ill-health charges 
are paid into a pension fund account, which is locally managed by each of the 46 fire and rescue authorities.  Any authorised expenditure, to which includes pension payments, commutation lump sums and transfer-out payments, are paid out of the pension account. Any annual shortfall (cash flow deficit) between the total annual pensions income received and the total annual pension expenditure paid is reimbursed to each employing fire and rescue authority through the mechanism of 
the annual Firefighters' Pension Top Up grant, which is paid by the Department for 
Communities and Local Government under Annually Managed Expenditure arrangements.  
 
6.3.11. Further information about the Firefighters' pension schemes in England can be 
found via https://www.gov.uk/government/collections/firefighters-pension-scheme­
statistics 
6.3.12.  **Tables 6.3d** and **6.3e** provide figures of income and expenditure of the 
Firefighters' Pension Scheme from 2010-11 to 2014-15.