Local authority spending may be divided into categories based upon the expenditure. Common expenditures include education, social services, procurement, subsidies, grants, capital expenditures or social services. Each economic category is decided by the Office for National Statistics. Experts define the spending by measuring the contribution of the local authorities to Total Managed Expenditure (TME). This amount is measured through national accounts. This amount usually excludes capital grants paid to public corporations or interest paid to central government.
The expenditures are usually analysed by evaluating the central government support for the local authorities within the Departmental Expenditure Limits (DEL) and Departmental Annually Managed Expenditure (AME). Currently, capital grants and other supported capital expenditures comprise the central government support for local authorities. Revenue supported grants are the largest grants offered. Other departments also offer grants.
Annually, local government expenditures are recorded in the Public Expenditure Statistical Analyses (PESA). This is published in Chapter 7 of the publication. Though much of the focus is on spending in Great Britain, some of the spending relates to Northern Ireland’s district council spending. Most of the expenditure data is collected via the following sources: Northern Ireland (NI), Scottish Executive (SE) and Welsh Assembly Government.
In the UK, both outturn and planned spending expenditures are included in the local authority spending budget. For example, the estimated spending for 2011 is £681 billion pounds. The expenditures were allocated towards Health, Welfare, Pensions, Education, Defence and a Miscellaneous or Remainder Group. These expenditures are planned expenditures. The local authorities have estimated the potential costs for the year. A budget is also allocated for outturn expenses that are more difficult to plan for or predict.
Local Authority Spending
Currently, the budgeted expenditures in the UK for 2010-2011 totals £121.9 billion. This is a 6% increase from previous years. Thirty eight percent of the budget was allocated to education. While 17% was spent on social care, 14% on housing benefits and 10% was spent on police. All of these statistics were provided courtesy of the UK Statistics Authority.
In the coming years, the UK may expect some cuts in government spending, according to the Liberata. Nearly 97% of the local authority chief officers are planning cuts in government funding. Many of these cuts will be between 10% and 20%. Nine out of 70 local authorities expect there will be some sharing of services to cut government spending. Twenty-one expect sharing in the next five years. Joint working may also become more popular in the next five years according to 30% of those polled. Off-shoring services are expected to only receive 1% of the interest.
The UK wants to outsource some jobs, but desire to keep most of the jobs within the UK. The local authorities are developing strategies for balancing outsourcing with local jobs to minimize the effects on the UK communities and local economy. When the council must pay unemployment benefits because of outsourcing, this increases the public costs. Local authorities devise plans to delicately balance outsourcing with local jobs.
Total Place Initiative
The UK implemented the Total Place initiative to monitor public spending within the local areas. This initiative helps authorities identify how public money could be used to better the community. Councils are encouraged to gain control of local delivered services in their area. Total Place gives the local authority the governing power to make decisions regarding sharing or not sharing in their area. Some local authorities are concerned that sharing the staff diminishes the authorities’ ability to think strategically.
Since the Total Plan was implemented, nearly half of the local councils were prepared to take direct control over locally delivery services. Some of these services may include local health services, benefits or jobs advice from Jobcentre Plus. Some of the local councils would also like control over house building and the Homes and Communities Agency. Nearly 43% of the local authorities believe that significant savings will be achieved by restructuring services. Some local authorities cite that this type of plan will save them over £70 million over the next three years.
Other Effects of Local Authority Cuts
Some suspect that elderly care may also suffer due to budget cuts. Since elderly care is dispersed across many different departments the fund is harder to protect than other funds. For instance, most elderly care is comprised of social services, housing and government benefits. Without a formal, fundamental review of funding, many experts worry that state funded care for elderly people may collapse within four years. Many experts recommend appointing a government minister to oversee the elderly funds to ensure that these funds are not completely depleted.
Local authorities serve as monitors or gatekeepers to those who assess elderly for health care. Officials of the local authorities assign a fee for services regardless of the provider’s costs. Local authorities may ensure that elderly are able to receive the care they need without paying exorbitant costs.
Local Education Authorities
Since education comprises a large portion of the 2010-2011 budget, this topic will be discussed primarily as an example of local authority spending. Currently, the UK has allocated 38% of the total budget to education. Education is expected to comprise 12% of the total government spending in 2011. This percentage represents a significant cut in allocated revenue. In 2009 and 2010, the gross planned expenditure on education totaled £41.2 billion.
Local education authorities (LEAs) are responsible for distributing funds and resources for schools in the UK. This organization retains a portion of the funds to maintain their operational duties which include supporting students with special education needs, psychological needs, or home-to-school transport. LEAs promote the growth of academies and “Free Schools” by the new Coalition Government.
Many academies receive funds directly rather than through LEAs. Some experts are concerned that by increasing academies the role of LEAs will be diminished. However, the local authorities still provide services that would not be affected by an increase in academies and direct funding. Those searching for additional information on LEA budgets may find additional information in the Apprenticeships, Skills, Children and Learning Act 2009 or in the data archive section of the Department of Education’s website. Educational local authority spending may be found in the children’s services section.
Compulsory Competitive Tendering (CCT) was introduced in the 1980s. This method of tendering improved the services and health care through competition. Incentives were needed to stimulate reform. However, some of the incentives were resisted by the local government. This method provided a compromise.