Thomas P. Broughan
Question:140 Mr. Broughan asked the Minister for the Environment and Local Government if he will give local authorities financial autonomy. [21848/00]
Written Answers. - Local Authority Funding.
As the Deputy is aware, local authorities currently receive significant Exchequer funding for a wide range of their operations. I have not received a request from any local authority seeking to change this in favour of full financial autonomy, but I would be happy to consider any such proposal should it be put forward.
Under the present system, there are certain services which local authorities deliver which are essentially national in character – national roads, higher education grants etc. It is appropriate in these cases that financial support from central Government should be conditional on national objectives being met. That said, local authorities already have considerable autonomy in raising income and in determining the priorities for expenditure and the levels of expenditure on most individual services and programmes. Each year local authorities adopt their own estimate of expenses setting out their revenue raising and expenditure plans for the following year. The adoption of the estimate is a matter entirely for the local authority itself. Expenditure provided for in the estimate is funded from a variety of sources including rates, fees and charges for services, the Local Government Fund and other State grants.
Local authorities are empowered to collect commercial rates which are a major source of local finance. The setting of the annual rate in the pound in the context of the adoption of the annual estimate of expenses is a decision taken locally by the elected members of the individual local authorities. The elected members adopt the rate which they consider necessary in order to provide the range of services for their area. In the current year it is estimated that rates will generate income of about £456 million or 25% of all local authority current income. In 1999 and 2000, I capped rate increases at 5%. The decision to cap rates at this level was designed to allow authorities scope to determine the appropriate level of rate to meet their needs, while at the same time ensuring that the rate demand on the commercial sector was neither excessive nor disproportionate to other sectors of society.
Local authorities are empowered by law to charge for the services they provide, with the exception of charges for domestic water and sewerage services. In the current year, it is estimated that income from charges will be about £505 million or 28% of all current income. It is a matter for the elected members of each local authority to decide whether or not to levy charges and the level of any such charges. Such decisions are at the absolute discretion of the local authority having regard to the needs of their area, the level and range of services to be provided and all the sources of revenue available to the authority to finance those services.
Under a new system of funding which came into operation on 1 January, 1999, general-purpose grants and non-national road grants to local authorities are financed from the Local Government Fund. It is estimated that the fund will amount to some £660 million (36% of current income) this year. The additional resources being provided through the fund have increased the general level of funding available to authorities and accordingly, has allowed authorities greater discretion and flexibility in formulating and adopting spending plans. It is important to stress that it is at the complete discretion of local authorities as to how to spend their general-purpose grants. Local authorities also receive various State grants for specific purposes.
I am satisfied given that the combination of central and local sources of income are largely available for spending at the discretion of local authorities together with the fact that spending plans are adopted locally, affords local authorities considerable autonomy in their financial affairs.