Non-Formula grants and others

Local Government Finance Non-Formula Grants

The central government introduced Non-Formula Grants, which includes Specific Grant (Ring-Fenced Grants and Unfenced Grants/Targeted Grants) and Area-Based Grants (ABGs) to direct money into specified area of spending.

Ring-Fenced Grants have to be spent by councils in strictly defined areas, such as Dedicated Schools Grant (DSG), which council must spend on staffing, maintaining schools or providing related services such as special needs teaching.

Unfenced Grants/Targeted Grants is allocated to councils to spend however they see fit. These grants are residual pots of money to be spent on services judged to be equally worthy of central government funding across the country.

For example, Housing and Planning Delivery Grant (HPDG) may be used in any number of ways by individual local authorities rather than only in housing and/or planning.

The Area-Based Grant, introduced in 2008 – 2009, it is designed to encourage local authorities to work with partners (such as charities, local businesses and even neighbouring authorities) to improve local services across the shared localities in which they operate.

The idea is that by forming partnerships, authorities will achieve efficiency, savings and avoid duplicating or overlapping with other service providers.

Government's efforts to constrain local authorities abilities to spend their revenue income where they please do not stop with ring-fenced and area-based grants.

Though the process of virement was once common, today it is becoming impossible because of the severe restrictions placed on authorities' ability to use money allocated for a specific purpose elsewhere.

Fines/Charges/Fees

Other sources of local authority revenue income derive from the following: council house rents; leisure service use such as swimming pools, sports centres; trade refuse collection, car parking tickets, fines; income from private contractors, the European Social Fund (ESF).