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National Audit Office report: The local government finance system in England: overview and challenges

The local government finance system in England: overview and challenges

This financial overview looks at what local government in England spends, how this spending is funded and the effect of changes in recent years.

Local authorities in England provide a broad range of universal services, with targeted services for the most vulnerable in society. They have also been pivotal in the local response to the COVID-19 pandemic. 

Local authorities are funded through multiple funding streams, including government grants, taxes, and charges for services. 

The Department for Levelling Up, Housing & Communities, previously the Ministry of Housing, Communities & Local Government, is responsible for a framework that provides assurance on the financial health of local government and allows for intervention in individual cases and in response to system-wide risks. 

Scope of the report: 

This overview looks at what local government in England spends, how this spending is funded and the effect of changes in recent years. It draws on relevant findings from past NAO work.  

The overview aims to enhance financial transparency about local government in England. It covers: 

  • An introduction to local government funding
     
  • Government policy and actions since 2010 
  • Some results or consequences of these changes. 

The overview covers England only as local government is devolved in Scotland and Wales. We focus on five types of English local authority – London boroughs (including City of London), metropolitan boroughs, unitary authorities, county councils and district councils This does not include town and parish councils, combined authorities, or stand-alone police and fire authorities.  

For further information about activities of local government, and different types of local authority, please see our Financial sustainability of local authorities visualisation and our departmental overviews. 

 

Publication details:

ISBN: 9781786043948 [Buy a hard copy of this report]

HC: 858, 2021-22

Published date: November 10, 2021