The fiscal implications of differential population change for local authorities in England and Wales 1971-1981
The evidence of 'counterurbanisation' in Britain suggests that differential outmigration is occurring in all of the country's metropolitan areas. The growth of suburbs and free-standing towns and cities is at the expense of city centres. The loss of population from central cities leads to the increasing concentration of a service dependant population who place growing demands on locally provided services. The loss of part of the local tax base adds to the fiscal pressure on local authorities who need to spend more, but experience reduced revenues. In Britain, this is partly offset by the receipt of central government grant suport, although in aggregate this too has been reduced. In order to assess the extent to which the concept of 'fiscal stress' can be applied to British cities, it was first necessary to define a set of central cities and their suburbs, or lq'functionally linked districts'. This was done using commuting data for all the post-1974 402 lower tier local authorities in England and Wales, for both 1971 and 1981. The resulting classification formed the basis of all further analysis in this thesis. The measurement of an authority's 'need to spend' is necessary to determine the existence and extent of fiscal stress. Having considered the various grant mechanisms employed over the 1971-81 period, and the philosophy of needs assessment, the Grant Related Expenditure Assessment (GREA) approach, as currently used in the government's block grant system, is discussed. This methodology identifies the client group for each locally provided service and applies a unit cost weighting for each client, such that, when taken over all services, a total need to spend is calculated. A comparable aproach was adopted, and calculations undertaken, for all 402 lower tier authorities for both 1971 and 1981. This permitted the description of the need to spend of local authority groups both functionally and administratively. Changes over time were presented, and the relative importance of demographic, socioeconomic and physical features in determining changes in need to spend were identified. Consideration was then turned to the local tax base in the form of rateable value. The rates are discussed for their suitability as a local tax and some of the alternatives are considered. The pattern of changes in rateable value since the last revaluation in 1973 is presented, and the small degree of change is noted as the main feature. Faced with a virtually static tax base and changing need to spend, an authority's only means of raising sufficient revenue is by increased tax effort, which is seen in the local tax rate, or rate poundage increases. Changes in rate poundage are discussed, and attention is turned to actual expenditure by six main service headings, which is described using the functional and administrative classifications. This leads finally to a simultaneous expenditure model which highlights the inter-relationship of needs, grant, rateable value and rate poundage in determining expenditure.