Rate Support Grant Research Articles

Notes on the Concept of Rural Deprivation

This paper offers a retrospective study of the rural deprivation debate which is used as a policy concept to deal with rural social welfare problems collectively in UK and to compare the idea of rural deprivation and that of kaso in Japan. The term rural deprivation emerged as a slogan for gaining additional regional policies by policy circles in rural areas that were motivated by the 1974 Rate Support Grant reform that favored the London metropolitan area.In the 1970's many studies concerning rural deprivation were presented. Most early studies applied multivariable analysis using social indicators. But these studies were criticized as insufficient to determine the real figures of rural deprivation owing to the lack of usable statistical data and offer inadequate analysis of subjective aspects of the inhabitants and their conditions. Afterwards, two intensive and large-scale household surveys were carried out. They were Deprivation in Rural Areas(DR) in the 1980's and Rural Lifestyles Project(RLP) in 90's. These surveys clarified the realities of deprivation problems in rural areas and had the effect of changing the public perception of rural problems.The causes of rural deprivation were theoretically explained with the help of two different models. Planning theory sees that the provision of opportunities in particular places leads to deprivation. Sociological theory sees that power relations within social structures bring about deprivation.The findings of DR and RLP showed the importance of social structures as causes of rural deprivation. Additionally, the Thatcher government's drastic reforms and the prevalence of idyllic view of rural areas in the 1980's greatly changed rural social structures and made deprivation problems within rural areas more severe. But the policy circles continued to cling to planning theory because of its convenience for policy appeal.We can admit many similarities in policy concepts between rural deprivation and kaso in the emerging process, logic and the stances of policy circles. We also find clear differences between them in the way they recognized the problem. The fundamental cause of rural deprivation is considered to lie in poverty, but that of kaso is not. Therefore, in the case of kaso, the impact of the shift from welfarism to New Right Policies or post-welfarism in the 1980's was much slighter than in the case of rural deprivation.

The local impact of changes in the public finance system in an area of Severe Rural Depopulation

This study looks at how changes in the public finance system resulting from changes in rural development policy since 1965 have had an impact on local developments in Yamagata Village, Iwate Prefecture.By noting major changes in the fiscal resources of Yamagata Village, and in particular the ratio between external subsidies, borrowing, and local taxes, the study can be divided into three distinct periods. In the first period, from 1945 to 1964, depopulation in Yamagata Village caused a steady lowering of the local tax base. Essential services and other expenditures could only be met by local allocation tax (Chiho Kofuzei), a fiscal equalization system like Rate Support Grant. In the second period, from 1965 to 1982, programmes initiated under, for example, the Law for the Promotion of Mountain Districts, and the Emergency Measures Law for Areas of Severe Rural Depopulation, brought in substantial sums of direct subsidy from central government to help implement rural development policies. There was strong investment in particular in road construction projects. In the third period, from 1983 to the present, national government cut the amount of grants and subsidies to local governments. Instead, earlier restriction on the purpose of borrowing were eased, and joint projects with private investors encouraged under what is known as the 'muraokoshi' campaign. Yamagata Village invested in a new ski-resort in this period, and also in improvements to agricultural facilities. In the latter case a consumer group in Tokyo (known as Daichi-wo Mamoru Kai) joined in partnership with the Village.In summary, two important impacts of these changes in fiscal policy on the development of Yamagata Village can be identified. First, the increases in fiscal expenditure led to a sharp increase in the number of employees in the public services and construction sectors. These are now the leading occupational groupings in the Village. Second, many of the new public facilities financed under these programmes for rural development have been located in the central setlement of Yamagata Village, called Kawai. The overall economic impact of this has been to maintain the population of Kawai at a relatively stable level.

Gains and Losses from the Changes in the System of Grants Paid to English Local Authorities

The principal purpose of this paper is to contrast the present rate support grant system that applies to local authorities in England with the revenue support grant system that will apply from 1 April 1990. The paper begins by describing the two systems briefly and then seeks to show how much grant receipts per head might change if local authorities maintained their present spending levels after 1 April 1990. At collection-fund level, there would be gains exceeding £150 per head in some areas and losses exceeding £150 per head in others. In the paper the factors causing these changes are analysed. In general, areas gain if they have high multipliers, overspend, and have high rateable values. Finally, the point is made that the people in any area also stand to gain or to lose if they end up paying less or more in nondomestic rates. It seems likely that changes in these amounts will do much to offset the changes in grant receipts.

The Problem of Sparsity in Education Provision

Central government contributes around one-half of the cost incurred by local authorities in financing and managing state schools in England. The Block Grant system, dating from the 1980 Rate Support Grant settlement, introduced the concept of the payment of grant in relation to the number of clients rather than, as previously, actual expenditures. Within that framework, adjustments are made to compensate for certain unavoidable, non-discretionary factors which serve to increase unit costs in particular authorities. This paper is concerned with the problems caused by 'sparsity', a term used to refer to the sparse nature of population distribution. Several pieces of research have identified sparsity as a cause of increased unit costs of provision: by necessitating schools of smaller size (in which overhead costs cause diseconomies) and/or higher costs for the transportation of pupils. The way in which these factors operate was found to differ between the primary and secondary sectors. A method was devised which sought to evaluate the additional costs attributable to sparsity, independently of local authority policy preferences and the other factors affecting variation in unit costs. A 'standardised unit cost' was derived which related costs to the 'norm' of the average national unit cost. The cost measure was then regressed against a measure of the incidence of sparsity to derive a 'fitted' unit cost, such that compensation would only be paid where actual sparsity was observed. The resulting Grants Related Expenditure Assessment (GREA) has been subjected to continuing refinement and adjustment via a process of negotiation with the local authority associations; the paper describes some of the resulting changes.

The burdens of the non‐domestic rates on business

Non-domestic rates have become an increasing area of political concern such that the government in January 1986 proposed reform by centralizing the rate poundage at which rates are levied1. This will provide a so-called 'uniform business tax'. It was possible that a local discretion to levy a local non-domestic rate poundage at 5 per cent of the national poundage would be available2. Despite this proviso, it was clear that a major shift in local autonomy and in the level of autonomous resources of different local authorities would occur with implementation of this proposal. The level of political concern, and the proposal to centralize the non-domestic rate poundage reflect, in part, a general concern with the level of rates in aggregate. However, the discussion and the thrust of the proposed reform is directed not so much at aggregate burdens, but at the variation in burden from place to place. This has been argued to distort the basis of competition between firms in different localities3, and severely affects the real rates of return to be derived from investments in different local authorities4. These effects have been accentuated by reductions and reforms of corporation tax which, in reducing the benefits of local rates deductibility, have had the effect of allowing rates to become almost as important as corporation tax in total yield; whilst, for many firms, rates have become the largest single tax they pay. The phenomenon of increasing variation in rate poundages in England and Wales can be seen from Fig. 1. This demonstrates that although a limited narrowing of the range between places in the level of rate poundages occurred over the period 1974-9, since that date there has been a steady trend for those local authorities which levy higher rate poundages to move further and further away from the centre of the distribution. This 'stretching' of the distribution is accounted for by about 20 local authorities, where the rate poundages is extreme (at least 40 per cent above average), whilst four of these are particularly extreme in being more than 55 per cent above the average (in 1986 Newcastle, Sheffield, Manchester and Haringey). This paper does not seek primarily to analyse the reasons for this position, but it is clear that they lie in part with central government actions with rate support grant, as well as with the local authorities themselves. There is also considerable pressure on the poundages of many metropolitan districts arising from the out-of-date valuation of rateable values which is a result of deferment of revaluation by both Labour and

Defining Equal Standards in Local Public Services

This paper explores different interpretations of the notion of equal standards in local public services, as applied to the systematic distribution of resources between localities. After discussing the context and goals of public resource distribution between territories, a typology of standards is defined and analysed in terms of simple microeconomic theory. From this analysis are drawn some conclusions about the applicability of different standards to different kinds of service and about systematic territorial distributional effects related to income and urban-rural character. The discussion is illustrated with examples drawn from United Kingdom systems including the Rate Support Grant. In the concluding section it is argued that standards should be explicit and that consistency with key value judgements should guide the choice of standards.

Optimal Control Theory and Grants in Aid

The methodology of optimal control theory is used to highlight some of the current policy issues raised in the United Kingdom by the central government's allocation of grants to local authorities. It is shown that there is a link between the number of policy variables and targets and the freedom of action of individual local authorities. One consequence of current policy is shown to be that it makes optimal control theory an even more relevant tool for the analysis of the rate support grant system. Another is that the demise of local control appears to be the logical outcome in the long run.

Pointers: Privatisation; Regulation; Plain English; Pensions; Rate support grant

Pointers: Privatisation; Regulation; Plain English; Pensions; Rate support grant

Review: Central Grants to Local Governments: The Political and Economic Impact of the Rate Support Grant in England and Wales, Geography and the State: An Essay in Political Geography, US Options for Energy Independence, Government and Urban Poverty: Inside the Policy-Making Process, Conflict, Politics and the Urban Scene, the Computer in Court: A Guide to Computer Evidence for Lawyers and

Review: Central Grants to Local Governments: The Political and Economic Impact of the Rate Support Grant in England and Wales, Geography and the State: An Essay in Political Geography, US Options for Energy Independence, Government and Urban Poverty: Inside the Policy-Making Process, Conflict, Politics and the Urban Scene, the Computer in Court: A Guide to Computer Evidence for Lawyers and

Bennett, R. J., "Central Grants to Local Governments: The Political and Economic Impact of the Rate Support Grant in England and Wales" (Book Review)

Bennett, R. J., "Central Grants to Local Governments: The Political and Economic Impact of the Rate Support Grant in England and Wales" (Book Review)

Pork-Barrelling in Britain: A Review

Pork-barrelling (PB) is defined as that subset of political resource allocation decisions that is both overtly vote-catching and has an explicit spatial component. From comments on the implications of this definition, the prospects for PB being present in Britain are discussed from a back-cloth comparison between political systems in Britain and the United States of America. The ‘motives’, ‘means’, and ‘opportunities' for PB in Britain are adjudged, and a review made of possible areas of such political activity, among individual members of parliament, in one-off Westminster decisions, in more continuous streams of central government policy, in the spheres of parliamentary boundary reform and the Rate Support Grant, and among the political activities of local authorities. There is little indisputable evidence for PB in Britain, and the conclusion suggests this may be consequential on a number of different factors.

Central Grants to Local Governments: The Political and Economic Impact of the Rate Support Grant in England and Wales

Preface 1. Central grants to local governments Part I. Central Grants: Theory and Practice: 2. Categories of central grants 3. The evolution of central grants and local finances in Britain 4. The Rate Support Grant 5. The distribution of the RSG since 1981 Part II. Distributional Effects of British Local Finance: 6. Local expenditure need 7. Local taxes and expenditures 8. The distribution of the Rate Support Grant 9. Modelling expenditure and grants Part III. Towards a More Rational Procedure: 10. An appraisal of alternatives 11. An alternative structure for central-local relations 12. The British experience of central grants - a way forward? Appendices Notes Bibliography Index.

The Financial Health of Local Authorities in England and Wales: Role of the Rate Support Grant, 1974/1975-1980/1981

The financial health of local authorities in England and Wales is examined over the period 1974/1975-1980/1981 to determine the manner in which financial positions have been affected by central government transfers under the rate support grant. The results of the analysis are preliminary pending fuller analysis of needs positions, but they do demonstrate that local party control has very little relation to grant allocations. This is mostly because of the interrelation with levels of urban stress, which is found to be a very significant correlate with levels of grant received. It is concluded, therefore, that in contrast to the USA, local authorities in England and Wales have received progressively larger grants in relation to higher levels of urban stress.

Accountability and control of local spending

Though often accused of seeking to extend its control over local authorities, this Government has in fact put forward a series of measures designed to restore control of council spending to the local electorate. These include the recent reform of rate support grant, the ill‐fated proposal that authorities should seek approval, via a referendum, for additional revenue‐raising, and the creation of a new Audit Commission. But such measures do not in fact tackle the major obstacles to the control of expenditure through an effective system of local accountability.

The Financial Health of Local Authorities in England and Wales: Resource and Expenditure Position 1974/1975–1980/1981

This paper describes the spatial distribution of tax base, local expenditures, and local tax rates over the period from 1974/1975 to 1980/1981. The paper then analyses the extent to which resource and expenditure patterns are related to inner-city stress (as measured by partnership and other statutory status following the 1978 Inner Urban Areas legislation) and local political party colour. From the use of analysis of covariance methods, the conclusion is drawn that urban stress has little relation to resource and expenditure differences, but that local party colour is strongly correlated with expenditure and tax base differences. Deriving from the role of the rate support grant, tax rates show no significant relation to urban status or local party colour.

A Representative Need Index of Local Authority Expenditure in England and Wales 1974/1975–1980/1981

Six main approaches to the determination of the expenditure needs of the local authorities in England and Wales are discussed. A representative needs index is then chosen which is based on multiplying the average local authority service costs by the size of client group and summing over each service group in any authority. This index is estimated for 1974/1975–1980/1981 both for discretionary and for nondiscretionary services. The index is then compared with the grant-related expenditure (GRE) used for rate support grant purposes in 1981/1982. Discrepancies are shown to arise from particular choices of GRE assessment which exclude the large discretionary spending of some large central cities and some Inner London boroughs.

A Hierarchical Control Solution to Allocation of the Rate Support Grant Using Representative Needs as Targets

The aims and objectives of the Rate Support Grant (R.S.G.) in England and Wales are described, together with a brief summary of the reforms instituted in 1981/2. An alternative method of allocation method is then developed which places greater emphasis on both central control and local autonomy in setting of local tax rates. This method is based upon the use of optimal control theory with quadratic costs and linear equality and inequality constraints on the control variables. This method is then applied to 115 local authorities in England and Wales over the period 1975/6-1979/80, using an index of representative needs as targets to be optimized. The resulting algorithm is of hierarchical form in order to permit efficient solution. The results of the calculation are compared with actual allocations of R.S.G. over the study period and are found to diverge greatly: penalizing the inner cities and metropolitan areas in relation to the original allocations. A number of problems are noted in the form of the control approach adopted, especially with respect to estimating the state equation. Suggestions for overcoming these problems are made in conclusion.

A Hierarchical Control Solution to Allocation of the British Rate Support Grant

A Hierarchical Control Solution to Allocation of the British Rate Support Grant

Local authority budgets 1981

Local authorities in England and Wales drew up their budgets this year in a uniquely difficult situation. They had behind them a tough rate support grant settlement and Government plans for further cuts: ahead, the prospect of further grant penalties, or worse, if the overall budgets were not on target . . . How did they react?

NHS budget escapes relatively unscathed

Mr Patrick Jenkin's reward for having been so accommodating about the social service side of his empire in the Cabinet battle over public spending cuts has been that the health budget was allowed to escape relatively unscathed. The NHS did not, of course, emerge unpruned at the end of the day, but at least it was not included in the 2% cut all the other rash-limited central government programmes have to accept. The Government has, however, still to fix the cash limits and it will depend on the allowance made for inflation whether the health authorities will find themselves in trouble again next year. The indications are that they will be subject to broadly the same discipline as local government, where the rate support grant will allow for a 6% annual increase in earnings and for an increase in prices other than pay of 11%. The direct NHS contribution to the cuts is about ?25m, which will be found by better use of resources and increased efficiency. Mr Jenkin believes that it can be raised through the elimination of inefficient working practices, energy savings, economies in catering, and more effective drug control. The motto for the NHS is to be: Practisegood housekeeping. As a result of the measures health authorities' revenue spending will be able to rise by 1 i% next year, which is expected to be enough to cover demographic changes?mainly the increasing numbers of old people in the population?as well as to allow a start on some high priority developments. The planned spending on the family practitioner services is also to be maintained. Given that the surgery is of the order of only ?25m (though if people try really hard the savings could be greater), how is it to be done ? Mr Jenkin's answer is that the growth of spending on the NHS can be maintained by making people pay a bit more through National Insurance contributions. He also believes people are prepared to do just that to get results. The NHS has escaped the axe because the 1% increase in employees' National Insurance contributions to be introduced in April includes a i% for health, which will raise an extra ?254m. Some of that, if the sums provided are anything to go by, will probably be needed to meet the ?121m required to pay for various services which the Government had planned to intro duce charges for, such as road accidents and eye tests. But this i% is regarded by Labour MPs as part of a move to soften up the public's attitude towards paying for treatment through insurance. I think some of the hopes raised recently by Dr Gerard Vaughan, the Health Minister, about a consultative document on insurance funding in the New Year might prove to be a little high. Certainly some people who should have known better were surprised by what he said. The thought of insurance as a supplementary means of raising revenue has its attractions, and Mr Jenkin, who is said to have come round to the idea some what, will be making a speech soon setting out the pros and cons.