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Local Government Expenditure And Income In 2019-20

27th April 2021

The Chief Statistician has released figures on local government expenditure and income in 2019-20. These figures provide a comprehensive overview of the financial activity of local government, including revenue expenditure and income; capital expenditure and financing; reserves; debt; and pensions.

Revenue expenditure is the cost of delivering services each year. Net revenue expenditure is calculated as service expenditure minus service income. In 2019-20, net revenue expenditure was £11,077 million, an 8.1% increase from £10,250 million in 2018-19. Education and social work were the services with highest net revenue expenditure, £5,327 million and £3,461 million respectively.

Local authorities use general funding to meet their net revenue expenditure on services and any non-service specific revenue expenditure. In 2019-20, general funding was largely made up of General Revenue Grant (GRG), £6,937 million; Non-Domestic Rates, £2,853 million; and council tax, £2,493 million.

Capital expenditure is expenditure that creates the buildings and infrastructure necessary to provide services, such as schools and roads. Due to the nature of capital expenditure, it can fluctuate substantially between years. Local authorities incurred £3,794 million of capital expenditure in 2019-20, a 27.4% increase from £2,977 million in 2018-19.

Local authorities can finance capital expenditure in a number of ways. In 2019-20 the main sources of capital financing were grants and contributions, £1,297 million; and borrowing, £1,128 million.

Usable reserves are local authorities' surplus income from previous years. This can be used to finance future revenue or capital expenditure. At 31 March 2020, local authorities held £2,708 million of usable reserves, an increase of 4.7% from £2,586 million held at 1 April 2019.

When local authorities borrow money or use credit arrangements to finance capital expenditure, a debt is created. Local authorities have to repay debt from future revenues. At 31 March 2020, local authorities had debt of £19,377 million, an increase of 6.3% from £18,224 million at 31 March 2019. In 2019-20, local authorities made debt repayments of £624 million.