To ask the Secretary of State for Communities and Local Government what proportion of local government revenue expenditure was financed by specific grants in each year since 1997-98; and what the estimated figure is for 2007-08. (145536)

The percentage of local government revenue expenditure financed by specific grants in England in each year since 1997-98 and the estimated figures for 2006-07 and 2007-08 are tabled as follows.

The table is produced on a non-Financial Reporting Standard (FRS 17) basis to 2003-04 and on an FRS 17 basis from 2003-04 onwards. The main implication is that the costs of entitlements to retirement benefits (pensions) in FRS 17 are accounted for in the year in which employment gives rise to the entitlement, rather than the year in which cash payments of contributions or pensions take place. On an FRS 17 basis, revenue expenditure is now financed by appropriations from pension reserves, in addition to appropriations from other reserves, revenue support grant, redistributed non-domestic rates, police grant and council tax.

The large change in specific grant from 2006-07 onwards is largely due to changes in the way the expenditure on schools is funded. Local authorities now receive dedicated schools grant, included in specific grants, replacing funding previously included in formula grant.

The definition of local government revenue expenditure used here is expenditure funded from aggregate external finance (AEF), council tax and authorities’ reserves. AEF is central Government revenue funding that comprises formula grant (revenue support grant, redistributed business rates and police grant), general Greater London authority (GLA) grant and specific grants inside AEF, i.e. revenue grants paid for council’s core services. The specific grants used here are the specific grants inside AEF. Comparisons across years may not be valid owing to changing local authority responsibilities.