Council funding explained

Posted on November 24, 2023 by chelseykirklees

We receive a lot of comments online, asking us to spend money elsewhere or where does council tax go.

So, to try and help provide some clarity we have pulled together information about how the council is funded and how it works. Kirklees Council, like all UK local authorities, is funded from a combination of different sources.

Our main funding sources include:

Central Government grants: the government allocates funds to councils based on different factors such as population size, levels of deprivation, and specific needs. These grants are to support a range of services, from education and social care to waste management and transportation.
Council Tax: Council tax is paid by residents and is based on the value of their property. The revenue generated from council tax is used to fund local services like education, police, fire services, and waste collection. In the financial year 2023/24 we will collect approximately £259 million in council tax. Around £39.4 million of that goes to fund police, fire and parish council services. The £219.5 million that goes towards running the council is just 33% of what it actually costs.
Business Rates: the council also receives income from business rates, which are taxes paid by businesses based on the value of the commercial properties they occupy. This source of funding contributes to local services and infrastructure development. In the financial year 2022/23 we collected approximately £95 million in business rates. The council keeps 50% of the business rates we collect – the rest goes to central government. The £47.5 million we kept is just 7% of what it costs to run the council.
Fees and Charges: the council charges fees for certain services, such as parking, licensing, venue hire and planning applications. These fees help cover the costs of delivering those specific services.
Grants and Funding Streams: In addition to central government grants, we sometimes receive grants from other sources, including non-governmental organisations and charities.
Reserves: It is sometimes possible to use reserves or savings from previous years to support our budgets. We have done that to help with the budget situation for 2023/24 but do not have enough reserves to do that again for 2-24/25. We must have some reserves at all times.
Rental Income: the council can generate rental income from leasing or renting out properties.
Housing Revenue Account (HRA): The council operates a Housing Revenue Account, which is ringfenced specifically to manage its 21,806 (2022-23) social housing properties. Income is generated through charging rents and service charges, which covers the cost of managing and maintaining its properties and delivering the housing service. A proportion of receipts from the sale of right to buy properties is used to develop new properties and buy back properties to increase social housing properties available to let.

The combination of these funding sources allows the council to finance essential public services and maintain infrastructure within our communities. The allocation and distribution of funds varies based on factors like the specific needs of the local area, government policies, and economic conditions.

Commonly asked questions we receive online, explained.

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