Hello, my name is Ms. Ikomi.

I'm a teacher from London and I'm going to be taking you through today's lesson.

Let's get started.

Today's lesson is called what are the financial challenges facing local government? It is part of the wider unit, how does the economy work? By the end of today's lesson you will be able to explain what local governments fund and how local councils are funded.

Let's get started.

The key words we're going to hear today are local government.

This is a system of government that operates at a local level, providing services to its community.

Public services.

These are essential needs provided by the government or local authorities to meet the needs of the public, such as healthcare, education, transportation and safety.

Local council.

This is an elected body responsible for local decisions including parish councils, city councils and county councils.

Council tax is a local direct tax calculated on the basis of the value of a property and the number of people living there.

Keep an eye out for these key words as we move through today's lesson.

We're going to start by thinking about what does local government fund.

Local authorities are specific organisations or bodies that carry out local government functions.

They might include things like city councils, district councils, county councils or other governing bodies responsible for providing those local public services.

Local government is the broader system while local authorities are the actual institutions operating within that system.

We can see a diagram here that demonstrates some of these points.

We have local government that incorporates local authorities and some specific examples include city councils, district councils and other bodies.

National government spending targets strategic priorities that benefit the entire country.

It is more large scale and might include things like defence, healthcare, the education system and big infrastructure and social welfare changes.

These are all funded through national taxes and that means that they're managed centrally by the national government.

Local government funding addresses community specific needs, things that are going to impact that specific local community like roads, the housing, waste management, that means things like our bins being collected and also local schools.

Whilst national spending establishes a cohesive framework, meaning it brings everything together, local government funding improves everyday community life.

The focus of local funding and national government funding is very different.

The national funding prioritises the nation whereas local prioritises the community.

National funding is financed by national taxes, local funding is financed by local taxes.

National funding funds healthcare, defence and the education system whereas local funding funds things like local roads, public houses and local services.

National funding is managed by national departments whereas local funding is managed by local councils or parish councils.

Local government fund public services that are provided in that specific community.

It might include things like education or the rubbish and recycling being collected, maybe youth services, maybe things like adult social care, thinking about food licencing within that community, maybe the libraries where people can go and use those services.

Have a second now to read through some of the other examples.

Local government have to balance their budgets to make sure that they are able to fund local councils within their areas.

Without managing the funds carefully there would be no rubbish collection for example because the local councils are the ones that are responsible for putting money into that.

Local government is also responsible for planning new buildings and maintaining roads, street lights and also things like pedestrian crossings.

Andeep says, "When there was a pothole on my road it was the local council who came to fix it." Aisha says, "A new housing estate has just been built near me.

The local council had the builders add more green spaces to the plans." There's some really good examples of how the local government spends their funds.

Let's have a check.

Which services does the local council have to fund? Is it A housing, B defence policies or C rubbish and recycling? Choose all of those that apply.

The correct answers are A and C.

Well done if you got those right.

Jun is telling us that defence policies are managed by central government not local government.

If you look at a typical street, you can see some of what the local government are responsible for funding.

Have a look at this picture and see if you can spot anything.

Some of the things you might have seen is somebody doing the rubbish collections.

Local businesses in the background that would need funding.

The streets and the pavements.

There's a school there which shows us that education in local schools is funded.

Cutting and trimming down trees and planting flowers.

Air quality management and how that affects local residents.

Park equipment that people might use in those spaces.

Road safety which you can see with somebody crossing the pedestrian crossing.

Other goods and services that local government are responsible for include things like council offices, street furniture such as the benches that you can sit on, the car parks, maybe local signage on the roads.

Take a second to read through some of the other examples.

Lots of services are provided directly by local councils but some of these services are outsourced to private companies or not-for-profit organisations.

For example the bin collection is funded by local councils however it's often private companies that are actually carrying this out.

By outsourcing local councils can make sure that the people who have expertise in these areas can ensure value for money to make sure that the services are more efficient.

There are different departments in local councils.

They look at the services that are funded.

For example planning and building control.

They would look at planning applications, building regulations and land use management.

Highways and transport.

They would be looking at road maintenance, street lighting and parking enforcement.

Leisure and culture who would look after the libraries, sports facilities, museums and any events that happen in the community.

And social services.

They include giving support to vulnerable adults or elderly care.

Local councils often have to give permission for things to happen in the local area.

They need to consider not only health and safety regulations but also their budgets.

They give out licences for things like food establishments, taxis, working with children and street sellers.

Jacob's telling us, "My cousin's setting up a food stall at a local market.

She's getting a licence from the council to show that she will follow the food hygiene rules." Lucas is telling us the local council registers all births, marriages and deaths in the area.

This is a legal requirement that has been set up by central government.

The local council also makes sure that landlords treat people fairly as Laura is telling us.

That includes making sure that the landlord carries out any repairs that are needed.

By working closely with residents in these different contexts that Lucas and Laura have told us about, local councils are trying to make sure that the public services they provide meet the needs of communities within the area and the budget is really important for that.

We can see a pie chart that shows what expenditure looks like for a local council.

Expenditure means the money that is spent.

This is just an example.

We have a certain amount of money that is spent on communities and leisure, community housing, a bit more is spent on things like waste recycling and street cleaning.

Highways and transport get some of the money.

A big chunk is spent on adult social care and then another big chunk is spent on children's services in schools.

We also have other things that would be incorporated.

We've seen some examples on the previous slides.

Let's do a check.

I'd like you to match the service funded by the local government with the description of that service.

Pause the video and have a go at this now.

Let's check our answers.

Social services support individuals, families and communities by addressing personal and social needs.

Waste management collects, disposes and sorts recycling of household and business rubbish.

Housing manages council homes, prevents homelessness and provides home advice.

They also enforce rented home standards.

Highways and transport look after road maintenance, public transport, traffic management, parking, disability parking licences, cycling and walking routes.

Registry offices provide information on how to become British, settle in the UK.

They also register marriages, births and deaths.

Well done if you got those correct.

We can split the services that local governments fund into essential and non-essential categories.

Essential services are those things that we need for the well-being and safety of the community.

They will rarely be subjected to cuts when it comes to the budget.

Some examples of this might be the public health services like food inspection teams, the emergency services like the police, fire and ambulance services, water and sewage, giving everyone access to water and sewage disposal.

Non-essential services are likely to be cut first if there is a difficulty in balancing the budget.

These might include community events, non -urgent repairs of roads or buildings, leisure facilities, arts and culture events like libraries, theatres or museums. Even though it might be necessary for things to be cut, they can also be very unpopular.

Local people often react negatively to changes that they use regularly and the local council have to balance up the weather they can afford to use these services.

Have a look at the services below and decide whether these are considered essential or non-essential.

Pause the video and have a go at this now.

Let's check our answer.

Fire services and access to sewage disposal are essential, however leisure facilities and community events are non-essential.

Let's put this into practise.

I'd like you to complete the table and try and list at least nine things that the local government funds.

Pause your video and have a go at this now.

You might have included some of the following.

Education, libraries, housing, social care, food licencing, planning for new buildings, rubbish and recycling, waste disposal, environmental standards, local road maintenance, entertainment licencing and council offices.

Let's do another practise.

I'd like you to imagine that you are working for the local council.

The budget has been cut for the year.

You are part of the spending review team who must reduce funding to one of these public services.

I'd like you to decide which service you think should be cut and write a short statement that could be presented to local residents to explain your decision.

You have to include why you chose this service over the others and what challenges you face when making your decision.

The three services you can choose from are, waste collection and recycling, local libraries or public parks and green spaces.

Pause your video and have a go at this now.

I asked you to write a statement explaining which of the local services you were cut, imagining you were part of a spending review.

If you chose waste collection recycling, your answer might have looked like this.

Due to budget cuts to the local council we have had to reduce spending on waste collection and recycling.

We believe the community can adapt by reducing food waste and single-use plastic packaging and by increasing personal responsibility for recycling of larger items. Instead of stopping the service entirely we will reduce collection frequency.

This approach allows us to continue providing other essential services such as the emergency response which is vital.

If you chose local libraries your answer might have looked like this.

Due to local council budget cuts funding for libraries will be reduced as many people now access books and resources online.

To save money we will keep one main library open and close the smaller branches.

We know libraries are more than just book lenders because they serve as community hubs so this decision was difficult but we felt we had to make this difficult decision to balance our budget.

Last if you chose to think about public parks your answer might have looked like this.

Due to local council budget cuts funding for parks will be reduced as nature requires less ongoing maintenance compared to other services.

Volunteers or community groups may assist with upkeep rather than using vital local funds.

We realise this might be hard for some but we have to concentrate our budget on more crucial services for the meantime.

Well done if you included some of that in your answer.

Next we're going to think about how local councils are funded.

The quality of public services provided by the local government often depends on how much income they're allocated.

Every year the local councils set a budget.

A budget is where you set out what you're going to spend money on in the forthcoming year.

This explains their income revenue, how much money is going to come in.

And expenditure, how much money they are planning to spend.

If local residents call for more to be spent in one service, that can mean spending less on another to balance the budget and control spending.

This is an example of where a local council might get their funding from.

A majority of it might come from government grants.

Fees and charges are also a way to get a lot of money.

Rent from particular buildings can also bring in money.

Council tax from people paying it based on the value of their property.

Business rates which we'll think about in a bit, and then other areas whereby money is given to the council.

We can see from this diagram that most of the funding comes from central government.

Local councils receive their income from lots of different places.

The three sources that are really key include government grants, council tax and business rates.

Let's do a check.

Which of the following is not a form of income of local councils? Pause your video and have a go now.

The correct answer was C income tax.

Income tax is a form of income for central government not local government.

Central government allocates grants to local councils based on the population site in that area and also the need of people living in that area.

Some of the grants are designed for specific services and the council has to use them accordingly.

For example, there's an adult social care grant.

A local council must use this to pay for things like adult social care that might look like home care services.

There are household support funds.

A local council might use this to distribute food vouchers for families in the holidays.

Local councils also charge citizens council tax.

This is where each household in the local area pays an amount of money per year for the services that they provide.

A council tax depends on the value of the house and discounts can be given to people for various things.

Every home is placed in a band.

The council tax band determines how much the property is worth.

The bands range from band A, the lowest, to band H, the highest.

Local councils set their own rate for council tax so this might be different in different areas.

In 2024, Elmbridge in Surrey had the highest average council tax at £2646 per household.

People in the lowest band paid around £1565, and people in the highest band paid around £4697.

Contrast to that, in 2024, Wandsworth in London had the lowest average council tax.

This was approximately £921 per household.

People in band A, paid around £640.

People in band H paid around £1922.

Council tax is often mentioned in local and national elections because the amount that local government charge can be contentious.

That means that people don't necessarily agree.

Even though the local council set the tax is also dependent on how much money they get from central government.

If people feel that their money is not being spent wisely, they might decide to vote for a different MP or local councillor.

Candidates campaigns might include council tax to try and draw people in and convince them to vote for them.

Spending cuts can be a risky strategy for governments.

Central government doesn't want local governments to cut spending to public services.

This could result in people changing their allegiance towards certain political parties and also might create civil unrest.

The government would always want to avoid that.

Let's do a check.

True or false? Council tax is set by the central government.

Pause your video and have a go now.

The correct answer is false.

This is because local councils are able to decide how much they charge for council tax within reason.

This is why it can be different in different areas.

Business rates are another important source of income.

Business rates are a tax on business premises set by central government and collected by local councils.

Local councils keep part of the revenue.

About 50% is set to the government.

This is called the business rates retention.

Trials are currently underway to allow local councils to retain all business rates.

Other legislation is in discussion to retain equality within different local councils.

The 50% business rates retention system is a way for local councils to keep some of the money collected from businesses in their area.

Instead of sending all the money to the national government, they can keep 50% of it.

This is because it gives councils more control over finances.

It encourages local businesses to be supported and helped grow.

The council will get more money so therefore they're going to be interested in this.

It helps to fund local public services like roads, schools and waste.

The idea is to make local councils more responsible for their economy but also sharing some money with the national government.

Alex is talking about the main purposes of the 50% business rates retention system.

What purpose has he missed out in his answer? He said, "It's a great system because it gives local councils more control over their finances and encourages them to support local businesses to encourage growth." Pause your video and have a think about what Alex has missed.

You might have said that Alex has missed out that one of the purposes of business rates retention system is to fund local public services such as roads, schools and waste collection.

Some other forms of income for the local council include when we go to the library we sometimes have to pay small fines for late books.

Our families might pay money to the local council when we park in town.

We also pay to go swimming at the leisure centre.

We have to pay for things like our weekly bus passes or local transport.

These things are called service charges.

Let's do another check.

I'd like you to match the type of income to the correct definition.

Pause your video and have a go at this now.

Let's check our answers.

Service charges are small fees for activities or funds.

Business rates are tax on the value of business premises.

Council tax is a tax on households.

And government grants are money that is provided by the government.

There are financial challenges that local councils face.

They depend on lots of things including the needs of the local area, what central government says that they must spend money on, plans for the future, population size, opinions of local residents.

Local councils have to balance up all of these challenges and manage their budgets.

They can't spend beyond their yearly allocation.

They can't borrow for day-to-day expenses therefore they have to save money in order to be financially stable.

Having reserves helps to manage money.

These are funds that are saved through underspending and that might help to cover some additional costs that may be unforeseen in the future, such as if the income is lower than they had expected, if there were local emergencies or unexpected costs.

Other financial challenges that local councils often face include having less money coming from central government.

Cuts to grants might leave councils with less funding to maintain important services.

A rising demand for public services such as more need for social care, housing and other local services.

Business rates might be uncertain.

Changes to policies including resets and appeals can mean that there is an unpredictable revenue for councils.

They might also have to think about inflation and rising costs.

Increasing costs for good services and staff puts additional pressure and strain on the budget.

They have limited powers to raise local revenue.

Local government has restricted ability to generate income independently.

They rely heavily on government funding and local taxes.

There might be things like increases in crime rates.

If a local area is suffering from gangs, drug use or violence then that is going to put additional strain on the council budget.

Let's do another check.

I'd like you to correct one word in each sentence below to make the answers true answers to the question.

What financial challenges do local councils face? Pause your video and have a go at this now.

Let's check our answers.

We should have said financial challenges that local councils face include reduced central government funding, higher demand for public services, business rate uncertainty, inflation and higher costs, limited powers to raise revenue and increase in crime rates.

Let's do a check.

I'd like you to imagine that a local council has been given their budget of 200 million pounds for the year.

You are going to create a newsletter to send to residents in the area that explains where the budget has come from and why this income is important to the local council.

You should include definitions of council tax, business rates, government grants for some residents who might not have heard of these terms before.

Pause your video and have a go at this now.

I asked you to create a newsletter explaining to residents where the local council revenue comes from.

It might have looked like this.

Dear residents, this is how we are spending 200 million pounds this year.

As your local council we're responsible for providing key services that help our community thrive.

This year we've been given a total budget of 200 million pounds.

We want to make sure you know exactly where this money comes from and how we'll spend it to benefit everyone in the local community.

This year 30% of our budget, comes from council tax, 25% from business rates and 30% from government grants, and 15% from other sources like membership fees.

Council tax is a payment that households make to help fund local services.

Business rates are taxes that businesses pay on their properties which help to maintain roads and support services like the fire department and public transport.

The government provide financial support to local councils in the form of grants.

These are funds given to us to support the services we provide to you like health care, social care for the elderly and housing support for those in need.

Why does this matter? The money we collect from council tax, business rates and government grants allows us to deliver the services that keep our community running smoothly.

From keeping streets clean to supporting schools we're committed to using the budget to make life better for everyone.

We also need to ensure we save for emergencies so we never have a budget deficit.

Please see our website for more information.

Thank you for your support and understanding.

Your local council.

"Working together to build a safer community with a balanced and strong local economy.

Well done if you included some of that in your answer.

Today we have been learning about the financial challenges that face local governments.

We have learned the local government is responsible for providing public services such as education, social care, waste management and housing.

A local council receives funding from various sources including government grants, business rates and council tax.

One major financial challenge for local government is reduced central government funding which limits council's ability to maintain key services.

There is a rising demand for public services that might put additional pressure on already stretched local council budgets.

Local councils also face challenges due to the uncertainty of business rates and their limited ability to raise additional revenue independently.

Thanks for joining me in today's lesson.