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New
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Year 10

What are the financial challenges facing local government?

I can explain what local governments fund and how local councils are funded.

icon-background-square
New
New
Year 10

What are the financial challenges facing local government?

I can explain what local governments fund and how local councils are funded.

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Lesson details

Key learning points

  1. Local government deliver essential public services, including education, social care and waste management.
  2. Local councils are funded through government grants, business rates, Council Tax contributions and fees and fines.
  3. A key financial challenge for local government is the reduction of central government funding.
  4. Increased demand for public services intensifies fiscal pressure on council budgets.
  5. Local councils also contend with revenue uncertainty from business rates and restricted income-generating powers.

Keywords

  • Local government - a system of government that operates at a local level providing services to its community

  • Public services - 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 - an elected body responsible for local decisions, including parish councils, city councils and county councils

  • Council Tax - a local, direct tax calculated on the basis of the value of a property and the number of people living there

Common misconception

Local government has no control over their finances because the Government controls the Budget.

Devolution of the economy means that the Government have given local government more control over their local community spending.


To help you plan your year 10 citizenship lesson on: What are the financial challenges facing local government?, download all teaching resources for free and adapt to suit your pupils' needs...

Research your own local area and adapt this lesson to your own local council and its specific funding. You can do this by finding statistics and information on the Government website and your local council authority to explore and explain the local economy.
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This content is © Oak National Academy Limited (2025), licensed on Open Government Licence version 3.0 except where otherwise stated. See Oak's terms & conditions (Collection 2).

Lesson video

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6 Questions

Q1.
Which of the following areas of spending is not part of social protection?
disability benefits
pensions
Correct answer: international aid
housing benefits
Q2.
When the Government spends more than it earns, it must money to cover the shortfall.
Correct Answer: borrow
Q3.
Of those listed below, who plays the biggest role in deciding where Government money is spent?
the Bank of England
business leaders within the private sector
Correct answer: the Chancellor of the Exchequer and the Treasury
the public, through referendums
Q4.
Match each economic situation to the most likely government response.
Correct Answer:the economy is growing strongly,increased investment in public services
tick

increased investment in public services

Correct Answer:the economy is in recession,lower taxes or increased government borrowing
tick

lower taxes or increased government borrowing

Correct Answer:high inflation is causing rising prices,measures to reduce spending, such as higher interest rates
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measures to reduce spending, such as higher interest rates

Q5.
Why do some people argue for more NHS funding over other areas?
The NHS is free, so it does not need more money.
Correct answer: Increased NHS funding improves public health and reduces long-term costs.
Other sectors, like transport, are more important than healthcare.
The NHS currently receives the smallest share of government spending.
Q6.
Match each tax to its main purpose or use.
Correct Answer:Council Tax,funds local services like waste collection and social care
tick

funds local services like waste collection and social care

Correct Answer:Corporation Tax,paid by companies on their profits to fund public services
tick

paid by companies on their profits to fund public services

Correct Answer:Excise Duties,taxes on specific products like alcohol, tobacco and fuel
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taxes on specific products like alcohol, tobacco and fuel

6 Questions

Q1.
What is the relationship between central government and local government, in relation to funding?
Local councils have no control over their spending.
Central government fully controls local budgets.
Correct answer: Local councils are able to make some decisions about their spending.
All councils receive equal funding.
Q2.
Which of the following is not a responsibility of local government?
rubbish collection
roads and pavements
park equipment
Correct answer: foreign policy
Q3.
A key financial for local government is the reduction of central government funding.
Correct Answer: challenge, problem
Q4.
Match the source of funding for local councils with the relevant explanations.
Correct Answer:business rates,a tax paid by businesses on the properties they use
tick

a tax paid by businesses on the properties they use

Correct Answer:Council Tax,a tax on property owners or renters
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a tax on property owners or renters

Correct Answer:government grants,funding provided to councils to help run local services
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funding provided to councils to help run local services

Q5.
How does inflation create a financial challenge for local councils?
It reduces the number of people using public services.
It makes Council Tax rates automatically rise.
Correct answer: It means that councils cannot provide the services at the same cost.
It increases the amount of government funding councils receive.
Q6.
Which of these local government services is considered essential?
libraries
Correct answer: fire services
public gardens
museums