Christchurch's financial information

How the council is funded and details of how Government grants and business rates are calculated.

Council services are funded from three main sources:

Charges for services used (e.g. paying for a swim at the leisure centre)
Formula Grant from the government (made up of Revenue Support Grant and business rates)
Council tax payers

The net revenue budget is the cost of council services after deducting income from charges. It has to be funded from formula grant and tax payers.

Formula Grant is determined by the Government and fixed for the year. After deducting it from the net revenue budget set by the council the remaining cost has to be met from council tax payers.

Formula Grant is worked out using a complex formula set by the Government and is made up of four blocks:

Relative Needs Block (based largely on the characteristics of the local population)
Relative Resource Amount (a negative figure which reflects the number and value of properties in the area)
Central Allocation (a fixed amount allocated per head of population)
Floor Damping Block (set to ensure that each council receives a minimum grant increase each year)

Business rates are collected by local councils and paid over to the Government, forming a central "pool". This pool, together with the Revenue Support Grant, is then allocated to each council using the formula.

Part of the formula measures the ability of each council to fund its needs by taking its tax base (the number and value of properties in its area) into account. Therefore councils with higher tax bases will normally receive less grant than councils with lower tax bases because the Government believes that they can raise more resources from council tax.