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How the budget is funded

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Our income is the amount of money we expect to receive. It is received through:

  • Council Tax
  • business rates
  • charges such as car parking
  • direct funding from national government

We also have reserves which are savings set aside. We are proposing a financial approach for next year which has less reliance on the use of reserves.

Council Tax

The amount of council tax residents pay depends on the value of their property and the corresponding valuation band it falls into.

Business rates

Business rates is determined by central government, not councils. It is payable for all premises that are not domestic and are not exempt from rates.

We collect the rates on behalf of central government and a small proportion for the fire authority.

The government redistribute part of the rates collected to all councils, which then goes towards the cost of providing local services.

Funding from national government

Funding from national government falls into two categories:

  • grants
  • core funding

Grants from national government

We receive grants that are passed straight on to other services. These are known as ‘ring-fenced grants’.

Some examples of ring-fenced grants include funding for schools and work to relieve homelessness.

Core funding from national government

We also receive what’s known as ‘core funding’ from the government. This funding goes into our general funds pot and supports the costs of running the council.


We also have savings set aside, which are called ‘reserves’. They fall within two categories:

  • unearmarked reserves
  • earmarked reserves

Unearmarked reserves

Unearmarked reserves are there to help manage the council’s financial standing in the event of extraordinary or unforeseen events.

They also act as a financial contingency should any additional costs associated with the general day-to-day running of the council impact our budget.

Earmarked reserves

Earmarked reserves are set aside for specific purposes; such as supporting various partnerships where the council is the accountable body or providing funds for a project before the government grant due for it is received into our accounts.

Earmarked reserves can also be used to support the general budget of the council or to build up funds for any future expenditure.

In the last three financial years we have used some funds from our reserves to help run our services.

Whilst some unearmarked reserves are always made use of during a normal financial year, reducing our reserves to balance the council’s budget is considered a short-term solution.

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