BRIEFING PAPER

Number 07104, 8 June 2020

Local government in By Mark Sandford

England: structures
Inside:
1. Local government structures
2. Functions of local
government
3. Elections to local government
4. Boundary changes and
restructuring
5. Local government finance
6. Structures: history

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 Number 07104, 8 June 2020 2

Contents
Summary 3
1. Local government structures 4
1.1 Local authorities in England 4
1.2 Fire and rescue authorities / Police and Crime Commissioners 4
1.3 Other authorities 5
2. Functions of local government 6
2.1 Intervention in local government 6
3. Elections to local government 8
3.1 Electoral systems and wards 8
3.2 Elections by halves and thirds 9
3.3 The franchise 9
3.4 Turnout 9
4. Boundary changes and restructuring 10
4.1 Creating a unitary authority 10
4.2 District council mergers 10
4.3 Structural changes since 2010 11
4.4 Government guidance 12
4.5 Consent for structural change 13
5. Local government finance 15
5.1 Sources of finance 15
Council tax 15
Business rates 15
Central government grants 15
Local fees and charges 16
5.2 The Local Government Finance Settlement 16
Funding included 16
Annual practice 16
6. Structures: history 18
6.1 Pre-1972 18
6.2 The 1972-74 reforms 18
6.3 Structural changes since 1972 19
Table: changes to local government structure in England since 1972 19
Appendix: functions of local authorities in England 21

Cover page image copyright: The Council Chamber by Tim Ellis. Licensed under CC
BY 2.0 / image cropped.
3 Local government in England: structures

Summary
This note contains basic details of the structure and functions of English local government.
It outlines the system of counties, districts and unitary authorities), and other bodies such
as fire and rescue authorities, combined authorities, and Police and Crime Commissioners.
Section 3 explains the system of local government elections, including the systems of
electing by ‘halves’ and ‘thirds’ used in many local authorities. It also provides details of
the local government franchise (those eligible to vote).
Section 4 provides details of the legal process for structural change in English local
government. This includes the merger of district councils and the creation of ‘unitary
authorities’ to replace ‘two-tier’ local government – i.e., county and district councils.
Section 4 provides details of current restructuring plans and recent changes, and discusses
Government guidance on proposals for unitary local government. The Appendix provides
a breakdown of the division of responsibilities between county and district councils in
two-tier areas.
Section 5 provides brief details of the financing of English local government, including an
explanation of the annual Local Government Finance Settlement. Additional details can be
found in the Library briefing Local government finances, and details of the 2020-21
settlement process can be found in the Library briefing on the Local Government Finance
Settlement 2020-21.
Section 6 provides some historical information about the development of local
government in England.
 Number 07104, 8 June 2020 4

1. Local government structures

1.1 Local authorities in England
The systems of local government in each part of the UK have developed
separately, though often in parallel. This note focuses on local
government in England: local government is devolved to Scotland,
Wales and Northern Ireland. It outlines the structure and functions of
English local government, together with elections and historical
development.
English local government is divided in some areas into county councils
(the upper tier) and district councils (the lower tier). A major reform in
1972 established county and district councils throughout England,
Wales and Scotland (excluding three Scottish island authorities). Since
then, unitary authorities have been established in a number of areas.
The creation of unitary authorities has frequently been contingent on
Government policy, or local initiative, at a given time, rather than any
rationale relating to local economy, geography or identity.
The two tiers have distinct functions, though they overlap in some
matters. In other areas, ‘unitary authorities’ carry out all local
government functions. There are 339 local authorities in England, of
which 25 are county councils, 188 are district councils, and 126 are
single-tier authorities. Of the latter, 33 are London boroughs and 36 are
metropolitan boroughs. 1
Additionally, a further tier of parish and town councils exists in some
parts of England (see the Library standard note Parish and town
councils: recent issues): these number some 10,000 across England.
District, county and unitary authorities are sometimes referred to as
‘principal councils’ to distinguish them from parish and town councils,
whilst parish and town councils sometimes refer to themselves as ‘local
councils’ to distinguish themselves from principal councils.
Wales has 22 unitary authorities (also known as county councils or
county borough councils), and Scotland has 32 unitary authorities. Both
Wales and Scotland also contain ‘community councils’, roughly
equivalent to parish and town councils in England. As of 2014, Northern
Ireland has 11 district councils, but does not have (and has never had)
an equivalent to parish and town councils.

1.2 Fire and rescue authorities / Police and

Crime Commissioners
There are 45 fire and rescue authorities in England (including the
London Fire Commissioner) and three in Wales. Some are ‘combined fire
authorities’, covering more than one upper-tier local authority area.

1
These figures take account of recent and proposed mergers, including new
authorities in Buckinghamshire and Northamptonshire which have been formally
established but have yet to hold their first elections at the time of writing: see
section 4 for more information.
5 Local government in England: structures

Others cover a single upper-tier area, and may form a department of

the county or unitary authority.
There are 38 Police and Crime Commissioners (PCCs) in England,
including the Mayor of London, plus four in Wales. Police and Crime
Commissioners are directly-elected, with elections taking place in 2012,
2016 and 2021.
PCCs have the power to take on responsibility for fire and rescue in
their area. As of May 2020 this has taken place in Essex, North
Yorkshire, Northamptonshire and Staffordshire. In addition, the directly-
elected mayoralties in Greater London and Greater Manchester are each
responsible for both functions.
In England, the boundaries of each of these types of authority are
mostly based on the county areas established under the Local
Government Act 1972 (see section 5.2 below).
Both Scotland and Northern Ireland have a single fire and rescue service
and a single police service, but no directly-elected PCCs.

1.3 Other authorities

The Common Council of the City of London, and the Council of the
Isles of Scilly, are often described as ‘sui generis’ (unique) authorities. In
functional terms they are unitary authorities, despite their very small
populations (they are included in the figures given in section 1.1 above).
It is common for Acts of Parliament to mention specifically that they
extend to each of these areas.
The Greater London Authority exercises a range of functions in
transport, policing, planning, fire and rescue, housing and economic
development. It is not a local authority for most purposes and is not
included in the figures in section 1.1. In other parts of England, central
government manages some of the functions that it undertakes for
London. Further details can be found in the Library briefing paper
CBP05817, The Greater London Authority.
Ten combined authorities have been established in England under the
Local Democracy, Economic Development and Construction Act 2009.
These are not local authorities but joint legal bodies through which
groups of authorities can work together. They too are not included in
the figures in section 1.1. Further information is available in the Library
briefing paper Devolution to local government in England.
Local authorities may establish joint waste authorities under section 205
of the Local Government and Public Involvement in Health Act 2007.
Four have been established in London (West London, North London,
Western Riverside, and East London) with others in Greater Manchester
(excluding Wigan) and Merseyside. The Greater Manchester Combined
Authority absorbed the waste authority on 1 April 2018.
 Number 07104, 8 June 2020 6

2. Functions of local government

A breakdown of the functions of county and district councils in two-tier
areas can be found in the Appendix. Councils in single-tier areas
undertake all of these functions. Some are ‘concurrent’ responsibilities,
which may be undertaken by either tier of government.
Under section 101 of the Local Government Act 1972, counties and
districts are at liberty to agree to undertake functions for one another. If
they do so, the responsibility for the function remains with the council
to which it belongs in law.
Many public services are delivered by national organisations that are not
accountable to local government. Examples include health services (via
the NHS), welfare benefits and employment services, probation, and
prison services.
Many further national organisations have been established by
Government to carry out functions and/or distribute funding, but they
are not accountable to local government. Examples include the
Environment Agency, Natural England, the Homes and Communities
Agency, Highways England, the Arts Council, the Skills Funding Agency
and the Education Funding Agency. Many local authorities will have
working relationships with these bodies, but they are accountable to
their sponsoring central government department. They are often known
as non-departmental public bodies (NDPBs), or ‘quangos’.
All parts of England are covered by (at least) one Local Enterprise
Partnership. These are voluntary bodies, established in 2010-11 to co-
ordinate economic development and growth policy in local areas. They
have a close working relationship with local authorities (and any
combined authority) in their area, frequently with councillors sitting on
their management boards, but they are not formally accountable to
local authorities. Further details can be found in the Library briefing
paper Local Enterprise Partnerships.

2.1 Intervention in local government

In England, the Government has broad legal powers to intervene in the
running of a local authority, which permit the takeover of any local
functions by the Secretary of State or appointees. Intervention takes
place under section 15 (6) of the Local Government Act 1999.
Each intervention begins with a formal direction notice. Typically powers
are returned to the local authority after a period of years, although they
may not all be returned at once. Some interventions have been
preceded by reports based on ‘best value’ inspections, though this is not
a legal requirement for an intervention to take place.
Formal Government interventions in the running of local authorities are
rare. The circumstances of each intervention have been quite different.
For instance, the Government intervened in Rotherham MBC in the light
of a report on child sexual exploitation in the borough by Dame Louise
7 Local government in England: structures

Casey. An earlier intervention in Hackney was focused on social

services, education and waste management.
To date, eight interventions have taken place under the 1999 Act:
1 London Borough of Hackney (2001-2007)
2 Hull City Council (2003-2006)
3 Stoke-on-Trent City Council (2008-2010)
4 Doncaster Metropolitan Borough Council (2010-2014)
5 London Borough of Tower Hamlets (2014-2017)
6 Rotherham Metropolitan Borough Council (2015-2019)
7 Anglesey Council (2009-2013: intervention by Welsh
Government)
8 Northamptonshire County Council (2018-present)
In each case, the Secretary of State (the Welsh Ministers in Wales)
appointed ‘commissioners’ to take over certain functions of the councils
in question. The breadth of commissioner responsibilities has varied
between the interventions. 2 The Communities and Local Government
Committee examined two interventions in its 2016 report Government
interventions: the use of Commissioners in Rotherham and Tower
Hamlets.
There is no fixed policy governing when the Government should
intervene in a local authority. In its evidence to an inquiry by the
Communities and Local Government Committee in 2016, the
Government stated that statutory intervention was very much a last
resort:
Statutory intervention … is part of wider strategies that the
Government uses to monitor risk and ensure accountability in
local government. … It acts as an effective backstop should
significant failings be identified. 3

2
See Clive Grace, Steve Martin, Tim Allen and Mike Bennett, evidence to
Communities and Local Government Committee, June 2016
3
DCLG, Evidence submitted by the Department for Communities and Local
Government, CLG Committee inquiry, June 2016
 Number 07104, 8 June 2020 8

3. Elections to local government

3.1 Electoral systems and wards
Local authorities in England and Wales use the First Past the Post
electoral system. Local authorities in Scotland and Northern Ireland use
the Single Transferable Vote, with multi-member wards. 4
Local authorities are divided into wards, represented by councillors.
Wards are based on parish areas where they exist. The Local
Government Boundary Commission for England carries out ‘electoral
reviews’, of ward boundaries in England, as it sees fit. Up to 2009 there
was a statutory requirement for every authority to be reviewed every
10-15 years. 5 Currently, reviews take place at the discretion of the
Commission. 6 Its current practice was outlined in a response to a
Parliamentary Question in February 2019:
The [Boundary] Commission administers a rolling programme of
electoral reviews and can include local authorities if they meet one
or more of the following criteria:
• If a council has high levels of electoral inequality, where
some councillors represent many more, or many fewer,
voters than the average for the local authority area. The
Commission targets authorities where the number of
electors in 30% or more wards or divisions varies from the
average of the council by 10% or more. Where one ward
or division varies by 30% or more, the Commission will also
consider carrying out a review. In both cases, the
Commission will carry out a review if it believes the
variances will not be corrected, without a review, within a
reasonable period of time.
• If a council has not undergone an electoral review in more
than 12 years.
• Where the Commission has been asked to carry out an
electoral review. 7
Ward boundaries are required to take account of community identity
and the need to achieve ‘effective and convenient local government’.
There is no requirement for ward boundaries to take account of
Parliamentary constituencies, though county ward changes should have
regard to district wards and vice versa.
Some local authorities have single-member wards, whilst others have
multi-member wards. In each case, under the First Past the Post system,
voters can vote for as many councillors as there are vacant seats.
Therefore, if all three members of a three-member ward face re-election
on the same date, the elector will have three votes. The major political
parties commonly put forward as many candidates as there are seats

4
See the Library standard note Voting systems in the UK for further details of each of
these.
5
See section 13 (3) of the Local Government Act 1992.
6
See section 56 (1) of the Local Democracy, Economic Development and Construction
Act 2009.
7
House of Commons PQ 222690 2017-19
9 Local government in England: structures

available in the ward. It is common for all councillors in a multi-member

ward to come from the same party.

3.2 Elections by halves and thirds

Some local authorities elect ‘by thirds’. Each councillor serves for a four-
year term, with elections held for one-third of councillors each year,
followed by a fourth year with no elections. This pattern is common in
metropolitan councils, and it is also used in some district councils, with
the fourth year being used for the county council elections. A small
number of councils elect by halves (half of the councillors retiring every
two years). In such councils, it is possible for the political balance – and
hence the council leadership - to change at each election.
The Government has published a list of councils and their electoral
patterns.
A council electing by thirds or by halves may resolve to change its
electoral cycle so that all councillors are elected every four years. 8 A
council cannot make the opposite change – i.e. moving from full
elections to electing by thirds or by halves – unless it is reverting to a
pattern of electing by thirds or by halves that it has used in the past. 9 A
two-thirds majority of all councillors voting is required for either of these
changes.

3.3 The franchise

Individuals who are citizens of the UK, Republic of Ireland, a
Commonwealth country or a member state of the European Union and
who are 18 years old or over, and resident in the UK, may register to
vote in local elections in the UK. In Scotland, the voting age for local
and devolved elections is 16 years or over. In Wales, a Bill lowering the
voting age for local elections to 16 years is currently in the Senedd.

3.4 Turnout
Turnouts for UK local government elections have long been far lower
than those for general elections. Despite some claims to the contrary,
this is not a recent phenomenon but can be traced back to the
establishment of UK local government. Average turnouts in UK local
elections have varied between 30% and 45% since 1980, except for
local elections which coincide with Parliamentary elections, which
typically attract a similar turnout to Parliamentary elections. More
detailed figures are available in the Library standard note Elections:
turnout (SN01467).

8
See Local Government and Public Involvement in Health Act 2007, s31-36.
9
Ibid., s37-52.
 Number 07104, 8 June 2020 10

4. Boundary changes and

restructuring
4.1 Creating a unitary authority
The procedure for the creation of a unitary authority can be found in
sections 1-7 of the Local Government and Public Involvement in Health
Act 2007.
The Secretary of State can ‘invite’ a proposal from a local authority to
make a proposal for a county or district, or group of districts, to become
unitary. The Local Government Boundary Commission for England
(LGBCE) can be, but need not be, asked for advice on any matter
related to the proposal. Regulations may be made covering how local
authorities should go about preparing their proposal. The Secretary of
State may then make an order implementing the proposal, or s/he may
reject the proposal.
The regulations must be approved by both Houses of Parliament. In
practice, such regulations are normally debated in the Lords but not in
the Commons.
The Government has published guidance indicating the criteria on
which it would assess proposals for mergers or restructuring (see section
4.4 below). This replaces previous guidance which applied to the 2007-
09 ‘round’ of restructuring. 10

4.2 District council mergers

Where two district councils wish to merge into a single district council, a
separate procedure exists, in sections 8-10 of the 2007 Act. Under this
procedure, the LGBCE may undertake a review at the request of the
Secretary of State or of a local authority. The review may propose
boundary changes, including the alteration of a boundary, the abolition
of a ‘local government area’ (i.e. a council area), and the constitution of
a new local government area.
This legal procedure would also be used to implement a proposal to
divide a council into two or more councils. However, no district council
units have been divided since the 1972 reorganisation. The trend in
recent decades has been towards larger rather than smaller units, as
reflected in the Government’s current criteria for structural change (see
section 4.4 below).
The creation of new parish councils is also a separate legal procedure.
This takes place under part 4 of the Local Government and Public
Involvement in Health Act 2007. Further details can be found in the
Library briefing paper Parish and town councils: recent issues.
There is no legal procedure to ‘promote’ a parish or town council to
become a district council or unitary authority. Any attempt to create a

10
DCLG, Invitation to councils in England to make proposals for future unitary
structures, 2006
11 Local government in England: structures

new district council would have to take place under the procedure
outlined above. There would be no formal role for a pre-existing parish
or town council.

4.3 Structural changes since 2010

The financial pressures on local authorities during the 2010-15
Parliament led to calls from some quarters for the creation of more
unitary authorities, as a means of saving money.
The ‘Heseltine report’, No Stone Unturned, proposed a fully unitary
system of local government for England in late 2012. The Government
rejected this recommendation, stating that it would prefer “authorities
not to be distracted by structural change”. 11 This reflected the views of
the then Secretary of State, Eric Pickles, who opposed any suggestions
of reorganisation during his tenure from 2010 to 2015. 12
The following changes have taken place to local authority boundaries in
England since 2010. The first three new councils in the table below are
merged district councils, and the remainder are new unitary authorities.
The net effect has been to increase the number of unitary authorities by
3, to decrease the number of district councils by 17, and to decrease the
number of county councils by 3 (as Buckinghamshire and Dorset are
now regarded as unitary authorities rather than county councils).
Table: changes to local government boundaries in England, 2010-

New council Predecessor councils Date of Orders

first
elections

Somerset West & Taunton Deane DC, 2019 Order

Taunton West Somerset DC
Lords
debate

East Suffolk Suffolk Coastal DC, 2019 Order

Waveney DC
Lords
debate

West Suffolk Forest Heath DC, St 2019 Order

Edmundsbury DC
Lords
debate

Bournemouth, Bournemouth, Poole, 2019 Order

Christchurch and Christchurch DC,
Lords
Poole Dorset CC (part)
debate

Dorset Dorset CC (part), East 2019 Order

Dorset DC, West

11
DCLG, Government response to the Heseltine Report, Cm 8587, 2013, p.54; HCDeb
12 Nov 2012 cc7-8
12
See, for instance, HCDeb 12 Nov 2012 c8; HCDeb 21 Oct 2010 c1155.
 Number 07104, 8 June 2020 12

Dorset DC, North Lords

Dorset DC, Purbeck, debate
Weymouth & Portland

Buckinghamshire Buckinghamshire CC, 2021 Order

Wycombe DC, Chiltern (postponed
Lords
DC, South Bucks DC, from 2020)
debate
Aylesbury Vale DC

West Daventry DC, South 2021 Order

Northamptonshire Northamptonshire DC, (postponed
Lords
Northampton BC, from 2020)
debate
Northamptonshire CC
(part)

North Corby BC, Kettering 2021 Order

Northamptonshire BC, Wellingborough (postponed
Lords
BC, East from 2020)
debate
Northamptonshire DC,
Northampton CC
(part)

Other proposed mergers have not gone ahead: for instance, a merger
between Babergh and Mid-Suffolk district councils was postponed in
early 2018, and one between West Devon and South Hams district
councils was rejected in October 2017.
Unitary local government has also been mooted in a number of other
localities, including East Lancashire, Cumbria, Leicestershire,
Oxfordshire, Hampshire and Lincolnshire. 13 Of these, Oxfordshire
submitted a formal proposal, but this was later abandoned.

4.4 Government guidance

The then Secretary of State, James Brokenshire, made a written
statement on 22 July 2019 which set out the criteria used by the
Government to assess requests for restructuring and for district council
mergers:
I confirm that I will assess any locally-led unitary proposal that I
receive against the criteria for unitarisation which we announced
to Parliament in 2017 and which I and my predecessor have
consistently used since then. These criteria state that subject to
Parliamentary approval a proposal can be implemented, with or
without modification, if I conclude that across the area as a whole
the proposal is likely to:
• improve the area's local government;

13
LGC Briefing, “The Siege of Oxford part ii”, 6 February 2017; David Paine, “Districts
cast doubt over two-unitary plan”, Local Government Chronicle, 1 February 2017;
Jon Bunn, “County leader pushes for unitary referendum”, Local Government
Chronicle, 24 January 2017; Mark Smulian, “Push for ‘Greater Portsmouth’ unitary
as devo bid falters”, Local Government Chronicle, 7 February 2017; House of
Commons PQ 281718 2017-19, 3 Sep 2019
13 Local government in England: structures

• command a good deal of local support across the area; and

• cover an area that provides a credible geography for the
proposed new structures, including that any new unitary
council’s population would be expected to be in excess of
300,000.
On district council mergers, I confirm that where two or more
district councils submit a proposal to merge, I will assess this
against the criteria for mergers which we announced to
Parliament in November 2017 and which we have used since
then. The statutory process for such mergers does not involve my
inviting proposals, and I recognise that particularly small district
councils may wish to propose merging as a natural next step
following a number of years of successful joint working, sharing
of services and senior management teams.
The criteria for district council mergers are that, subject to
Parliamentary approval, a proposal to merge would be
implemented if I had reached a judgement in the round that if so
implemented it would be likely to:
• improve the area’s local government;
• command local support, in particular that the merger is
proposed by all councils which are to be merged and there
is evidence of a good deal of local support; and
• the area is a credible geography, consisting of two or more
existing local government areas that are adjacent, and
which, if established, would not pose an obstacle to locally-
led proposals for authorities to combine to serve their
communities better and would facilitate joint working
between local authorities. 14
The latter criteria repeat a statement made on 7 November 2017 by the
then Secretary of State, Sajid Javid. 15 They are also in line with guidance
provided to councils in Northamptonshire following the publication of
the Caller report in February 2018. 16

4.5 Consent for structural change

Section 15 of the Cities and Local Government Devolution Act 2016
gives the Secretary of State general powers to disapply the provisions of
the 2007 Act in respect of boundary change. The initial aim was to
provide an expedited procedure for creating unitary authorities, and for
reviewing ward boundaries and councillor numbers within local
authorities or for the review of local authority areas. Where a new
combined authority is to be created, this would allow the simultaneous
creation of unitary authorities, if this was desired locally.
The 2016 Act permitted this disapplication only where the ‘relevant
authorities’ consent – i.e. those which would be directly affected by a

14
HCWS 1790 2017-19, 22 July 2019
15
HCWS 232 2017-19, 7 Nov 2019
16
MHCLG, Invitation to submit a proposal for a single tier of local government in
Northamptonshire, 27 Mar 2018. For more information on the events leading up to
reorganisation in Northamptonshire, see the Library briefing Local authority financial
resilience.
 Number 07104, 8 June 2020 14

proposal. A section of the Act permitting restructuring where only one

of the affected authorities consented expired on 31 March 2019.
The 2019 changes in Dorset also featured regulations under section 15
which gave retrospective authority to the Dorset local authorities to
make a proposal without a formal invitation. 17

17
See the draft Dorset (Structural Changes) (Modification of the Local Government
and Public Involvement in Health Act 2007) Regulations 2018
15 Local government in England: structures

5. Local government finance

Local government finance is extremely complex. This section of the
paper presents a very brief framework of the key sources of funding and
procedures for allocating funds to local authorities.

5.1 Sources of finance

English local authorities have four principal sources of finance, as
follows. The bulk of the funds from these sources is not ‘ring-fenced’ –
i.e., local authorities can spend the money as they choose.
Council tax
Local authorities set their own levels of council tax and retain all of the
revenues locally. Council tax bands are fixed by the Government, and
properties are allocated to the bands by the Valuation Office Agency
(VOA). Annual rises in council tax are subject to ‘referendum principles’
set by the Secretary of State (see the Library briefing Council tax: local
referendums).
Business rates
Local authorities collect business rate revenue. Some of this is retained
locally, some passed to central government, and some redistributed
within the sector (see the Library briefing Business rates). The
Government intends the sector to retain a larger proportion of rate
revenue in the future (‘75% business rate retention’: see the Library
briefing Reviewing and reforming business rates). This was to have been
introduced from the 2019-20 financial year, but it has now been
postponed to 2022.
Currently, local government as a whole retains 50% of business rates
revenue (the ‘local share’), with the other 50% being passed to central
Government (the ‘central share’). The ‘local share’ is subject to a system
of redistribution between authorities (the ‘tariff and top-up’ system). In
short, areas with high rate revenues pay a ‘tariff’ in, and areas with low
rate revenues receive a ‘top-up’ out. Additionally, a number of areas
have piloted local retention of 100% of rate revenue from 2017
onwards.
Central government grants
Central government passes a number of grants to local authorities. The
largest is the annual Revenue Support Grant (RSG). This grant is not
ring-fenced.
Some additional grants are ring-fenced (e.g. the Public Health Grant).
Others are not, and may be spent as local authorities choose (e.g. the
New Homes Bonus, Rural Services Delivery Grant). Each of these grants
are distributed between authorities according to separate criteria.
 Number 07104, 8 June 2020 16

Local fees and charges

Local authorities have hundreds of powers to charge fees for services
provided. 18 In most cases, fees must not exceed the cost of providing
the service, and in many cases fee levels are set nationally. The income is
retained locally but must be treated as a contribution to the provision of
the service for which it is paid. Thus it does not constitute a separate
source of revenue in local government accounts.
Local authorities may also receive commercial income deriving from
their ownership of assets, or from investments.

5.2 The Local Government Finance

Settlement
Funding included
Each year, levels of central government grant for local authorities in
England are decided via the annual Local Government Finance
Settlement. This involves the setting of redistribution provisions for
business rates revenue (‘tariffs’ and ‘top-ups’) and the fixing of Revenue
Support Grant levels. These sums, together with a few smaller grants
are known as an authority’s Settlement Funding Assessment (SFA).
The annual settlement covers all county, district and unitary authorities
in England, plus fire and rescue authorities and the Greater London
Authority. It has also recently included mayoral combined authorities.
Police and education funding are not included in the annual settlement.
Nor are figures for housing benefit (which is administered by local
government to central government requirements). However, some
central government statistical publications list all of these lines of
funding as elements of ‘local government funding’.
The funding mentioned here solely consists of revenue funding. Local
authorities also receive annual allocations of capital funding, which
must be accounted for separately (see the Library briefing paper Local
government in England: capital finance).
Local government finance is devolved to Scotland, Wales and Northern
Ireland. In each of the devolved territories, the devolved legislature
operates a comparable annual procedure, though with differences
regarding the funds included.
Annual practice
The Government is required by statute to publish Revenue Support
Grant allocations annually, and the House of Commons must approve
the settlement. 19 Practice in recent years has been for a draft settlement
to be published in mid-December, and a final settlement in early to mid-
February, before the start of the relevant financial year in April. The

18
These powers are found in multiple Acts of Parliament: a comprehensive list is not
available.
19
See sections 78 and 78A of the Local Government Finance Act 1988. The law is
silent on what happens if the House of Commons fails to approve the settlement.
17 Local government in England: structures

Library has published a briefing paper on the Local Government Finance

Settlement for 2020-21.
In December 2015, for the first time in recent decades, the Government
published indicative funding levels for the following four financial years
(2016-20). Local authorities were given the opportunity to ‘sign up’ to a
four-year settlement:
The Government will offer any council that wishes to take it up a
four-year funding settlement to 2019-20. As part of the move to
a more self-sufficient local government, these multi-year
settlements can provide the funding certainty and stability to
enable more proactive planning of service delivery and support
strategic collaboration with local partners. Councils should also
use their multi-year settlements to strengthen financial
management and efficiency, including by maximising value in
arrangements with suppliers and making strategic use of reserves
in the interests of residents. 20
Funding levels for individual authorities agreed at this time can be found
on the website of the Department for Communities and Local
Government (DCLG). 21
It is commonplace for funding streams to be transferred in and out of
the finance settlement each year. This makes it difficult to provide
meaningful figures for how much an individual authority’s funding has
risen or fallen over several years, as it is not possible to directly compare
like with like. The four-year settlement between 2016 and 2020 is an
exception to this: but in other years, the Government has published
adjusted figures for the current year alongside the forthcoming
settlement to allow direct comparison to be made.

20
DCLG, The provisional Local Government Finance Settlement 2016-17 and an offer
to councils for future years, December 2015, p. 24
21
See the spreadsheet entitled Core Spending Power: supporting information.
 Number 07104, 8 June 2020 18

6. Structures: history
6.1 Pre-1972
Elected county councils were established in England and Wales by the
Local Government Act 1888, and district councils by the Local
Government Act 1894. A number of larger towns and cities were
permitted to opt out from county government under the 1888 Act:
these became ‘county boroughs’. The 1888 Act included criteria
through which authorities could apply for county borough status in the
future. Similar structures were introduced by the Local Government
(Ireland) Act 1898 and the Local Government (Scotland) Act 1889.

6.2 The 1972-74 reforms

The Local Government Act 1972 reorganised the whole of England
(except London) and Wales into a two-tier structure, with 45 county
councils as upper-tier authorities and 332 district councils as the lower
tier. Six of the counties, and 36 of the districts, were ‘metropolitan
counties’ and ‘metropolitan boroughs’ respectively: the division of
functions between the two tiers in metropolitan areas was different to
that in non-metropolitan areas. In addition, London was governed by
the Greater London Council (GLC) and 32 London boroughs.
Immediately prior to the reorganisation, England had 46 county
councils, 79 county boroughs, 32 London boroughs, 449 urban districts,
227 metropolitan boroughs, and 410 rural districts. 22 The changes came
into effect on 1 April 1974.
The six ‘metropolitan counties’ all covered newly-constituted
geographical areas, with most including parts of two or three traditional
county areas. Their boundaries took strong account of ‘functional
economic geography’ – essentially uniting cities with their economic
hinterlands. Metropolitan counties handled police, fire, passenger
transport, waste disposal, economic development and land-use
planning. These counties were abolished by the Local Government Act
1985, following the Conservative government’s 1984 white paper
Streamlining the Cities.
An equivalent reorganisation took place in Scotland under the Local
Government etc. (Scotland) Act 1973, which replaced 33 counties, 197
burghs and 196 district councils with nine regional councils, 53 district
councils, and three unitary authorities (Orkney, Shetland and the
Western Isles). The Local Government Act (Northern Ireland) 1972
replaced 55 district councils, two counties, six county boroughs and ten
boroughs with 26 district councils in Northern Ireland.
London had previously been reorganised under the London Government
Act 1963, with changes taking effect in 1964. This Act introduced one
county council, 32 boroughs, and left the City of London untouched.
The area covered by the new Greater London Council had previously
been covered by the London County Council (with 28 boroughs, smaller
22
Lord Redcliffe-Maud, Royal Commission on Local Government, 1968, p. 21
19 Local government in England: structures

than the current ones), Middlesex County Council, and a patchwork of

municipal boroughs and urban district councils.
A number of local authorities were permitted to retain the title of
‘borough council’ or ‘city council’ following the 1972 reforms, despite
taking on the status of a district. These are honorific titles and have no
implications for these authorities’ functions.

6.3 Structural changes since 1972

A number of further reforms to local authority structures have taken
place since 1972 (see the Table below; see also the table in section 4.3).
The overall effect has been to reduce the overall number of authorities
and councillors, and to move further towards a pattern of unitary
authorities and a move away from the two-tier structure of the 1972
reforms. 23
Table: changes to local government structure in
England since 1972

Year Change

Abolition of the six metropolitan county councils and the

Greater London Council, passing some of their functions
to joint boards and some to borough councils in their
1986 areas

Replacement of two-tier structure in Scotland and Wales

1994 with 32 and 22 unitary authorities respectively

1996-98 Creation of 46 new unitary authorities across England

Proposals for unitary authorities in the North-East,

Yorkshire & Humber and North-West regions,
accompanying plans to introduce elected regional
assemblies in the North of England. Neither plan
2003-04 succeeded.

Creation of nine new unitary authorities across England,

2007-09 in an application-based process

Merger of 26 district councils into 11 larger district

councils in Northern Ireland. Proposals for the merger of
22 unitary authorities in Wales into 10-12 larger unitary
2014-15 authorities

Occasional creation of new unitary authorities on request

2019- in England

23
See Office for National Statistics, Historical boundary change, for details of changes
up to 1998; Office for National Statistics, United Kingdom: Local Authority Districts,
Counties and Unitary Authorities, 2012, for subsequent changes.
Number 07104, 8 June 2020 20
21 Local government in England: structures

Appendix: functions of local

authorities in England
Function Tier
Arts and recreation County / district
Births, deaths and marriage registration County
Building regulations District
Burials and cremations District
Children's services County
Coastal protection District
Community safety District
Concessionary travel County
Consumer protection County
Council tax and business rates District
Economic development County / district
Education, including special educational needs,
adult education, pre-school County
Elections and electoral registration District
Emergency planning County
Environmental health District
Highways (not trunk roads), street lighting and
traffic management County
Housing District
Libraries County
Licensing District
Markets and fairs District
Minerals and waste planning County
Museums and galleries County / district
Parking County / district
Passenger transport (buses) and transport
planning County
Planning County / district
Public conveniences District
Public health County
Social services, including care for the elderly and
community care County
Sports centres, parks, playing fields District
Street cleaning District
Tourism County / district
Trading standards County
Waste collection and recycling District
Waste disposal County
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