Commentary Part 5: Community Empowerment Chapter 1: Council Tax Sections 73 to 79 - Local authority requisite calculations
189.Sections 73 to 79 amend the calculations (“the requisite calculations”) which billing authorities, major precepting authorities and local precepting authorities in England must make to determine their basic amounts of council tax for a financial year. The principal effect of these sections is to replace the obligation to calculate a budget requirement for a financial year with an obligation to calculate a council tax requirement. This change has been made possible in relation to England by the repeal of the Secretary of State’s power to cap an authority's budget requirement (see generally paragraphs 4 to 28 of Schedule 6) and the introduction of referendums in relation to council tax increases (see section 72 and Schedule 5).
190.Under previous legislation an authority’s budget requirement for a financial year was the amount that the authority requires from council tax, revenue support grant, redistributed non-domestic rates and certain other income sources in order to finance its budget for the year. Powers in the Local Government Finance Act 1992 and the Greater London Authority Act 1999 were used to make annual Alteration of Requisite Calculations Regulations in relation to England the purpose of which was to ensure that the requisite calculations for local authorities in England operate appropriately each financial year. In particular, those Regulations ensured that the correct items were taken into account in the respective calculations of an authority’s budget requirement and its basic amount of council tax.
191.The changes made by sections 73 to 79 place local authority requisite calculations on a simpler footing and avoid the need for regulations each financial year.
192.Under the new provisions an authority’s council tax requirement for a financial year is the amount that the authority requires from council tax alone in order to finance its budget for the year and this amount is used to calculate the authority’s basic amount of council tax. This approach simplifies the council tax calculations, since it avoids the need to deduct revenue support grant, redistributed non-domestic rates and the other income sources from the authority’s budget requirement before the authority’s council tax is calculated.
193.The new provisions also make explicit reference to “proper practices”. Proper practices for these purposes are the accounting practices that govern the preparation of local authorities’ annual accounts. Including references to proper practices in the requisite calculations simplifies and clarifies the operation of those calculations.