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Gains and Losses from the Changes in the System of Grants Paid to English Local Authorities

The principal purpose of this paper is to contrast the present rate support grant system that applies to local authorities in England with the revenue support grant system that will apply from 1 April 1990. The paper begins by describing the two systems briefly and then seeks to show how much grant receipts per head might change if local authorities maintained their present spending levels after 1 April 1990. At collection-fund level, there would be gains exceeding £150 per head in some areas and losses exceeding £150 per head in others. In the paper the factors causing these changes are analysed. In general, areas gain if they have high multipliers, overspend, and have high rateable values. Finally, the point is made that the people in any area also stand to gain or to lose if they end up paying less or more in nondomestic rates. It seems likely that changes in these amounts will do much to offset the changes in grant receipts.