Annex C
FUNDING ARRANGEMENTS FOR OPERATING AUTHORITIES
1. The EA's non grant-aided flood defence
expenditure is funded primarily from levies on local authorities
and also from IDB contributions. In Anglian Region only, it is
also funded from a general drainage charge per hectare, payable
by farmers, on land which is not within Internal Drainage Districts.
IDBs are funded primarily by the combination of special levies
on local authorities and drainage rates payable on agricultural
land and agricultural buildings.
2. Where local authority flood and coastal
defence schemes are grant-aided, the Ministry issues Supplementary
Credit Approvals (SCAs) to enable local authorities to borrow
to cover the residual costs of the scheme.
3. The way in which local authority costs
are financed is a function of the general funding arrangements
for local authorities. Flood and coastal defence revenue expenditure
including Environment Agency levies and IDB special levies is
reflected in the Standard Spending Assessments (SSAs) for local
authorities and in the Revenue Support Grant (RSG) made available
to them. Flood defence and coast protection expenditure appear
as two separate sub-elements in the SSAs of local authorities.
4. RSG is distributed to each receiving
authority so that if it were to spend at the level of its SSA
then, subject to certain qualifications, all billing authorities
could set broadly the same council tax for dwellings in the same
valuation band in any area.
5. There are two parts of the SSA which
are relevant to flood defence and coast protection. One relates
to the day-to-day costs associated with these services. The other
relates to the cost of servicing borrowing undertaken on the strength
of SCAs.
6. An authority's share of the national
totals of SSA for the day-to-day expenditure on flood defence
and coast protection is its share of budgeted expenditure in the
previous year. The national totals reflect an estimate by MAFF/DETR
of expenditure on Environment Agency Levies and IDB special levies,
together with authorities' own spending.
7. The element of the SSAs relating to the
cost of servicing borrowing is based on a notional debt for each
authority, reflecting the SCAs which have been issued to the authority.[1][2]
8. The overall effect of these arrangements
is that nearly all of the day-to-day costs of flood defence and
coast protection which might otherwise fall on local authorities
and their council tax payers are met by central government through
the Revenue Support Grant, as is the majority of the debt charges.
(a) allowing the county council to make
only a token contribution (but this is possible only with agreement
of both parties); or
prior to the issues of
an SCA by the Ministry for the non-grant aided costs of an approved
project, then the SCA can be apportioned accordingly between the
district and county, and reflected in RSG calculations.
1 SCAs issued before 1997/98 also increase the negative
element of SSAs relating to interest earned on set-aside capital
receipts. This reduction no longer applies to new credit approvals. Back
2
Under the CPA 1949, s.20, county councils are required to make
a contribution towards the borrowing costs of grant aided coast
protection projects carried out by district councils within their
area. But to avoid placing an unnecessary financial burden on
a local authority, and to avoid any double counting of RSG, it
may be necessary to consider either: Back
| 
