The information below describes the nature of the council's expenditure and how this is funded.
The council is required by law and best accounting practices to publish certain financial information about both what it intends to spend each year (its budget) and to publish its accounts, which show what was actually spent in each year.
The financial year runs from the 1 April to the 31 March and this is the basis for all of the information published.
Each year the council is responsible for spending money in order to provide the people of Sunderland with a variety of services.
This expenditure can be divided into two types:
- Revenue Expenditure - This is the cost of running and maintaining the day-to-day services such as schools, providing care for the elderly, collecting rubbish, maintaining roads and street lights
- Capital Investment - The council also spends money on investing in the future of the City. Capital investment is expenditure on items such as land, buildings, plant and vehicles. Examples include building a new school or improving leisure facilities, developing road networks or investing in the economic development of the city.
How does the council fund revenue expenditure?
The council needs enough income to fund all of its revenue expenditure. This income comes from a variety of sources. The major sources of funding are:
- General grants from central government
- Business Rates - This is a levy set by the government on all businesses based on the rateable value of premises they occupy. It is collected by each council. The amount is then shared between central government (50%), the council (49%) and Tyne and Wear Fire Authority (1%)
- Fees, charges and other income - Fees and charges are levied on certain services provided by the council. These fees and charges contribute to the cost of that specific service and means less needs to be charged to council tax payers. Examples include charges for use of home and day care services, car parking and library facilities
- Other income received by the council includes specific grants from government allocated to fund specific services as well as interest received
- Council Tax - This is a tax on each house and is calculated as revenue expenditure less general government grants, retained Business Rates and any fees, charges and other income. The level of council tax is therefore directly affected by the income which the council will receive and the amount which it plans to spend
How does the council fund capital investment?
To finance the cost of capital investment the Council can:
- Borrow money - the council can borrow to fund capital investment but must ensure that its capital spending plans are affordable, sustainable and prudent. The costs arising from borrowing, including interest and principal repayments, are revenue expenditure. Therefore the more money borrowed, the greater the ongoing revenue expenditure
- Use funds from its revenue budget
- Secure grants for specific projects, mainly from government, or other national and regional organisations
- Utilise sale proceeds generated from the disposal of council assets
Either of the first two options will have a direct impact on the total revenue expenditure of the council and therefore the amount spent on services or the amount of funding to be raised by council tax.