What should the Reserve Power seek to limit?
4. The Local Government Finance Act 1992 specifically sets out the Secretary of State’s powers in relation to limiting an authority’s budget requirement. So although the relevant part of the legislation refers to the Limitation of council tax’, this is achieved indirectly by the control of the budget requirement. A budget requirement is defined in the 1992 Act. Broadly speaking, it is the difference between an authority’s expenditure and income, after movements in and out of reserves, but before taking into account RSG, NDR and some other specified grants. The gap between the budget requirement and grants etc is made up through council tax. So, all other things being equal, an increase or decrease in a budget requirement will lead to an equivalent increase or decrease in council tax. Limiting the budget requirement offers greater stability and predictability of expenditure than other approaches and is less open to manipulation’ than limits on council tax (for example, of surpluses and
