This section contains financial information about the council including:
- the budget for day-to-day spending, called the Revenue Budget
- the Capital Programme which is money spent on things that should benefit the council for a number of years (such as building new schools or buying new recycling vehicles), and
- the council’s Statement of Accounts.
Capital and Revenue are words to which we in local government do not give a second thought when discussing current and future budget issues.
However, it may not always be clear why the council might have money to undertake a major road scheme or build a new school, while at the same time having to make cuts to day-to-day services.
The reason for this is the way the capital programme and the revenue budget are funded and what councils are and are not allowed to do when spending the money.
Similar to the revenue budget, the council receives general and specific grant funding to support capital expenditure. However, other than that, there are some significant differences to how capital expenditure is funded:
One of these is that councils are allowed to borrow to fund capital expenditure. They may also sell existing assets to buy new ones, or reinvest the money to refurbish others.
Borrowing is not allowed to fund revenue expenditure.
And this makes sense in a personal context. Generally, you wouldn’t take out a loan to buy groceries, but you may consider borrowing to buy a new car.