Tuesday, 16 November 2021
Department of Housing, Planning, and Local Government
294. To ask the Minister for Housing, Planning, and Local Government the reason there are discrepancies in funding allocations from his Department to local authorities; and if he will make a statement on the matter. [55972/21]
The funding system that applies to local authorities is a complex one, as authorities derive their income from a variety of local sources including commercial rates, Local Property Tax (LPT), charges for goods and services and funding from Central Government.
Central Government funding of local authorities similarly presents a complex picture, with transfers, both current and capital, coming from a wide range of Departments and Offices, not solely from my Department, for a variety of purposes. Some streams of funding are delivered directly from funding departments to local authorities, while others are routed through departmental agencies.
Most of the funding sourced from Central Government and provided to local authorities must be used for specified services. These can be grouped into 5 broad programme categories: recreational, education, environment, housing and transport. In 2020, funding from central government to local authorities totalled €6.08 billion, an increase of 46% on 2019.
Additional detail on Central Government funding of local authorities is provided in the Comptroller and Auditor General's Annual Report, accessible at the following link:
Local authorities vary significantly from one another in terms of size, population, population distribution, public service demands, infrastructure and other income sources, all factors which must be taken into account when comparing levels of funding in different local authority areas.
My Department has a wide and diverse business agenda, covering a broad range of functions, including local authority housing, voluntary housing, homeless services, estate regeneration, energy efficiency retrofitting, housing grants, rural water schemes, urban renewal/regeneration, and fire services. In order to achieve its objectives, my Department allocates significant resources to an extensive range of organisations, including local authorities, dedicated agencies, and other bodies; some allocations, depending on the programmes concerned, are made on a national or other non-county basis in the form of grant funding.
The local government funding model changed in 2014, primarily due to the establishment of Irish Water. Its financial relationship with the local government sector had a considerable impact on local authority financing at that time. In allocating General Purpose Grants from the Local Government Fund for 2014, my Department took account of the movement of certain water related activities from local authorities to Irish Water. In this context, it was necessary to defer defining a certain proportion of the proceeds of the LPT to be retained in each local authority and the setting of LPT baselines until 2015.
Local retention of LPT began in 2015 and is now established as an important source of funding for the local government sector, which reduces reliance on central funding. In accordance with decisions taken by Government regarding the distribution of LPT funding, every local authority has a minimum level of funding available to it known as the LPT baseline. The redistribution of the 20% of LPT from all local authority areas assists in providing equalisation funding to those authorities that have lower property tax bases.
The Programme for Government 'Our Shared Future', commits to bringing forward LPT reforms. These reforms will bring new homes, previously exempt from LPT, into the taxation system as well as providing for all money collected locally to be retained within the county. This will also be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer, as is currently the case.