HC Deb 02 July 2003 vol 408 cc362-4W
Mr. Prisk

To ask the Deputy Prime Minister (1) what mathematical formula was used in(a) the old standard spending assessment and (b) the new formula spending share to calculate the level of reimbursement received by each local authority in Hertfordshire to compensate for student council tax exemptions; [122495]

(2) how much each local authority in Hertfordshire (a) lost in council tax per head and (b) received in reimbursement per head through formula spending share, as a result of student council tax exemptions in (i) 2002–03 and (ii) 2003–04 estimates. [122496]

Phil Hope

Under both the standard spending assessment and formula spending share systems, each local authority is compensated for student exemptions from council tax in the calculation of its entitlement to revenue support grant. The calculation does not, however, involve a separate mathematical formula for student exemptions. Student exemptions are, instead, one of several factors affecting the size of a local authority's taxbase, and it is the overall taxbase for the authority that is taken into account in the calculation of revenue support grant.

More specifically, revenue support grant is calculated as the difference between a local authority's standard spending assessment (or formula spending share) and the sum of its share of redistributed business rates and its assumed council tax income, with the reduction in the taxbase due to student exemptions being taken into account in the calculation of the assumed council tax income. The resulting revenue support grant allocations are then constrained so that the like-for-like increase in formula grant over the previous year is neither below the floor nor above the ceiling.

The following table shows how much council tax per head of resident population was foregone by each local authority in Hertfordshire in 2002–03 as a result of student council tax exemptions.

Number of class M and N exemptions1 Council tax income foregone per head
Hertfordshire 1,550 1.04
County Council
Hertfordshire Police 1,550 0.12
Broxbourne 32 0.03
Dacorum 53 0.04
East Hertfordshire 195 0.21
Hertsmere 125 0.18
North Hertfordshire 56 0.06
St Albans 126 0.15
Stevenage 88 0.13
Three Rivers 36 0.07
Watford 75 0.19
Welwyn Hatfield 764 1.17
1 Class M exemptions are for halls of residence provided predominantly for the accommodation of students, and Class N exemptions are for dwellings which are occupied only by students, the foreign spouses of students, or school and college leavers.


CTB1(s) returns from local authorities and the Registrar General's population estimates.

The above figures are equivalent to an average of £1.38 revenue foregone per head across Hertfordshire. Comparable figures for 2003–04 are not available because the relevant return for 2003–04 did not request information on the distribution across council tax bands of exempt properties. Assuming a similar distribution across bands as 2002–03 gives an average of about £1.70 revenue foregone per head for 2003–04.

The precise extent to which the above losses were compensated for through revenue support grant could be calculated only at disproportionate cost. In general terms, however, a local authority spending at the level of its formula spending share is fully compensated for council tax income foregone as a result of council tax discounts and exemptions in the calculation of its entitlement to revenue support grant before the application of floors and ceilings.

Back to