The local government expenditure and income figures for 2019-20 provide a comprehensive overview of the financial activity of local government, including revenue expenditure and income; capital expenditure and financing; reserves; debt; and pensions.

Revenue expenditure is the cost of delivering services each year. Net revenue expenditure is calculated as service expenditure minus service income. In 2019-20, net revenue expenditure was £11,077m, an 8.1% increase from £10,250m in 2018-19.

Education and social work were the services with the highest net revenue expenditure, £5,327m and £3,461mrespectively.

Local authorities use general funding to meet their net revenue expenditure on services and any non-service specific revenue expenditure. In 2019-20, general funding was largely made up of General Revenue Grant (GRG), £6,937m; Non-Domestic Rates, £2,853m; and council tax, £2,493m.

Capital expenditure is expenditure that creates the buildings and infrastructure necessary to provide services, such as schools and roads. Due to the nature of capital expenditure, it can fluctuate substantially between years. Local authorities incurred £3,794m of capital expenditure in 2019-20, a 27.4% increase from £2,977m in 2018-19.

Local authorities can finance capital expenditure in a number of ways. In 2019-20 the main sources of capital financing were grants and contributions, £1,297m; and borrowing, £1,128m.

Usable reserves are local authorities’ surplus income from previous years. This can be used to finance future revenue or capital expenditure. At 31 March 2020, local authorities held £2,708m of usable reserves, an increase of 4.7% from £2,586m held at 1 April 2019.

When local authorities borrow money or use credit arrangements to finance capital expenditure, a debt is created. Local authorities have to repay debt from future revenues.

At 31 March 2020, local authorities had debt of £19,377m, an increase of 6.3% from £18,224m at 31 March 2019. In 2019-20, local authorities made debt repayments of £624m.