A brightly-coloured ‘heat map’ which claims to show levels of local council spending is inaccurate and misleading, says Chris Game

As an academic, I might have been quite excited about the DCLG producing a council ‘spending heat map’ – imagining it could help ward off, at least for a few minutes, the soporific tendencies of students in local government finance lectures.

How wrong I would have been.

You may have noticed how communities secretary, Eric Pickles, has been promoting his department’s new toys – and he was at it again recently in his 17 May press notice: ‘How will councils spend your £53bn this year?’ which encouraged local taxpayers to ‘go compare and ask how their money is being spent’ at http://www.communities.gov.uk/news/corporate/1904842.

First, it’s David ‘calm down, dear’ Cameron. Now, Mr Pickles. It has to be the man’s surname, for why else could Conservative Cabinet ministers possibly want us to keep associating them with Michael Winner?

Forget that, though, and overlook too that this latest of Mr Pickles’ wheezes is actually based on billing authorities and so, unhelpfully, allocates all county spending to districts.

Even in its own terms, almost everything about this press notice was irritating. It may not actually be wrong, or even misleading to those who know about local government finance. But to my students and, I imagine, to passing local taxpayers, it’s confusing, partial – in both senses – and unhelpful.

Let’s start with that headline £53bn. Divide it by England’s population of 51.8 million, and you get £1,017 – an average of, as the first sentence of the press notice put it, ‘exactly how much town halls have to spend for each resident’.

But, of course, it’s not. It’s nothing of the sort. If it were, those residents really would have cause to complain. After all, most of the taxpayers among them are paying more than that in council tax. A moment’s thought should surely have suggested to whoever wrote it that it just doesn’t make sense, but apparently not.

The fact is that every single unitary and county council spends more than £1,017 per resident. Many spend close to that on children’s services alone. Indeed, in 2010/11, the average per capita service expenditure by all English local authorities taken together was almost precisely double Mr Pickles’ figure – £2,044 (CIPFA, Finance and general statistics, 2010-11, column 270) – and that’s net of sales, fees and charges, internal recharges, and other odds and ends. Gross expenditure could be at least half as much again, and it is these gross figures that will feature in the spending pie charts and tables in councils’ tax leaflets.

The leaflet for my own council, Birmingham, for example, shows that for 2011/12, the council’s revenue expenditure – the day-to-day running costs of the council – will be £3.5bn, which, divided by the city’s population of just over one million, gives £3,280 per resident.

The point is that Birmingham’s £3,280, and the equivalent numbers in all other council tax leaflets, are meaningful figures. They are what the council is budgeting actually to spend on services, employees, premises and supplies.

What’s more, these figures are divided among the different major service areas – children, young people and families, adults and communities, transport, environment and regeneration – and, should we want more details, they too are available, plus council tax comparisons with other similar authorities, in the council’s Budget Book.

In short, even if Mr Pickles’ figures made sense, we didn’t need them. Council spending is not like that of central government. Local taxpayers have always been informed exactly where their council taxes go, and, indeed, what a very small proportion of their council’s spending they finance.

Similarly, it has been possible for years to make detailed inter-authority comparisons of councils’ spending patterns and priorities – through CIPFA, but also through their own publications.

Obviously, then, unless Birmingham accounts for almost one-sixth of England’s total local government revenue spending, something is seriously wrong with the £53bn figure in Mr Pickles’ headline. There is. As half-explained in a muddled ‘Note for editors’, it appears to include just two income sources – £29.4bn in formula grant, which itself comprises revenue support grant, redistributed business rates, and, where relevant, the Home Office police grant, and £26.5bn in council tax.

This clearly isn’t right. The two figures exceed the £53bn on their own. Council tax receipts appear to constitute almost half of the total sum ‘town halls have to spend on each resident’.

There is no mention of, or apparently room for, other revenue sources. Maybe the conveniently accompanying heat map can provide some clarification? Indeed it can.

The map plots for all English billing authorities their revenue spending power (RSP) per head – a novel and contentious term of which even most council treasurers were happily ignorant this time last year.

RSP made its public debut in last December’s provisional finance settlement, as the Government’s new and purportedly truer measure of councils’ resourcing than the existing and familiar measure of formula grant.

Truer is debatable. Its political convenience, on the other hand, is blatant. RSP was created for the purpose of massaging the severity of the grant settlement and the front-loading of funding cuts.

RSP is an inclusive measure – formula grant plus – the pluses comprising council tax, non-ring-fenced specific grants (for example, early years intervention grant), and NHS funding to support social care. The addition of these funding sources, together with a few other tweaks, was predictable and dramatic – presentationally.

In Oldspeak, formula grant to local authorities, excluding police grants, would fall by 11.6% in 2011/12. In Newspeak, total revenue spending power of non-police local authorities would fall by an apparently much less scary 4.5%.

To be honest, even formula grant, while its every penny may be vital to a council treasurer, is not a hugely-useful figure for most residents and taxpayers. But at least, if explained, it makes sense, says something about an authority’s grant reliance, and enables measurement of year-on-year central funding gains and losses.

RSP is a politico-financial construct, and, as shown above, its very name is nonsense. CSBAPORSP doesn’t make the catchiest of acronyms, but it would be more accurate – carefully selected bits and pieces of revenue spending power.

And that strikes me as its only real use to my students. It’s another example of how statistics can be used for political ends – like the parties’ contrasting ways of presenting their claims about levels of council tax, discussed in my recent INLOGOV blog: ‘Conservative and Labour councils both cost you less’ – www.inlogov.bham.ac.uk/News/2011/04/conservative-labour-councils.shtml.

As for the DCLG’s heat maps, they will never displace the pie charts in council tax leaflets.

Chris Game is a visiting lecturer at INLOGOV, the Institute of Local Government Studies at Birmingham University