The Determinants and Efficiency of Local Authority Spending in England

IMF Working Papers, January 1, 1991

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The Determinants and Efficiency of Local Authority Spending in England

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Bibliographic details

• Authors: James P. F. Gordon, Tamim Bayoumi
• Published: January 1, 1991
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451927108.001

Summary / Main findings

• The paper analyzes the efficiency and determinants of local authority expenditure in England during 1989/90.
• The capitalization of local spending in house prices is used as a test of efficiency.
• It is found that local services are in general excessive from the capitalization standpoint.
• Application of the analysis to the recently introduced local government reforms suggest small effects on the overall level of spending.

Efficiency test: capitalization of local spending in house prices

• Method: Use capitalization of local spending in house prices as a test of efficiency.
• Result: Local services are in general excessive when evaluated by capitalization in house prices.

Determinants of local government spending (estimated)

• Significant determinants identified:
  • Local incomes
  • The tax price faced by the electorate
  • Local party control

Policy implications and local government reforms

• Application of the estimated determinants and efficiency analysis to recently introduced local government reforms suggests:
  • Small effects on the overall level of spending.

Subject areas and keywords

• Subject: Expenditure, Housing, Housing prices, Income, Labor, National accounts, Prices
• Keywords: authorities rise, benefit principle, government grant, Housing, Housing prices, Income, local authority expenditure, local government, property tax, spending authorities, tax price, thatcher government, United Kingdom government, WP