CHANGING PATIERNS OF BUDGETING IN ENGLISH LOCAL GOVERNMENT
| Author | ROYSTON GREENWOOD |
| Date | 01 June 1983 |
| DOI | http://doi.org/10.1111/j.1467-9299.1983.tb00510.x |
| Published date | 01 June 1983 |
CHANGING PATIERNS
OF
B.UDGETING
IN
ENGLISH LOCAL GOVERNMENT
ROYSTON GREENWOOD
Worsening financial circumstances have prompted local authorities to review the
appropriateness of traditional budgetary arrangements. Using Wildavsky's concept
of
incremental budgeting as a guiding framework this paper examines how
and
why
authorities have altered their bud etary processes. Results indicate that underlying
are more affected than others by declining revenues.
INTRODUCTION
The study of local government finance has focused in recent years upon the
changing structure of central-local relationships and the development of new
systems
of
grant-aid. The consequences of the new systems for local authority
discretion and local political expression have prompted several observers to
devote attention and analysis to the altering relationship between central and local
government, and to comment upon the appropriate form of financing and central
direction required for the provision
of
local services (Jones and Stewart 1982;
Jackson 1982; Raine 1981; Burgess and Travers 1981). The introduction
of
industrial
militancy (Bassett 1982) and of more extensive and novel use
of
the courts (Elliot
1982) has sharpened interest in this area
of
study.
Rather less is known about how local authorities have coped with the
sharpening pressure upon resources.
As
grant-aid
is
reduced, or made more
uncertain, and as rates of inflation have risen to previously unknown levels, how
have local authorities sought to manage their affairs? What changes have been
required of the budgetary process?
The aim
of
the present paper
is
to document the changes in budgetary practices
that occurred in 20 local authorities in the five fiscal years following the 1974
reorganization
of
local government.' The period was one
of
a deteriorating
incrementalism is the assumption
o
B
growth, although certain aspects of incrementalism
1
The sample of
20
local authorities included
14
shire counties and
6
metropolitan districts or London
boroughs,
chosen to represent variations in fiscal pressure (hence the larger proportion
of
shire
authorities). The larger proportion of shire counties coupled with the electoral successes
of
the
Conservative Party in the mid
1970s
means that the sample is biased towards Conservative controlled
administrations. At the beginning
of
the period
13
shire counties and
4
of the metropolitadLondon
authorities were Conservative controlled.
By
the end of the period a total of four of the counties had
either turned Labour
or
lost any overall controlling majority.
Royston Greenwood is an Associate Professor in the Department
of
Organizational Analysis,
University
of
Alberta. This paper is based upon research funded by the Social Science Research
Council.
Public Administration
Vol.
61
Summer
1983 (149-168)
0
1983
Royal lnstitute of Public Administration
150
ROYSTON
GREENWOOD
national economy and of increasing financial pressure upon local authorities
(Wright 1980; Hood and Wright 1981). Indeed, what follows
is
an account of how
20
local authorities coped with sustained fiscal pressure.
By
fiscal pressure
is
meant
:
a situation in which local government faced with the necessity of achieving a
balance between revenues and expenditure must in time choose either to
(1)
increase taxes
...
in order to maintain existing real expenditure and service levels
(2)
reduce expenditures from the level of the previous year or
(3)
engage in some
combination of these activities (Wolman 1981,
1).
Over the period covered, local authoritiesfacedfiscal pressure from two sources
-
pay and price increases, and losses in grant-aid. The scale of that pressure as it
applied
to
the sample of
20
authorities may be gauged from Table
1
which shows
the rate of increase in local property tax which would have been required to meet
the costs of inflation, and to replace revenues lost through cuts in grant-aid.
It
is
rather salutary to note that for most authorities the pressure upon local
government (as represented by the sample of
20
reported here) was equivalent to
annual increases of 10% or more per year for a period
of
five years.
The statistics in Table
1
do not reflect any increases in revenues that occurred
through additional rating income arising from revaluations of additional
properties.
As
these are relatively insignificant, except where full scale
revaluations occur, it was felt reasonable to exclude them.
It
is also worth noting
that the definition of fiscal pressure is a financial one. That is, to indicate that
authorities experienced a loss of revenues (in real terms) equivalent to given levels
of rate increases does not necessurilymean that politicians regard such increases as
unreasonable. Politicians may be prepared to raise taxation
to
even higher levels,
in which case the term ‘pressure’ would be inappropriate. We do not have rigorous
data on the political elasticity of property
tax
income: however, there is
no
doubt
that the authorities studied here did feel that inflation and grant losses, coupled
with an economically non-buoyant property tax, was a serious fiscal problem.
To
arrange and make sense of the material we have drawn upon Wildavsky’s
conception
of
budget preparation as an essentially incremental process
(Wildavsky 1964). For present purposes incrementalism is understood in terms of
three structural dimensions of the budgetary process and various ’rules of the
game’ or shared role expectations which pattern interaction between actors. The
three structural dimensions are:
(1)
the extent to which activities and expenditures (especially existing
expenditures) were reviewed each year;
(2) the mode of analysis employed during the review (especially whether priorities
are fixed using political as opposed to ’rational’ or ’bureaucratic’ criteria (Pfeffer
and Salancik 1974);
(3)
the time-scale of the budget (whether
it
is
retrospective or future oriented, and
essentially short or long-term).
An incremental budgetary structure would be characterized by the application
of essentially political criteria to
a
narrow range of proposed increases or decreases
To continue reading
Request your trial