Block grant was introduced by the Local Government, Planning and Land Act 1980. The grant, which is paid for out of central government taxation and borrowing, partially equalises between local authorities' different rateable values and between a government measure of their spending needs. In addition, it subsidises rates generally. It replaced the 'needs' and 'resources' elements of the Rate Support Grant (RSG), whihc had operated, with occasional modification, since 1958. Attempts to equalise between authorities' different rateable resources and spending needs have been made since the late nineteenth century. This paper looks at the origins of and recent economic background to block grant. Two distinct phases emerge in this analysis: the early search for improvements to local government finance in general and the grant system in particular, followed by a later desire to reduce local authority spending by manipulation of the RSG.
