External influences - local authority spending

As A2 students start to broaden their thinking about the influences on a business’s decisions, they have to learn about local and national government revenue raising and spending. I often find that they don’t know the different roles of local and national government, but an interactive device which the Local Government Authority is about the roll-out to all councils websites might help with that. The idea is to ask the public to play the role of council leaders in deciding where to make cuts in spending, changes in employees pay and in the fees charged for various services, in order to achieve the required cuts and keep any rise in council tax to less than 5%. It has been trialled by Redbridge local council in London, and you can see it in operation on their website.

It is a game with a purpose - local authorities will take the results into account when they draw up their budgets, in which they are bound to be asked to make cuts of up to 33%. The process gives you a target for the amount to be cut, and also for a maximum of a 5% rise in council tax. As you make your decisions about where to make cuts, and how to adjust revenue, it gives you feedback about the practical consequences of your decisions. If you log on to Redbridge’s website you can try it for yourself - it is quite a simplistic process, but might be helpful to get students thinking about the opportunity costs involved in balancing the local authority’s spending. I would suggest, though, that you ask students to avoid pressing the final ‘Finish’ button, otherwise Redbridge may suddenly find themselves innundated with hundreds of students’ suggestions about how to balance their budget!