In this article we develop and apply three normative criteria for evaluating the equity of the spatial distribution of local government finance. These are: service needs, as indicated by the characteristics of local population; rights, as measured by contributions to national and local taxes; and effort, which is the ratio of local taxes to incomes. We hypothesize that, in line with the Conservative governments' commitment to market criteria of equity in the 1980s and 1990s, the relationship between local spending and need became weaker while the relationship with rights and effort became stronger. The results of an empirical analysis of the spatial equity of expenditures in England are not consistent with this expectation. The dominant criterion of equity in local government finance between 1981 and 1996 was service need, rather than rights or effort. The evidence suggests that those areas which need more local spending get more, those which pay more get less and those which try harder get little reward for their efforts.
- Local government
- Public expenditure