Six main approaches to the determination of the expenditure needs of the local authorities in England and Wales are discussed. A representative needs index is then chosen which is based on multiplying the average local authority service costs by the size of client group and summing over each service group in any authority. This index is estimated for 1974/1975–1980/1981 both for discretionary and for nondiscretionary services. The index is then compared with the grant-related expenditure (GRE) used for rate support grant purposes in 1981/1982. Discrepancies are shown to arise from particular choices of GRE assessment which exclude the large discretionary spending of some large central cities and some Inner London boroughs.
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