Local government in England broadly consists of three layers: regional authorities, local authorities and parish councils. Legislation concerning English local government is passed by Parliament, as England does not have a devolved parliament.
This article does not cover the 31 police and crime commissioners or the four police, fire and crime commissioners of England.
Further information: Parish council (England)
Parish councils form the lowest tier of local government. They can also resolve to call themselves a community council, a neighbourhood council, a village council, a town council or (if city status is granted) a city council, but this is purely stylistic. Parish councillors sit on parish councils.
As of December 2021, there are 10,475 parishes in England, but they do not cover the whole of the country (notably including the vast majority of Greater London).
The only specific statutory function of parish councils, which they must do, is establishing allotments. However, there are a number of other functions given by powers in the relevant legislation, which they can do, such as providing litter bins and building bus shelters. Their statutory functions are few, but they may provide other services with the agreement of the relevant local authorities,  and under the Localism Act 2011 eligible parish councils can be granted a "general power of competence" (GPC) which allows them within certain limits the freedom to do anything an individual can do provided it is not prohibited by other legislation, as opposed to being limited to the powers explicitly granted to them by law. To be eligible for this a parish council must meet certain conditions of quality.
Local councils are funded by a combination of central government grants, Council Tax (a locally set tax based on house value), Business Rates, and fees and charges from certain services including decriminalised parking enforcement. Up to 15 English councils risk insolvency, the National Audit Office maintains, and councils increasingly offer, "bare minimum" service. The New Local Government Network maintains most local authorities will only be able to provide the bare minimum of services five years from 2018.
Many of these funding sources are hypothecated (ring-fenced) - meaning that they can only be spent in a very specific manner - in essence, they merely pass through a council's accounts on their way from the funding source to their intended destination. These include:
The other main central government grant - the Revenue Support Grant - is not hypothecated, and can be spent as the council wishes. For many decades, Business Rates were gathered locally, pooled together nationally, and then redistributed according to a complicated formula; these would be combined with the Revenue Support Grant to form a single Formula Grant to the council. Since 2013, a varyingly sized chunk of Business Rates is retained locally, and only the remainder is pooled and redistributed; the redistribution is according to a very basic formula, based mainly on the size of the 2013 Formula Grant to the relevant council, and is now provided to the council independently of the Revenue Support Grant.
Main article: Council Tax
When determining their budget arrangements, councils make a distinction between hypothecated funding and non-hypothecated funding. Consideration of all funding in general is referred to as gross revenue streams, while net revenue streams refers to funding from only non-hypothecated sources.
Historically, central government retained the right to cap an increase in Council Tax, if it deemed the council to be increasing it too severely. Under the Cameron–Clegg coalition, this was changed. Councils can raise the level of council tax as they wish, but must hold a local referendum on the matter, if they wish to raise it above a certain threshold set by central government, currently 3%.
Council Tax is collected by the principal council that has the functions of a district-level authority. It is identified in legislation as a billing authority, and was known as a rating authority. There are 314 billing authorities in England that collect council tax and business rates:
See also: Precepting authority
Precepting authorities do not collect Council Tax directly, but instruct a billing authority to do it on their behalf by setting a precept. Major precepting authorities such as the Greater London Authority and county councils cover areas that are larger than billing authorities. Local precepting authorities such as parish councils cover areas that are smaller than billing authorities.
The precept shows up as an independent element on official information sent to council tax payers, but the council bill will cover the combined amount (the precepts plus the core council tax). The billing authority collects the whole amount, and then detaches the precept and funnels it to the relevant precepting authority.
Levying bodies are similar to precepting authorities, but instead of imposing a charge on billing authorities, the amount to be deducted is decided by negotiation. The Lee Valley Regional Park Authority is an example of a levying body. Voluntary joint arrangements, such as waste authorities are also in this category.
Aggregate External Finance (AEF) refers to the total amount of money given by central government to local government. It consists of the Revenue Support Grant (RSG), ringfenced and other specific grants, and redistributed business rates. A portion of the RSG money paid to each authority is diverted to fund organisations that provide improvement and research services to local government (this is referred to as the RSG top-slice), for example the Local Government Association.