Suddenly the word "subsidy" seems to be very much in fashion, especially in local government. I've heard it three times in the last week used in connection with local government services, but I don't recall hearing it in this context before.
Recently it was in the news - and continues to be to some extent - due to the changes in housing benefit which introduced rules about the number of bedrooms that anyone claiming housing benefit would be entitled to, with a commensurate reduction in their benefit if they were deemed to have too many rooms. Opponents of this change called it the "bedroom tax", which was a clever soundbite and infuriated the government, who (correctly) pointed out that it was not a tax, but who still found it difficult to counter. (It had the unlooked-for and unwanted effect of leading elderly and comfortably-off supporters of the government to think that they were actually going to be taxed on their own extra rooms - rather like King William III's window tax and the subsequent Georgian attempts to increase revenue from the tax by decreasing the number of windows you could have before incurring it). Then somebody came up with the idea of calling it the "spare room subsidy". The implication here is clear: money paid to people with rooms which are now deemed to be surplus to their needs is a hand-out, has always been so, and is to be withdrawn (but it never was called the "spare room subsidy" before: this is an attempt to put a certain spin on the policy).
It's a word with an interesting history. According to the OED (use your public library's subscription to check it online!) it was often originally used to indicate a tax: a tax on imports and exports, which was given to the sovereign; a levy paid by parliament to the sovereign for a particular purpose (such as a war); or (an obsolete meaning) help, assistance (of the kind which you could request from a saint, for instance).
More generally, it also means: a donation (usually to provide assistance); a sum which one country might send to another for a specific purpose (such as war, or to repay aid); and, the meaning which is closest to what we are starting to see now, money granted by the state or a public body to keep down the price of a commodity or service or to support something held to be in the public interest (so, the government's intervention to assist the banks after the crash could reasonably be called a subsidy, as would be money supporting a rural bus service which might otherwise be too expensive to be viable, but which is considered to be in the public interest because it enables people living in otherwise isolated communities to have jobs, visit the shops, &c.)
The word "subsidy" does not traditionally have negative connotations (such as the idea of a generous hand-out to an undeserving recipient, or the idea of its being something which could be withdrawn at any time and for which the recipient should be suitably grateful). It is not a word to use with scorn about something which one does not wish to pay for any more. This seems to be the meaning which is beginning to be attached to it, however. It has come a long way from its meaning of a tax which was raised in order to fund the monarch!
It is not a word which is appropriate when discussing the provision of statutory services. They are not "subsidised" but provided in accordance with legal requirements. We do not need to feel inferior for being on the receiving end of them. Did the monarch ever feel this when receiving his subsidy? or, to be more up to date, do the banks show any sign of unworthiness at having received such a substantial subsidy? Local government spin doctors and eager adopters of buzz words everywhere, please desist! We know what you are trying to do: use language to distort the argument. You have been rumbled!