Finance committee of Stourport-On-Severn Town Council

MEETING ON 25^TH JANUARY 2022

REPORT OF THE TREASURER ON THE BUDGET 2022/23

1. INTRODUCTION

The Committee needs to recommend a budget and a precept for 2022/23 to the Council.

Members may recall that 12 months ago the Council approved an increase in the precept from £39 to £41.70.  At that time it was estimated that a further increase in the precept to £44.70 was likely to be needed in 2022 to meet the full cost of the services being transferred from Wyre Forest District Council.

The appendices attached provide:

• Revised estimates for the current year;
• A draft budget for 2022/23; and
• A projection for 2023/24.

 2. ACTUAL INCOME AND EXPENDITURE TO 31^st DECEMBER 2021

Accepted good accounting practice requires that budgetary control be carried out during each financial year.  This has been happening as usual at officer level but also by this Committee in November when it considered a report on budgetary control at the halfway stage of the financial year. 

These papers do include a column showing ‘Actual Apr-Dec’ and this is taken into account in the next column i.e. Revised Estimate for 2021/22.

3.  REVISED ESTIMATE 2021/22

Total net expenditure per the Revised Estimate for 2021/22 is £267,413 compared with the Original Estimate of £308,073 so an underspend of around £40,660 is now forecast.  This compares with a forecast underspend of £56,000 reported to the Committee in November. The reasons for the underspends are the same as reported in November.

 Significant variations are as follows:  

	£	£
Adverse variations
Localism – legal and property advice	5,100
Community centre security (approved by Finance Ctte)	2,720
		7,820
Benign variations
Riverside toilets – budget not used	-31,000
Salaries – net effect incl. Lin leaving	-3,900
Mayor/Deputy Mayor expenses – budget not spent	-5,600
Civic occasions – negligible spending	-1,800
Cemetery fee income – revised estimate exceeds budget	-2,000
Rent income from offices -revised est exceeds budget	-4,000
Town twinning – budget not used	-3,600
		-51,900
Other variations		-3,420
Net ‘benign’ variations		-40,660

 

Members may recall that we will pay service charges to Worcestershire County Council in relation to our occupation of the first floor of the Civic Centre.  Despite promptings from our solicitor, Maynard Burton, to WCC’s Legal Services we are still waiting for the signing of the lease and for charges for 2017/18 onwards.  I continue to set aside sums to meet these costs but they can only be estimated so there remains scope for variances between these estimated sums and the eventual actual charges.

4. DRAFT BUDGET 2022/23 & BUDGET PROJECTION 2023/24

The summary page of the draft budget shows Total Net Expenditure for 2022/23 of £327,787 and £352,657 for 2023/24.  By far the biggest figure in our budget is Salaries and this figure has been calculated on a person-by-person basis and takes due account of pay awards, increments where relevant and includes provision for National Insurance and employer pension contributions.  Price inflation has increased in the last 12 months or so and allowance is made for this where it appears to be required.  In relation to income it is suggested that:

• cemetery fees should increase this time following a standstill in 2021 preceded by an increase in the ‘headline’ charge from £720 to £800 in 2020 – an increase to £850 this time is suggested;  and
• allotment rents should not be increased this time following an increase from £44 to £46 (large  plots) and from £22 to £23 (small plots) in 2021.

The issues arising in preparing the draft budget for 2022/23 include:

• the paddling pool – to open the pool safely for more than 5 weeks will require an increase in the budget. The Town Council took on full operational responsibility for the paddling pool for the first time in 2021 but, due to the pandemic, the pool was only open for a few weeks. It was very successful but also quite costly partly due to the requirement for daily inspections. The draft budget for 2022/23, therefore, includes an increase from £14,000 in 2021/22 to £32,000 in 2022/23. The Town Clerk will update the Committee in relation to this and, it is hoped, be able to clarify how many weeks of opening can be paid for with a £32,000 budget.
• Riverside toilets – the transfer to the Town Council has not yet been completed but more is known now re the costs and it is felt that the budget to meet these costs needs to be increased from £31,000 to £36,000;
• Rental income from offices on the first floor of the Civic Centre – this can be volatile as tenants may leave at short notice and then not be replaced quickly;
• Service charge from WCC for occupying our offices at the Civic Centre - continuing uncertainty over if, when and how much WCC will charge.

Please note that the Budget projection for the financial year 2023/24 has been provided to assist with developing budget strategy.

5.  FUNDS AND RESERVES

Council policy is to maintain a number of funds to avoid ‘spikes’ in expenditure that distort the pattern of expenditure between financial years.  The programme attached shows the 3 funds, the annual contributions to them from the budget and the forecasts of spending from those funds.

6.         DETERMINATION OF THE PRECEPT FOR 2022/23

(a)   COUNCIL TAX BASE

The Town Council’s Council Tax base has been set by the District Council at 6,985 compared with  6,886 in 2020/21.  This means that:

• with no increase in the current charge of £41.70 the precept income to the Town Council would increase from £287,146 to £291,274; and
• a £1 increase to the Council Tax from the current charge of £41.70 to £42.70 would increase the Council’s precept income by a further £6,985.

(b)  WORKING BALANCE

Council policy was for some years to maintain a minimum balance of £50,000 but it was agreed last year that, because of increased volatility in some of the budget headings (especially income), the Council should aim to increase this, if possible, to around £70,000.  In fact, mainly because of inactivity arising from Covid restrictions, the balances actually increased to nearly £102,000 by 31^st March 2021 and are now forecast to be £124,000 by 31^st March 2022. The increase in responsibilities now falling on the Town Council does seem to me to warrant holding a higher level of balances than in previous years.

The Council does also hold three earmarked reserves and the balances on these at 31^st March 2022 are forecast as follows:

	£
Vehicles, mowers, equipment, computing etc.	6,489
Elections	12,000
Civic Hall maintenance	23,950

(c)   PRECEPT FOR 2022/23

Members will, as always, have to strike a balance between protecting the Council’s services, both now and for the foreseeable future, and minimising the Council Tax.  It is recognised that different members may strike this balance differently but the Council has to come to a decision.

Fully meeting the spending pressures referred to above in 2022/23 and subsequent years, would require an increase in the precept from £41.70 to £46.93 – an increase of 12.5%. This is the most straightforward way for the Council to proceed.  However, it is recognised that: 

• with balances now looking healthy; and
• with many Stourport people struggling financially following the pandemic and increases in the cost of living

the best approach this time may be to limit the increase by using some of the Council’s balances. In light of these points, the draft budget for 2022/23 attached is based on increase of £2 (from £41.70 to £43.70) – an increase of 4.8%.  This would require taking £20,500 from balances leaving balances at 31^st March 2023 at around £103,000.

If members do decide to use some of the balances to support the 2022/23 budget they need to understand that a further increase will be needed in 2023/24 because a ‘funding from balances’ approach can only be sustained short-term.  The projection provided for 2023/24 is based on a precept increase to £46.00 and, it is estimated, this would leave balances at 31^st March 2024 at around £93,000. Of course, much can change in the next 12 months.

Members may be interested to see how the Stourport precept in 2021-22 compared with that of other sizable town and parish councils in Worcestershire.

Local Authority	Parish Name		Band D council tax (£)
Wyre Forest	Kidderminster Town Council		42.50
Malvern Hills	Malvern		105.09
Wychavon	Evesham		62.45
Wychavon	Droitwich Spa		47.06
Wyre Forest	Stourport-on-Severn		41.70
Bromsgrove	Wythall		28.10
Wyre Forest	Bewdley		55.56
Wychavon	Pershore		70.65
Bromsgrove	Hagley		63.77
Bromsgrove	Catshill and North Marlbrook		30.53
Bromsgrove	Alvechurch		76.00

Members are, of course, very welcome to discuss all these issues and the draft budget figures can be amended as appropriate. 

7.         RECOMMENDATIONS

            It is RECOMMENDED that the Committee Recommends to Council:

1. A decision in relation to burial fees and allotment rents;
2. Approval of the Revised Estimates for 2021/22;
3. Approval of a draft Budget for 2022/23 and the Vehicle, Equipment and Election Programme.
4. An appropriate level of precept after taking into account the draft Budget, any further budget ‘bids’ and the remainder of this report.

I will be pleased to respond to any questions arising and help the Committee to decide on its recommendations.

Graham Shaw, January 2022