REPORT OF THE TREASURER ON THE BUDGET 2023/24

FINANCE COMMITTEE MEETING ON 23rd JANUARY 2023

 

1.         INTRODUCTION

The Committee needs to recommend a budget and a precept for 2023/24 to the Council.

 

Members may recall that 12 months ago the Council approved an increase in the precept from £41.70 to £43.70.  In my report to this Committee in November I did explain the impact of the greater-than-expected level of inflation since the budget and that this would mean:

  • an overspending of the 2022/23 budget; and
  • a significant precept increase for the 2023/24 budget.

The appendices attached provide:

  • Revised estimates for the current year;
  • A draft budget for 2023/24; and
  • A projection for 2024/25.

2.         ACTUAL INCOME AND EXPENDITURE TO 31st DECEMBER 2022

            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 2022/23.

3.         REVISED ESTIMATE 2022/23

Total net expenditure per the Revised Estimate for 2022/23 is £353,419 compared with the Original Estimate of £327,787 so an overspend of around £25,632 is now forecast.  This compares with a forecast overspend of £19,000 reported to the Committee in November. The main variations are as reported in November. 

Significant variations are as follows:

 

 

£

£

Adverse variations

 

 

Salaries – arising from higher-than-expected pay award

16,000

 

Elections – cost of by-election

  6,750

 

Parks equipment – repairs following vandalism

  4,000

 

Rent – community centre – no agreement so budgeted rent not received

  2,600

 

Allotments – miscellaneous previously explained unbudgeted costs

  3,500

 

Non-recurring – new gates at Kingsway allotments – approved in June

  4,000

 

Riverside toilets – expected cost of electricity

  2,000

 

Non-recurring – other additional spending approved by Finance Ctte.

  5,100

 

Other minor variations

  3,700

 

 

 

47,650

Benign variations

 

 

Cemetery – income from burial fees – greater than budgeted

-22,000

 

 

 

-22,000

Net total variations

 

 25,650

 

          4.         DRAFT BUDGET 2023/24 & BUDGET PROJECTION 2024/25

The summary page of the draft budget shows Total Net Expenditure for 2023/24 of £370,319 and £351,419 for 2024/25.  By far the biggest figure in our budget is Salaries and this figure has been calculated on a person-by-person basis and takes account of pay awards (a 6% increase in the paybill has been assumed), 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 the recommendations of the Parks Committee are:

  • cemetery fees – an increase in the ‘headline’ charge from £850 to £900; and
  • allotment rents - an increase this time, following no increase in 2022, from £46 to £50 (large plots) and from £23 to £25 (small plots).

The issues arising in preparing the draft budget for 2023/24 include:

  • Inflation – the rate at which pay and prices will increase in 2023/24 is, this year, unusually uncertain;
  • Localism – this is now a case of consolidation of many of the services that have transferred from Wyre Forest D.C. to the Town Council rather than taking on significant new services;
  • Savings – where possible, the Council need to find these so as to keep precept increases as low as they reasonably can be. In this context it is felt that the annual £3,000 grant to  Stourport Forward can no longer be justified and is, therefore, omitted from the draft budget;
  • New non-recurring costs are: (1) Coronation £500, (2) Electrical testing at Civic Hall £400, (3) Lloyds Meadow – refurbish steps £1,000, and (4) Community Centre – sprucing up £400.

Please note that the Budget projection for the financial year 2024/25 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 2023/24

(a)   COUNCIL TAX BASE

The Town Council’s Council Tax base has been set by the District Council at 7,056 compared with 6,985 in 2022/23.  This means that:

  • with no increase in the current charge of £43.70 the precept income to the Town Council would increase from £305,245 to £308,347; and
  • a £1 increase to the Council Tax from the current charge of £43.70 to £44.70 would increase the Council’s precept income by a further £7,056.

(b)  WORKING BALANCE

Council policy was for some years to maintain a minimum balance of £50,000 but it was agreed two years ago to increase this to £70,000. In fact, mainly because of inactivity arising from Covid restrictions, the balances increased over two years to nearly £127,000 by 31st March 2022. It was agreed 12 months ago that around £21,000 of these balances would be used to support the 2022/23 budget. The forecast overspend for 2022/23 means that balances are expected to fall to just below £81,000 by 31st March 2023.

The Council does also hold three earmarked reserves and the balances on these are forecast as follows:

 

At 31st March 2023

At 31st March 2024

Vehicles, mowers, equipment, computing etc.

£7,324

£359

Elections

£18,000

£3,000

Civic Hall maintenance

£29,110

£35,110

 

(c)   PRECEPT FOR 2023/24

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 2023/24 and subsequent years, would require an increase in the precept from £43.70 to £49.10 – an increase of 12.4%.  This is the most straightforward way for the Council to proceed.  However, it is recognised that:

  • with balances now looking reasonably healthy; and
  • with many Stourport people struggling with the cost of living

the best approach may be to limit the increase by using some of the Council’s balances. In light of these points, the draft budget for 2023/24 attached is based on increase of £3.90 (from £43.70 to £47.60) – an increase of 8.9%.  This would require taking £10,500 from balances leaving forecast balances at 31st March 2024 at £70,000.

If members do decide to use some of the balances to support the 2023/24 budget they need to understand that a further increase will be needed in 2024/25 because a ‘funding from balances’ approach can only be sustained short-term.  The projection provided for 2024/25 is based on a precept increase to £50.00 and, it is estimated, this would leave balances at 31st March 2024 at around £73,500. Of course, much can change in the next 12 months.

Members may be interested to see how the Stourport precept in 2022-23 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

47.50

Wyre Forest

Bewdley

56.67

Malvern Hills

Malvern

105.82

Wychavon

Evesham

63.39

Wychavon

Droitwich Spa

46.30

Wyre Forest

Stourport-on-Severn

43.70

Bromsgrove

Wythall

29.34

Wychavon

Pershore

76.65

Bromsgrove

Hagley

64.76

Bromsgrove

Catshill and North Marlbrook

22.22

Bromsgrove

Alvechurch

80.82

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 2022/23;
  3. Approval of a draft Budget for 2023/24 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 2023