Council finances – future Budget situation

Funding arrangements for Councils have changed significantly with the Government’s Revenue Support Grant decreasing from £992k in 2016/17 to an estimated £504k in 2017/18, a 49% reduction, with a further reduction to £204k in 2018/19, followed by a tariff payable to central government of £131k in 2019/20.  In other words, in three years’ time, Babergh will lose some £1.123M of support from Government – a deficit which somehow has to be overcome.  The council is becoming reliant on limited Business Rates (BR) income and incentivised funding such as New Homes Bonus(NHB); hence the growth agenda. More homes also means more council tax.  Both BR and NHB lack certainty.  Work is also on-going to find savings, efficiencies and income generating ideas.

The Council Tax Base is the number of Band D equivalent dwellings in a local authority area, taking account of discounts, etc.  This is expected to grow by about 1.4% next year, which could yield another £51K.  Whilst the Government has maintained its 2% council tax rise as the threshold for a referendum, councils – including Babergh – with lower quartile Band D tax levels could potentially impose an increase of up to £5.  This would generate an additional £162K next year. The decision will be taken at the February Council.

Devolution

Given the recent withdrawal by some Norfolk councils from the proposed Norfolk and Suffolk devolution deal, Babergh agreed to continue talking about a different proposition for Suffolk, possibly as a “coalition of the willing” (or some similar expression.) This could include those Norfolk councils which are interested in a deal and even councils in Essex or elsewhere. I gave this decision qualified support as I remain hostile to the notion of an elected mayor and yet another layer of local government – complete with provision to levy business rates and precept, hire a CEO and other officers, set up committees, etc.  However, given that there might still be some extra money for Suffolk projects, at this stage it’s worth continuing the conversation.

Sale of council owned homes

Seven properties were sold in 2015/16, with a total value of £1,103,050 (averaging £157,579 per property.) Three further sales have been completed to date in 2016/17 with a total value of £420,000.  A range of indicators are used to consider the viability of the future of council-owned homes.  They include properties with higher than average costs or which offer other opportunities.  The capital receipts are ring fenced and will be invested in acquisition and new build of council housing.