General fund revenue budgets

 

	Budget 2021/22	Percentage
	£’000	%
Employees	16,151	58
Premises	2,296	8
Transport	908	3
Supplies & Services	4,501	16
Third Party Payments	4,032	15
Total:	27,888	100%

 

General Fund:	Estimated Position At 31st March 2021 £’000
Minimum Working Balance	1,000
General Reserve	1,717
Job Evaluation Reserve	566
Insurance Reserve	198
Business Rates Volatility Reserve	599
Business Rates Pooling Reserve	872
Retained Business Rates Reserve	2,482
Developers’ Contributions Unapplied	141
Leisure Management Trust	325
Invest to Save Reserve	813
VAT Refund	342
Revenues and Benefits DWP Grants	270
Other Minor Reserves	947
Total	£10,272
New Homes Bonus Reserve (Capital)	24
Total	£10,296

 

	2017/18	2018/19	2019/20	2020/21	2021/22
	£’000	£'000	£'000	£'000	£'000
Revenue Support Grant	1,191	734	224	227	229
Retained Business Rates Baseline	3,788	3,902	3,991	4,057	4,057
Total	£4,979	£4,636	£4,215	£4,284	£4,286
Financial Reduction	(£640)	(£343)	(£421)	£69	£2
Percentage Reduction	-11%	-7%	-9%	2%	0%

  

Element of core spending power	2020/21 £’000	2021/22 £’000	Change %
Settlement Funding Assessment (SFA):
Revenue Support Grant	227	229	0.9%
Business Rates Baseline	4,056	4,056	0.0%
	4,283	4,285	0.0%
Business Rates multiplier compensation	161	211	31.1%
New Homes Bonus grant (NHB)	1,147	822	-28.3%
Rural Services Delivery Grant	54	56	3.7%
Lower Tier Services Grant	0	173	0.0%
Council Tax Income	6,313	6,600	4.5%
Core Spending Power	11,959	12,147	1.6%

  

	£’000
Grants for Voluntary & Community Sector	45
Councillor Community Grants	48
Parish/Town Concurrent Grants	2
Parish/Town Street Cleaning Grants	24
Parish/Town Public Convenience Grants	14
Parish/Town Cemetery Grants	12
Misterton Centre	6
Notts Wildlife Trust	3
Total	154

Council Tax

Bassetlaw did not increase its level of council tax between 2009/10 and 2013/14 and instead opted to take the now discontinued Council Tax Freeze grant. It is estimated that this represents £1.2m per annum in lost income to the Council. For 2014/15 and 2015/16, members agreed a 1.5% increase and forego the 1% Council Tax Freeze Grant.

There was no offer of a Council Tax Freeze grant for 2016/17 and 2017/18 and members approved an increase of 1.9% for both years. For 2018/19, Council took the option provided by government to increase Council Tax by the equivalent of £5 per Band D equivalent rather than stay within the 3% referendum This resulted in an increase of 3.06%.

A similar decision was made in 2019/20 increasing Council tax by £5 per Band D equivalent, which represented a 2.96% increase, which was just below the 3% referendum limit.

In 2020/21 the referendum limit was reduced to 2% whilst retaining the option to increase Council Tax by £5 per Band D equivalent and this limit is part of the provisional settlement for 2021/22.

The average Band D council tax for 2020/21 for Bassetlaw District Council is £178.48 or £3.43 per week. Due to the tight financial constraints in 2021/22, the budget has been prepared assuming a £5 increase that would mean a new council tax of £183.48 per Band D property. This represents a 2.80% increase or 10p per week.

The report to Council on 5th January 2021 proposed a council tax base for collection purposes of 35,771.49 Band D properties for 2021/22, which reflects a growth in Band D of 398 properties or 1.1%.

The majority of properties (approximately 50.8%) in the Council's area are in Band A with a 2020/21 council tax of £118.99. An increase of £5 for 2021/22 would mean a new council tax level of £122.32. This would represent an annual increase of £3.33, or a weekly increase of 6p.

Parish, Police, Fire and County precepts are still to be set by the precepting authorities and will be included in the Council Tax Resolution in the 4th March 2020 report.

Collection Fund Surplus

The Council is statutorily obliged on 15th January each year to prepare an estimate of its Collection Fund transactions for Council Tax. This estimate enables Bassetlaw and the three major precepting authorities to take account of any surpluses or deficits on the Fund when they set their own authority budgets.

Collections to 31st March 2020 were slightly less than forecast and resulted in a deficit of £0.007m carried forward. A surplus of £0.5m was declared on 15th January 2020 for 2019/20 and a deficit of £0.328m has been declared for 2020/21. The 2020/21 deficit of £0.963m was adversely affected by the Coronavirus pandemic and the government has allowed Councils to recover the deficit over the 3 years from 2021/22.

The Council tax base report to Council on 5th January 2021 recommended that the estimated collection rate be retained at 98.0%. The Collection Fund estimates are shown below.

Business Rates

Central government requires all local billing authorities to complete a return (called the NNDR1 return), which sets out the business rate income baseline for the purposes of budget setting.

There is a direct link between the NNDR1 return and the amount of business rates retained by the Council. The total is currently allocated on the basis of:

• 50% to be paid to the Central Government;
• 40% allocated to the District Council;
• 9% to be paid to the County Council;
• 1% to be paid to the Fire & Rescue

From this figure, further calculations are applied for tariffs or top-up’s, and safety net payments or levies, before arriving at an individual business rate budget for a local authority.

The 40% retained business rate income allocated to Bassetlaw District Council is much higher than central government deems to be required, and therefore a tariff is payable back to central government for distribution to other councils where the amount collected is less than the baseline amount required. 

The position as to whether a safety net is receivable or a levy is payable is less clear, as it depends upon how much income is collected in year when compared against the government’s baseline position i.e. what central government expects Bassetlaw District Council to collect.

From 1st April 2013, all of the seven Nottinghamshire District Councils joined Nottinghamshire County Council to form a business rates pool. This arrangement works the same as for an individual authority, except the tariff or top-up, and the safety net payment or levy, is calculated on the Pool as a single entity. This approach has enabled a greater level of financial resources to be retained within Nottinghamshire.

Both Bassetlaw and the Nottinghamshire Pool have benefitted from Bassetlaw taking a proactive approach to inspecting Business properties through a dedicated Business property inspector who has significantly increased the Rateable Value of properties in the district. 

Part two of the Non-Domestic Rating (Rates Retention) Regulations 2013 require all billing authorities to calculate the following amounts and to notify these to the Secretary of State and any relevant precepting authorities by 31st January each year via the NNDR1 return

1. the amount of the central share of its non-domestic rating income;
2. the amount of each relevant precepting authorities share of its non-domestic rating income in accordance with regulation 5;
3. the amount (if any) to be deducted from the central share payment in accordance with regulation 4(1);
4. the amount of each relevant precepting authorities share of any amount to be deducted from the central share payment in accordance with regulation 4(1);
5. the amount (if any) specified by regulation 7(2).

The NNDR1 return was completed and submitted by 31 January 2020 and is attached at Appendix 3.

Robustness of Estimates and Adequacy of Reserves

Under the provisions of the Local Government Act 2003, the Councils Section 151 Officer is required to report on the robustness of the estimates and the adequacy of the financial reserves. The Act requires Members to “have due regard to the report in making their decisions”. Where this advice is not accepted, it should be formally recorded within the minutes of the Council Meeting.

Robustness of Estimates

In assessing the robustness of the estimates in the 2021/22 revenue and capital budget proposals, the key strategic risks to consider in the context of the Medium Term Financial Plan are:

• General Fund Revenue Income
  • Investment income interest rate assumptions have been set at 0.1%, which is prudent given current market forecasts.
  • Income budgets have been set in accordance with the Corporate Charging Policy with a minimum increase of 3.1%, and realistic estimates have been included within the budget based on estimated usage of each service.
  • Government has not yet confirmed the DWP Housing Benefits Subsidy Grant. The budget includes £0.241m for 2021/22 and assumes that this will reduce by 8% for the year after.
  • New Homes Bonus is no longer used for the revenue budget. It was agreed that this money will instead be transferred into the capital programme for future one-off capital projects that will provide future revenue savings for the authority.
  • The Local Government Finance Settlement announced on 17th December 2020 confirmed the Revenue Support Grant of £0.229m for Bassetlaw, and a retention of £16.9m of business rates collected for 2021/22. Officers also expect to collect a greater proportion of business rate growth in year, and an amount of £0.392m has been included in 2021/22 on top of the government’s figure. This has been less than in previous years due to the closure of a power station. The full impact of the closure of both coal-fired power stations has been included in the future year’s budgets.
  • The government’s intention to move to funding local services from business rates has created a degree of risk when setting Council A high degree of volatility still exists due to the impacts of business rate reforms, the success of outstanding appeals, and changes to relief schemes.

• General Fund Revenue Expenditure
  • An average 2% in 2021/22 and 2% to each year thereafter in respect of the assumed pay award. The adoption of the discretionary Living Wage has been allowed for when setting budgets.
  • The Nottinghamshire County Council Pension Fund’s latest triennial review is effective from April The review set the employers' contribution percentage of payroll at 19.6% (16.2% 2019/20) for active employees, with an additional annual deficit lump sum. A decision was taken to pay the three-year lump sum element in one payment thereby saving the General Fund £0.196m. This saving has been spread over the three financial years 2020/21, 2021/22 and 2022/23 resulting in an annual budget requirement of £0.853m for the back-funding element attributed to former employees. The next triennial review is due April 2023.
  • The Council implemented a new pay structure form 2020/21 following a job evaluation A job evaluation reserve exists to meet any costs including equal pay claims. Any remaining balance on the reserve will be written back to revenue.
  • No inflationary increases have been applied to general budgets, however any contracts that are linked to RPI or CPI depending on individual agreements.
  • Through effective treasury management, the Council is currently under-borrowed which means that the budget for long-term borrowing interest can be kept lower than necessary. For cash flow purposes, if short-term funds are required in year, then temporary borrowing will be undertaken, however it is not envisaged that this will be needed.
  • The Council has been proactive in anticipating budget reductions and putting measures in place to meet the established savings A significant savings target was expected in 2021/22 resulting from the Local Government finance reforms, however, this has not materialised as the reforms have been delayed until a future date. To enable indicative future year’s budgets to be prepared this date has been taken as 1st April 2023.
• Capital Programme and Funding
  • Funding for General Fund capital schemes, particularly in later years, remains subject to generating capital receipts and being successful in bidding for In the absence of that funding, some schemes may not be affordable. Prudential Borrowing will be used for ‘long life’ assets as a substitute for capital receipts and where positive cash flows can be demonstrated. Any additional pressure on the Minimum Revenue Provision (MRP) has been included in the revenue budgets.
  • The Capital Programme is set out in a separate report. The costs of borrowing used to fund the Capital Programme are accounted for in the 2021/22 revenue budget.
• General Fund Provisions and Reserves
  • The Council holds an Insurance provision against general fund losses. This is based upon 100% of the cumulative cost of the loss adjusters estimated value of each individual claim. This provision is re-assessed each year during the closure of accounts process.
  • As a further measure against financial risk, the Council operates strategic Corporate Contingency and Legal Contingency Funds for which £0.100m has been allocated to each for the 2021/22 budgets. A Health and Safety Contingency budget of £0.025m has also been included. These budgets are sufficient to cover exceptional budget variances or emergencies that may occur in the year.
  • The continuing uncertainty about the current economic environment has exacerbated the effects on the Councils' debt collection rates and increased housing benefit levels. In the interests of prudence, the Council has included a bad debt provision of £0.05m within the budget.
• Housing Revenue
  • The government’s National Social Rent Policy allows rents to be increase by CPI plus 1%. For 2021/22 this amounts to 1.5% and has been included within the 30-year HRA business plan which will inform investment decisions for future years.
  • Under self-financing, all of the treasury management decisions are now made specifically for Housing as the loans pool is split into two i.e. one for General Fund and one for the Housing Revenue Account. The Treasury costs are one of the largest budgets within the Housing Revenue Account, and because of the changes, these are relatively fixed giving added stability to the decision-making process.
• Statement of Accounts
  • The Council has sound Financial Management arrangements in place as evidenced by the positive Audit Completion Report received from Mazars as the external auditors.

Adequacy of Reserves

The Local Government Finance Act 2003 requires authorities to have regard to the level of reserves when calculating their budget requirements. Professional guidance is set out to assist in this deliberation (guidance note on Local Authority Reserves and Balances – LAAP Bulletin 99 – July 2014).

Earmarked Reserves are intended to be used for specific purposes over a period of more than a single financial These earmarked reserves either protect the Council against specific financial risks, or are used as a means of funding specific revenue projects. The main reserves held by the Council are detailed above in para 3.13.

The General Reserve is a corporate contingency to be used by either Cabinet or Council for any purpose within the legal powers of the Council. Examples of the purposes for which it might be used include dealing with unforeseen in-year budget pressures, financing once-only items of expenditure, or creating a strategic earmarked reserve. For 2020/21, members will be asked to approve the use of the reserve to fund the deficit likely to be created by costs associated with the Covid-19 pandemic. 

In consideration of this guidance, the Council is maintaining its Minimum Working Balance of £1.0m for the General Fund, and £1.3m for the Housing Revenue In the event of these Minimum Working Balances being compromised, Cabinet and Council, as advised by the Section 151 Officer, must agree a plan to restore the balance in the following financial year.

The resulting levels of General Reserves and Balances for the proposed 2021/22 budget (i.e. at 31st March 2021) are shown in paragraph 3.13.

Future Years 

The budget report outlines the expected financial position of Bassetlaw between now and 2024/25. The savings target for 2021/22 has been set at £1.155m. Thereafter, as long as these savings are achieved, the budgets show small surpluses. However, numerous assumptions have been made about the future funding of the Council and if these prove to be inaccurate, future budgets may be affected. This is particularly pertinent this year as the Coronavirus pandemic adds another layer of uncertainty.

Having considered the above risks, the conclusion of the Section 151 Officer is that the Council be advised that overall:

• The estimates are sufficiently robust, and,
• The levels of reserves and balances forecasted to be held at 31st March 2021 are adequate, to allow the Council to set the Revenue Budget, Capital Programme and Council Tax for 2021/22.

Budget Consultation

Bassetlaw has a statutory duty to consult the business community as part of its budget preparations. This year it is not appropriate to hold a public meeting and instead consultation will take place in February via the website and social media.

Future Issues and Prospects

The impact of a number of uncertainties and challenges outlined below should become clearer in 2021/22. The new or developing issues and projects, which are not clear at the time of agreeing this budget report, include:

• The ongoing impact of Covid-19 This affects almost all areas of the Council’s finances including:
  • Business Rates – businesses closures, changes in rateable values, changes in working practices, government funded reliefs.
  • Council Tax – increase in LCTS claimants, ability to pay, effect on Council Tax base, accelerated move to Universal Credit.
  • Government Funding – continuation of funding, expectation of Councils to use reserves.
  • Ongoing loss of income and increased expenditure.
• How the proposed business rates reform will work in practice and what new responsibilities will be given to Councils are still unclear.
• Whether the Fair Funding Review will affect the Council’s funding levels to a greater (or lesser) extent than expected.
• How much future Comprehensive Spending Reviews will affect the amount of funding available to Local Government.
• Delivery of planned savings – the Council has delivered significant savings in previous years. As a result, current and future savings are more difficult to deliver. This represents a considerable challenge for the organisation.
• Financial pressure on other partners – as other agencies come under spending pressure there may be direct impacts on services which are currently funded by them or in partnership with them. The County Council is facing significant cuts over coming years and the health sector continues to be under pressure. Even when there are no direct cuts to Council funding there are likely to be indirect impacts on our community based services.
• Welfare Reform – the government continues to reform the country’s system of welfare payments, which will have implications for the Council - not least the continuing and increased roll-out of Universal Credit due to the Covid-19 pandemic.

General Fund Budget 2021/22 to 2025/26

General Fund Summary

 

Part 1B: Payments

This page is for information only; please do not amend any of the figures

The payments to be made, during the course of 2021-22 to:

1. the Secretary of State in accordance with Regulation 4 of the Non-Domestic Rating (Rates Retention) Regulations 2013;
2. major precepting authorities in accordance with Regulations 5, 6 and 7; and to be
3. transferred by the billing authority from its Collection Fund to its General Fund, are set out below

		Central Government	Bassetlaw	Nottinghamshire County Council	Nottinghamshire Fire Authority	Total
Retained NNDR shares		£	£	£	£	£
12. % of non-domestic rating income to be allocated to each authority in 2021-22		50%	40%	9%	1%	100%
Non-Domestic Rating Income for 2021-22
13. Non-domestic rating income from rates retention scheme		21,562,397	17,249,918	3,881,232	431,248	43,124,795
14.(less) deductions from central share		0						0
15	TOTAL:	21,562,397	17,249,918	3,881,232	431,248	43,124,795
Other Income for 2021-22
16. add: cost of collection allowance			166,956			166,956
17. add: amounts retained in respect of Designated Areas			0	0				0
18. add: amounts retained in respect of renewable energy schemes			1,200,000	0		1,200,000
19. add: amounts retained in respect of Shale oil and gas sites schemes			0	0	0			0
20. add: qualifying relief in Designated Areas			0	0	0			0
21. add: City of London Offset			0					0
22. add: in respect of Port of Bristol hereditament			0					0
Estimated Surplus/Deficit on Collection Fund		£	£	£	£	£
23. Surplus/Deficit at end of 2020-21		-3,138,443	-2,510,754	-564,920	-62,769	-6,276,886
(including adjustment for three year spread)
TOTAL FOR THE YEAR	£	£	£	£		£
24. Total amount due to authorities		18,423,954	16,106,120	3,316,312	368,479	38,214,865

Download our General fund revenue budgets 2021/2022 (PDF printable version). (Please note this document does not meet accessibility requirements).