torridge.gov.uk torridge.gov.uk torridge.gov.uk @torridgedc @torridgedc @torridgedc
Draft Budget 2020/21 MTFS to 2024/25 torridge.gov.uk @torridgedc
What am I going to Headlines cover in summary? Government Funding • Projected financial position has “improved” but caveats ! Council Tax • Funding Model changes from 2021/22 Business Rates • Greater uncertainty and risks – particularly from 2021/22 New Homes Bonus • Lengthy Report & Presentation Funding Horizon Assumptions & Risks torridge.gov.uk @torridgedc
What am I going to Report & Presentation cover in summary? Government Funding • Pick out / highlight key points Council Tax • Questions as go along Business Rates • Sum up and conclusions New Homes Bonus • Recommendations at end / debate & discussions Funding Horizon • Provide reasons and rationale to support why we reached the Assumptions & Risks recommendations torridge.gov.uk @torridgedc
Provisional Settlement 2020/21 • Core Spending Power – Headline figure to rise by 6.3% (4.4% in real terms); however for Shire Districts the figure is 3.4% • Revenue Support Grant confirmed at 2019/20 levels uplifted for inflation - £132k, Rural Services Delivery Grant also confirmed at 2019/20 levels - £474k. New Homes Bonus funding confirmed for 2020/21 but reward monies arising • from increased number of properties liable for Council Tax only payable in 2020/21 (previously reward monies accrued for four years). • Confirmation of addition £1.4billion for Adult Social Care, payable to upper tier authorities such as Devon County Council. • Confirmation of continuation of Flexible Homelessness Prevention funding for 2020/21 - £144k, previous award of funding covered the period 2017/18 – 2019/20. • Council Tax Referendum limit for shire districts confirmed at 2% or £5 per Band D Equivalent (£5 equates to 3.06% for Torridge). Upper Tier Authorities such as Devon County confirmed as 2% plus 2% for Adult Social Care Precept . Police & Crime Commissioner £10 per Band D (circa 4.7% in Torridge). No Referendum limits for Town & Parish Councils • Better Care Funding £1.84billion, Torridge allocation still to be confirmed, Torridge Council’s 2019/20 spend being circa £1.1m on disabled adaptations and energy efficiency initiatives. torridge.gov.uk @torridgedc
Council Tax Torridge Council is the billing authority for Council Tax, the majority of Council Tax collected is on behalf of its preceptors. • Devon County Council • Devon and Somerset Fire Authority • Devon & Cornwall Police Commissioner • Town and Parish Councils The share of the Council Tax retained by Torridge has been in long term decline and will continue to do so. Torridge as % of total Council Tax levied 9.40% 9.20% 9.00% Torridge as % of total 8.80% Council Tax levied 8.60% 8.40% 8.20% 14/15 15/16 16/17 17/18 18/19 19/20 torridge.gov.uk @torridgedc
Council Tax By statute Council are obliged to report their tax base in Band D equivalents, and increases to Council Tax are also referenced to the Band D equivalent. However the majority of properties within Torridge fall within bands A-C (68%), and consequently will pay less than the quoted Band D equivalent Council Tax. Properties by Council Tax Banding 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Band A Band B Band C Band D Band E Band F Band G Band H Council Tax is by far Torridge’s most dependable source of income, it easy to predict within narrow parameters. torridge.gov.uk @torridgedc
Council Tax Core Spending Power: When Central Government assesses the resources available to local authorities, in addition to taking direct grant income in account, it considers the potential resources available to local authorities from both business rates and Council Tax. Central Government modelling will assume local authorities raise their Council Tax up to the maximum allowed by their referendum limits. Central Government funding is a combination of an assessment of need vs resources available to meet the need. Because of the restrictions imposed Central Government Assessed Need Funding Gap by Council Tax Referendum limits it is Funding Provided not possible to “plug” the funding gap in subsequent years by raising Council Tax……Once the decision is made not to increase Council Tax its impact is felt in subsequent years. Government Resources Assumed Actual Local Actual Local Resources Resources Authority Authority torridge.gov.uk @torridgedc
Council Tax In previous financial years Torridge did not increase its Council Tax, but instead received non recurrent Council Tax Freeze grant. The consequences being that when the freeze grants ceased to be received, it was unable to make good the lost opportunity to raise its Council Tax. If the Council in previous years had increased the Council Tax in line with the relevant referendum limits it would be able to levy an additional £368k per annum in Council Tax Income (as at 2018/19). The cumulative council Income forgone over this period is just under £2m. Circa £2m would pay for Torridge Recycling Refuse Fleet – 13 vehicles x £150k torridge.gov.uk @torridgedc
Business Rates Prior to 2013 , Torridge collected business rates on behalf of central • government, any losses due to increases in empty properties, reliefs, bankruptcies etc. borne by Government. Conversely any gains from new businesses was retained by Central Government. Torridge Council’s finances largely unaffected by economic health of its businesses. From 1 st April 2013: Torridge retains 40% of business • rates, 10% to Devon County & Fire, 50% to Government. 100% of income from renewables (Wind, Solar etc.) retained by Torridge. • Torridge gains from growth in business rate base but is exposed to: • Business Rate Appeals • Growth in reliefs, e.g. Charitable, Academy School status • Bankruptcies, Empty Properties • Complexities caused by Central Government changes to reliefs. • Business Rate Income can be difficult to predict!...................but Torridge has enjoyed circa £750k growth from Business Rates since 2013 torridge.gov.uk @torridgedc
New Homes Bonus Introduced in 2011/12 • Rewards Councils for new homes becoming liable for Council Tax • Rewards Councils for reducing the number of long term empty homes (over 6 months), conversely penalised for increases in the number of long term empty homes. • There has been two major changes since its inception • Introduction of a deadweight adjustment 0.4% about which Councils are rewarded for growth in new homes. For Torridge no reward received on the 1 st 115 new additional properties. • The reward period for increases to new properties reduced from 6 years to 4 years • New Homes Bonus funding has been earmarked as follows • 50% earmarked for the Capital Program • 25% support the revenue budgets • 25% earmarked for member/community grants (£115k top sliced from this allocation to balance the 2019/20 budgets). torridge.gov.uk @torridgedc
New Homes Bonus Government has signalled that 2020/21 will be last year of the current New Homes Bonus scheme. Legacy payments are expected to be honoured, but the reward earned in 2020/21 for increased properties numbers will only be paid for one year. Consequently in 2021/22 Torridge will lose TWO years New Homes Bonus reward monies. 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Reward earned (2014/15 increased property numbers) 326,392 0 0 0 0 0 Reward earned (2015/16 increased property numbers) 440,254 440,254 0 0 0 0 Reward earned (2016/17 increased property numbers) 388,873 388,873 388,873 0 0 0 Reward earned (2017/18 increased property numbers) 216,647 216,647 216,647 216,647 0 0 Reward earned (2018/19 increased property numbers) 0 143,360 143,360 143,360 143,360 0 Reward earned (2019/20 increased property numbers) 0 0 174,709 0 0 0 Total - New Homes Bonus Funding 1,372,166 1,189,134 923,589 360,007 143,360 - Loss of funding earned in 2016/17 received for FOUR years Loss of reward monies earned in 2019/20, payable for only ONE year torridge.gov.uk @torridgedc
New Homes Bonus In 2019/20 New Homes Bonus funding is allocated as follows: • 50% to Capital funds contributions to Vehicle and ICT replacement Reserves • 25% to support the Councils revenue budgets • Balance to Community & Members (after £115k top slice) • Loss of New Homes Bonus will put pressure on revenue budgets as contributions to Vehicle and ICT Replacement reserves will still have to be made. Capital budgets are currently over committed by £1.1m. torridge.gov.uk @torridgedc
2020/21 Budget Headline – Favourable/ adverse movements from MTFS reported in February 2019 • Revenue Support Grant (RSG) and Rural Services Delivery Grant (RSDG) - £226k favourable Homelessness Grant Funding - £144k favourable Reduced contribution to Pension deficit - £208k favourable Refuse related savings, cost share income and transport related £200k favourable Staff Efficiencies - £275k favourable Assumed staff pay award, incremental growth, increased vacancy factor - £177k adverse Increased building inflation, increased contribution to property maintenance reserve - £75k adverse Reduced Business Rate income from renewable energy - £237k adverse torridge.gov.uk @torridgedc
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