District Matters

Council Tax pay

November 2019

This column is normally the preserve of the Council's Leader, Tony Jefferson. Tony, however, is currently convalescing following a hip replacement operation. In wishing him a speedy recovery, I also agreed to take this opportunity to write this column on his behalf.

For many residents within the District, there is a feeling that they pay a lot in Council Tax. Their annual Council Tax statement turns up with inevitable regularity and they wonder whether they are really receiving value for their hard earned money.

The District Council only retains a fraction of the Council Tax it collects towards the cost of the services it provides. Of every pound collected, 77p goes to Warwickshire County Council, 12.2p to the local Police and Crime Commissioner and 3.3p to the District's parish councils. The District Council's 7.5p forms only one of the sources of the Council's income. The rest comes from central government under various headings. The issue the Council faces is that the amounts from these central government sources have reduced in recent years and are likely to continue to reduce. For example, the Council receives a New Homes Bonus for houses built in the District. This year this is expected to amount to £4.5m. In 3 years' time this is projected to be no more than £1.3m.

The government of the day may change the way local government is funded between now and then. But the Council cannot rely on this. For example, in September the government announced an increase of £3.5bn for local government in the 2019 Spending Review. Stratford, however, will not receive any of this additional funding.

When setting its annual budget, the Council is required to produce a budget that is balanced. In other words, given the services that the Council is either required to provide by law, or chooses to provide in the interests of the District and its residents, the costs involved have to be met by the revenue it receives or generates. Where annual revenue needs to be supplemented by drawing on reserves to achieve that balance, this can only go on so long as there are sufficient reserves available.

In planning its finances, the Council looks beyond the immediate year to try to see what the picture will look like in 5 years' time. There is always the need for a minimum level of reserves to be able to respond to the unexpected. The greater the degree of uncertainty about future sources of revenue, the greater is the need to husband the level of reserves to be able to protect the provision of services to our residents.

The Council faces the prospect that within the next three years, its reserves could decline to the point where the minimum level needed will be approached. The Council's ability to raise revenue by increasing the Council Tax is effectively limited by law to increases of 2% per annum. Given the likelihood of continued reductions in funding from central government, this will not provide sufficient revenue to provide services at their current level. The Council's declaration on the climate emergency and its implications of change in priorities and actions, for example, illustrates the demand for additional resources.

This is the basis upon which there is a pressing need for the Council to identify ways to generate replacement sources of revenue so that it can continue to meet its obligations and the needs and expectations of its residents. It is against this challenging background that the preparatory work for next year's budget is currently being undertaken.

Dr Trevor Harvey, District Councillor, Shipston North
Portfolio Holder for Finance and Assets