Waverley Borough Council Committee System - Committee Document
Meeting of the Council held on 18/02/2003
APPENDIX A.2 - GENERAL FUND REVENUE ESTIMATES AND COUNCIL TAX LEVELS 2003/2004
WAVERLEY BOROUGH COUNCIL
COUNCIL MEETING – 18TH FEBRUARY 2003
REPORT OF THE EXECUTIVE – 4TH FEBRUARY 2003
GENERAL FUND REVENUE ESTIMATES AND COUNCIL TAX LEVELS 2003/2004
[Wards Affected: All]
1. On 10th December the Executive received an initial report regarding the draft General Fund Revenue Estimates for 2003/2004.
2. The Executive was updated on the Budget situation at the meeting on 14th January 2003, including full details and implications of the provisional Revenue Support Grant Settlement. The Executive gave final consideration to the Budget on 4th February 2003.
3. The Budget position statement as reported to the Executive is shown at
. The list of reductions agreed in the November cycle is shown at
. Further shortfall measures as accepted by the Executive on 10th December 2002 and considered by the Overview and Scrutiny Committees in January are shown at
4. Expenditure arising from new legislation is listed at
5. The final Revenue Support Grant Settlement was announced on 3rd February 2003. For Waverley, there was no change from the provisional settlement.
6. The Budget Position Statement at Annexe 3 takes account of the final settlement.
7. This year, a substantial amount of new legislation has arisen which will involve additional expenditure estimated at £407,000 in 2003/2004, as detailed at Annexe 6. The Revenue Support Grant Settlement makes no provision for these increased costs. Therefore, as part of the Budget Strategy it has been accepted that the Council has no realistic alternative other than to increase Council Tax beyond inflation to cover this necessary expenditure. The increase in Council Tax required to cover the new legislation is in the region of 7%.
Car Park Income
8. The initial list of reductions at Annexe 4 includes the estimated figure of £20,000 to be achieved from increases in long-stay car park charges. Specific proposals are contained at
which are in line with the Car Park Strategy.
9. The proposals of the Executive detailed in the schedule of charges included in Annexe 7 are that:-
(i) the daily charge for Croft Road, Godalming and Upper Hart, Farnham be increased from £2.50 to £3.00;
(ii) the charge of £1.80 for 5-hours parking in Upper Hart, Farnham be replaced by a charge of £1.80 for 4-hours parking; and
(iii) the season ticket rate for Croft Road, Godalming and Upper Hart, Farnham be increased from £560pa to £630pa.
10. These proposals should generate an additional £33,000 car park income.
11. The Collection Fund Revenue Account brings together all of the precepts from the relevant local authorities, including Waverley’s demand net of Revenue Support Grant and redistributed National Non-Domestic Rates (NNDR), together with the contribution to the NNDR pool (net of irrecoverables) in respect of Business Rates collected by the Council as agent of the Government. The income to the Collection Fund revenue account relates to that amount of Council Tax which is required, together with income from Business Rates, to balance the account. Any surplus or deficit on the Collection Fund at the end of each year is required to be shared between Surrey County Council, the Surrey Police Authority and Waverley in proportion to their precepts for that year. The estimated Collection Fund for 2003/2004 is attached at
12. As shown at Annexe 8, present indications are that there is likely to be a surplus of some £100,000 as at 31st March 2003. Waverley’s share of this will be some £15,000 which will be available to reduce Waverley’s element of the 2003/2004 Council Tax. Members are reminded that the collection rate allowed for in the tax base was increased from 98.5% to 99% for 2002/2003 to reflect actual collection rates and, therefore, the surplus is lower than in previous years.
Council Tax Levels
13. A table showing the effect of the final 2003/2004 Revenue Support Grant Settlement for Waverley and the resultant average Council Tax at Band D is attached at
14. The three options illustrated are:-
(i) A restriction in the basic increase in Council Tax and spending levels to 2.3%. The actual increase in Council Tax would be 2.8% because of the reduced Collection Fund surplus. Unfortunately, this option would require further reductions of £618,000.
(ii) A restriction in the basic increase to 2.3% as above, but with an additional £407,000 to cover the cost of new legislation. This is the option on which the Budget Strategy has been based. It requires further budgetary reductions of £211,000 from the position shown at Annexe 3. Waverley’s Council Tax increase would be 9.6%.
This is the option recommended by the Executive.
(iii) Should the Council decide to raise Council Tax to cover the remaining shortfall of £211,000 the increase would be 13.1%, as illustrated at Option 3.
15. The full level of Council Tax in 2003/2004 will depend, of course, to a large extent on Surrey County Council’s precept and on the Surrey Police Authority precept.
shows the likely effect, in 2003/2004, of the decision taken by Council on 12th October 1999 to levy a special expense from 1st April 2000 in respect of cemeteries costs.
17. As Farnham Town Council have agreed to assume responsibility for the cemetery function in Farnham from 1st April 2002, the special expense applies to Council Taxpayers in Haslemere area from that date.
18. Waverley’s Financial Strategy provides for Superannuation Buyback to be financed from surplus Provision for Credit Liabilities (PCL) monies (cash-backed set-aside capital receipts) as a better alternative to generating interest for the General Fund. This usually results from the receipt of reimbursements from the Housing Corporation under the LA SHG scheme. Slippage and underspends on the LA SHG programme have severely restricted progress on Buy-back and, in turn, the resultant benefits to the General Fund. However, the award of the BCA means that set-aside capital receipts may be used from 1st April 2003. This provides the opportunity to make a capital payment to the superannuation fund at the beginning of the year and achieve the full-year benefit of the abatement to the General Fund. Total Backfunding Buy-back would still be restricted to the overall approved figure of £7 million.
19. The annual reduction is determined by the actuary and the initial indicative figure was a reduction of £90,000 pa per £ million capital payment. The latest recently received quote is £106,000 pa per £ million.
20. The use of the BCA to facilitate Buy-back means it will be reasonable to budget for the benefit of £3 million Backfunding Buy-back for the full year. Using the latest figures provided by the actuary this produces:-
£3million @ £106,000 per £million
less Interest on £1million of set-aside capital receipts @ 4%
Net Benefit in 2003/2004
less provisional budget assumptions on buyback (£180,000+£60,000)
Further Benefit from latest figures
General Fund Shortfall
21. The Budget Position Statement as reported to the Executive at Annexe 3 shows a funding shortfall of £211,000. This takes account of the reductions at Annexes 4 and 5, the use of balances at £260,000 and a contribution of £145,000 from the Revenue Reserve Fund.
22. The improved assumptions on Superannuation Buy-back and car park income will reduce the shortfall to £160,000. On advice from the Director of Finance, the Executive recommends that a further measure would be to take the decision to credit interest from the Revenue Reserve Fund balance to the General Fund on a permanent basis with effect from 2003/2004. The estimated interest for 2003/2004 is £130,000. This approach has the following main advantages:-
In line with current treatment of interest on General Fund working balance and interest on Capital Receipts
Sustainable whilst Revenue Reserve level maintained
Largely avoids additional use of balances
23. It is proposed that the shortfall of £30,000 be met by additional use of balances.
Revenue Reserve Fund
24. When the Financial Strategy was updated for the Finance Seminar in October 2002 the Director of Finance showed the Revenue Reserve forecast balance at the end of each year to be:-
25. This level of balance was £500,000 more than was originally estimated. The Revenue Reserve fund original forecast at £2 million was considered acceptable by the District Auditor. The additional balance was due to the HRA capital charge adjustment arising from the Council’s debt free position, additional interest on usable housing capital receipts and further interest on the revenue reserve.
26. The interest on HRA receipts was unexpectedly high because of the slippage on the HRA Capital Programme. The HRA Capital Charge adjustment is unpredictable and may result in either a credit or a debit to the Fund, although in most years a small credit is experienced. Unusually, no special items such as redundancy costs were charged to the Fund in 2001/2002. As a result of the above items, the Fund has a surplus of some £500,000 beyond the levels envisaged in the earlier Financial Strategy.
27. Previous reports have drawn attention to the fact that the Matched-Funding provision will not extend beyond 2003/2004. In fact, almost £300,000 has been found to be available for 2003/2004, with the schemes being allocated during the current committee cycle. However, the amounts to be paid out during 2004/2005 would normally be applied for in the summer of 2003 and allocated towards the end of 2003/4.
28. The Matched-Funding provision was originally established within the Financial Strategy by a transfer of £1.5 million from the Revenue Reserve Fund for 5 years’ funding, (although it has stretched to 6). The Executive therefore consider it appropriate to recommend a transfer of the £500,000 surplus on the Revenue Reserve Fund detailed above to the Matched-Funding provision. This sum, together with internal interest and due allowance for schemes not proceeding, would be sufficient to continue the Matched-Funding scheme on the current basis for a further two years.
29. The estimated cost of the pay award, effective for this year from 1st February 2003, has been included within the overall figures as reflected by the position statement. The precise effect on the General Fund is dependent upon the final Practice Account and Central Support allocations, which also take account of a number of the minor changes and cost reductions.
30. The Executive consider the proposals detailed in this report to be an appropriate response to the current Budget situation.
31. The General Fund Budget in summary form, updated to take account of the recommendations of the Executive and the final allocations is presented to Council for approval at
. As anticipated, the use of balances proposed for 2003/2004 is in the sum of £290,000.
32. The Executive accordingly
3. option 2 (i.e. 9.6% tax increase) be adopted for Waverley’s element of Council Tax for 2003/2004;
4. the use of Waverley’s share of the Collection Fund surplus at 31st March 2003, estimated at £15,000, in 2003/2004 to reduce Waverley’s element of the Council Tax to the proposed level be approved;
5. the schedule of car park fees and charges as shown at Annexe 7 be approved with effect from 1st April 2003;
6. Waverley’s Financial Strategy be amended to provide for interest on the Revenue Reserve Fund being credited to the General Fund from 1st April 2003;
7. the transfer of £500,000 from the Revenue Reserve Fund to the Matched-Funding Provision be approved; and
8. the General Fund Revenue Estimates resulting from the budget options agreed above, detailed in the report and shown at Annexe 11 be approved.
There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.