Waverley Borough Council Home Page Waverley Borough Council Home Page


Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 02/12/2003
Review of Compensatory Grants



Summary & Purpose
This report reviews Waverley’s existing compensatory grant scheme and puts forward a number of options regarding the future working of the scheme for consideration by the Executive.

Quality of Life Implications
Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe Communities
Local Economy
Natural
Resource Use
Pollution
Prevention and Control
Biodiversity
and Nature
Local
Environment
Social
Inclusion
Safe, Healthy
and Active
Communities
Local
Economy
Positive or Negative
N/A
N/A
N/A
N/A
N/A
N/A


E-Government implications:

There are no E-Government implications.

Resource and legal implications:

There are no specific legal implications as a result of this report. Resource implications are contained throughout the report.

Introduction

1. As part of the 2003/4 Budget Setting process, the Council agreed that the compensatory grant scheme should be reviewed during the year. In part, this was in response to the increasing budget pressures that Waverley faces each year, and the consistent growth in the compensatory grant budget.

2. A full review of compensatory grants took place in 1998, including extensive consultation with towns and parishes.

Background

3. Compensatory grants were introduced in 1975 and were intended to prevent local taxpayers from effectively paying twice for the provision of a specific service. Originally, the scheme covered provision of recreational facilities and the burial function, but the latter was discontinued in 2000 in favour of a Special Expense.

4. Full details of the operation of the scheme are contained at Annexes1 to 5 to this report. To summarise: parishes are reimbursed for 50% of their actual expenditure on recreation, provided this does not exceed 50% of Waverley’s own expenditure per head of population served.

Problems with Existing Scheme
5. The scheme is rather complex, but understood by those parties actually involved in the administration. However, there are several potential anomalies that are overcome by goodwill in order to make the scheme work. Recreational facilities have been interpreted to cover formal recreation and recreational areas, but not informal countryside and amenity areas even though these are likely to be enjoyed by the wider Waverley population. Furthermore, the scheme is not deemed to cover major capital projects, but does cover routine capital expenditure such as improvements and equipment. These various assumptions are sometimes questioned by the parishes, but not challenged. 6. There is a wide disparity between the expenditure levels of various parishes and consequently in the levels of grant paid. It may be seen that there is an element of fairness in this as it reflects the facilities provided. However, the cost of compensatory grants is borne by all Waverley Council Tax payers. Therefore, residents from those parishes with few recreational facilities not only contribute towards the cost of Waverley’s recreation facilities, but also to the grants paid to parishes with more extensive facilities.

7. The recreational facilities provided by Waverley are very comprehensive and these are available for enjoyment by the wider population. The scale of provision means that the cost is inevitably relatively high. It is obviously necessary for Waverley’s maintenance to be carried out by a large professional contractor; whereas, parishes are often able to take advantage of cheaper options. Waverley needs to employ professional staff to manage the service, but in parishes this is just part of the Clerk’s duties. The cost of maintaining bowling greens and children’s play equipment is very high, but only one parish is known to bear the cost of maintaining a bowling green. These factors mean that the ceiling of 50% of Waverley expenditure may no longer be appropriate.

Budget Position 8. Total compensatory grants for recreational facilities over the last four years and the draft estimate for next year are shown below: 9. This shows that the demand on Waverley’s Budget has increased very significantly over this period. Furthermore, the maximum level that could potentially be reached under the current formula is some 180,000. Future Options:

Discontinue / Freeze Scheme

10. In view of Waverley’s Budget situation, one option that could be considered is to discontinue the scheme completely. This would reduce Waverley’s expenditure by over 100,000 in a full year, which would be a significant contribution to the Budget shortfall. In addition, the administrative effort involved in running the scheme could be redirected both within Waverley and the parish councils. In view of the impact on the parish precepts it would be appropriate to give notice one year in advance or, alternatively, the scheme could be phased out over a number of years. 11. In order to protect the current position of parishes, the decision could be taken to freeze the grants at the 2003/4 amounts either indefinitely or for a specified period. Amend Scheme 12. An alternative to discontinuing or freezing the scheme would be to amend the scheme so as to restrict the potential increase in cost to Waverley. The obvious measure would be to limit the increase in grant to any parish to the 2003/4 amount plus an allowance for inflation. This could be seen to be penalising those parishes that have historically had low expenditure, but equally this could be portrayed as the situation Waverley itself finds itself in. 13. Possibly, a fairer way of amending the scheme would be to restrict the amount of grant paid to 30% of Waverley’s expenditure per head of population rather than the present 50%. This would reduce the maximum potential total grants from 180,000 to 108,000. At present, all parishes are spending well below the current criteria of 50%, but a 30% criteria would result in some reduction in grant for a few of the higher spending parishes (notably Ewhurst and Witley) while allowing some scope for increase in those parishes that have, historically, been low spending. If this option were adopted for 2004/5, the grants in, the draft budget would be pulled back by 12,657 to just below the current year’s level. The effect on compensatory grants for 2004/5 is shown in detail at Annexe 6. The original 50% was somewhat arbitrary, but experience over the many years of the scheme’s operation indicates that a level of 30% would now be appropriate and meaningful.


Special Expense

14. An alternative approach to the compensatory grant system is to levy a special expense on those areas of the Borough where a service is provided by Waverley, but in other areas of the Borough the service is provided by parishes or is not provided at all. This achieves the same aim as the compensatory grant scheme of ensuring taxpayers do not pay twice for the same service. If the compensatory grant scheme were replaced by a special expense, the precepts of those parishes responsible for recreation would increase, but the Waverley element of Council Tax for those parishes would decrease relative to those areas where Waverley provides recreation.

15. The Council decided to adopt a Special Expense for cemeteries from 1st April 2000. This has worked well and the Special Expense now only applies to the Haslemere area and for 2003/4 is just 90p at Band D. It is clearly much simpler to levy a special expense on just one area rather than to administer a compensatory grant system that would otherwise apply to eight towns and parishes.


16. However, there would be significant problems in adopting a Special Expense for recreation. Expenditure on recreation is not as clearly defined as that on cemeteries and the amounts involved would be very much larger. The Special Expense would apply to Farnham, Godalming and Haslemere and Council Tax payers in these areas would be expected to resent paying this as it would be perceived as an increase, with the town precepts being unaffected. A further unfortunate consequence could be an emergence of conflict between Waverley’s towns and villages. It is also generally accepted that to some extent the facilities provided within the towns are also enjoyed by residents of the surrounding villages. Conclusion

17. The various options available for the Executive to recommend to Council are:
(i) to continue with the existing scheme unchanged;
Recommendation

It is recommended that the Executive agree to amend the scheme from 1st April 2004 so as to restrict the compensatory grant for any parish to 30% of Waverley’s expenditure on recreation per head of population served.



Background Papers (DoF)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.




CONTACT OFFICER:

Name: Mr B Long Telephone: 01483 523253 E-mail: blong@waverley.gov.uk
E-mail: blong@waverley.gov.uk











C