Read more on this

Read more on this

Council finances 1: who makes the decisions

by Prue Bray on 1 November, 2018

Wokingham Borough Council finances are a mystery to a lot of people – including, I have to say, some councillors.  The public don’t really understand how the council is funded, or what choices they have about how to spend the money and what it is compulsory for them to do.   They certainly don’t know what things cost.  Or even what all the services are that the council has to deliver.  So this is the first post in a series in which I am going to have a stab at explaining it.  Wish me luck – because it is complicated.

I am starting with a bit of scene setting.

What I am NOT going to do is to excuse the Tories. The current state of the council finances is primarily due to decisions made by Conservative councillors, who have been in charge since 2002.  During that time we have had Labour governments – who starved Wokingham of government grant because we were deemed to be a wealthy area – a Coalition government – who continued with that, but with a little bit more excuse in that there was a financial crash in 2008, and Conservative governments – who have starved Wokingham of government grant too.  But Conservative councillors made the decisions on Council Tax and spending in Wokingham.

The Executive make 95% of the decisions and the Executive is entirely made up of Conservative councillors.  Opposition councillors (and in fact, to be fair, Conservative backbenchers) have very little input into any financial decisions.

The biggest decision is of course the annual budget, which the whole Council gets to vote on every February, and sets the planned expenditure for the next financial year (1st April to 31st March).  The details of the budget go through Conservative group meetings over many months before emerging in the budget papers a week before the Council meeting.  No opposition councillors get to see the detail befote then.  As this is a multi-million pound and multi-faceted business, you can imagine how difficult it is for oppostion councillors to make any sense of anything in the week before the budget vote.

For the past couple of years the Conservatives have allowed a “public consultation” on the budget.  This has attempted to explain some of the constraints and has tried to get the public to validate the choices made by the Conservatives.  It hasn’t reached very many people.  And – bizarrely – the results of the consultation were not released.  We have no idea whether they were actually taken into account when the budget was prepared.

In many other councils the budget is discussed in public by council committees for some months before the February meeting and there is opportunity to influence the content.  That simply does not happen in Wokingham.  The Conservatives refuse to do it, saying it is too difficult to do it.  Strange that other councils manage it……

Finally, when it comes to the budget meeting in February, the council has to vote on 4 things:

  •  the budget for the following year.  The recurring spending is known as the “revenue budget”and the documents include projections of income and expenditure for the following 2 years as well, making 3 years in total.  On top of this, the spending on projects for the following year is agreed.  This non-recurring spending is the “capital budget”.   The decision on the following year’s budget determines the level of Council Tax to be charged, which is one of the key decisions taken at the budget meeting.  The amount the Council votes on is the Band D amount.  Council Tax works in bands with A being the cheapest.  D is the middle band.  The relationship between the bands is defined in legislation.
  • the budget for spending on projects (the “capital programme”) – this projects income and expenditure on projects for the next 10 years, although the projections get less reliable the further into the future they are projected
  • something called the Treasury Management Strategy – that is the statement of how the council is going to manage its money, the borrowings and the investments
  • something called the Housing Revenue Account – that is the money for council houses which is in a separate ringfenced pot

Just one more thing to note on who makes the decisions:  the council doesn’t have complete freedom as to how much to put on the Council Tax.  Council Tax increases are limited by the Secretary of State.  This year the limit was 3%.  If you want to go higher, you have to hold a referendum.  A referendum would be hugely expensive so the desired increase would have to be much higher in order ffor some extra money to come in after the cost of the referendum was deducted.  And the chances of getting the public to vote in favour of a swingeing increase are practically nil.

The council is also allowed to charge extra to cover the increased cost of adult social care.  Councils were allowed to raise Council Tax by a total of 6% over 3 years specifically for this. Wokingham has 1/2% of that 6% left.

And finally, finally:  also on your Council Tax bill you will find the other taxes that the council collects on behalf of other organisations.  The money that is collected is called the “precept” and these other organisations are known as “precepting authorities”.  They are: the police, the fire service and your local parish or town council.  Wokingham Borough Council does not set those precepts, it merely collects the money and passes it on.  While the fire and police amounts are the same for every house in Berkshire that is in the same band, the parish or town council amount varies by town or parish (and although all of Wokingham has town or parish councils, not all of Berkshire does).  So a Band D house in Wokingham town will pay a different amount of tax overall to a Band D house in Earley because the town councils charge a different amount.

Phew, got to the end of that bit.  More next week on what goes in to the budget.

   1 Comment

One Response

  1. […] 11. Council finances 1: Who makes the decisions? by Prue Bray on Prue Bray. A guide to the local government budgeting process […]

Leave a Reply

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>