Budget for Preston will 'steady the ship'

It is “steady as we go“ for this year’s budget from Preston City Council as it faces up to some possible risks in the future.

Wednesday, 5th February 2020, 6:00 am
Coun Martyn Rawlinson

The authority is steadying the ship as it braces itself for what could be three big waves on the horizon.

Brexit, the cost of Preston Guild Hall and changes to funds from Central Government are the city authority’s biggest trio of worries.

While leader of Preston City Council (PCC) Matthew Brown says he believes the council is “delivering high-quality frontline services to Preston’s residents” he also issued a note of warning.

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Preston Guild Hall

Introducing the budget in the report he says: “Unfortunately we are faced with unprecedented levels of financial uncertainty regarding future Government funding along with other significant financial considerations.”

Coun Martyn Rawlinson, cabinet member for Resources and Performance at the council, said: “It really is steady as we go because the budget is balanced. The forecast is balanced for the next four years but its not balanced beyond that.

“We are still spending more than what’s coming in.

“There are several major risks hanging over our forecasts.

Budget for Preston will 'steady the ship'

“Brexit first and foremost. Any down turn in the economy can have a major down turn in business rates, people not being able to pay their council tax and less returns. That’s a big one.

“The Government is also looking at our major income streams from them which are business rates and new homes bonus.

“We expect to find out what’s to happen with them in the next 12 months.

“We are expecting a reduction.

“And taking back the Guild Hall has increased expenditure.

“We are hopeful to get a new operator in but at the moment we really don’t know how much the building is going to cost us.

“That’s why there’s little happening in the budget and no cuts.”

The council took control of Preston Guild Hall after the operating company went into administration in 2019.

Since then it undertook a “mini competition and due diligence exercise to seek a suitable qualified and experienced theatre or venue operator who could reinvigorate the closed venue”.

PCC is expected to have an announcement on new operators for the theatre early this year but there is no word on this yet.

Meanwhile as the UK leaves the European Union the council says that judging the impact of Brexit is “unknown and difficult to estimate” but budget documents say “the council will closely monitor developments”.

Finally as the Government reviews how funds from the New Homes Bonus and Business Rates are to be allocated to local councils, the city council is taking a deep breath over fears its income will take a hit.

Under the Government’s Fair Funding Review the way business rates, paid by Preston’s traders and business owners, are allocated and redistributed between local authorities will be shaken up.

When the changes from the Fair Funding consultation come into play, PCC is concerned that the rates shared between the city and county councils will mean it loses out.

Outlining the risk the budget document says: “Although the Government has indicated that councils will be able to retain approximately 75 per cent of their business rates income, additional responsibilities are being handed over to councils at the same time.

“Future detailed allocations and splits between two-tier authorities are still unknown.

“The outcome of the fair funding consultation carried out early in 2018 is the suggested basis of the baseline calculation.

“Until further information is known we are highlighting this as one of the most significant financial risks for the council.”

In other changes to Government funding to local councils the Central administration has announced that there will be no legacy payments on New Homes Bonus allocations for 2020/21.

The New Homes Bonus is a grant paid by central government to local councils such as Preston to reflect and incentivise housing growth in their areas.

It is based on the amount of extra Council Tax revenue raised for new-build homes, conversions and long-term empty homes brought back into use. There is also an extra payment for providing affordable homes.

Legacy payments on allocations made in earlier years will be honoured this year but beyond 2020/21 the scheme is still discussion.

According to the council’s budget report: “Any New Homes Bonus due to the council now transfers to the City Deal therefore any change to the current system will impact on the City Deal.”

The budget proposals are due to be presented to Preston City Council’s cabinet tonight at the Town Hall before they come before full council for approval later this month.

Increase to council tax

Preston is looking to increase its share of council tax by 1.99 per cent for the next financial year.

If proposals are approved, the rise would mean, for example, Preston Council’s share of the council tax on a Band D property would increase to £320.75.

The rest of the annual bill is made up of contributions to Lancashire County Council, the police authority and parish councils.

Council documents say: “The council tax referendum principles allows the council to increase council tax by up to two per cent in 2020/21.

“This means if the council sets a council tax of two per cent or above it would have to hold a referendum to agree the increase.”

Budget proposals show that the city council, which increased last year’s council tax by 2.99 per cent, is also planning on increasing council tax by 1.99 per cent for the next two financial years of 2021/22 and 2022/23.

Savings

In plans to save money the council has proposed the “phased reduction” of a grant to Greater Deepdale Community Association.

The charity provides “facilities in the interests of social welfare for recreation and leisure time occupation with the object of improving lifestyles” for children, older people and people of a minority ethnic or racial origin.

It provides education, training, opportunities in arts, science and sport activities.

According to proposals there will be no drop in grant funding to the Association this next financial year but in 2021/22 funding is expected to drop by £7,000. After that the grant is expected to drop over the next two consecutive financial years by £14,000 each time.

Coun Rawlinson says that the money Greater Deepdale Community Association currently receives is an anomaly.

He says the phased reduction of the grant: “is just to bring it into line with other community centres”. He added: “I’m hopeful the community centre can withstand the change because its a successful operation.”

Elsewhere the council also hopes to make savings of £75,000 for the next four years as part of its Investment Property Action Plan.

Coun Rawlinson said: “We have a property portfolio which has income. The economy affects that and we are reviewing the portfolio and trying to streamline income.”

Council documents say that an increase to the £75k target “reflects the increased investment income estimated to be achieved from the work currently being undertaken by the Property Services team”.

The report continues: “Work has progressed during 2019/20 which has resulted in additional income and savings being reported in the financial forecast.

“The new target proposed for 2021/21 reflects the work currently being undertaken by the Property Services team.

“As work progresses on the action plan we anticipate that further increased investment income may be achieved over and above this target.”

Money invested into the Preston Model

A part of its growth proposals PCC is setting aside a budget provision of £30k for Community Wealth Building, otherwise known as the Preston Model. However details of how this will be spent are expected to be published at a later date, setting out further details.

Introducing the budget proposals for the next financial year leader of the council, coun Matthew Brown says: “We are committed to our ambitious Community Wealth Building agenda, often referred to as the Preston Model, which puts our residents at the heart of economic development for the city.

“It factors into all of our major decisions and will continue to influence the future of the City.

“We acknowledge the economy doesn’t often work for many people and it is why we will move forward with plans to create 10 new worker owned businesses and spearhead a new regional cooperative bank. “

The budget also includes plans to spend £30k, allowing the continuation of provision for staff car parking in 2020/21.