The Council’s total or ‘gross’ budget is over a billion pounds a year but much of this is provided for specific purposes and can’t be spent on anything else:
These resources cannot be taken into account when looking for budget savings.
The gross budget also includes income from fees and charges for various services. Fees and charges can be increased but it is difficult to make savings in these service areas because services reliant on the income they generate could fold without it.
The money that the Council has direct control over when setting its budget comes from:
Together these resources make up the net budget which this year (2015-16) totals £401 million.
Government grants make up over 40% of the Council’s current net budget – but the share has reduced from 49% in the year before. The Government has announced that by 2020 it will no longer provide support grants to councils – they will have to raise their funding locally from Council tax and business rates.
The only ways that the Council can find the £53 million it needs to balance the books over the next two years are by cutting what it spends on delivering services, asking people to pay or pay more for services and putting up Council tax.
Just over half of Bradford Council’s net budget is raised locally through Council tax and business rates, which is a fairly low proportion compared to other places. This means that the services the Council provides are particularly reliant on Government funding and vulnerable to national spending cuts.
In the last three years there have been moderate increases in Bradford’s Council tax following two years in which it was frozen. Those increases raised £7.5 million extra income to help to deliver local services.
Bradford’s Council tax continues to be the lowest in West Yorkshire and the fourth lowest of all Metropolitan Authorities. Every 1% increase raises around £1.5 million a year.
The Police, Fire Service and Parish and Town Councils can all place an extra charge on top of the Council tax.
Social care precept
The Government has said that councils can put an extra charge, known as a precept, of up to 2% on Council tax to help meet the costs of social care. This would be on top of any other increase in Council tax. In Bradford this extra charge would raise around £6 million over the next two years although that would not be enough to tackle the underlying financial problems facing care services in their entirety.
The Government sets the business rates nationally. The Council now keeps 49% of business rates it collects instead of passing them all on to the Government as was the case in the past.
Business rates will become an increasingly important source of local income as central grants from Government are cut back. The Government has said that by 2020 councils will be able to keep all their business rates; a policy which will favour areas with the strongest economies. Bradford benefits from the current system but will lose out under the new proposals unless it can increase its business rates enough to compensate for any changes. Some councils in areas that agree to have an elected mayor will have the power to reduce or increase business rates.
The Council holds money in the bank called reserves. Current reserves total £158.2 million and of these:
This leaves £12.5 million of unallocated reserves.
Reserves can only be spent once so it’s not a good idea to use them for day to day spending on services. This just stores up problems for later and is like paying household bills from savings, eventually the savings run out but the bills still have to be paid.
For these reasons the Council’s policy is to use reserves only for the following purposes: