Where the Council's money comes from

Update

Since the Executive meeting on 5 December 2017, at which budget proposals for 2018-19 and 2019-20 were approved for consultation, the Government has announced that councils have been given the power to increase their core Council tax requirement next year by an additional 1%, on top of the existing 1.99%, without a local referendum. This is in addition to the existing extra 3% Council tax increase councils are allowed to charge next year to assist with paying for social care. This change would result in a total 5.99% rise in Council tax in Bradford District from April this year.

 

In 2013-14 the Government grant to the Council was £183 million. Government have indicated that the core grant to Bradford will be zero by 2020. The Government's funding announcement for local government in December 2017 included no additional funding for adult and children’s social care. The Executive is therefore inclined to factor this extra increase into the final budget proposals which will be recommended to Full Council on 22 February 2018. A proposal to add the extra 1% core Council tax precept is now part of the budget consultation which closes on 28 January.

Click here to have your say on proposed updated financial plan 2018-19 to 2020-21 and Council tax proposals

Or download the paper version (PDF)

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. For example:

  • £325 million for schools
  • £170 million in Housing Benefits payments
  • £43 million for Public Health.

These resources cannot be taken into account when looking for budget savings.

The gross budget also includes income from fees, charges and contributions towards the cost of services – around £140 million in 2017-18. 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:

  • General Government grants that are not tied to specific purposes
  • Business rates
  • Council tax
  • Council reserves

Together these resources make up the net budget which this year (2017-18) totals £375.2 million.

Government grants now make up less than 35% of the Councils current net budget. 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.

Council tax and business rates

Over half – 62% – of Bradford Council's net budget is raised locally through Council tax and business rates. However, compared with other councils, the amount of money Bradford Council can raise in Council tax and business rates is limited by the district's low tax base.

If the total amount of tax collected is divided by the population, the value of the tax base per head is lower than in other places. This reflects household composition, the fact that Bradford has one of the lowest Council tax rates in the country – the lowest in West Yorkshire – and relatively low growth in the value of the business rate tax base.

This means that the services the Council provides are particularly reliant on Government funding and vulnerable to national spending cuts.

In the last five years there have been moderate increases in Bradford's Council tax following two years in which it was frozen. Those increases, including a further 3% rise in 2017-18 to help meet the costs of social care, raised £21.6 million extra income to help to deliver local services.

The Police, Fire & Rescue Service and Parish and Town Councils can all place an extra charge on top of the Council tax.

We need to grow our council tax base, grow our business rates base and make the money we do have work harder for us so that we can locally fund more public services for all. As part of our plan for inclusive growth we also will pursue a more focused strategy to invest in assets with the singular purpose of generating income

Business rates

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.

Bradford also remains dependent on the top-up grant paid via central governments mechanism which redistributes collected business rates from areas with lower needs to areas with higher needs.

Business rates will become an increasingly important source of local income as central grants from Government are cut back. The Government is reforming the business rate system, likely by 2020, but it cannot be predicted whether Bradford District will be better or worse off.

Reserves

The Council holds money in the bank called 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:

  • Support for transitional arrangements within the Council and in our communities.
  • Funding for time-limited investment that contributes to our priorities.
  • Support for activities that pay back the investment over time.

In recent years the Council has used its reserves in various ways to cover ‘one off costs and to help smooth the transition to having smaller budgets overall. This financial plan sets aside a further £0.2 million for use in 2018-19 and 2019-20. This will leave us with £15.5 million pounds of unallocated reserves to mitigate against uncertainties in the future.

The Council has other reserves, but these are set aside to cover future liabilities and key priorities – they are not available to fill the budget gap.

Next: Aligning resources to outcomes

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