Wednesday, February 14, 2024

Rates next steps


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Following the rates decision by Mid and East Antrim Borough Council there are a number of actions I believe are required to restore confidence in the administration of the council and those elected to office.
There must be a full analysis of the circa £7 million overspend identified in the latter half of 2023. This must include a line by line cost centre analysis of where expenditure deviated from the projected budget allocations in 2021/22, 2022/23 and 2023/24.
It is not enough to simply state that cuts of several million pounds will be made to lower the rate set, there remain significant issues when such reduction still results in a rate increase of nearly 10%. A comparison of each cost centre detailing initial projected budget, final agreed budget, total reduction and percentage reduction should be made available. For any reduction over 5% a brief explanation of impact on service delivery should be attached. Elected members must be clearly advised of the level of service proposed for each service area following budget reductions. Members are both responsible and accountable for the decisions they take.
Moving forward elected members should be provided with quarterly reports detailing the projected budget, actual expenditure and percentage deviation for each cost centre. All deviations of 5% either underspend or overspend should have an explanatory note. (This should involve limited additional work for staff as in the current financial situation the internal budgetary oversight the organisation should be carrying out should be more frequent)  
Moving forward, for each new revenue proposal councillors must be advised of the implications of additional costs on future rates setting. For each capital project councillors must be advised of the repayment costs, including interest per annum and the implications for future rates over the repayment term. Capital development also creates additional annual revenue costs to be added to the rates and these must also be considered at the point a decision is taken to proceed.
Normal economic activity will generate rates increases through interest rate increases, pay increases, supply chain inflation, legally required expenditure and projects council is already committed to. This means even on a do nothing trajectory future increases are inevitable, though now based on a higher baseline arising from the setting of this years rates. To limit further increases consideration must be given to limiting future borrowing to a lower headline capital borrowing limit and new revenue spending to be approved only where savings made elsewhere negate the proposed expenditure.
These initiatives will not reduce the likelihood of poor financial management decisions from previous administrations continuing to work their way through the system but they will begin to transfer responsibility for budget setting from council staff to elected representatives. Councillors will have been involved in the financial management decisions taken throughout the year and will not be faced with a catastrophic take it or leave it moment in future years.
This means a change in attitude from being spenders of the public purse to protectors of the public purse. This requires a change in the mindset of officers to understand the need for greater openness and transparency about financial governance with those elected to govern. It also means a change in mindset amongst some councillors, this is the job, previous administrations told you the job was to cut ribbons, it is not, for the foreseeable future your job is to understand the detail and cut rates.  
The problems will only be solved if councillors accept the challenge, if they do not then the problems will become worse and greater challenges and tougher decisions will lie ahead.


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