We operate 2 main accounts. The majority of the Council’s services are accounted for within the General Fund Account and are funded from a number of sources including Council Tax as outlined below. The second account is the Housing Revenue Account, this can only be used for the provision of Council Housing and is funded by Housing Rents. This statement refers to the Council’s General Fund only.
In summary the Council's budget forecast shows that we will be spending more money per year on services than we get in tax and other income.
It is our assessment that this situation will continue for some time into the future and require us to cut costs and to maximise income we wish to remain financially viable.
The main cause of this financial pressure is down to reductions in grant from central Government and increases in our costs.
The funding gap
We receive income from a number of key sources including:
- our share of local Council Tax
- our share of National Non-Domestic Business Rates
- new Homes Bonus (Government grant)
- Revenue Support Grant (Government grant)
- locally generated income such as commercial rents, fees and charges.
Over the next 2 years our forecasts show our income will not meet our expenditure and that we could be faced with a budget shortfall of up to £4.6m, depending on what changes are made by the government to our funding.
Our net budget to be financed from the sources listed is circa £17m, which means that a reduction of £4.6m would be very difficult to manage and affect services.
Due to the complexity of local government accounting requirements it is not always easy to understand our position in regards to its reserves. However, it should be noted we are concerned about the level of our reserves and whether they will be sufficient.
- a General Fund Reserve to underpin our annual revenue budget but this is not sustainable in the long term
- Earmarked Reserves are set aside to fund specific projects or initiatives. It is sensible for us to put money aside to (when we are able to) in order to pay for things coming down the line.
We hold £7.9m in Earmarked Reserves at 31 March 2019. The General Fund Reserve is predicted to fall below its lowest acceptable balance (set by the Council at £1.35m) by March 2023 or sooner if changes are made to local authority finances, unless a saving strategy is adopted.
In terms of Capital Reserves, these include grants from a number of funders plus developer contributions and can only be utilised in accordance with set conditions. We held £3.5m at 31 March 2019.
Housing Revenue Account
In addition to the General Fund we also have a Housing Revenue Account (HRA). This is necessary to meet the statutory obligation to account separately for local authority housing. The main source of funding for the HRA is council housing rent.
Housing rents can only be used to pay for the delivery of council housing. These rents cannot be used to pay for non-housing services and therefore cannot be used to subsidise Council Tax.
In addition to the delivery of housing services, the HRA pays for the investment in council housing improvements such as new roofs, kitchens and bathrooms. It is also utilised to develop new housing within Ashfield. Previously this has included such developments as Brook Street and Darlison Court.
The HRA balance at 31 March 2019 was £32.6m. Our minimum balance for this account is £2.5m. It also has Earmarked Reserves of £1.1m which have been set aside to cover pressures from the introduction of Welfare Reform, the need for IT investment and restructuring within the Housing Directorat
The above are based on 2018/19 audited accounts.