Council denies wrong-doing on budget setting

Berwick Town Council has firmly rebuffed a councillor's claim that the public was deliberately misled when budget decisions were made.

By The Newsroom
Friday, 01 July, 2016, 09:00

At another stormy finance committee meeting, Councillor Georgina Hill called for a public apology for what she claims was a ‘wholly unjustified’ council tax precept hike.

She insists that there was no £35,000 shortfall between income and expenditure – the basis on which the decision to raise the precept was made - because the annual funding the council receives from the freemen was not taken into account.

Cllr Hill said: “The public, many of which are struggling to make ends meet, are due an apology for being deliberately misled.

“At the time of the budget setting, we were told that the reserves were approximately £250,000 and all allocated.

“We were also told that on the basis of the budget plans and the previous year’s precept level there would be a shortfall of approximately £35,000 and an income/expenditure ‘deficit’.

“As I argued at the time, these figures were misleading as it failed to take into account the Schedule III income (an amount we are due under statute and has been around the £100,000+ mark every year). In fact, when we finally agreed the budget this money was actually sitting in our bank account.

“As is now clear, after the release of the actual year-end figures, we (and the public) were totally, and deliberately, misled and the talk of deficits used to justify the precept hike was phoney.

“The council’s reserves are about £411,000 with around 40% allocated, some of it very loosely ‘allocated’. On the current budget, the projected surplus this year will be £115,000, which will increase the reserve pot even more.”

She continued: “My concern is that we came very close to being issued with a public interest report, by the auditors, and the ongoing financial mismanagement and lack of transparency in the financial data/statements.

“I also believe in using public money wisely and cutting out waste and inefficiency.

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“This sort of discipline, any sort of fiscal discipline or planning, is an alien concept to others on the council who are now adopting a spend, spend, spend approach.”

However, the clerk explained that, in general, council reserves are held to cover unforeseen circumstances and normal operational cash flow requirements. She said reserves were a vital element of good financial management for any council, especially at a time of financial uncertainty.

Cllr Paul Hodgson, former chairman of the finance committee, also vehemently defended the council’s decision-making process.

“It was not misleading,” he maintained. “The budget process has to be started in October. The draft budget did include Schedule III (freemen) money but it was based on an average of the last six years which turned out to be £26,000 less than we actually received.”

He explained that when the draft budget was considered in November that total reserves were £252,283, including an unallocated reserve (general fund) of £50,500.

He said the proposed budget expenditure was £251,071, the previous year’s precept was £218,200, difference £32,871. The adopted budget for 2015-16 was £250,493, with a precept set at £218,200, leaving a difference of £32,293. Both figures are a difference between revenue expenditure and revenue income.

“Using our capital reserves to reduce that £33,000 deficit is not how you run a business,” insisted Cllr Hodgson.

He received backing from Cllr Karin Graham who said the council needed money to deliver the improvements the town needs.

“If we don’t start spending money soon, Berwick is going to become a ghost town,” she said.

Cllr Hodgson also explained that the figure of £411,756 is the council’s total net assets; 52% of this is in allocated reserves of which about £80,000 is already committed to purchase play equipment for Flagstaff Park. He said other spending plans would require use of the general fund such as seat repairs (£10,000) and councillors have yet to discuss how other parts of the fund would be allocated.