Huntingdon Town Council is currently going through its budget and precept setting for FY24/25. Unusually, the budget and precept were not approved when they were presented to the full finance committee earlier this month.
Below are my remarks on the budget and precept at the finance committee meeting on 11th January 2024. The headings weren’t read out, but were for me so I knew where I was in what I was saying. The budget is at the Town Council website and is the document I refer to.
At the meeting, it was agreed that councillors would submit their proposals. In the interests of transparency, I’m sharing mine publicly. My suggestions are in column G of this Excel.
I’m going to set out how I see our situation; why we’re in that situation; and what I think we should do.
What is our situation?
We have a problem. We spend more money that we take in.
The way this budget is balanced is by spending extra money we borrowed when we took out the public works board loan.
If we look at page 12 of the draft budget, near the bottom under ‘capital income’, the draft budget takes £486,000 from the investment account for 24/25. The forecast is to take the same amount in 25/26 and 26/27. That’s just under £1.5m in three fiscal years.
If you look at page 13, the capital project reserve stands at just over £1.5m.
That means by the end of the forecasts in this budget, we will have used up the extra money we borrowed to fund the first repayments on the crematorium/depot project. We are spending more money than we take in, and we are going to run out of money to make up the difference.
Why are we in this position?
Because the combined crematorium and depot project does not pay for itself.
If we go up to page 7, and look under 815 – Crematorium, the total income is £783,052 for 24/25.
On page 8, the expenditure for the crematorium is £616,876.50.
To that, we have to add staff. If you go to page 12, 4012 Salaries Gross – Crematorium is £272,436.
That works out as a loss for the crematorium of £107,260.50 for 24/25.
We also still have to pay the remaining half of the public works board loan that is attributed to the depot. That’s £243,249.50. Totalling that gives us how much the crematorium and depot project is losing us a in 24/25: £349,510.
The projections in the budget do not see us closing the gap. By 26/27, the crem is projected to be bringing in another £95,000 per year. We’d still be a quarter million pounds short.
In other words, the current budget, which relies on a 15% precept increase, is setting us up for an even bigger increase in the future.
What should we do?
During the budgeting process, I said that we needed a combination of precept rises, cuts, commercial income, and time to close our gap between money in and money out.
Precept rises
I’m afraid that there will need to be some precept rises. That shouldn’t be our first choice. This budget isn’t doing anything to avoid more and more precept rises – it’s setting us on a course where we have no choice but to tax more and more. The inflation rate over the last twelve months is 4.2%, so we are looking at a precept increase this year of more than triple inflation during a cost of living crisis.
There are about ten thousand parish and town councils. We currently have the 74th highest band D levy. We already cost residents a lot. That may well be value for money, but the absolute amount we take still matters.
Cuts
During the budget process, I suggested cuts totalling nearly £200,000. Cllr Fearon and the deputy mayor also made suggestions.
I don’t think we can justify budgeting £4,000 for civic regalia. I think we should cut quite a lot under 123 – Democratic Expenses; 410 – Grants and Donations; 430 Twinning; and 940 Huntingdon in Bloom.
Let me be clear that this means stopping doing things that I think are valuable. Things I would like to see continue. It doesn’t mean stopping them permanently, but it does mean pausing them until our income and expenditure are back in line.
I regret that I have to say what I’m about to say, because I know that it is likely to cause distress amongst people I care about. I’m afraid we have, at the very least, to freeze our salaries budget. That currently stands at £1.6m. We cannot increase our headcount further, and should look to reduce headcount through natural wastage.
Commercial income
We need to bring in more money through commercial income. I won’t rehash the various discussions we’ve had, except to say two things. Firstly, working out how we get more income, and then getting that income, should be top of the agenda. Secondly, getting that income will take time.
Time
We need time to get more commercial income. We get that time by making cuts now. We need to buy ourselves as much time as we can, and I do not think the budget does that.
If we vote down the budget and its associated precept, we will need, in short order, to draw up a new one. The clerk has said that we don’t legally have to give our precept figure to HDC for some weeks. We can do this. I will therefore vote against the budget, and encourage you to do the same.
I think we understand that we cannot go on like this. We have to do some really difficult things. We should do them now, and not wait. The longer we wait to grasp the nettle, the harder we will have to grasp it and the more it will sting.