Our budget process
Our Strategic Plan sets out our objectives, and our budgets follow on from this. They are monitored monthly, and reviewed each year.
Once the Strategic Plan is finalised at the end of June, our priorities are reviewed and draft revenue budgets sent to all councillors and considered by the Policy and Resources Committee in December.
The budgets take into account implications for the following two years, including detailed information on the base budget (the cost of continuing the existing level of service), bids for growth, and options for reductions.
In January, we involve the Area Committees and Overview and Scrutiny, who make recommendations.
The issues are further considered by the Policy and Resources Committee in February, along with a draft capital strategy and information on resources and proposals for the next three years' capital programmes.
The Policy and Resources Committee makes recommendations in mid/late February on budgets and council tax for us to make final decisions.
Also included in the process are advance considerations of the budget roll-forward (usually in June and/or September) and various means of consultation. Budget preparation is carried out by our individual service areas and accountancy team. Draft reports are considered first by our Management Team before discussion with members and submission to the Policy and Resources Committee.
You can also see budgets from previous years.
Revenue versus Capital
- Revenue is the ongoing cost of running an asset or facility (eg. salaries and wages, heat and light, maintenance)
- Capital is one-off proposals which usually involve the creation, improvement or renewal of an asset or building (eg. housing development or new building work)
Identifying funding
A key part of the budget process is identifying external funding opportunities, including Government grants. Our revenue budget is broadly funded 60% through Government grants (Revenue Support Grant and the National Non-Domestic Rate Pool) and 40% through council tax. The Government usually indicates provisional figures of grant at the end of October for the following financial year and usually confirms this at the end of January.
Our capital programme is funded through several sources. Borrowing, capital receipts, contributions from the revenue account or internal funds, and grants from external bodies including the Government.
As a district council, we collect the council tax for the Pendle area. The council tax takes into account the precepts (budget requirements) not only for ourselves but also for Lancashire County Council, the police Authority and the Fire Authority. These transactions are managed within the Collection Fund.
About 16% of the council tax relates to our requirements. The largest part (about 72%) is for Lancashire County Council, with the Police Authority accounting for about 8% and the Fire Authority 4%. We sends out bills with accompanying literature in March, in time for the start of the new financial year.
Monitoring
Once our budgets have been approved, they have to be implemented.
Each detailed budget is managed during the year by a budget holder. Budget holders have the responsibility of managing and monitoring budgets in accordance with our policy and the requirements of our Financial Regulations, in the achievement of our objectives, targets and plans.
There is a requirement for budget holders to report on variances and take any necessary action to avoid exceeding their approved budgets.
Arrangements for budget monitoring vary. Whilst budgetholders have the prime responsibility, detailed monitoring is undertaken on some accounts by the Accountancy Unit in support of service managers - eg the direct labour/service organisations (building, highways, cleansing and grounds maintenance), salaries, capital programme.
Regular monitoring reports are submitted to the Management Team and the Policy and Resources Committee, along with advice on any action which may be required.
Review and reporting
Our Financial Manager has to report on the resilience of the budgets and the position on reserves. A view is taken on our finances over a three year period.
The budget process involves a review of our activities and provides an opportunity to change things where appropriate, in the process of continuing improvement.
At year end, variations between budgets and outcome are reported to our Accounts and Audit Committee, along with explanations as appropriate. The final accounts are the subject of audit by an external auditor who reports separately to us.