NE Derbyshire council to increase council tax by 2.99per cent and housing rent by six per cent

The local authority’s councillors considered an extensive financial plan at a full council meeting, on January 29, before voting by a majority to levy a council tax increase of 2.99per cent in respect of Band D properties and they voted by a further majority to increase rent for council housing tenants by six per cent.

Council Leader Nigel Barker said: “From a council perspective 2024 looks like being an exciting and challenging year. None more so when it comes to money and the council finances.”

Cllr Barker added: “Our finances are in a better shape than many of our neighbours but that does not mean 2024 will be plain sailing or that we won’t face some hard choices.

“It’s easy for what appears to be a stable financial position to suddenly get out of hand if you take your eye off the ball.”

The Labour-led council sought to approve its General Fund, Housing Revenue Account and Capital Programme as part of the council’s Medium Term Financial Plan covering 2023/24 to 2027/28 including 2023-24 and 2024-25 budget considerations.

This followed an announcement in January, 2023, that there was a need to meet an estimated but manageable £784,000 budget shortfall, but by November, 2023, this was reduced to an estimated £331,000 shortfall.

In efforts to meet its budget for the 2024-25 financial year, from April 1, the council has also had to consider the uncertainty surrounding future Government funding which it argues has created difficulties for local authorities to plan ahead.

The Government has confirmed that the maximum possible increases available for Band D properties remain at three per cent for district councils in 2024-25 and although the 2025-26 level is yet to be confirmed there is speculation that it will remain at three per cent in the future.

NE Derbyshire District Council stated if council tax rates increase by 2.99per cent for its residents then a current estimated 2024-25 budget shortfall of £303,000 will be reduced to £100,000 putting matters into a manageable position.

Council Director of Finance and Resources Jayne Dethick said that a share of a recently announced £600m Government funding handout for local authorities may also amount to about £92,000 for the council which may be confirmed in February.

Ms Dethick stated: “We have been operating in a challenging financial climate for several years and have an excellent track record of both identifying and delivering service efficiencies as required.

“There is a strong commitment to being fiscally responsible and efficient and to demonstrating strong financial governance in the Council Plan that was approved by council in July.”

Council tax provides 40per cent of the council’s annual income needed to fund its services and the annual increase will support the initial financial year’s budget from April 1 and it is also expected to support future years.

The council stated the approved increase for the 2024-25 financial year from April 1 will be 2.99per cent which is the equivalent of £6.11 and this will generate additional annual revenue for the council of £293,007.

In 2023-24, the council’s part in the council tax bill was set at £204.27 for a Band D property and this had also involved an increase of 2.99per cent.

Other local authorities battling multi-million pound budget shortfalls have blamed the influence of high inflation rates, the cost of living crisis, rising costs, rising demands and the impact of the Covid-19 pandemic for their financial plight.

NE Derbyshire District Council recognised some of the external pressures experienced in 2023-24 will continue and it feels one of its main pressures relates to costly pay awards.

The council stated that it has had to address increases in the National Living Wage, employer pension contribution increases, and National Insurance changes, and that a subsequent additional £1m was needed in 2023-24 and a further £1.3m in 2024-25.

In terms of the district council’s reserves, the level of the General Fund Balance has been maintained at £2m representing a working balance of resources that could be used at short notice in the event of a major financial issue.

The council’s Invest to Save Reserve had an opening balance of £2.75m on April 1, 2023, but due to earmarked commitments this has since been reduced to £1.92m which will be available for future innovations and spending to save initiatives.

In addition, the council’s Resilience Reserve is expected to be reduced to £2.3m after a planned contribution from this reserve of £303,000 to the 2024/25 budget.

Deputy Leader Cllr Pat Kerry, who is also the Strategic and Leadership portfolio holder, said it is never easy making decisions about any increase and a balance must be sought between the council’s financial position and the interests of residents.

He added: “We recognise that we are in a better financial position than many local authorities, some of whom are struggling to set balanced budgets next year but none the less we do appreciate that there is still a need to continue to tackle the underlying budget deficit in a planned and managed manner.”

Conservative councillor, Alex Dale, said the current Labour-led council inherited a very good budget from the former Conservative administration but he claimed the new administration had not proposed any ‘bright ideas’ to reduce the council tax rate.

Cllr Dale’s requested amendment to reduce the local authority’s council tax rate to 1.99per cent was out-voted and the majority of the council voted for an approved annual council tax rate increase of 2.99per cent to be introduced from April 1.

The council also voted in favour of increasing housing rent for its tenants by six per cent from the beginning of the financial year from April 1, 2024-25 in relation to the Housing Revenue Account.

And the council also approved £12.05m of management fees for housing services and £1.1m of management fees for capital works for the 2024-25 financial year to be undertaken by Rykneld Homes who oversee the council’s housing stock.

Ms Dethick stated: “The HRA balance is being maintained at £3m in line with the level of financial risk facing the HRA. Maintenance of this balance is necessary as it will help ensure the financial and operational stability of the HRA which is essential to maintain the level of services and quality of housing provided to tenants.”

The Social Housing Regulator confirmed that rent increases of an amount equal to the Consumer Prices Index plus one per cent are still allowed which could have meant a 7.7per cent rent increase.

A rent increase of six per cent means a new average weekly rent will include a £5.17 increase for tenants and will provide the council with £2m of extra revenue.

The council and Rykneld Homes explained they are working to provide affordable homes that will be overseen by a regulator and which will have to meet strict repair, electrical, mould and damp requirements and every council housing executive will have to to be qualified under the Chartered Institute of Housing.

There is a statutory requirement for the HRA to break even each year and rental income is the main source of revenue to meet the costs of management and maintenance of homes and to service debt.

Cllr Kerry said the council has decided upon a six per cent rent increase as the way forward despite the costly new regulations even after the rent could have been permitted to go as high as 7.7per cent.

The council has also accepted that estimates in the Medium-Term Financial Plan for 2023-24 to 2027-28 are robust and that the level of financial reserves are adequate, and that officers will make progress reports to the cabinet and the services scrutiny committee on a quarterly basis.

In addition, the council which has has a legal obligation to balance its budget, approved the General Fund Capital Programme for the current 2023-24 financial year, and for 2024-25 to 2027-28.