Thursday 27 January 2022
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A Nottinghamshire local authority freezes council tax after large housing grant

A larger-than-budgeted Government grant for building new homes and bringing disused ones back into use helped a local authority freeze council tax, documents show.

The authority had planned a 1.99 per cent hike in residents’ bills – the most it could legally increase the precept by without calling a referendum – in a bid to plug a £1.3 million financial black hole.

This would have raised about £115,000 and meant residents living in Band A properties, which make up almost 55 per cent of all homes in the district, would pay the council £2.38 more per year.

Other measures to claw back the deficit included using £300,000 of earmarked reserves.

But the council scrapped the plans last month after confirming Government grants for the coming financial year were more than anticipated.

The Labour executive had initially budgeted to receive £677,000 from Whitehall, which would have meant the council tax rise and large reserve use were necessary.

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But cabinet documents confirm the council will receive £1.078 million to spend from April – about 60 per cent more than the authority had planned to receive.

The bulk of the funding comes in the form of a £654,000 New Homes Bonus, which is £386,000 higher than the authority received in 2021/22.

This grant funding is made available to councils to “incentivise” housing growth and reflects increases in council tax receipts from new-build houses, conversions and empty homes being brought back into use.

The authority will also receive a £7,000 rise in the Services Grant, taking the sum to £257,000, while the Lower Tier Services Grant of £167,000 is £8,000 higher than in 2021/22.

The authority also plans to bring in money through the introduction of a trade glass collection service and by reducing special councillor allowances by 10 per cent – raising £5,000 and £20,000 respectively.

Alongside freezing council tax, the extra grants also mean the authority will scale back the use of its reserves down from £300,000 to £100,000.

And it allows the council to make a number of investments, including spending £25,000 to ensure the Tour of Britain’s Nottinghamshire leg returns to the town in the summer.

Further investments will see £26,000 spent on the district’s parks, £30,000 spent on ‘economic stimulus’ and £10,000 invested into a council tax ‘hardship’ fund.

The council expects this will be offset by a £204,000 increase in the council tax base for 22/23, while £25,000 more will be received from interest payments.

The new medium-term financial strategy is due to be approved by the cabinet on Monday (17 January ) before it goes to the full council for debate.

Cllr Craig Whitby, portfolio holder for corporate finance, said: “The recent confirmation of a higher-than-expected Government grant means we are in a position where we no longer need to increase our portion of council tax.

“This would be good news for Mansfield residents, many of whom continue to be affected by the pandemic.

“Our original decision to propose an increase was not an easy one to make for this reason but was necessary based on the information we had at the time.”

However, uncertainty over the 2023/24 and 2024/25 grant settlements from Government – which caused some county councillors to call for clarity this week – means the authority expects the deficit to return next year.

The 2023/24 budget shows the council is forecasting a £1.080 million deficit from April 2023, which could rise to £2.242 million a year later.

 

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