Uttlesford District Council adapting to new government rules for local authority accounting
Uttlesford District Council is announcing that it is adapting to significant new financial accounting rules that have been imposed on all local authorities by the government.
These technical finance rule changes, introduced just before Christmas, effectively halve the amount of income available for council services from its highly successful £275m commercial property asset portfolio assembled over the last five years.
Uttlesford District Council has one of the most successful council commercial property investment portfolios in the country, which has increased in value by nearly £40 million since the authority created it. The rental income from these investments - forecast to be some £7.1m by 2023/24 - compares with its £16.2m net spending on public services and key community initiatives such as climate change projects, new sports facilities and economic recovery. The government's changes will progressively reduce the use of this income by about £1m a year over 4 years, up to 2027, for which the council is now planning.
The impact of these changes will not be felt until the 2023/24 financial year and therefore no alterations are proposed in the draft 2022/23 budget. The council will be taking time over the coming months to explore different options and solutions to minimise the future impact.
Cllr Petrina Lees, Leader of the Council, said: "These national government changes are out of our control and affect many councils. They will not have an instant impact on us - but we are being proactive so that we can adjust to the new reality.
"We are in a much better starting position than many other councils. Uttlesford is a low-tax authority due to the significant rental income from our investment portfolio, and will remain so.
"As we make budgetary changes over the next few years I can assure residents that our underlying values and ambitions to support improved outcomes for them remains as strong as ever, as does our commitment to delivering good services."
Direct government funding to councils has reduced significantly over the last decade and there are further important changes on the horizon that will impact local authority budgets, like the end of the current New Homes Bonus funding scheme.
Cllr Neil Hargreaves, Deputy Leader and Portfolio Holder for Finance and Budget, said: "The government has been continually reducing local authority funding. UDC has managed to avoid passing on those major spending cuts to residents, largely due to income from our highly successful and low risk commercial investment strategy.
"Although the government is mandating that we are no longer allowed to use a significant amount of our £7.1m a year income, it has offered no replacement funding.
"However, in the past we've shown we are good at finding solutions and we will adapt and continue to innovate so that we can continue to meet the needs of our residents."
Draft proposals for the 2022/23 budget will be put before the Scrutiny Committee on 3 February, before going to Cabinet on 10 February and then for final approval by Full Council on 22 February.
The suite of financial papers will include the Medium Term Financial Strategy, which sets out the council's commitment to spending over the next five years, and Commercial Strategy, which will contain details about how the council is dealing with the new rules changes on investments.
21 January 2022
► Medium Term Financial Strategy 2022-2027 [895.23KB] - draft being considered by Scrutiny Committee