The Director of Finance and Resources reminded the Committee that, at its meeting on 18th December, it had been provided with an update on the Council’s Medium Term Financial Plan. The Committee had, after due consideration of business-as-usual cost pressures, growth proposals and efficiencies, agreed, in principle, to a District Rate increase of 1.98% for 2021/22. That increase had been based upon the assumption that there would be no change to the 2020/21 Estimated Penny Product and that the Government would guarantee rates income based on 2020/21 levels and provide funding for Covid-19 related additional expenditure and income losses.
The Director reported that the final Estimated Penny Product, which had now been received from Land and Property Services, had seen an increase of 0.02% on the 2020/21 position, giving a revised Estimated Penny Product of £6,253,110. That meant that the required increase in the District Rate had been reduced to 1.92%. However, that did not take into consideration the potential impact of Covid-19 upon the Council’s district rates income for 2021/22.
With that in mind, the University of Ulster’s Economic Policy Centre had been commissioned to develop a rates impact economic model. He confirmed that that work, which had entailed a detailed analysis of key economic factors across all non-domestic property types against the level of rates debt and vacant rate losses, had now been completed. He provided an overview of the Centre’s findings and confirmed that they had since been forwarded to the Department of Finance. The Northern Ireland Local Government Association and the Society of Local Authority Chief Executives had written to the Ministers for Finance and Communities requesting that the Northern Ireland Executive guarantee rates incomes at 2021/22 levels. As yet, there was no indication as to whether the request would or would not be met.
The Director explained that, in order to set the District Rate within the legal timeframe, which had now been extended till 1st March, the Committee was required to agree a course of action in the event that rates support from the Government was not forthcoming. He presented the Members with two options, the first of which was based on the worst case scenario presented within the Economic Policy Centre’s model and would leave a budget deficit of £4.65m. The second option, which he recommended for approval, would base the Estimated Penny Product on the Land and Property Services calculation, that is, a rates increase of 1.92% and would require the establishment of a specified reserve of £4.65m to cover rates losses, in the event that Government support was not forthcoming. That reserve would be financed through a combination of 2020/21 year-end savings, in-year savings for 2021/22 and general reserves, if required.
He informed the Committee that, as part of the 2021/22 revenue estimates process, officers had assessed the levels of income which the Council was likely to receive in the context of the ongoing pandemic. The loss of income had been forecast to be in the region of £3.9m and Covid-19 costs of £1.3m were anticipated. Since there was no indication at this stage if further support would be provided by the Department for Communities, it would, he pointed out, be prudent to have contingency plans in place. Therefore, he recommended that the Committee grant approval to establish a specified reserved of up to £5.2m for that purpose, which again would be financed through a combination of 2020/21 year-end savings, in-year savings for 2021/22 and general reserves, if required.
The Director went on to remind the Committee that it was responsible for setting the annual cash limit for each of the Council’s Standing Committees and recommended that it approve the limits for 2021/22, as set out within the report. He confirmed that those would, in February, be presented to each Committee for consideration and that the Strategic Policy and Resources Committee would, at its meeting on 19th February, be requested to agree the cash limits and the District Rate.
He concluded by pointing out that the recommended increase in the District Rate would enable the Council to continue to deliver its business as usual activities and priorities, such as the City Deal and the Leisure Transformation Programme. Based on the economic outlook presented by the University of Ulster’s Economic Policy Centre and the impact on rates income, the Council was likely to find itself in a similar position in 2022/23. Once the District Rate for 2021/22 was set, a review of the Council’s overall financial strategy would need to be undertaken, to ensure that current resources were maximised and new sources of income were found.
After discussion, the Committee:
i. approved a 1.92% increase in the District Rate for 2021/22, based on the Estimated Penny Product provided by Land and Property Services;
ii. agreed to establish a specified reserve of £4.65m for funding of potential loss of rate income in 2021/22, in the event that the Northern Ireland Executive does not guarantee rates income;
iii. agreed to establish a specified reserve of £5.2m for funding Covid-19 related costs and losses of income for 2021/22, in the event that Department for Communities funding is not forthcoming;
iv. agreed to recommend the following cash limits for 2021/22:
a. a cash limit of £45,309,102 for the Strategic Policy and Resources Committee, including £3,270,000 for Belfast Investment Fund and £2,500,000 for City Deal.
b. a cash limit of £83,949,408 for the People and Communities Committee;
c. a cash limit of £18,237,846 for the City Growth and Regeneration Committee;
d. a cash limit of £1,362,893 for the Planning Committee; and
e. a Capital Financing Budget of £21,774,022 for 2021/22;
v. noted the next steps in the district rate setting process;
vi. agreed to consider at its meeting in March a report on the Council’s future financial strategy; and
vii. agreed that the aforementioned decisions should not be subject to call-in, as it would cause an unreasonable delay in striking the rate by the legislative deadline of 1st March 2021, which would be prejudicial to the Council’s and the public’s interest.