Lifting the Lid on Accounts (3) : Precepts and Reserves

 

Recently Betley Parish Council decided to earmark £8000 from it s reserves to cover election expenses.  No election took place in December.  Two applications were received and one was chosen by the Council as a co-optee to fill the vacancy for  Wrinehill.

The rules are about to change with regard to who pays for local elections.  It seems that NBC will now charge parish and smaller councils.   In 2022 the cost of an election was around £350.   Now we are told that it will be £8000 as advised by the NBC.   Perhaps the NBC can give a full account of the costs?   It should also be noted that whilst larger council are capped with regard to the Council Tax, Parish councils are not.  Perhaps this is why the council tax in Betley has steadily risen over the years.  (At one point it was suggested that it rise by 10 percent.)  But then the Minutes can record a lot of information that is simply hearsay and not necessarily true.           

The recent suggestion of £8000 seems excessive and was the amount charged by much larger councils than NBC. 

Whilst it is understood that under the Local Government Act 1972 and guidance from the National Association of Local Councils (NALC), that  parish councils should:  maintain reasonable general reserves (often 3–12 months of expenditure); justify earmarked reserves; avoid excessive accumulation without purpose; set a precept that reflects realistic need.

Auditors may question : excessive reserves; double-provisioning for the same risk; a lack of a documented rationale.

However, the auditing process for small councils is reputed to be light touch – internal and external, so such questions might not be raised..

How much is picked up by the auditing process is often questionable and can rely heavily on the information that Clerks submit to the Auditors.  Equally questionable is how much Clerks take on board of subsequent audit suggestions.  Often after an audit it can be business as usual.   

With regard to the £8000 this has now been ‘earmarked’.   The forthcoming election might not even be contested.  It also needs to be asked if a formal cost estimate has been received and considered from the NBC and on the grounds that for a small council such as Betley with around 1200 residents, £8,000 could be considered on the high side, unless special circumstances apply.  These, however, would need to be revealed.

Also the amount of reserves needs to be taken into account also: so that if the reserve is around £30,000 when this is measured against an approximate £23,000 precept, it suggests that reserves would be roughly 130% of annual income.  NALC guidance for small parish council general reserves is that they should cover 3–12 months of expenditure; earmarked reserves, however, must be justified and documented.

Best practice would be to obtain estimated recharge cost from NBC; confirm the current balance of election reserve; decide if  a top-up is required (rather than duplicating).  The status of this £8000 therefore needs to be clearly stated.  Small parishes are sensitive to precept increases.   An extra £8,000 on a small tax base could significantly raise Band D equivalent.

Thus residents could legitimately question and ensure that there is no duplicate election provision; why existing reserves are not being used; and whether or not the cost is precautionary or excessive.

Other legitimate queries could be what are the PC’s total reserves?  What is the annual precept; and what form will any forthcoming election take?  Will it be a stand-alone or combined election?  Perhaps these are the questions that should be asked before any sums/precepts can be decided.  It might be that the current estimate of a forthcoming election is excessive and this needs to be queried with the NBC.