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27 July 2023
This blog is about the financial performance of Hughenden Parish Council in 2022/3. This is what I intended to blog about some weeks ago and now feel free to do.
I’m going to start at the beginning.
Approving the budget and precept for 2022/3
The Council approved its budget for 2022/3 in January 2022. It also decided what taxes it should receive from Hughenden taxpayers, (called the precept) for the 2022/3 financial year.
I blogged about this on 3 January 2022. I pointed out that HPC had received no financial information since October 2021 and was in no position to set its precept.
I had to make a guesstimate of HPC’s financial position in 2021/2 and what might happen in 2022/3.
I guessed that, like previous years, HPC would underspend in 2021/2. It would underspend on the maintenance of the allotments and the burial grounds. It would massively underspend on work on open spaces where substantial sums were allocated to planting trees which would not get planted. It would underspend on playground maintenance and massively underspend on projects. It would not spend its reserves.
The only area where I could see HPC overspending was on administration which already accounted for nearly half of the budget.
I guessed that at the end of 2021/2, HPC would have a surplus of about £30,000 - £40,000 and would start 2022/3 with reserves of nearly £400,000.
That guesstimate proved to be bang on.
I also suggested that this pattern would repeat itself in 2022/3 and proposed that Council set a very low, if not zero, precept. However, Council decided to set the same precept again (£219,000).
What I didn’t know then was that within a few weeks, the Council would become inquorate. So, before we look at HPC’s financial performance last year, let’s remind ourselves of just how difficult life was at the start of the 2022/3 year.
What things were like, financially, in 2022/3?
In April 2022, the Council had only just become quorate again after being inquorate for 6 weeks. Only 2 councillors had carried on over this period; 7 had just been co-opted onto the Council. The Council still had 6 vacancies.
The Council had no staff as both its staff had resigned and left.
Councillors found that only one councillor had authority to access HPC’s bank accounts. HPC’s bank required two councillors to authorise the release of payments from HPC’s account.
HPC’s bank also required two councillors to authorise others to have access to HPC’s accounts. It took months to persuade the bank to get other councillors authorised.
HPC could not therefore pay its creditors for months. Even then, Council was not sure which invoices left over from the 2021/2 year had been paid and which not.
The Council’s first financial priority was to pay its creditors so that minimum services could be maintained.
Council also had an outstanding internal auditor’s interim report and a number of difficult financial issues to resolve. It also had an antiquated accounting and budgeting system, much of which had to be operated manually.
None of the councillors had detailed knowledge of how HPC financial systems worked. They all just had to pitch in and do the best they could. Councillors are not expected to be experts in public finance.
Gradually, with the help of locum Clerks, temporary staff and some of its contractors, Council sorted out its bank mandates, paid its creditors and started to understand the systems.
By July, HPC had recruited a permanent Clerk and in November Council had its first budget monitoring report, just in time to set the precept.
At this time, only 2 councillors had experience of setting a precept. Three of the seven councillors who had been co-opted in March had resigned, and council had been joined by other co-opted councillors, some of whom stayed for a very short time.
And then the new Clerk left. Once again Council was helped by temporary staff who had no experience of finance in a public sector, and by experienced part-time locum Clerks.
Nine months into the financial year, Council had only just had its first budget monitoring report and had three internal auditor’s report outstanding.
In the circumstances, I think it a miracle that HPC survived financially; it is a miracle that HPC didn’t have a complete financial meltdown.
And for this, it is indebted to the commitment of many people, particularly Cllr Jones who stood in as the statutory Responsible Finance Officer for long periods and to Cllr Main who spent long hours fighting the financial systems.
So how much money did HPC get and how much did it spend in 2022/3?
HPC budgeted for an income of £257k. It actually received £285k. This included £219 k as the precept, 8k from allotment rents, £20k from burials and £11k from Bucks Council for services it devolved to HPC.
HPC also received, rather unexpectedly, at the end of the year, £24k from the Community Infrastructure Levy (CIL). This is money developers pay towards local infrastructure when they build homes in the parish.
Without the CIL money, HPC would have received £4k more than it budgeted, which was not bad forecasting. With the CIL money, it received £28k more than budgeted.
However, HPC wasn’t so good at spending money - which is unfortunately the normal pattern for HPC. HPC spent close to its budgeted spend on overheads, e.g. staff, rates, electricity for the office, insurance, and IT at a cost of £117k.
However, it seriously underspent on basic maintenance across the parish. And it simply couldn’t begin to progress any major projects.
Overall, HPC spent £213k against a budgeted spend of £304k, leaving a surplus of £72k.
HPC did not spend any of its reserves, except £31k of back rent to HCST, part of which, due to normal accounting procedures, had to be what is called “accrued” to previous years.
This left a surplus for the 2022/3 financial year of £49k. This was added to HPC’s existing balance giving Council £448k to carry over into this financial year.
So, I was pretty well bang on again.
What of 2023/4?
The budget and precept for 2023/4 was approved by Council last December. In view of HPC’s history of failing to spend its budget and deliver major projects, I proposed, once again, that the precept could be reduced. Once again, Council voted to retain it at its previous level.
Council has only received one financial report this financial year. It was circulated with the papers for the July meeting. I had questions about the report but, as it wasn’t on the agenda, the Chair decided it could not be considered.
The report shows that, at end June, HPC had £600k in the bank. Council was overspending on its Admin, HR and Governance Expenses against its budgeted spend. It was underspending on its direct costs. It had spent none of its earmarked reserves (roughly £200k).
So, will history repeat itself?
Well, I don’t know. My concern at the moment is that Council may be so keen to be seen to deliver and to spend its money that it doesn’t spend prudently and/or in compliance with its Financial Regulations. Those Regulations are there to protect taxpayers’ money.
But more of that when I report on other items on the July Council agenda.
In the meantime, there are no formal meetings of HPC until 19 September and I understand that one of the reasons is to allow councillors to be refreshed and return rejuvenated. I am taking the opportunity to take breaks from HPC concerns. I feel rejuvenated already.