SETTING THE PRECEPT (AGAIN)

Question

In recent weeks I have been involved in some intense and often heated debate about the right way to set the precept.  A letter to the relevant Government dept simply referred me to LGFA 1992 s31a .  Examination of this legislation mandates that PCs must create budgets (including both reserves pots)  and have regards for their financial reserves   (cash in bank) .  Having read this I believe it cried out for an equation to be used   ie sum of all 3 budgets net expenditure less forecasted end of year cash in hand equalled precept .   My PC argued that no such requirement existed and they could do whatever they wanted and decided to set just the year round budget and call that the precept .  I then turned to my County Association  for advice and they are still after several weeks "liaising with their partners" for advice.    There does however seem to be a widespread  opinion that the major consideration has to be the level of increase of the precept when compared with the previous year rather than the actual cost.  In summary there seems to be little advice as to what is the correct way .  Should it be whatever the agreed budgets dictate or set at an acceptable level ?   Without clear advice IMHO there comes abuse

Answer 1

The simple answer to your question may be that there is no "correct way." There are many aspects of local council administration in which the legislation is either vague or absent and the council is self-governing. You simply decide what works best for you.

Answer 2

So, for all your research, you are back at square one with the realisation that - your council precept can be whatever the ‘majority’ can be convinced to vote for regardless of how illogical, unreasonable and unjustifiable. 

That is the situation in a nutshell and only when someone with financial literacy arrives is there any chance of competence but that process will likely bring with it conflict, intransigence and resistance to change - as you seem to have discovered. 

The fundamental point I would take issue with in your summary is:

“…There does however seem to be a widespread  opinion that the major consideration has to be the level of increase of the precept…”

Whilst I agree that this is an accurate summation of the reality, an immediate assumption of increase is the first indicator of financial illiteracy!

Comments

I do wish someone else would say something as then I could correctly refer to the three wise men .  Having said that I do not believe that s31a is either unclear or vague . I think it tells you what you must do,  what it does not say is to what use you should put the information gleaned .  Other references talk of the use  of "proper practices" but they are not defined although some say  the JPAG guidelines are the definitive reference point .   The bottom line is that no one has properly considered what is the right way  and are wary of opening the debate of what is a can of worms .  Ultimately PCs are only "answerable to the electorate".  Now what precisely does that mean ?   We fight on

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Its all you can do....  Until the batteries are flat!

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So can I be clear guys that when the precept procedure talks of setting the "expenditure" budget, do you include both reserves budgets in that category ?  To be precise are the total reserves amounts for the following year set in Jan ?
I cant see any difference,  as a budget is a budget and it has to be funded just the same as any other