Can unfinished proposed project be included in next years budget?

Question

One of our newer but very enthusiastic, pro-active councillors is working on a proposed project of a small outdoor amphitheatre. The estimated cost is £10,000. The Clerk has recently sent an email asking for proposed projects to be considered in next years budget with only 10 days notice. The project proposal was submitted but rejected by the clerk as a budget consideration as it it needs a public consultation and permission of the landowners (the county council), all of which is correct.
The councillor is very disheartened as he has done a lot of work. He does not understand why we cannot put the money aside for the project as that could then be used for something else if this project cannot happen for any reason. This sounds very reasonable to me and I want to check if this is in fact possible? The clerk has previously mis-informed me on a couple of things, whether due to her lack of knowledge or deliberately it's hard to say.
Also, when is the final date that the budget and precept request can be submitted? (Wales)

I have addressed the lack of notice by asking the Clerk to produce an Annual Timetable of council activities - when the precept comes in, when the audit takes place, when the budget is supposed to be submitted etc etc. I think this will be very useful to all councillors, especially new ones.

Answer 1

Is the budget set for the financial year  April 1st - 31st March? Does the Council have a policy or Finance or budgetary procedure?  I would have thought that the Council's finance committee, or failing that full council -  not the clerk -  should rule on this.

Comments

Thank you for your reply.

Yes, the budget is for April to March. We have a finance committee. I've just checked and there is nothing the policy that helps with this question.

One of the reasons I asked about the final date the budget and precept request must be submitted is so that I know how much room for maneuver there is. Also if setting money aside for an incomplete project is actually allowed. Through no fault of her own the Clerk was very much left to her own devices for a couple of years and has become very controlling, and sometimes inaccurate in what she says. The older members of the council have simply accepted what she said without question.  I am slowly addressing this issue, but like to make sure that I have the proper facts.

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It would be interesting to know the context of how the Clerk asserted that the Project cannot be considered for the 2021-22 budget.  Did she imply that it isn't permitted under appropriate legislation, or simply refuse to include it by virtue of an unauthorised personal decision.  I would suggest E mailing her along the following lines and CC all Cllrs in to it:

Dear Ms Clerk.You recently rejected a proposal for £10,000 to be included in the 21/22 budget for Project X on the basis that the project was dependent on the outcome of a public consultation and permission of the landowners.  I believe that the Finance Committee should consider the proposal and put a recommendation for full Council to resolve.  Please can you indicate why you feel you are justified or have the right to personally reject the Budgetary submission, and circumvent any input from the Finance committee about it?  Yours Cllr Jann

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Thank you for your reply.
I have already broached the subject with her and she appears to be under the impression that we cannot include anything in the budget for the forthcoming year unless we know for definite that it will actually happen in that year. At the present moment we cannot be certain it will happen as we have not had time to complete the project.

Answer 2

Town & Parish Councils up and down the land will no doubt be in starting (or already started) setting budgets for their respective 2021-2022 civic programs.  Budget headers for a variety of reasons often go unspent (e.g external funding sources becoming available indeed am sure many councils event budgets this year have been left unspent as a result of Covid-19).  Personally I would be politely stressing to your RFO (Clerk) that allocating money does not mean Council has decided to proceed with the project merely recognising that allocating resources enables them discussions/consultations to take place and should they prove fruitful enable the Council to act on them.  As member of Parish Council in England we would expect to finalise our budget for the 2021-2022 Civic Program at January 2021 Full Council with discussions at the various committees very much ongoing already.   Its really up to elected members to vote on said on whether to include proposed budget header. 

Comments

Thank you. This is very helpful.

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I fully understand the budgetary precept building/setting process which could include pending projects. But should a cost arise at any time which was not budgeted for  what is there to stop any Council from utilising general reserves or viring from earmarked reserve funds?   It may not be regarded as best practice but is surely entirely possible?

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Absolutely.  Its a common misconception within this tier of local government that just because a project has not been specifically budgeted for does not automatically mean project can't move forward far from it.  Providing sufficient reserves to meet the project and elected members vote to proceed entirely possible.  Slightly related point,  I would suggest some almost forget existence of reserves that keep building up something akin to the Bank of England and when that rainy day comes still wont spend it..

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Thank you for your reply.
Your comment about reserves is interesting. Ours seems to go up and up, on the Clerk's recommendation. Is there any legislation regarding a minimum reserve amount?

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I think most Councillors will say you can never have too much money,  Arguably if say one year there was underspend this should in theory lead to a decrease in the precept. Far better to vire any excess cash to some spurious project. In our case its "Planning contingency" a fighting fund to employ experts should any "inappropriate development" arise.   The system is there to be played

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What they mean is you can’t have too much of the Parishioners money !

What if every publicly funded body built up enormous  reserves of your money “ just in case “

I forced my PC to bring in a reserve policy although the amount they hold is still excessive

Auditors don’t want to lose their fee income by being critical of excessive reserves
The PC should be able to explain why they have X in reserve rather than Y

With regard to the initial question about the project PC’s should be planning three years ahead anyway
With regard to the Clerk it’s the usual case of the tail wagging the dog

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Thanks for your comment.

This one of the reasons I asked if there is any legislation (or advice, good practice) regarding what should be reserved. Our clerk had stated it should be the value of one precept payment 'in case we don't get one'. I can't envisage this actually happening! I would have thought reserving utility payments, contract payments and wages would be a starting figure in case of possibly a late payment or an overspend.

I annoys me that we have thousands of pounds of taxpayers money sat in a bank when it could be used for a project that would enhance our town. Especially when told by the clerk that we can't budget for it!

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Jann do you have it clear in your mind the difference between General reserves and earmarked reserves. They are entirely different things.  I did post about Earmarked Reserves some time ago.
https://towncouncillor.com/3833/earmarked-reserves

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Thank you very much for this link, it has been extremely helpful.

I have never heard the term 'earmarked reserves' used by our council. I have also attended some training sessions by our advisory body, One Voice Wales, and so far not heard it there either.  It is now obvious there is no reason why we cannot support and earmark reserves for the proposed project in the forthcoming budget. It will be a great enhancement to our towns and a big help to tourism, on which the town relies.

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They are actually called specific reserves and to be frank I can’t see how any PC can function without them
If you send me a private message I’ll send you some more information

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In the good Councillors Guide it details information about General and Earmarked reserves. It then concludes "If the amount of reserves at the year-end are above a certain level in relation to the annual precept then the council must advise the external auditor of why this level of reserves is required". What does this mean?   Does it apply to just the general reserves?

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We are a very large PC when I questioned the size of the reserves the Clerk claimed we needed to cover her salary and her replacements salary if she sick
I asked in that case why do we pay keyworkers  insurance
Auditors won’t rock the boat unless the reserves are rock bottom
Always remember it’s not the PC’s money