Budget Considerations for January 2022 PCM:
Three options have been presented to consider for the precept and budget. Please note the following considerations in setting the precept:
General reserves:
The auditor recommends holding a general reserve of 3 to 6 months expenditure. Six months expenditure has been set aside as a prudent amount.
As a general consideration, long term it may not sustainable to draw on general reserves to support the annual budget. This could lead to eventual large increases in the precept, all in one go, once the general reserve has been exhausted. It may be preferable to make a virement of any excess general reserves to ear marked reserves for future projects. This allows for gradual and moderate increases of the precept over time to cover both the annual budget and earmarked reserves.
Virements to Ear marked reserves:
Future costs of replacing play equipment can be resourced by adding a reasonable increase to the earmarked reserve each year.
Current economic factors that relate to a precept increase:
Inflation was reported above 5% in November 2021, with fuel inflation even higher. Other increasing factors include the cost of ageing playground equipment and rising fuel costs that impact the costs for mowing.
Comments on Specific cost centres:
4000 Clerks Salary:
Two pay increases are due on pay scales, we are still using the 2020 rates. The NJC national agreement on pay for local government employees has not yet been agreed for 2021/22 or 2022/23. For budget planning purposes, if an agreement of 2.5% increase was reached for each year, this would mean allowing for a 5% increase in pay for 2022/23 rates, along with any planned incremental changes to pay scales.
(To note: Unions have rejected the current pay offer and are actually asking for 10% increases, 2.75% was agreed in 2020)
4040 Recruitment costs
It is hoped that recruitment will not be an annual cost. It may be preferable to hold £200 in the recruitment ear marked reserve rather than an annual budget cost of £200 for future recruitment costs.
4050 Bank charges
If a credit card is added to the account, this may be about £3 per month extra in service charges.
4200 Mowing and 4310 grass cutting
Fuel costs have increased significantly, well above recent 5% inflation, this may be reflected in future mowing costs.
4311 Play equipment inspections
Internal rot in wooden play equipment has been shown as a potential severe risk of life changing injury. Additional inspections may be required for ageing wooden equipment. (see inspection report)
- Posted: 7th January 2022