Budget Archives - Page 4 of 4

Harrogate council bosses warn tax rise needed to balance books

A 1.99% tax rise has been backed by Harrogate Borough Council’s cabinet after officials warned some of the authority’s key income streams won’t return to pre-pandemic levels until at least 2023.

Paul Foster, head of finance at the council, told a meeting last night that the rise equates to an extra £5 per household per year and was needed as the authority is still feeling the effects of covid and decades of government funding cuts.

If the proposed increase gets final approval in February, contributions to the borough council for the average Band D property will rise to £255.92.

Mr Foster said last night:

“Given the impacts of the pandemic, we are provisionally forecasting a budgeted reduction in income of £150,000 in 2022/23.

“And income is not forecast to reach pre-pandemic levels until 2023/24 in the areas of commercial property, planning fees and Harrogate Convention Centre lettings.”

Mr Foster also said government grant allocations had been reduced by £8.2m since 2010 and that the council would have to use reserves cash to fund some major projects.

These include plans to accelerate a redevelopment of Harrogate Convention Centre, as well as carbon reduction works at the venue and other council-owned buildings.

Mr Foster said:

“Overall, in order to produce a balanced budget, a net transfer from the budget transition fund of £142,000 is required.

“And finally, a thorough review of reserves has identified that just short of £4.5m can be repurposed, with a recommendation that £2.8m is set aside to fund the acceleration of works at the convention centre, and just short of £1.7m is set aside to support our carbon reduction strategy.”

The tax rise has been proposed as part of the council’s final ever budget before it is abolished and replaced with a new North Yorkshire-wide authority which will take over control of all services from April 2023.

This will mark the biggest changes to local government in the area for almost 50 years, with elections to the new council set to take place in May 2022.

Currently, the borough council makes up just under 13% of council tax bills, while North Yorkshire County Council makes up 70% and police and fire services the remainder.

Speaking at last night’s meeting, Cllr Graham Swift, deputy leader and cabinet member for resources, enterprise and economic development at the council, said the authority’s council tax contributions represented “incredible value” and would help keep key services and projects running.

He said:

“For £255 we not only empty the bins and provide local cleaning services, but also look after parks, gardens, leisure facilities, and health and homeless charity programmes.

“On top of that, we are still able to invest in meaningful activities that improve the district and lives of residents.”

Fears for rural bus services post-pandemic

Concerns are mounting for traditional bus services in rural areas as passenger numbers remain well below pre-pandemic rates.

While numerous services were kept afloat across North Yorkshire with £1.5m of subsidies from the county council before covid, the county’s transport boss has stated many are now facing “great pressure” due to a lack of passengers.

Bus demand in Great Britain maintained its downward trend in the quarter before the pandemic, falling by 2.7 per cent, according to statistics published by the Department for Transport, but since covid the number of passengers using North Yorkshire services has dropped by about 30 per cent.

North Yorkshire County Council’s older people’s champion Councillor Caroline Dickinson questioned whether the pandemic had led to a long-term shift in behaviour away from public to private transport.

The member for Northallerton said bus user groups were wanting more bus services in rural areas.

North Yorkshire County Council’s executive member for access, Councillor Don Mackenzie responded by issuing reassurances that the authority had launched initiatives to counter the drop in passengers.

He said alongside the Yorbus initiative, which the authority hopes to roll out elsewhere to improve access to public transport, the council was looking to develop services that were better value for money and more effective as part of its bus services improvement plan, valued at £116m over eight years.

Cllr Mackenzie warned the council would always focus its available funds on where it would achieve the strongest outcomes.

He said:

“Clearly bus services, like rail services, have suffered as a result of covid. I understand passenger numbers are still well below where they were before covid came along.

“We’re looking at something like 70 per cent patronage on bus services and because of that the commercial viability of especially rural services remains under great pressure.”

Ripon service

The executive also heard the first three months of Yorbus, its demand responsive travel pilot in the rural area surrounding Bedale, Ripon and Masham, had “exceeded expectations” and achieved the majority of its targets expected at six to 12 months in the first three months of service.

An officers’ report to the meeting stated:

“Feedback from customers has, on the whole, been extremely positive, and the high levels of customer satisfaction are reflected in the number of repeat passengers using the service.

“During the quarter, 98.5 per cent of all completed bookings were made via the customer app and 1,541 accounts were created in the first three months, against a target of 171.”

Cllr Mackenzie added:

“At the moment we invest £1.5m a year subsidising rural bus services and in addition to that £7m a year on bus passes under the national concessionary travel scheme.

“We are doing plenty for it, but inevitably value for money will come into this. Our ultimate aim is to make rural bus services much more viable by improving patronage.”

North Yorkshire County Council waves red flag over finances

North Yorkshire County Council has raised a red flag warning over its finances for the coming year, despite announcing a £2.8 million underspend for the first three months of this year.

The warning comes despite the council making annual savings of more than £200 million since 2011/12 in response to austerity.

Cllr Gareth Dadd, the authority’s executive member for finance, said that although budgets were always a best guess, the pandemic had shattered the council’s traditional projections and its ability to budget with confidence.

He said:

“I will say that the government have honoured their pledge, by and large, to offset the majority of the additional covid costs, but one has got to question for how long or if that can continue.”

Cllr Dadd added the council had drawn on £3 million of reserves to balance the books for the current financial year, which was an unsustainable move.

However, he said:

“We are in a far better position than most other authorities up and down the country.”

Hospital and school transport overspends

Major issues threatening the council’s finances include hospital discharge costs and home to school transport, over which there is a projected £785,000 overspend for the year.

Cllr Dadd said the adult learning and skills service was also facing a substantial deficit, so the authority was examining how to overhaul the service.

Corporate director Gary Fielding added the authority was grappling with “completely unknown factors” and “starting to see worrying signs in some areas”.

He added the council faced massive uncertainty on demand for services, particularly for adult social care and children and families.

Mr Fielding said as demand is going up placements for care, especially home care, were becoming extremely challenging.

He said:

“We all understand that when supply and demand get out of kilter if demand is higher than supply then you start to feel the financial pressures of that anticipating “upwards financial pressure” in its supply chain.”

Mr Fielding said unprecedented levels of government funding through covid were masking numerous issues, as funding for services such as enabling hospital discharges, supporting vulnerable people, community work and preventing infections were due to end.

Harrogate council forecasts £6.5m income losses despite covid restrictions easing

Harrogate Borough Council has predicted that covid will wipe millions of pounds off its finances this year despite the hopeful end of all lockdown restrictions.

Finance bosses at the authority have forecast income losses of around £6.5million from areas including Harrogate Convention Centre, leisure centres and planning in 2021/22 after what they described as an already “incredibly challenging” year during the first 12 months of the pandemic.

Speaking at a meeting on Wednesday, Paul Foster, head of finance, said out-turning on budget in February was an “incredible achievement” and that the council would now need to generate around £18.8million in income to do the same this financial term.

He said:

“I can report that in line with monitoring through the year, we will out-turn on budget. This is despite a net cost of circa £10million that the council faced last financial year as a result of the pandemic.

“To out-turn on budget is an incredible achievement, particularly as we have managed to maintain performance in a number of critical areas – and this is in addition to the council’s response to the coronavirus pandemic itself.

“Key to achieving a balanced budget in 2021/22 is income recovery. We have budgeted for ongoing income losses of £6.5million as a result of covid, but income generation of £18.8million is still required to balance the budget.

“There is a lot to play this year to see how successful we are in keeping to budget.”

Council budgets across the UK have been stretched for some time as a result of years of government cuts, but for many covid has only compounded the problem.

At a time when local authorities have had to spend more on supporting their communities, income streams have been hit hard with little cash coming in and a lot going out.

Some councils have struggled to carry out statutory duties, been at risk of bankruptcy and have had to ask the government to borrow emergency money in order to keep services running.

In Harrogate, the situation has not been quite as alarming but serious all the same.

At the start of the pandemic, the council scaled back spending to essential areas only before introducing a recruitment freeze and shedding around 60 jobs.

The council has also redeployed many staff into under pressure areas such as bin collections and business support grants, with chief executive Wallace Sampson himself lending a hand to waste collection crews.

The authority has received around £7.8million in emergency government grants, but this has still meant £2.7million of reserve cash has had to be used in to plug funding gaps.

Meanwhile, North Yorkshire County Council – which looks after the vast majority of services including social care, education and highways – is facing a much starker picture with a projected funding shortfall of £59million over the next three years.

Speaking at Wednesday’s meeting, Mr Foster said detailed reports of how Harrogate Borough Council is plotting its way out of the financial pressures of the pandemic will be brought to a cabinet meeting later this month.

He said:

“This report will be finalised this week and published next.

“The out-turn position reflects the support across the council in adhering to the spending controls we put in place, including the recruitment freeze, in response to the financial challenges of the pandemic.

“The delivered savings would not have been achieved without a successful staff redeployment scheme. However, as we move towards business as usual, it is clear that the vacancy freeze is not sustainable and the filling of essential posts is key to our continued success.”

Chancellor’s budget does not go far enough, say opposition parties

Opposition political parties in the Harrogate district have said the Chancellor’s budget does not go far enough to help businesses, NHS staff and the climate.

In his Budget statement today, Rishi Sunak extended the furlough scheme and announced extensions to the business rates holiday and 5% VAT cut for hospitality and tourism.

He unveiled an extra £400 million in grants for the arts sector and £5 billion in financial support for high street shops and other businesses.

But, Cllr Pat Marsh, leader of the Liberal Democrats on Harrogate Borough Council, said the budget did not go far enough to help businesses and the future of the high street.

Cllr Pat Marsh, leader of the Liberal Democrats on Harrogate Borough Council.

Cllr Marsh said:

“The Future High Streets Fund needs to be expanded to help more than the 72 areas already in receipt, far below what is actually needed in England. Our towns need help to recover from the pandemic and need help to deliver ambitious regeneration plans.

“Maybe the Chancellor could make it as easy as possible for entrepreneurs to set up on the high street, by offering grants for low-cost incubation space and business support for start-ups.

“Temporary pop-up units should be available for start-ups to trial new products and services without being tied to long rents. This is about investing in our future.”

Meanwhile, the Harrogate and Knaresborough Labour Party said businesses may still find it difficult to balance the books during furlough.

Margaret Smith, chair of the local Labour Party, said it welcomed the extension to the scheme but added that some firms, such as pubs and restaurants, will find it tough once they have to contribute towards furlough.

She said:

“Businesses within those specific sectors, having to contribute towards furlough payments of 10% from July and 20% in August and September, might still find balancing the books extremely difficult. The impact on employers has a knock-on impact on employees.

“Therefore, unemployment is expected sadly to increase even more. The increase in Universal Credit by £20 per week is also only being extended for six months so the autumn does not bode well for a significant number of people.

“Although furlough has been extended, the Labour Party thinks it would have made more sense for it to have been targeted on firms that actually need it – “smart furlough” and made it conditional on firms signing up to industrial and environmental standards and with greater support for training built in.

“In addition, what is significantly missing from today’s Budget is any reward for key workers such as NHS staff.”

Shan Oakes, chair of the Harrogate and District Green Party, said there was nothing to support the climate or biodiversity in the budget.

She said:

“First, we welcome any measures which genuinely help those who have been hit socially or economically by covid. This must be a priority. But I can see nothing in support of biodiversity, nature, or the climate.

“We would hope for encouragement for green business initiatives at the very least, but there’s nothing at all here, just green investments and yet another green bank, as we have seen before, but we do hope they do mean something this time. We should be focusing on helping grassroots with green initiatives that benefit communities.”

The Stray Ferret contacted the district’s Conservative MPs Andrew Jones, Julian Smith and Nigel Adams for comment, but none responded by the time of publication.

We also contacted the Conservative leader of Harrogate Borough Council, Cllr Richard Cooper, but did not receive a response.

Harrogate district businesses await details of support in Budget

Businesses across the Harrogate district are eagerly awaiting details of the support on offer to them in the Chancellor’s Budget, to be announced later today.

An extension to the furlough scheme, continued business rates relief and moves to support sole traders are high on the list of hopes for local business leaders.

Mike Patterson, head of employment at law firm Berwins, said support for continuing employment was vital, as well as more support being offered to self-employed people. He said:

“The furlough scheme has been a major financial lifeline for many businesses, especially those forced to close during this lockdown, and for it to continue for another few months would be a massive boost in helping to save jobs and hopefully minimise redundancies.

“We’re also expecting the Chancellor to announce a new wave of grants for the self-employed. Although this scheme could either be scrapped or scaled back from May when lockdown restrictions are expected to start being lifted and self-run businesses could reopen.

“There are then the sole traders and company directors we act for who have had no income support from the government at all. We’re aware that the Chancellor is under pressure to introduce a support scheme for those in this category and I hope to see support for those who have fallen through the gaps of previous support – up to three million people.”

Neil Addley, left, and Mike Patterson

Neil Addley, who runs automotive data specialist firm JudgeService, is expecting an increase in corporation tax, as well as sector-specific support. For JudgeService’s clients, keeping fuel duty and vehicle tax static would help, along with measures to support the infrastructure for electric vehicles, both for business and personal use.

Mr Addley, who launched new public survey platform YourPoll in autumn 2020, said rates reductions and a short-term cut in VAT would help the high street. However, he said he felt positive about the prospects for his businesses and the local economy over the coming months:

“Demand for vehicles and for reviews is likely to rise as we emerge from lockdown. Hospitality will reopen. People have been cooped up for the best part of a year and will be happy to splash the cash.”

His views were echoed by Marc Squires and Kevin Masheder of SignHub, who work with many hospitality clients. Marc said:

“It would be good to see the possibility of support extended as things are still up and down and it might be a while until businesses can return to normal later in the year.

“We work with a lot of local retail and hospitality businesses so, if the government can help get them going again with support and schemes to help them once they are back open, this will have a positive knock-on effect to other businesses that rely on working with them too, which hopefully will boost the local and national economy.”

For the property sector, the biggest question is whether the stamp duty holiday will be continued. Tim Waring, head of residential at estate agent Lister Haigh, said:

“Some form of tapering would be logical as a possible three-month extension would merely be deferring the ‘cliff edge’. This is not the answer to achieve market stability.

“The property market thrives on confidence and at this time, people want more than anything to hear good news. Economic uncertainties, including Brexit which seems to have dropped out of the headlines, will not produce a thriving housing market.”

Mr Waring said he also wants to see measures brought in locally to ensure town centres are able to reopen, even if some businesses do not survive. He called on Harrogate Borough and North Yorkshire County councils to work together with local businesses to bring people back to the high street, such as through lower parking charges.

Marc Squires, left, and Teresa Bowe

Looking across all sectors, Teresa Bowe, founder of CCF Accountancy, said the government had to balance the need to maintain the economy and employment against the huge sums spent over the last year.

“I’m not expecting income tax rates to change but maybe thresholds. The government has a tricky job of clawing back the money used to support business throughout this time but they still need to balance the books.

“I expect indirect taxes to be targeted such as capital gains tax and I wouldn’t be surprised if they reduced business disposal relief. There has been talk of aligning self employed taxes to employed and they have already got closer in recent budgets, but I suspect this gap will be narrowed further.

“I hope that they keep the employers rates and allowances in place and I also hope that they do not increase the rate of tax on dividends.”

Meanwhile, authorities across North Yorkshire are hoping the Budget will include announcements about investment in transport infrastructure.

Invest East Coast Rail has set out a raft of benefits, which it says is worth £11 billion to the economy, from improving the East Coast Main Line. The group has called for measures to encourage people to use the route more as lockdown is eased, saying confidence in its reliability is vital after 17 major incidents in 2018 cost the economy £46 million.

North Yorkshire County Councillor Don Mackenzie, executive member for access, who represents the authority on Invest East Coast Rail, said:

“The East Coast Mainline provides an essential transport link for North Yorkshire residents and businesses and the rail line certainly merits further investment, particularly to address capacity constraints.”

District welcomes business rates break

Retailers in the Harrogate district have welcomed the news of a break in their business rates to help them deal with the impact of coronavirus.

The announcement in this week’s Budget will see retail, leisure and hospitality firms with a rateable value below £51,000 receive the tax break in the coming financial year.

It has been welcomed by business groups, with both Independent Harrogate (IH) and Harrogate District Chamber of Commerce (HDCC) saying it will be badly needed by businesses worrying about the impact of the pandemic.

Sandra Doherty of Harrogate District Chamber of Commerce

Chamber CEO Sandra Doherty said:

“This rates break could mean the difference between businesses surviving into next year and what could otherwise have been many more empty units around our towns. However, we shouldn’t be complacent – this is a short term measure and local businesses still need our support in the coming months and years.”

William Woods of Independent Harrogate also raised concerns about the extent to which businesses would benefit.

“It is just not fair the high street has to pay the lion’s share of tax when online businesses hardly pay anything. It’s only smaller businesses that benefit from rate relief for a year – what about good family businesses like Hoopers that will get no benefit?”

He added that, in the current climate, Independent Harrogate would be renewing its calls to delay any planned increase in parking charges.

Harrogate rail commuters say spend some of the £600bn here

Commuters in Harrogate have reacted to the Chancellor of the Exchequer’s pledge to ‘build better railways’.

Chancellor, Rishi Sunak, in his first Budget announcement, made the pledge to spend billions of pounds on road and rail projects as part of a proposed £600 billion infrastructure programme.

Although there was no specific announcement yesterday as to where the money will be spent, long-suffering passengers at Harrogate Railway Station were clear about where they feel the government should prioritise.

Jerome Morrow (pictured above) who regularly travels between Harrogate and Leeds, said

“The trains themselves have improved, but too few carriages are put on and at peak times that leads to overcrowding and an uncomfortable journey.

“Compared with London, we have a lot of catching up to do in the north. We are paying the same fares for an inferior service and investment should be made in the provision of more carriages.”

York University sociology student Kate McWhirter

For York University sociology student, Kate McWhirter, who was in Harrogate to meet friends, the issue is lack of communication:

“On four separate occasions recently, I was waiting for trains that were suddenly cancelled with no reason given for the cancellation and left wondering if the ticket I had was valid on another train. They need to spend the money on better communications.”

The Harrogate line has recently had national attention with the Sunday Times reporting at the weekend that the 07:13 Harrogate to Leeds service being “the most cancelled in the UK”. Northern Rail, which had operated the line, lost its franchise at the beginning of this month and the service is now in government control.

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Ripon service

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Hospital and school transport overspends

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