Agenda item

Dave Shipton (Head of Finance - Policy, Planning & Strategy) was in attendance for this item.

1.         Mr Oakford introduced the item of council tax subsidies and advised that a decision had been taken by Full Council to agree the Capital Programme 2025-35 and Revenue Budget 2025-26 (including Council Tax Setting 2025/26) and that this included savings to be achieved via this proposed decision.

2.         Further to questions and comments from Members, the discussion covered the following:

•        Regarding queries about future reviews on the impact of the decision, Mr Oakford responded that any future reviews would be the responsibility of a new administration post May elections.

•        Members highlighted that the local taxation equalisation reserve was £11.95 million and had a drawdown of £1.8 Million. It was estimated that in 2025/26 an additional draw down of £3.48 Million may be observed and leave £6.67 million for March 2026. Clarification was sought as to whether this use of reserves was sustainable.

•        Mr Shipton advised that there was an assumption on collection surpluses of an average of £7 million per annum. This had been the position for a number of years - if a higher surplus was to be observed, normal policy meant that it had been paid into the smoothing reserve.

•        Mr Shipton explained that in the last two years the council tax surplus was lower the £7 Million. Mr Shipton added that the drawdown for 2025-26 had been related to the collection surplus for 2024-25 and not related to the proposed decision.

•        Clarification was sought on paragraph 1.6 and the return of investment being set at 400% with regard to a subsidy paid to three Kent districts. It was further added that paragraph 1.7 stated that there was no evidence for CTRS payments. It was suggested by Members that this sentence was misleading.

•        Members flagged that paragraph 1.8 stated that no billing authority had proposed or implemented any changes to discounts or premiums. However, it was highly likely that authorities would not impose any changes prior to a decision being made by the County Council.  Concerns were therefore raised regarding the implications of progressing with the decision.

•        Mr Oakford highlighted the discussions that had taken place during the previous budget debates as part of the budget development process. Mr Oakford commented that the concerns were speculative and it was unknown what collection rates would look like going forward. He explained that Districts had a statutory duty to collect council tax, and they had responsibilities to prevent collection failures.

•        Responding to queries from the Chair, Mr Watts confirmed that the decision had not been taken and that there was still an opportunity for Members to comment and put forward recommendations to the Cabinet Member for consideration prior to the decision being taken.

•        In response to queries raised regarding the consultation period for any changes should the grant be reinstated, Mr Shipton confirmed that in terms of the Council’s medium term financial plan this had been assumed to be a sustainable saving. However, it was only a plan and there would be an opportunity to review and make the necessary changes for the 2026-27 budget.

•        Clarification was sought on paragraph 2.3 on the subject of proposed recovery costs of unpaid council tax and the financial responsibility to bodies other than themselves. Mr Shipton responded that it was the legal responsibility of District and Borough authorities to recover unpaid council tax.

•        It was highlighted that subsidies to District and Borough authorities were discretionary and it was suggested that the subsidies no longer represented value for money for the taxpayer. 

3.      Mr Lehmann proposed that recommendations be made to the Cabinet Member to the effect that he be asked to explore a possibility of an option of incentive payments for pre-agreed target for councils.

4.      Members debated the procedural considerations of progressing specific recommendations beyond endorsement of the decision. 

5.      The Chair accepted the motion put forward by Mr Lehmann and seconded by Mr Brady that a recommendation be made to the Cabinet Member to consider the following: :

“To explore the possibility of incentive payments for pre-agreed targets for those affected councils to reduce the risk of large amounts of council tax not being recovered”

6.      Mr Oakford stated that he would take into consideration any recommendations made by Members, however, he would not be prepared at that moment in time to amend a decision that had been agreed at the Budget County Council meeting. Further decisions on the matter would require resolution by the next administration.

7.      Mr Watts clarified the current position, that comments and recommendations had been made during the debate which the Cabinet Member could take into account and they would be recorded in the minutes.

8.      Mr Rayner proposed, and Mr Webb seconded the motion that the Policy and Resources Cabinet Committee endorse the proposed decision. The motion was carried.

RESOLVED, that the proposed decision be endorsed. Namely, that the Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services agree to:

a)      Cease the current arrangement with the Billing Authorities pursuant to which the Council provides financial support and incentive payments towards the cost of setting up and administering local Council Tax Reduction Schemes (CTRS) with effect on and from 1st April 2025.

b)      Cease the current arrangements with the Billing Authorities pursuant to which the Council makes incentive payments to support the removal of local discretionary empty property discounts and the charging of empty property premiums with effect from 1st April 2025.

c)      Delegate authority to Interim Corporate Director Finance to formally notify the Billing Authorities that payments will cease from 2025-26 financial year and to take any actions or make any decisions deemed necessary to the Interim Corporate Director Finance to implement the decisions of the Cabinet Member for Finance, Corporate and Traded Services in (a) and (b) above

Mrs Dawkins asked for their vote against the recommendation be noted in the minutes.