Ribble Valley Council is bracing for a significant financial shortfall in the upcoming year due to a combination of factors, including the loss of key grants and a freeze on core spending power by the new government. The council is currently reviewing its budget and exploring various options to mitigate the impact of these changes.
Ribble Valley Council anticipates a financial shortfall of £161,000 in the upcoming fiscal year compared to the previous year. The council expects to lose two grants: the Rural Services Delivery Grant and another unspecified services grant. A further challenge stems from the current government's decision to freeze 'core spending power' for many district councils nationwide.
Core spending power is a government estimate of the primary funds available for day-to-day council services, calculated based on government funding, retained business rates, and council tax revenue.The Ribble Valley Council is currently formulating its new budget and reviewing the latest financial forecasts. The Policy & Finance Committee is analyzing reports on the government's recent policy announcements and proposed funding arrangements for councils, expected to be finalized soon. Key factors under consideration include government funding changes, council tax adjustments, business rates revisions, and a government bonus allocated for new housing developments. Council tax and business rates are both subject to ongoing debates and potential changes, with business rates reform anticipated for the year 2026-27.The new government is implementing a national funding overhaul, characterized by a £600 million 'Recovery Grant' distributed over the next 12 months. Additional changes are planned to determine the financial needs of different regions in the following year. Regarding council tax, the government anticipates that Ribble Valley Council will increase its tax by the maximum permissible amount without triggering a public referendum, which stands at 2.99 percent. However, the council has not yet made a final decision and may opt for a lower increase or even maintain the current council tax levels. The council tax system has faced criticism from opponents who argue that it is outdated, inequitable, and fails to accurately reflect contemporary property values and residents' financial capabilities.The report on Westminster government grants states that the Rural Services Delivery Grant will be repurposed in 2025/26, with funding redirected to areas experiencing high service demand. Similarly, the Services Grant will also undergo repurposing. The report further notes that Ribble Valley Council will not benefit from the new £600 million Recovery Grant, as its distribution formula prioritizes areas with higher deprivation, population density, and limited capacity to raise income through council tax. However, for the financial year 2026-27, areas with significant rural populations, like Ribble Valley, are projected to receive an average five percent increase in their core spending power. The government intends to continue the New Homes Bonus scheme, previously implemented by previous administrations, next year, and Ribble Valley Council anticipates receiving £547,000 from this incentive. This bonus encourages local councils to retain more council tax based on the delivery of new homes, conversions of existing buildings, and the revitalization of vacant properties. However, the government is currently seeking feedback on the scheme's long-term sustainability, as critics argue that it inadvertently promotes large-scale new housing developments on greenfield sites. Regions such as Ribble Valley have witnessed substantial new housing construction over recent years, resulting in significant bonus payments.Business rates, officially known as National Non-Domestic Rates, are established by the Westminster government, collected locally by councils, and subsequently remitted to the government for redistribution. In recent years, councils collaborating collectively have been granted increased flexibility to retain a larger share of business rates revenue under government arrangements. Nevertheless, business rates also face criticism for being outdated, expensive, and lacking democratic accountability. Concerns include the reliance on historical property valuations for commercial properties, which may not accurately reflect current market dynamics, and the limited local influence over the allocation and utilization of business rate funds.
Ribble Valley Council Funding Gap Government Grants Council Tax Business Rates New Homes Bonus Local Finances
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