Budget Time Is Coming

   The preparation of an annual budget is one of the key statutory tasks to be undertaken by a local council, irrespective of its size. The budget has three main purposes:

1. It results in the council setting the precept for the year;

2. Subject to the council's Financial Regulations, it gives the clerk and other officers overall authority to make spending commitments in accordance with the plans approved by members; and

3. It provides a basis for monitoring progress during the year by comparing actual spending against planned spending.

The importance of the budget should not be underestimated. It is essential that council members understand how it is put together and how it should be used in the running of the council. At its simplest the budget compares what a council would like to spend in the forthcoming year on local services with the amount of income it expects to generate, with the excess of planned spending over income being made up by the precept. But as the year progresses, things will not always go to plan and the prospect of a shortfall of available cash during a financial year can present a significant risk. Reviewing the budget against actual expenditure regularly gives members early warning about the likelihood of a shortfall (or surplus) and helps them to decide what responsive action to take.

The full article - including a table which sets out the process for preparing and making use of the annual budget - can be downloaded here:

Preparing a robust and detailed budget underpins the council’s activity for the year and ensures that the council is operating efficiently and effectively by thinking about service delivery in advance.

If your council requires further information or guidance on budgeting and precepting please contact Northants CALC.

The article above is based on information contained in Governance and Accountability for Local Councils - A Practitioners’ Guide (England) (2010). The 2016 edition of the guide omits detailed practical advice on the budget process.