Seven million reasons to vote against Regional Government : 16 February 2004

Ryedale District Council’s Policy and Resources Meeting of 12th February was a first class opportunity for new councillors like me to find out as much as possible about the state of the Council’s finances.

The Council can congratulate itself for keeping its council tax increase to 5%. This may be an increase greater than inflation, but then, perhaps, if one takes into account the zero budget increase last year, Ryedale may have actually increased its tax by less than inflation over a two year period! Would that other councils in North Yorkshire could do the same.

The increase was kept to 5% largely by taking £100,000 of the interest earned on the Council’s reserves and transferring it to the Revenue account. This was interesting, as I had previously thought that all the interest earned on the Council’s reserves was used to support the Revenue account and so reduce Council Tax. So I asked some questions, and will set out below my understanding of the answers.

Apparently the Council has over £7,000,000 in reserve. This is a huge sum, bearing in mind that it exceeds the annual Revenue budget, and the amount which councils are advised to keep in reserve is only % of the Revenue budget.

The £ 7,000,000 Reserves generate about £400,000 in interest receipts annually. Of this, this year £100,000 has been transferred to Revenue, as mentioned before, while the remaining £ 300,000 is used to support the Council’s capital programme.

The Council’s capital programme is set to spend £2,352,000 over four years. However, this will be offset by at least £1,200,000 interest receipts over the same period. It follows that, in four years time, all things being equal, the council will have carried out its capital programme and will have kept just under £6,000,000 in reserves.

At the same meeting, we had to consider the council’s response to the Boundary Comission’s Draft Options Consultation. We had a choice of supporting either the “Gemini” option (which for Ryedale, means a merger of Scarborough with Ryedale), or an option including Scarborough, Ryedale and Hambleton. It was made very clear to us that, if there is a vote against the government’s proposals for Regional Government at the Referendum which is due to take place in September, there would be no local government reorganisation and no merger with Scarborough at all.

So, it would be useful for voters to know the state of Scarborough’s finances. I have requested this information, but none has been provided. So I will set out the little that I know.

Scarborough is currently carrying out a massive coast protection project, at a cost of about £30,000,000. There is a rumour that, in addition, Scarborough’s previous debts amounted to £20,000,000 – making a total of £50,000,000 in debts, if the rumour is true. Against this, Scarborough has received £23,000,000 on the sale of their council houses, as well as other money from the sale of other council assets. So although we may not know the precise amount of Scarborough’s debts, it is reasonable to expect them to exceed £20,000,000.

So, it is quite obvious that, if Ryedale merges with any number of authorities which includes Scarborough, Ryedale’s remaining reserves will be swallowed up by Scarborough’s debts.

It is understood that Hambleton is not interested in merging with Ryedale and Scarborough. Hambleton is also a debt free authority, like Ryedale. One wonders if their opposition to such a merger has something to do with a concern for their reserves, as well as for other reasons.

It is unfortunate that the government has linked Regional Government to local government reorganisation in North Yorkshire. However, as they have made the link, whether one is in favour of Regional Government or not, Ryedale voters have seven million reasons for voting against it.

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