Council tax and rent rises, Canal Quarter and Bailrigg projects up for Lancaster City Council budget vote

Under the 2022-23 plan, the amount of council tax paid by households in a home in Band D will rise by £5 to £241.95.

Meanwhile for social housing, typical rents are expected to rise by 4.1 per cent for the next 12 months. For general properties, the average rent of £78.24 is proposed. For sheltered and supported homes, the average rent of £73.49 is being recommended to councillors for approval.

The city council is allowed to increase housing rent by a maximum based on the official Consumer Price Index inflation rate plus one per cent. For 2022/23, the CPI figure of 3.1 per cent from last autumn has been used.

For 2023/24 onwards, council housing rents will increase by slightly lower rate of three per cent annually for two years and then two per cent after, subject to reviews.

Business rates for this year’s budget look set to remain unchanged, at a time when the economy is recovering from the disruption of the Covid pandemic and Brexit.

But the council’s business rate collection has been hugely disrupted in recent years and special government grants are compensating it in the meantime. Furthermore, the future decommissioning of the Heysham nuclear power sites will also impact on business rates, councillors are being told.

Lancaster City Council holds its annual budget meeting on Wednesday February 23, at Morecambe Town Hall, starting at 6pm.

Recommendations for council tax, business rates, income for day-to-day costs and other types of funding for major projects, including Lancaster Canal Quarter and Bailrigg Garden Village, will be voted on.

The city council has two main types of funds. ‘Reserve’ funds are for day-to-day costs over the next 12 months such as staff wages, energy bills, vehicle fuel and building maintenance. ‘Capital’ funds are for big long-term projects, such as new buildings, land developments or equipment which will run over a number of years.

It also has housing budgets, including rents and projects, such as ugrades to Lancaster’s Mainway estate, due to begin soon.

Day-to-day ‘reserve’ cash mainly comes from government funding plus local council tax. Capital funds can come from other sources including major financial loans, one-off grants, and sales of council-owed assets such as property and land.

Councils are legally required to set so-called ‘balanced budgets’, meaning they can only spend as much as they expect to bring in through income each year. In addition, they cannot increased the local council tax by more than two per cent unless they hold a public referendum.

The council expects to raise a total of almost £10.2m through council tax in the next 12 months. Its overall revenue budget, for operating costs, is forecast to be £21.2m for the period. So the remainder required will be found through other sources, such as business rates, fees and charges, some leisure centre price increases and government funds. The council has no plans to dip into its own reserves this year, which has been praised by leading councillors as an achievement in testing times when government funding has fallen for many years.

Looking to the future though, Lancaster City Council may face a funding gap of around £2.2m in 2023-24 and almost £4m after. Reserve cash may need to be used to fill the gap, if no other income is found, a budget report states.

Councillors are also being told the proposed 2022-23 budget comes against a backdrop of uncertainty about long-term council finances. Factors for this include increased short-term funding and one-off grants for councils from the Westminster government, the impact of the Covid pandemic and Brexit, rising energy and fuel costs, general inflation and council staff pay rises.

Business rates paid by local firms make up another important element of the city council’s revenue. Officially called national non-domestic rates, these are paid by local firms in commercial properties such as offices, shops, restaurants, industrial units and factories. Business rate levels set by the government look set to stay the same this year. However firms have suffered major disruption with the pandemic, creating uncertainty with rate payments and city council forecasts.

The current business rates system, which is controlled and designed by the Westminster government, is also controversial. It is calculated using historic ‘rateable values’ of commercial properties. But this technique is increasingly disputed across the UK. It is seen as not reflective of modern property use and values, and especially unfit to tackle high-profile property and economic challenges, such as finding new uses for empty shops and stimulating town centres.

Hopes were rising at councils across the UK that a greater share of business rates collected locally could be retained locally this coming financial year, rather than being sent to the Westminster government for allocation as it sees fit. But government reform of the system this coming year now looks uncertain.

Looking ahead, city councillors are being told the decommissioning of the two Heysham nuclear power stations, Heysham 1 and 2, which are due to stop operating by 2024 and 2028, will be significant for the council’s business rates income.

The Heysham sites currently account for 45 per cent of the district’s total commercial rateable value, according to a budget report for councillors. But the government has a system to compensate councils which face significant drops in business rates such as these.

Major capital funding projects proposed for the 2022-23 period account for £8m of current investment . Overall, the council’s borrowing for all longer term major projects is expected to be around £84m this year, then falling over the next few years.

For major regeneration and building schemes in development stage, £1m is earmarked for Lancaster Canal Quarter this year and £650,000 for Bailrigg Garden Village near Lancaster University.

Other major capital projects include £725,000 earmarked for sea and river defences, £2.3m for Lancaster heritage action zone, £375,000 for the Morecambe Co-op building renovation, £3.6m for disabled facilities, £549,000 for Salt Ayre, £600,000 for Mellishaw Park, £340,000 for urgent repairs at 1 Lodge Street, £138,000 for Palatine Recreation Ground pavilion and almost £500,00 for IT systems and equipment.