Value for Money and Financial Resilience 2023/24
Introduction
Cheshire East Council is the third largest Council in the Northwest of England, responsible for approximately five hundred services and with a population of nearly 400,000. Our gross annual spending is normally in the region of £700m and includes capital spending and costs funded direct from government grants such as Dedicated Schools Grant. Net spending reflects spending that is only funded from Council Tax, Business Rates and unring-fenced government grants and is approximately £350m for 2023/24.
The range of services provided by the Council are both statutory and discretionary and there is a clear responsibility on Members and officers of the Council to maintain a stable financial environment.
The information on this page brings together a number of key pieces of financial information into one place to provide an overall picture of the Council’s finances.
The aim is to support Member decision making to maintain a sustainable financial environment for the Council. The approach is intended to promote decisions that can make a valuable difference to residents in the medium and long term and place less focus on detailed day-to-day operational management of the finances which are instead the subject of an audited control environment.
The information is split into the following four key areas:
- Local taxation
- Core Spending Power
- Capital spending and borrowing
- Reserves levels
Local taxation
As a publicly funded organisation the Council relies on taxation to provide funding for most services. Over time the level of Central Government financial support has reduced. This places a growing reliance on locally raised income from taxation, in the form of Council Tax and Business Rates, and from fees and charges.
Council Tax
Council Tax is set by the local authority and other local preceptors (Police and Crime Commissioner, Fire Authority and Town and Parish Councils) in accordance with the Local Government Finance Act 1992. Property occupiers or owners are issued with annual bills according to the value of their property. Government and the local authority can influence reductions based on household circumstances. Since 1st April 2013, the Council also has the power to manage a Council Tax Support scheme to help people on low income, through Council Tax reductions. Income is collected by the Council and payments are then made to the other precepting bodies.
The analysis below highlights how Cheshire East compares to other Unitary and Upper Tier authorities in England (i.e., all authorities with responsibility for Social Care):
Cheshire East Council analysis on Council Tax
Business Rates
Business Rates, in accordance with the Local Government Finance Act 1988, are set by the Government and the Council issues bills and collects payments for those that sit within the borough. From the 1st April 2013 the proceeds of Business Rates have been divided between the Council (49%), Fire Authority (1%) and Central Government (50%) although various restrictions are in place to prevent large fluctuations in the amount distributed. The government retains significant influence to set discounts and provide exemptions although the local authority has options to work with business in the interests of the taxpayers to raise more or less business rates in certain circumstances (this includes pooling with other local authorities).
The analysis below gives more information on the mechanics of the scheme and highlights the change in Cheshire Easts retained business rates levels since the introduction of the scheme in April 2013:
Cheshire East Council analysis on Business Rates (PDF, 175KB)
Core Spending Power
Core Spending Power is a measure of the resources available to local authorities to fund day-to-day service delivery (Schools funding is ringfenced separately). It sets out the money that has been made available to local authorities through the Local Government Finance Settlement which is announced annually in December (provisionally) and finalised by the following February.
The analysis below highlights how Cheshire East compares to other Unitary and Upper Tier authorities in England (i.e., all authorities with responsibility for Social Care:
Cheshire East Council analysis on Core Spending Power (PDF, 122KB)
Capitalspending and borrowing
This section aims to demonstrate the long-term importance of capital planning and treasury management.
Capital expenditure relates to spending on assets, although the government continues to provide the flexibility of allowing receipts from asset sales to fund transformational revenue projects.
Treasury management is the term used to describe the approach to the Council’s cash flows, its banking, money market and capital market transactions, the effective control of the risks associated with those activities and the pursuit of optimum performance consistent with those risks.
Members approve the Treasury Management Strategy as part of the annual budget. This is a statutory requirement (Part 1 - Local Government Act 2003). The Strategy aims to maximise returns but also seeks to maintain security whilst ensuring that there is appropriate liquidity too. The strategy can be found as part of the MTFS on the budget web pages
The borrowing strategy aims to restrict the revenue cost of debt from impacting on front line services whilst also protecting the Council from overall revenue pressures in the event of interest rate volatility. There is a statutory requirement, complied with by the Council, which sets aside an amount for repayment of debt, known as the Minimum Revenue Provision.
The Council undertakes a balance sheet review exercise each year. This considers the level and maturity of investment balances and planned use of reserves, in addition to estimates on expenditure, the Capital Financing Requirement and maturing debt. It also includes an analysis of working capital and schedules of planned receipts and payments. The Council also produces an annual Investment Strategy as part of the Medium-Term Financial Strategy (MTFS) (see link to budget web page above). This covers assets of the Council that are primarily held for the purpose of making a financial return. Investment returns are currently a small feature of the MTFS , but this may change in the future if suitable opportunities are identified and begin to impact positively on the financial resilience of the Council.
Variations to capital spending requirements are reported and approved in line with the Council's financial procedure rules.
Cheshire East Council analysis on Capital Spending and Borrowing (PDF,177KB)
Reserves levels
The Council’s Reserves Strategy is approved by Members as part of the annual budget each year. However, it can be amended during the year in response to emerging issues. The Strategy is to protect the Council against risk and provide suitable access to funds to manage emerging pressures or opportunities. It is a responsibility of the Council’s Section 151 Officer to comment on the adequacy of the Council’s reserves and take the appropriate action. They can impose sanctions on Council expenditure if they think reserve levels are inadequate or may become inadequate in the future.
Being able to manage the Council’s annual revenue expenditure within budget is an important indicator of risk, as is the need to ensure fees and charges are billed and collected effectively. These measures provide information to the Section 151 Officer, and elected Members, in considering forecast levels of reserves as well as understanding how predictable spending patterns are over time. Stable spending patterns and good debt collection reduces overall financial risks.
The information in the Cheshire East Council analysis on Reserves Levels (PDF, 132KB) is based on 2021/22 information as published data for other authorities is not yet consistently available for later years.
CIPFA Financial Resilience Index
Further analysis of financial resilience and comparisons to other local authorities can be accessed through the CIPFA Financial Resilience Index
The index shows a council’s position on a range of measures associated with financial risk. The selection of indicators has been informed by the extensive financial resilience work undertaken by CIPFA, public consultation and technical stakeholder engagement.
The index is made up of a set of indicators. These indicators take publicly available data and compare similar authorities across a range of factors. There is no single overall indicator of financial risk, so the index instead highlights areas where additional scrutiny could be undertaken.
Page last reviewed: 28 February 2024
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