The budget represents the future spending plan for the community, read Scribe’s tips on budget and precept setting.

For Local Councils, the budget represents the future spending plan for the community and provides financial accountability. Read Scribe’s tips on setting the budget and precept below, and where to get more help.

5 top tips to help you through the process

1. Schedule time – budgeting is an important task and requires dedicated time. Work back from your scheduled budget meetings to determine when you should begin prepping. Try to delegate tasks where possible, involving committees or departments and setting clear deadlines for them.
2. Forecast – predict future income and expenditure to result in your likely end of year position and in turn assist with setting the precept for the following financial year. You should forecast to complete calendar months and remember to be realistic. If you are expecting to come well over or under budget, this should be what your forecast shows.
3. Don’t be afraid to start again – zero-based budgeting involves starting from scratch and ignoring previous budgets. This may be necessary where the current budget is not fit for purpose (e.g. lacking in detail, inaccurate, vastly different to actuals). It can also be used for specific projects or new elements of the budget where no previous data is available.
4. Make notes – keep a record of how you came to your calculations, especially for estimated budget lines and those that have changed considerably. This is a great help if questions arise or for you to refer to at a later date. You should also keep notes of changes to the budget and one-off, unexpected costs throughout the year (particularly useful for your explanation of variances at year end).
5. Monitor the budget – the budget process is not just about setting the precept, it should be seen as a continuous process to assist in monitoring the current financial position of the council. Determining any areas of over/underspend throughout the year allows you to take necessary corrective action, like drawing down from reserves.

More resources from Scribe

If you want further help or details on budget setting, Scribe has some useful resources here:

• Complete Guide – Forecasting, Budgeting & Setting The Precept: A Complete Guide For Town & Parish Councils
• Budgeting Spreadsheet – Free Parish & Town Council Budgeting Spreadsheet
• Cost of Living – 15 Tips To Combat Cost Of Living Crisis At Your Town Or Parish Council

Scribe also has some free webinars on ‘Budgeting and Forecasting in Uncertain Times for Town and Parish Councils’ which can be found here on October 20th and November 9th.

Further help

Our Knowledge Bank has more information on setting your budget and precept, along with some things you may particularly want to consider this year such as the cost of holding an election in 2023, increased insurance and staffing costs, and utility costs (read guidance here from Clear Utility Solutions on the government help for utility costs)

Member councils can also access our range of finance training which includes courses on Budgeting for Clerks and Finance Staff, and Finance for Councillors (which includes budgets and precepts)

Guidance on the importance of insurance for local councils to protect your assets, services and activities

Local councils may face a number of risks to public money and insurance is one way to protect the council by mitigating those risks. It can be targeted to the council’s needs, depending on what facilities, services or assets the council offers.

In 2022, many councils are finding that the cost of insurance is increasing significantly; if that increase hasn’t yet hit your council then you may want to consider that for your 2023/24 budget. You may also want to allow more time for the process of renewing your documents as insurers are looking more carefully at what they are being asked to cover and may ask for more information than they previously have.

Whenever a council is renewing their insurance, it’s a good idea to confirm that your package still suits your needs; are there any new projects or assets which aren’t currently insured? Anything you are insuring that doesn’t need it? Take a moment to review the situation and check that you have the appropriate level of cover.

Different types of cover

For more guidance on the different types of cover available, talk to your insurer or check in The Good Councillors Guide to Finance and Transparency 2018 but some things you may want to consider are:

• Employers Liability (compulsory if the council has any employees, such as a clerk)
• Public Liability
• Property
• Business Interruption
• Libel and Slander
• Motor
• Fidelity Guarantee
• Cyber Security
• Legal Cover

Please note: councils cannot recover insurance premium tax. 

The SAAA (Smaller Authorities’ Audit Appointments) is responsible for appointing external auditors for opted-in smaller authorities and is now appointing for the next five year period.

The Smaller Authorities’ Audit Appointments (SAAA) is responsible for appointing external auditors to opted-in smaller authorities and managing the contracts with the appointed auditors. They are now writing to local councils regarding the appointment for the next 5 year period (2022-23 to 2026-27) and advising councils of the ability to opt-out if they wish.

Emails are being sent in batches, so you may not have received your email yet. If your contact details have changed, or you do not receive an email in the coming weeks, then please contact PKF Littlejohn on sba@pkf-l.com to make sure they have the correct contact details for your council.

All authorities require an appointed external auditor, even those that qualify as exempt since you are still required to send a Certificate of Exemption to the external auditor. During the last five years, all smaller authorities opted-in to the central procurement regime managed by the SAAA; no smaller authority decided to opt-out and follow the various complex procedures required under statute to appoint their own external auditor. If you wish to opt-in and continue as part of the SAAA sector led auditor appointment regime then no action is required; you will remain part of the central scheme.

Although the email will contain guidance on how to opt-out, NALC strongly recommends that councils opt-in (in which case, no action is necessary), and continue as part of the SAAA sector-led appointment regime.

Please bear in mind that this only relates to external auditors; councils will continue to appoint their own internal auditors and we have guidance here to help you choose an internal auditor.

Opting Out

Opting out is a significant decision which requires careful consideration and guidance has been developed to clarify what it would mean in practice. Key implications are:

• an opted-out authority regardless of size (including exempt authorities) MUST appoint an appropriate external auditor;
• the appointed auditor must be a registered auditor as defined by the Companies Act and a member of Institute of Chartered Accountants (England and Wales).
• an opted-out authority must convene an appropriate independent auditor panel which meets the requirements of the Local Audit and Accountability Act 2014 (LAAA). Detailed guidance on auditor panels is available in Schedule 4 of the LAAA Act and from CIPFA;
• an opted-out authority will need to develop its own specification for its external audit contract, will need to negotiate the price for this work on an individual basis and will need to manage the contract, including any disputes, and any independence issues that may arise;
• an opted-out authority must ensure full compliance with the relevant requirements of the Local Audit and Accountability Act and supporting Regulations;
• any opted-out authority that does not successfully appoint an appropriate external auditor in the correct manner and notify SAAA who their external auditor is by 30 November 2022 will have an external auditor appointed for it by the Secretary of State through SAAA. This will result in additional costs of £300 which will have to be met by the authority.

An authority that wishes to opt out must formally reach and record that decision in a way that meets the requirements of its own governance framework, by convening a full council meeting or an extraordinary council meeting.

The SAAA have also shared a case study in NALC’s blog as a cautionary tale of what to avoid during the audit process, and the importance of having a generic email address. There is guidance here on setting up a generic council email with the gov.uk domain.