Reading taxpayers could face five per cent council tax hike to help plug funding gap

Reading Borough Council (RBC) has revealed its plans for the next three years in its draft budget papers, with a minimum council tax increase of three per cent proposed.

But council tax could increase by five per cent as one way of helping the council to achieve a balanced budget.

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All local authorities must deliver a balanced budget every year by law but the council’s current draft budget leave it with a £5 million gap for 2021/22.

RBC Leader Jason Brock said savings need to be delivered but “frontline services will be protected”.

With the council pushing ahead with all of its “flagship investments”, including its £9 million road resurfacing programme, two new swimming pools and the introduction of food waste collection, savings are needed elsewhere.

The council has outlined savings of £14 million but, to balance the books, the council will need to generate extra savings or generate additional income.

One method the council has suggested is increasing the adult social care precept, a council tax which can only be used for social care, from one to three per cent.

Along with the maximum two per cent general council tax rise, this would hike tax up by five per cent this year and reduce the budget gap to £3 million.

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The council also has £4.6 million of reserves but says this would not address the underlying need for ongoing savings over the coming years.

Another method to balance the budget would be to find savings in the council’s departments through reducing services or being more efficient.

The draft budget will be approved for consultation at next Monday’s Policy committee.

A further report with a finalised budget – and the chosen method of removing the £5 million budget gap – will be brought to the committee on February 15 to be voted on and passed onto the full council for a final decision on February 23.

What impact has Covid had?

The council has revealed its funding gap due to the coronavirus pandemic is down to just £700,000, as part of its new draft budget announcement.

In terms of the impact of Covid, RBC is forecasting it will leave the council with a budget deficit of £0.7 million up until the end of September 2020.

A £19.2 million overspend due to Covid will be mostly cancelled out by £16.6 million from three rounds of government funding to assist the council during the pandemic.

This combined with an underspend in the corporate budget of £2 million brings the funding gap down to £700,000.

The government has since given the council a fourth tranche of funding, giving it £3.5 million to respond to the pandemic, but it is not yet clear where this will leave the funding gap, as officers explained in the budget papers.

They said: “With a further national lockdown throughout November in response to a second wave of the virus and the relaxation over Christmas, albeit with the promise of a widescale vaccine rollout in the new year, the situation remains volatile and it is likely costs will increase.

“Hence continued close monitoring is required.”