Glossary of Terms

Actual 2006-2007

The 'outturn' or the actual income or expenditure incurred during the financial year.  It refers to the amount spent against the budget in that period.

Affordable Borrowing Limit

A requirement to ensure that total capital investment remains within sustainable limits and, in particular, that the impact upon its future council tax levels is 'acceptable'.

Agency and Contract Payments

Payments to third parties for the provision of services not provided directly by Council employees.

Asset Management Revenue Account

An account Hastings Borough Council is required to maintain under the capital accounting arrangements.  All principal repayments and interest charges on loans are charged to the account.

Audit

The formal review of activities by people or agencies not otherwise responsible for those activities.  Originally used for the periodic review of financial transactions but now increasingly used also for any independent review, usually ad hoc, of any activities.

Band 'D' Equivalents

This term relates to one of the Council Tax valuation bands.  The bands 'A' to 'C' and 'E' to 'H' are weighted to the equivalent of Band 'D'.  This derived band 'D' equivalent is used as a basis for calculating the Council Tax.

Best Value

This is the duty which local authorities owe to their stakeholders to provide relevant, cost effective services.  All services are expected to be reviewed once in every five years.

Billing Authority

This is an authority such as Hastings which is responsible for collecting the Council Tax and Non Domestic Rates.

Budget

A statement of Hastings' plans for revenue or capital expenditure over a specified period of time.  The annual budget is prepared as part of the Council's annual Council Tax setting process.

Capital Expenditure

This is expenditure on the acquisition of assets, or expenditure which adds to and not merely maintains the value of an existing asset.  Section 40 of the Local Government & Housing Act 1989 defines 'expenditure for capital purposes'.  Expenditure outside this definition must be charged to the Revenue Account.  A fixed asset is one which generally yields benefits to the local authority for a period exceeding one year.

Capital Finance

This is the raising of money to pay for capital expenditure, for example by borrowing, leasing, capital receipts, revenue or grants.

Capital Programme

This outlines the capital schemes that the Authority proposes to undertake over a set time; Hastings has a four year capital programme.

Capital Receipts

These are monies received from the sale of assets.  The Council is required, under current legislation, to 'set aside' a proportion of the receipt to meet debt repayments.  The remaining sums are 'usable' to finance capital expenditure.

Collection Fund

This fund is administered by each billing authority and all proceeds from the Council Tax are paid into the fund to meet the net budget requirements of the County Council, Police Authority and Borough Council.

Contingency

A sum put aside to cover unforeseen expenditure during the period of the budget.

Corporate Expenses

These are costs which are of a necessity and/or benefit to most services and include bank charges, Audit Commission fees, central telephone switchboard costs, costs associated with the Data Protection Act, and other cross-cutting issues.  Bank charges and Audit fees remain as an unallocated corporate cost.

Council Tax

Council Tax is paid on most residential properties in a local authority's area.  Properties are valued within eight valuation bands (A-H, see also the report to Cabinet on the Budget and Council Tax).

Council Tax Base

A calculation which determines how much will be collected for every £1 of Council Tax at Band D.  It relates to the number of dwellings in each of the valuation bands, their relationship to Band D multiplied by the % collection rate.

Democratic Representation

This is the cost of administering Council, Cabinet and Committee meetings.  It includes the salaries of the Committee Clerks together with other expenses such as Members Allowances, refreshments at meetings and printing agendas.

Employee Costs

This consists of salaries, national insurance, pensions, plus any allowances of staff employed on the service.  The costs of recruitment and training are also included.

External Interest

External Interest consists of payments to the Public Works Loan Board (PWLB), banks, other financial institutions, and other local authorities in respect of interest incurred on borrowing undertaken to fund the activities of the authority.

Fixed Assets

These are tangible assets that yield benefit to local authorities and the services it provides for more than one year.

Growth

An increase in expenditure not due to inflation.

Housing Benefit

An allowance to persons on low income (or none) to meet in whole or part their rent.  Benefit is allowed or paid by local authorities but Central Government refunds part of the cost of the benefits and of the running costs of the service to local authorities.  Benefit paid to the authority's own tenants is known as rent rebate and that paid to private sector tenants as 'rent allowances'.

Local Performance Plan

A document which the Council must produce annually to describe its short-term and long-term ambitions for the town.  It demonstrates how it will achieve this, how well it has met its targets in the previous plan, and provides residents with a chance to judge the Council's performance.

Minimum Revenue Provision (MRP)

This is the minimum amount which must be charged to the Authority's revenue account each year and set aside as provision for credit liabilities, as required by the Local Government & Housing Act 1989.  The present rules required that an authority sets aside a minimum revenue provision at least equal to 4% of General Fund debt, and 2% of Housing Revenue Account debt outstanding at the end of the previous financial year.  In Hastings' case the 'debt outstanding' at the end of the previous financial year is a negative figure and, therefore, there is no requirement to make an MRP.

National Non Domestic Rates (Business Rates)

These are paid on commercial, business and non residential properties.  The Government determines the level, although the Council is responsible for its billing and collection.  The proceeds are pooled nationally and then redistributed amongst local authorities on a per capital basis.

Precept

This is the levy made by precepting authorities (such as East Sussex County Council and the Sussex Police Authority) on a billing authority (Hastings Borough Council), requiring the latter to collect income from the Council Taxpayers on their behalf

Premises

All costs associated with running a building, including repairs and maintenance, energy costs, rent and rates, insurance and cleaning costs.

Provisions, Reserves and Balances

These are amounts set aside in one year to cover expenditure in the future.  Provisions are for liabilities or losses which are likely or certain to be incurred, but the amounts or the dates on which they will arise are uncertain.  Reserves are amounts set aside which do not fall within the definition of provisions and include general balances which every authority must maintain as a matter of prudence.

Prudential Code

The 2003 code introduced a need for local authorities to consider capital spending plans with reference to affordability (implications for Council Tax), prudence and sustainability, value for money, stewardship of assets, strategic objectives and the practicality of the plans.

Recharges

The local authority accounting code of practice requires that Support Service costs be fully recharged to services except for those relating to corporate matters and democratic processes.

Revenue Expenditure/Budget

This is expenditure on the day to day running of the authority, for example staff costs, premises related expenditure, transport and supplies and services.

Revenue Support Grant (RSG)

This is a grant paid by Central Government in support of general net revenue expenditure.  The amount is calculated with reference to an area's assessed needs and a share from National Non Domestic Rates based on population.

Standing Instructions

A scheme of delegated authority given to officers of the Council.

Supplies and Services

Examples include: Equipment and materials, printing and stationery, telephones, postages, computer services, office furniture, advertising and publications, fees for professional services.

Support Service Costs

These are made up of administrative buildings and office services such as Legal, Personnel, Accountancy, Information Technology and Estates Management.

Taxbase

The estimated sum receivable from each £1 of council tax levied, calculated with reference to the number of domestic properties in each valuation band assessed for the tax, less any assumptions for discounts, exemptions and irrecoverable amounts.

Total Costs

The principle that all unit costs and other comparable costs should include apportionments of all relevant overheads and support service costs.

Transfer Payments

Payments such as Housing Benefit and Council Tax benefit or discretionary business rate relief.

Transport Costs

All costs associated with vehicles and transport, including car mileage allowances, public transport costs and fuel costs.

Virement

This is the permission to spend more on one budget head when this is matched by a corresponding reduction on some other budget head.  Virements must be properly authorised by the Cabinet or by officers under delegated powers.

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