Department refuses to restore Council's Rates Support Grant

The Department for Communities (DfC) has flatly refused Derry City and Strabane District Council’s (DCSDC) request to retain its previous Rates Support Grant (RSG).

It has also emerged, DCSDC has had to meet its RSG commitments from its “financial contingency reserve”.

In May, DfC informed Council the RSG across the North was being slashed from £8.924 million in 2022/23 to £4.9 million in 2023/24 - a cut of £4.024 million or 45.09%.

Derry City and Strabane District Council was set to receive £982,450 or 20.5%.

Responding to Council’s request to protect the “quantum of the RSG in legislation and ensure inflation uplifts are applied on an annual basis”, DfC’s permanent secretary, Colum Boyle, said: “Primary legislation would be required to protect the RSG quantum in legislation and currently this could not be considered or progressed until the Northern Ireland Assembly is restored and a Minister for the Department is in place”.

Councillor’s at Tuesday’s meeting of Derry City and Strabane District Council’s Governance and Strategic Planning Committee heard Council had had a “financial contingency reserve” in place to cover the RSG cuts.

In the ‘Quarter 1 Financial Outturn’ report, presented to the meeting by Council’s lead finance officer, councillors were told “of a number of positive savings and increases in income streams within the organisation for the first quarter of the financial year”.

The report also acknowledged “significant financial challenges had to be addressed during the 2023/24 rate process”.

It said: “The challenges included staff pay pressures, global cost of living pressures, inflation and central government grant cuts which led to a 7.97% increase in the District rate being struck in February of this year.

“That process included a cost savings programme worth some £3.7m across all departments.

“Despite those pressures, a surplus of £435,000 has been reported for the first three months of the financial year, partly due to a growth in income levels from Council’s leisure, planning and building control services.”

Members were also told that leisure income had now returned to pre pandemic levels and, despite the wider global challenges, planning and building control services were benefiting from a “continued growth on building activity and new developments” in the Council area.

In addition, it highlighted savings in electricity, oil and gas budgets due to a reduction in prices to below those forecast during the rates process.

There were also “savings generally across all Council services in relation to expenditure control, travel and vacancy control”.
The report continued: “The surplus also benefited from Bank Interest received being ahead of budget to the tune of £135,000 due to higher interest rates and funds on long term deposits accruing higher interest rates on Council surplus cash and reserves.

“Overall this is a very positive position, particularly given the substantial savings programme and corporate savings target that Council has had to implement.

“It is important however to note that this is a very early point in the financial year and that the position would not have been as positive had Council not had a financial contingency reserve in place to cover Rates Support Grant cuts and other pressures that arose following the rates process.”