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Budgeting for Success: A Clerk's Guide to Setting the Precept

by 
Jane Dafforn
· Updated
Sep 18, 2023

What is the precept and why is it important?

As a local council, setting a precept is an important responsibility that has a direct impact on the community. The precept is the amount of money that the council requires from local taxpayers to fund its annual budget, and it is a crucial factor in determining the level of services and amenities that the council can provide. In this post, we'll walk through the process of setting a council's precept and explain why it's important to get it right.

The first step in setting a precept is to estimate the cost of providing the services and amenities that the council is responsible for. This includes things like parks and recreation grounds, allotments, venues and cemeteries. The Clerk and/or RFO of the council will use historical data and known costs to make predictions about how much these services will cost in the upcoming year, and how much money the council will need to raise from local taxpayers to cover these costs.

Next, a draft budget is drawn up and the council agrees the final budget for the upcoming year. This budget takes into account any changes in costs, as well as any new initiatives or projects that have been proposed. Once the budget has been set, the council can calculate the precept by determining how much money it needs to raise from local taxpayers to fund the budget (e.g. expected income less expected expenditure).

Once the precept has been set, it is passed on to the local billing authority, which is responsible for collecting the money from local taxpayers and distributing it to the council. The council also provide information to the residents about the precept and what the council will do with the funds.

The process of setting a council's precept is not always easy, and there are many factors to consider. However, the main thing is that the Council can justify any increases and show the benefit it will have on the community. By being transparent and taking the time to understand the costs and the needs of the community, the council can ensure that the precept is set fairly and that the money is used effectively.

Best Practices when setting your precept

When setting a council's precept, there are a number of best practices that can help to ensure that the process is fair and transparent, and that the money is used effectively:

  1. Conduct a thorough and accurate assessment of costs: Before setting the precept, the council should conduct a thorough and accurate assessment of the costs associated with providing the services and amenities that the council is responsible for. This should take into account both fixed costs, such as employee salaries, and variable costs, such as maintenance. By understanding the costs, the council can ensure that the precept is set at a fair and reasonable level.
  2. Be transparent: The council should provide clear and detailed information about the precept to the community, and explain how the money will be used. This can include holding public meetings, publishing budget documents online, and providing regular updates to the community about the council's finances.
  3. Consider alternative revenue sources: The council should consider alternative revenue sources, such as grants or partnerships with local businesses, to supplement the funds raised through the precept. This can help to lower the burden on taxpayers and ensure that the council has the necessary funds to provide services and amenities.

By following these best practices, the council can ensure that the process of setting the precept is fair and transparent, and that the money is used effectively to provide the highest level of services and amenities to the community.

Free Parish & Town Council Budgeting Spreadsheet - DOWNLOAD HERE

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For a full overview of Budgeting and forecasting read Forecasting, Budgeting & Setting The Precept: A Complete Guide For Town & Parish Councils

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