Balancing local authority budgets: Calculating the cost of discretionary licensing

Balancing Budgets 1

Local government finances are often shrouded in complexity. Balancing the budget for a single year—while also planning for future years—is a significant challenge. In councils with responsibilities for children's services or adult social care, these departments can consume the majority of the budget, sometimes over three-quarters. Months of discussions often focus on what services can be maintained, what needs to be scaled back, and what must be cut altogether. Every decision is scrutinised down to the last pound, sparking debates over statutory service levels and identifying where the greatest needs lie.

This places immense pressure on officers trying to deliver discretionary licensing schemes. With the five-year scheme paid in advance the department has to sit on a large pot of money for the future four years when other council departments' finances are under strain.

Setting council budgets is particularly challenging for officers when different departments compete for limited resources. The pressure to prioritise funding for essential services, while balancing the needs of other departments, creates a complex and often contentious environment.

Financial planning for discretionary licensing requires projecting the costs of staff needed to conduct inspections and manage compliance over a five-year period. What will the programme of work entail? How many properties will be inspected? This involves careful forward planning, balancing known factors with uncertainties when drawing up the scheme. Additionally, the process must account for costs the local authority will face, including staff training, recruitment, and potential challenges like illness.

Although payments are front-loaded and councils can recoup costs through fees, these fees are collected in advance, based on anticipated expenses over the five-year term of the scheme. Importantly, the funds are earmarked specifically for the scheme. If the council diverts this money for other purposes without fulfilling its obligations, it risks acting ultra vires.

Home Safe’s partnership approach helps alleviate this pressure by supporting local authorities with budget setting. With fixed costs for application and certificate compliance for five years, we also offer one, two or three inspections and compliance programmes with fixed budgets. This allows the council to budget confidently and set a licence fee knowing what many of the fixed costs will be and what the outgoing for the council will be, along with the knowledge that the scheme will be delivered against the aims in the business case. This certainty allows the property inspections to be carried out over the five years as required.

Home Safe supports local authorities in fixing these costs and ensuring legal obligations are met with transparency in both spending and service delivery. By providing clarity on the fixed costs associated with improving the private rented sector, Home Safe brings stability to council departments. This enables departments to plan and budget with confidence, ensuring inspection programmes and enforcement actions are effectively modelled and delivered. With this certainty, councils can manage their five-year schemes as planned, meeting their objectives and delivering the outcomes outlined in the scheme.

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