Special Levy and Drainage Rate Increase FY2020/2021
Despite an annual increase in operating costs for the past 5 years, the Special Levy/Drainage Rates have been artificially constrained to an average annual increase of 1% since 2014 in order to minimise the impact of any increase on the Local Authorities that make up, and have the majority of seats on, the Boards.
The actual costs of running the Boards has increased on an annual basis; nationally, Administration costs (nearly 45% of the Boards Expenditure) have gone up by over 25% since 2014. In general, the annual Cost-of-Living increase alone has been around 2% both in terms of Staff salaries and Contractor costs to deliver annual maintenance and Project Schemes. The Environment Agency PRECEPT in its own right, paid by the Drainage Boards each year and making up a quarter of the Board’s annual Expenditure, has increased by 2% annually. The Boards income, sought primarily through Special Levy and Drainage Rates, are specifically generated only to provide the absolute minimum to deliver the Board’s annual maintenance and Flood Risk activities each year.
The result of a compound increase in Operating costs over 5 years whilst constraining the Boards’ income has ultimately resulted in utilising the Board’s limited Reserves to supplement the shortfall between income and expenditure each year.
The change in Chief Executive and Responsible Finance Officer has highlighted that constraining Special Levy & Drainage Rate income to keep the Penny-Rate increase as low as possible is no longer sustainable and, as such, has required a significant increase this year as a result of 5 year’s compound increase. The larger increase this year was expected and will raise the income to match the actual operating costs of the Boards.