Agenda item

The budget Scrutiny Working Group will be pre-scrutinising this report at a meeting on Monday 10^th February 2020.  Due to the timing of the group’s meeting any recommendations arising from this meeting will be tabled for the consideration of the Executive Committee.

 

The Executive Director of Finance and Corporate Resources presented the Medium Term Financial Plan 2020/21 to 2023/24 and in so doing highlighted the following for Members’ consideration:

 

·                As Members were aware the Council had been issued with a Section 24 Notice in September 2020 by the external auditors, Grant Thornton.

·                In the Section 24 Notice Grant Thornton had raised concerns about the financial sustainability of the Council moving forward.  The Council was required to have a realistic financial plan and to monitor the budget and expenditure in 2019/20.

·                Officers had been monitoring the Council’s performance in relation to the 2019/20 budget.  By the date of the meeting the authority was on track to deliver significant savings by the end of the financial year.

·                Throughout the year updates in respect of the Section 24 Notice and the Council’s budget position had been provided to the Budget Scrutiny Working Group and the Audit, Governance and Standards Committee.

·                At the start of the financial year the Council had had less than £1 million in balances and this had been a cause for concern for the external auditors.

·                Grant Thornton had been clear that Members needed to be able to demonstrate that they could make difficult decisions in order to balance the Council’s budget.

·                In 2019/20 a number of difficult decisions had been taken, including in respect of Rubicon Business Centre, funding for Voluntary and Community Sector groups and the closure of the One Stop Shops.

·                At the start of the 2019 financial year a financial gap of £1.1 million had been expected for the Council in 2020/21.  By February 2020 the Council was anticipating a surplus of £82,000 in that year.

·                The £82,000 surplus would be returned to balances which would bring the Council’s budget to a total just over £1 million.

·                Savings had been secured in relation to areas such as the Management Review and as a result of a review of the operational model for the Dial a Ride service.

·                Proposed changes to the Dial a Ride service would result in a reduction of buses in operation from six to five and the introduction of a voluntary car scheme.  There would be no associated redundancies arising from these changes

·                The Council’s actuaries reviewed the authority’s pension scheme each year.  The investments that had been made for the pensions fund had performed better than expected and as a consequence the Council’s contributions to the pensions fund would not be as great as had originally been anticipated therefore an annual saving had been included in the budget projections.

·                During the year there had been capital reprofiling work undertaken in respect of the Council’s Capital Programme.  This had resulted in significant changes and savings in respect of borrowing costs.

·                The Council had unexpectedly received additional income in the form of New Homes Bonus (NHB) funding for 2020/21.  The Government had been very clear that there would be no legacy payments associated with the NHB available to the Council in subsequent years.

·                The Council Tax Resolutions would be presented to the Executive Committee at a meeting immediately before Council on Monday 24^th February 2020.

·                There remained a lot of uncertainty moving forward regarding future funding for local government.

·                The Government’s Fair Funding Review would provide some clarity once this had been finalised.

·                Changes were also anticipated in respect of business rates.  Members were advised that the Government was due to reset the level of business rates growth and this could result in a significant loss of income for the Council in the future.

·                The Council also still needed to address a total budget gap of £1.6 million in 2021/22 to 2023/24.

·                The Housing Revenue Account (HRA) was in a better position than had been anticipated at the start of the year.  The Council would, however, still need to draw down from balances and reserves in order to balance the budget in the first couple of years of the plan.

·                By 2023/24 the financial position for the HRA would start to improve as rent rises would be having a positive impact on the budget by that point.

 

After the presentation of the report Members discussed the following points in detail:

 

·                The work of the Financial Services team and Heads of Service in respect of achieving savings in order to balance the Council’s budget.  Members thanked Officers for their hard work.

·                The requirement for the Council to achieve a balanced budget at least in the first year of the four year plan.

·                The challenges that had been presented by the Section 24 Notice.

·                The difficult decisions that had been taken by Members in 2019/20 and the need for further difficult decisions to be taken in the future.

·                The good news that the Council had received in respect of returns on the Council’s pension investments.

·                The need for a proper review to be undertaken of Local Government funding and the challenging financial situation impacting on many local authorities.

·                The income that had been received from Rubicon Leisure since the company was established.  Officers explained that as a result of introducing the company the Council’s funding for Leisure and Cultural Services had reduced from £1 million to £600,000.  The finances of the company would be reported to the Shareholder Committee.

·                The date by which the 30 year business plan for the HRA would be available.  Officers explained that the Council was in the process of working on a four year plan.  Once the stock condition survey was completed the information arising from that survey would enable the Council to plan work for Housing over a longer period of time.

·                The Government’s plans to reset of business rates and when this might occur.  Members requested further information about this process once it had been clarified.

·                The funding that had been allocated to a café in Morton Stanley Park in the Capital Programme and the purpose of this fund.  Officers explained that a business plan would be produced in respect of this matter and there was some S106 funding which could also be used for infrastructure spending in the park.

·                The date by which the business plan would be reported to Members.  Officers explained that should this funding be approved in the Capital Programme there would not be a requirement to present a report to the Executive Committee and this would be the preferred approach in order to increase the speed of the decision making process in line with recommendations from the Corporate Peer Challenge.

·                The £1 million for works in respect of asbestos falling to £400,000 in subsequent years and the extent to which funding on this process had been spent to date.

·                The issues that could impact on the Council’s budget which were outside of the authority’s control such as Brexit.

·                The Briefing that had recently been provided to Members in respect of commercialism and the fact that this had been well attended.

 

During consideration of this item Members noted that the Budget Scrutiny Working Group had pre-scrutinised the report at a meeting held on Monday 10^th February 2020.  Based on their discussions the group had concluded that the capital programme should be presented in a different style in future years, whereby items in the plan would be set out in groups aligning to the Council’s strategic purposes.  The group had also suggested that the Council needed to ensure that once the Section 24 Notice no longer applied, this would be effectively communicated to the public in order to reassure residents.  Members agreed that both of these proposals from the group should be supported.

 

RECOMMENDED that

 

1)        the Unavoidable costs as attached at Appendix1 be approved:

                                    2020/21 £221k

                                    2021/22 £221k

                                    2022/23 £228k

                                    2023/24 £235k

 

2)         the Revenue Bids as attached at Appendix 2 and Appendix 4 be approved:

                                    2020/21 £95k

                                    2021/22 £45k

                                    2022/23 £45k

                                    2023/24 £45k

                       

3)        the Identified Savings as attached at Appendix 3 be approved:

                                    2020/21 £467k

                                    2021/22 £562k

                                    2022/23 £676k

                                    2023/24 £729k

 

4)        the General Fund Capital Programme bids as attached at Appendix 4 be approved:

                                    2020/21 £242k

                                    2021/22 £51k

                                    2022/23 £51k

                                    2023/24 £51k

 

5)        the General Fund capital programme at Appendix 5 be approved:

                                    2020/21 £3.775m

                                    2021/22 £3.206m

                                    2022/23 £5.149m

                                    2023/24 £3.246m

 

6)         the net general fund revenue budget be approved;

                                    2020/21 £9.701m

                                    2021/22 £9.903m

                                    2022/23 £10.141m

                                    2023/24 £10.355m

 

7)        the Housing Revenue Account Budget at Appendix 7 be approved:

                                    2020/21 £24.657m

                                    2021/22 £24.987m

                                    2022/23 £25.233m

                                    2023/24 £25.705m

 

8)        the Housing Revenue Account Capital Programme at Appendix 8 be approved:

                                    2020/21 £10.755m

                                    2021/22 £12.555m

                                    2022/23 £12.217m

                                    2023/24 £11.931m

 

9)        the increase of the Council Tax per Band D at £5 for 2020/21 be approved;

 

10)     the transfer to Balances of £82k for 2020/21; and

 

RESOLVED that

 

11)     there should be a review of how the capital programme spreadsheet is presented in future years, and that items on the capital programme should be grouped in accordance with the Council’s strategic purposes; and

 

12)     once the Section 24 Notice no longer applies to the authority, the Council should ensure it actively communicates this to the public in the local press, having communicated it to the public in the first place.  Members recognise that this will be subject to the Council receiving a sustainable value for money statement from the external auditors and approval of the Council’s accounts in September 2020.