Agenda item

The Portfolio Holder for Finance thanked the Director of Finance and the Finance Manager for their work in preparing the reports.  It was noted that the draft budgets had been prepared against a background of reduced funding by central Government, constraints on council tax limits and high inflation, all of which were significant factors.

Recommendations from the Committees would go forward to Cabinet on 1 February before referral to full Council to agree the budget.

The Director of Finance outlined the budget position and presented the draft Revenue and Capital budgets for 2023-2024, highlighting the following key points to the Committees:

·         With regard to the General Fund position, since the report was compiled the Local Government Settlement has been announced which provided an additional £349,000 in grants, leaving a requirement of £85,000 to be taken from reserves in order to balance the budget.

·         It was acceptable to take this amount from reserves and Government advice was that Councils should consider taking amounts from reserves due to the current significant implications of inflation.

·         The report highlighted significant variations in portfolio expenditure between years with a 25% increase in expenditure due to factors such as the national pay award in the current financial year, the assumed pay award for the next financial year and the Council’s recent pay review.

·         Increasing energy costs had added £200,000 to the budget across the whole Council.

·         Regarding service specific variations between years, a one off cost of £169,000 had been included for the District Election in May 2023.

·         A linked background paper explained the requirement for the inclusion of £100,000 in the budget for the early stage planning of a new town.

·         An additional £1.1m was required by StreetScene for expenditure on recycling and waste as a result of the approved bridging solution and inflation linked to contract payments.

·         The Housing Task Force Team required an additional £182,000 which would be met from earmarked reserve.

·         Special items had been excluded from the draft budget as there was no scope for additional expenditure until the outturn position was known.

·         The report highlighted that since the draft budget had been prepared, LED had requested a revised amount of £1.498m which was an increase of £126,000 above the draft budget figure of £1.372m.  This request would be considered at the forthcoming meeting of the LED Forum, following which recommendations would go back to Cabinet in February before the final budget proposals are considered by full Council.

·         The draft budget assumed a £5 increase to the Council Tax, taking the charge for a Band D property to £161.78, being a 3.19% increase.

·         The draft budget was within the range adopted by the Council, although it was noted that it was close to the bottom end of the reserves level.  This was due to expenditure approved during the current year and the cost of the upcoming elections.

·         The business rate income at £6.7m was significantly above the Government baseline figure and the report highlighted a risk in 2025/26 of this income being substantially reduced as a result of the anticipated Government rebasing of business rates.  The potential effect of this on budget shortfall in the following years was shown in the table at 2.18 of the report.

·         The report highlighted the Financial Sustainability Model as the agreed approach to addressing the modelled deficits.  An in-house review is being undertaken to ensure that work is being carried out as efficiently and effectively as possible and results would be reported back to Members to inform decisions with regard to future budgeting and any potential cuts to services.

·         The Housing Revenue Account would be considered in detail by the Housing Review Board at its January meeting.

·         The results of the housing stock survey are still awaited.

·         The Government cap of 7% on local authority housing rents had been built in to the budget and it was noted that the increased rental income would be needed to cover maintenance costs which were likely to increase by the Consumer Price Index (CPI) which was currently around 10%.

·         The Housing Revenue Account was showing a surplus of £268,000 but it was anticipated that this would be required for in-year costs.

·         With regard to the Capital Programme the details were set out in the Budget Book which was attached to the report and which had been recommended by the Budget Setting and Capital Allocations Panel.

The Chair thanked the Finance Director for presenting a balanced budget during very challenging times.

In response to questions and comments from Members the following points were made:

·         With regard to the Business Rates Retention Scheme, Members were concerned that the Council would be penalised for its achievements.  It was noted that the Scheme was always going to be for a certain period of time only and had never been reviewed.  The Council was now using income from business rates to support services and the Medium Term Financial Plan set out the anticipated worst case scenario as a result of the future re-basing of the Scheme.  It is likely that the Government will introduce a transition period to mitigate against the worst effects.

·         Members were of the view that the issue of the Business Rates Retention Scheme review should be raised with MPs.

·         The increase in the budgeted expenditure for car parks was due to additional staffing costs.

·         Budgeted increase in costs for public conveniences was due to inflationary pressures and particularly increases in the cost of water and electricity.

·         In response to concerns regarding second homes, Member’s attention was drawn to the report to the January meeting of Cabinet and the on-going work on this issue.

·         Members expressed concern at the proposed increase to Council tenants’ weekly rent and whether there was sufficient support for tenants.

·         Members expressed concern regarding the potential increase in the LED costs and it was noted that budget reports would be presented at the January meeting of the LED Monitoring Forum, followed by further consideration by Cabinet at its February meeting.

·         With regard to Members’ concerns about the increase in maintenance costs for the Council’s housing stock, it was noted that payments are built into maintenance contracts and that there is no scope for renegotiation.

PROVISIONAL RECOMMENDATION

That, in principle, and subject to any further revisions following the joint meeting of the Overview and Scrutiny Committees on 12 January 2023, the draft Revenue and Capital Budgets 2023-2024 be recommended to Cabinet for adoption.