Agenda item

The Chair invited the Strategic Lead Finance to outline the budget position and present the Draft Revenue and Capital Budgets. 

In presenting the budgets, the Strategic Lead Finance highlighted to the committees:

·        The draft budget proposed and adopted by Cabinet requires £323k to be taken from the General Fund Balance.  This would put the retained General Fund within the adopted range but at the lower end of that range, giving reduced flexibility in-year to approve additional expenditure or any risks that might come forward;

·        The joint committees are asked to consider a revised increase in prime car parks to a £1.50 hourly charge.  If agreed, this will generate an estimated additional income of £339k thereby negating the aforementioned need to use the General Fund Balance, and balancing the books for 2022-23;

·        The draft budget assumes an increase in Council Tax by £5 a year;

·        The draft budget includes income from central government of £710k for the year;

·        The draft budget includes an additional £2 million from Business Rates over and above the government assessment of what the Business Rates would be;

·        The budget has been produced on an ‘as is’ basis in terms of service delivery, but service leads in a number of areas (including StreetScene, Environmental Health and Car Parks, Development and Management, Arts and Culture) have highlighted that in order to deliver services as is, and items within the Council Plan, they would require additional staff resources.  These items, totalling £737k, are currently not in the budget as they are unaffordable;

·        Other items not included in the budget due to being unaffordable include a request for £60k per year for Council Voluntary Service and £50k for a detailed Tree Strategy;

·        The New Homes Bonus for 2022-23 is £2.1 million. Of this, £1.5 million will go into the General Fund and the remainder into the Capital Budget to fund the capital programme;

·        The Housing Revenue Account will be debated for recommendation by the Housing Review Board;

·        The Capital Programme has been considered by the Budget Setting and Capital Allocation Panel.  Recommendations were approved by Cabinet and are reflected in the presented Capital Budget.  

The risks for the year ahead, which have been included in the draft, include:

·        Recycling and Refuse – negotiations are ongoing regarding additional crew and vehicles required to meet increased demand, and a separate report will be taken to Cabinet and Council with the full details of implications for the Revenue and Capital Budgets.  Discussions have indicated that a budget should be included in the range of £400k to £600k;

·        LED – a Service Level Payment is included in the draft budget of £944k but there is a risk that the final sum could be higher if no service degradation is to be seen.  Full details will be presented through the LED Forum for debate.  It is proposed that a sum in the range of £50k - £100k as additional budget may be required;

·        Pay review – an authority-wide pay review is in progress and whilst the outcome will not be known until February 2022, indications are that Council pay has fallen below the medium pay level in key areas.  It is assumed that the review will recommend an increase in the Council’s pay bill, which will affect the General Fund and Housing Revenue Account.  It is considered appropriate to consider a budget sum in the range of £300k - £500k for the General Fund. 

It was proposed to allow a 75% risk factor within these bandings which would result in a sum of just over £1 million to be added into the budget.

Recommendations would go forward to Cabinet before referral to Council to agree the final budget.

The joint committees were asked to be mindful of the financial challenges and the overall budget position of the Council in considering the Draft Service Plans for 2022-23, and to recommend approval or any amendments being made to Cabinet. 

The Portfolio Holder for Finance thanked the Strategic Lead for Finance for his succinct report.  He highlighted that:

·        If the General Fund Reserve was taken down to £3.6 million this would be very close to the minimum and it was unsustainable to continue to raid the Reserve going into future years;

·        Funding of £1.6 million had been provided to LED to support them through the impact of the pandemic.  Had leisure services been provided through the Council’s own resources instead of through LED, the Council would have been eligible to claim financial support from central government.  Pleas have been made via MPs to central government for support and if successful, this will help the budget position considerably;

·        Car parking charges have not increased for 10 years despite inflation and the introduction of 20% VAT which has reduced the Council’s income further. An increased hourly rate of £1.50 would still be very reasonable relative to neighbouring authorities;

·        The vast majority of capital allocation proposals were urgent maintenance issues related to health and safety, rather than for new projects.

Questions, comments and clarification included:

·        In response to a Member’s request for clarification, the Strategic Lead Finance confirmed that the additional staff resource requests which had been deemed unaffordable were not factored into the budget for the pay review calculation, as the numbers would be immaterial to the budget level;

·        In response to a Member’s question about penalty clauses in the recycling contract, the Service Lead StreetScene stated that there was a penalty calculator in the contract related to missed bin collections and contractor complaints and these were monitored at the Partnership Management Board.  No penalty clauses had been invoked to date and the focus was on working together in the spirit of partnership;

·        Following a request for clarification it was confirmed that if approved, the £50k for a detailed Tree Strategy would have been a one-off payment.  A member commented that the Council has committed to a climate strategy and it would be appropriate for the joint committees to recommend to Council that the Tree Strategy one off payment should be made;

·        Views were expressed that the proposed increase in the hourly car parking rate to £1.50 was not enough. It was noted that in peak tourist season some prime car parks were full and the Council was not getting the income from this that it should be.  Car parking charges in neighbouring authorities were higher although it was unclear whether car parks being compared had toilets attached or close by, and whether these were chargeable.  Comment was made that in comparing parking charges with those of neighbouring authorities, it was important to compare like with like;

·        Comment was made that in comparing parking charges with other authorities, it should be recognised that East Devon is competing with the whole of the South West for tourist spend, not only with neighbouring authorities;

·        It was noted that the customer reaction to increased car parking charges was unknown and it could not be assumed that a percentage increase in hourly charges would equate to the same percentage increase in revenue, especially given the wider cost of living squeeze.  The Service Lead Environmental Health and Car Parks informed Members that under legislation, the Council could not simply raise car parking charges for the purpose of raising money, but had to consider carefully what raising charges would do to demand.  In discussion, Members expressed differing views on the likely impact on demand of increasing charges;

·        It was acknowledged that in considering car parking charges, Members needed to be mindful of the potential impact on vulnerable high streets and town centre economies;

·        Members expressed opposing views on whether car parking charges should be consistent across all of the district’s car parks, or whether they should differ depending on demand and location.  Comment was made that a blanket fee did not take account of the different uses that car parks have;

·        In response to a question about revenue from green garden waste bins, it was clarified that green waste is a profit making service, with profit split between Suez and the Council.  Income from the service goes into the overall recycling and waste budget which helps to offset the cost of providing the service;

·        Comment was made that the cost of car park permits should be subject to the same percentage increase as the hourly charge.  The Service Lead Environmental Health and Car Parks stated that a decision had been taken a year ago to increase the cost of the parking permit to £120 from April 2022;

·        Views were expressed that the car parking permit should be more widely promoted among local residents, with the ability to pay monthly.

Councillor Paul Millar proposed, seconded by Councillor Davey and Councillor Woodward, the following recommendations:

·        Council adopt a £2.00 an hour charge for a limited number of popular hot-spot car parks within Category 1: Exmouth Queen’s Drive Echelon, Exmouth Beach Gardens, Budleigh Lime Kiln, and Sidmouth Ham (East and West) from April 2022.

·        Council adopt a £1.50 an hour charge for all other Category 1 car parks from April 2022 but avoid the 10p per year charge for the subsequent three years to prevent damage to vulnerable High Street businesses.

·        Cabinet review other budgetary requests (e.g. Tree Strategy and StreetScene) which have been rejected in line with new estimated budget forecasts.

·        That Overview and Scrutiny Committees further request that a working draft of the Car Parking Strategy be presented to the next Overview Committee in order to set timescales for a speedy adoption.

Councillor Marcus Hartnell proposed the following:

·        Council increase all £1.00 an hour car parks to £1.20 an hour so that all car parks are £1.20 an hour.

·        Cabinet review other budgetary requests (e.g. Tree Strategy and StreetScene) which have been rejected in line with new estimated budget forecasts.

·        That Overview and Scrutiny Committee further request that a working draft of the Car Parking Strategy be presented to the next Overview Committee in order to set timescales for a speedy adoption.

Following a vote of committee members present, Councillor Millar’s proposals of were accepted.

Councillor Andrew Moulding proposed the following recommendation:

·        Moving £500k from the Capital Budget to the Revenue Budget.

Following a vote of committee members present, Councillor Moulding’s proposal was rejected.

RECOMMENDATION;

The following provisional recommendations by the Overview and Scrutiny Committees to Cabinet were agreed at this point:

·        To adopt the draft Revenue and Capital Budgets for 2022-23 taking account of the following:

o   adopting a £2.00 an hour charge for a limited number of popular hot-spot car parks within Category 1: Exmouth Queen’s Drive, Exmouth Queen’s Drive Echelon, Exmouth Beach Gardens, Budleigh Lime Kiln, and Sidmouth Ham (East and West) from April 2022; and

o   adopting a £1.50 an hour charge for all other Category 1 car parks from April 2022 but avoid the 10p per year charge for the subsequent three years to prevent damage to vulnerable High Street businesses.

·        To review other budgetary requests (e.g. Tree Strategy and StreetScene) which have been rejected in line with new estimated budget forecasts.

·        That a working draft of the Car Parking Strategy be presented to the next Overview Committee in order to set timescales for a speedy adoption.

The Chair advised that this would be revisited after the two committees had reviewed the Service Plans in both this meeting and the following session on 17 January 2022.