Agenda item

Report by the Director of Resources and Deputy Chief Executive to the Strategy and Resources Committee on 6 February 2023 (attached).

Councillor Worden, provided an introduction to the Revenue Budget 2023-24, Capital Programme and the Medium Term Financial Strategy 2023-24 to 2028-29 which had been considered by the Strategy and Resources Committee and Policy Development Committee. He thanked those Councillors that had attended the workshops held in August and October 2023.  The workshops had been cross party and considered options for reducing the £2m budget gap.  Some of these options had been included within the budget report to reduce the budget gap. He thanked the Director of Resources and the Finance team for producing a balanced budget and advised that the Council was extremely fortunate for having these officers.

Council received a presentation by the Director of Resources regarding the Revenue Budget 2023-24, Capital Programme and Medium Term Financial Strategy 2023-24 to 2028-29 (circulated previously) as follows:

• Consultation on the financial plans had taken place with local business rate payers at an event held on 21 February 2023 at Node.  Around 25 businesses had attended and positive feedback on the Council’s projects and plans was received.
• Funding levels to Local Authorities from 2012/13 to 2023/24.
• Finance Settlement – core spending power of 9.2% and analysis.
• As a Shire District the Council’s actual core spending power was on average only at 5%.
• The spending power varied according to region and the overall national level of 9.2% equivalent for the South West was 8.8%.
• Central Government had run a finance settlement consultation, closed 16 January 2023.  Appendix F of the report showed the response our Council had made in relation to this consultation.

• The draft budget was assuming an increase of 2.99% on Council Tax.
• Retained growth on Business rates of around £2 million.
• The challenges to the budget came from reduced grant funding from Government, reduced workforce levels since 2010 and the uncertainty of the future Local Government Funding.
• Inflationary pressures on the budget came from increased staff pay, increased energy prices, rising fuel prices and increased costs of external contracts.
• There had been two earlier budget workshops with Members and a full report to Council in November 2022 to approve options identified to draft the refreshed Medium Term Financial Strategy.
• Bridging the gap in the budget as follows (as detailed in section 4.1.2.14 of the report):

• Positive feedback received from Parishes and Town Councils in taking on responsibility for public conveniences.  This was being assumed as a revenue saving in the 2023/24 budget.
• A breakdown in how the split of Council Tax was shared out and to whom showed that this Council received 10% of collected council tax for services such as refuse collections, kerbside recycling, housing, planning, street cleaning and leisure. It was recommended that there was a 2.99% increase in Council Tax.
• Green Lanes Shopping Centre financials update showed performance was in line with the budgeted position for 2022/23 and the cash flow was in line with forecasts for 2023/24.
• Appendix A of the report detailed the Council’s summary budget for 2023/24.  The net budget for 2023/24 was £14.766 million.
• Appendix B of the report detailed the recommended level of strategic grants for 2023/24. The Council had provided assistance to Citizens Advice by providing accommodation at Lynton House that was around a tenth in cost of the rental that they previously paid. Citizens Advice had similar clients and it provided the opportunity to give a much better service for customers.
• Assumptions and risks had been detailed within the budget report.
• Appendix C of the report detailed reserves held.  The General fund balance was £1.211 million, which equated to 8.2% of net budget.  The recommended level was 5%-10%. 
• The current forecast level for earmarked reserves at 31 March 2024 was £5.688 million.
• The Collection Fund reserve was linked to the Council’s share of the Business rates collected and offered a 40% protection of around £2m if the Council’s share of business rates collected were to drop.
• The Budget Management reserve added protection to the revenue budget for additional cost pressures or reductions in income sources.
• The Corporate Property Management Initiative reserve was to cover any additional costs of marketing and preparing new units to let in Green Lanes.
• The Corporate Property Income Volatility reserve protected the Council budget if any tenants dropped out of Green Lanes and we saw a rent level reduction.
• The Strategic Contingency reserve added protection for any one off expenditure.
• The Treasury Management reserve was held to mitigate against the increased cost of borrowing rates in future years. 
• The Regeneration Projects reserve was to contribute towards future regeneration capital programmes identified.
• Assurances were given by the Chief Financial Officer that budget estimates made were robust and the level of financial reserves being proposed were adequate.
• The model for the Medium Term Financial Strategy had been refreshed and this was shown in detail at Appendix D of the report.
• The forecast cumulative budget gap/(surplus) was shown as follows:

• Appendix E of the report detailed the Capital Programme costs for 2022/23 to 2025/26.
• The Performance and Financial Management Quarter 3 of 2022-23 was also reported on the agenda.  This report highlighted the latest plans for capital investment for the period 2022-23 to 2025-26, which amounted to £32.211m and was broken down as follows:

Ø  2022-23        £9.506m

Ø  2023-24        £18.336m

Ø  2024-25        £4.299m

Ø  2025-26        £0.070m

• The Project Appraisal Group had received five business cases for capital funding as follows:

Ø  LED Lighting - renewal & safety testing             £75,000       

Ø  Old Lime Kiln Larkstone Cove regeneration          £111,325

Ø  Victoria Pleasure Grounds – PC / bus Shelter          £180,000

Ø  Fairview & Brookdale – car park resurfacing          £395,000

Ø  Disabled Facility Grants (Better Care Fund)          £1,200,000

• Following the Strategy and Resources Committee meeting on 6 February 2023, Ward Members had been consulted on the Fairview and Brookdale car park resurfacing project which would include the complete resurfacing and realignment of both car parks and had endorsed the improvements.
• The Gross cost of these business cases for funding was £1,961,325 which would be funded through the following:

Ø  External Funding (£1,380,000)

Ø  Regeneration reserve (£111,325)

Ø  Repairs fund reserve (£250,000)

Ø  Borrowing requirement (£220,000).

• Projected borrowing was dependent on how treasury activity was managed.  To safeguard against future loan interest rate rises a Treasury Management reserve was in place.
• Risks that could affect financial plans included the following:

Ø  Government Grants

Ø  Key areas of income

Ø  Capital receipts

Ø  Savings plans

Ø  Increase demand for services

Ø  Localisation council tax support

Ø  Business rates retention

Ø  Welfare reform

• The Revenue Budget 2023-24, Capital Programme and Medium Term Financial Strategy 2023-24 to 2028-29 had been considered by the Strategy and Resources Committee on 6 February 2023, the Policy Development Committee on 9 February 2023 and finally at full Council on 22 February 2023.
• Future options for consideration.

Councillor Topham left the meeting.