Agenda item

The Council's 2022/23 Budget and Medium Term Financial Plan 2022/23 to 2024/25 Draft - pre-scrutiny

Meeting of Overview and Scrutiny Board, Tuesday 15th February 2022 6.00 p.m. (Item 67/21)

Minutes:

The Executive Director of Resources presented the Draft 2022/23 Budget and Medium Term Financial Plan 2022/23 to 2024/25 for the Board’s consideration. Members were advised that the report had been pre-scrutinised at a meeting of the Finance and Budget Working Group. The format of the report had also changed, when compared to previous years, to help improve clarity.

There were some key points that underpinned the content of the budget and Medium Term Financial Plan:

· The 2022/23 budget was robust and balanced, although only by using funding from balances.

· The budget and Medium Term Financial Plan had been developed in challenging financial circumstances for local government and in a context of particular uncertainty about future funding for the sector.

· The Council’s general fund balances were forecast to go below minimum levels considered acceptable by the Section 151 Officer in 2024/25 if no action was taken to address challenges in the budget prior to that date.

· The in year deficit position for 22/23 had improved when compared to the budget and Medium Term Financial Plan that had been agreed by Council in February 2021 from a forecast deficit of circa £1.1m to circa £0.4m

· Pressures on the budget included costs and budget bids. In many cases, costs were increasing due to the impact of inflation.

· Savings and income opportunities had been identified in some areas and these had been incorporated into the budget.

· Interest costs and costs associated with the Minimum Revenue Position (MRP) had been reduced.

· Officers were anticipating that reduced income from car parking, due to a decrease in demand following the Covid-19 pandemic, would create a £200,000 pressure in the budget in 2022/23.

· The decision not to increase fees for car parking also placed a pressure on the budget.

· The Council had received £700,000 in Lower Tier Grant funding from the Government and this had had a positive impact on the budget position moving forward, as the funding had not been anticipated when the budget was set the previous year.

· A total of £382,000 had been identified provisionally for release back to general fund balances from reserves.

· The budget proposed a £5 increase in Council Tax in 22/23.

Following the presentation of the report, the Portfolio Holder for Finance and Enabling explained that the £700,000 Lower Tier Grant had helped with balancing the budget in the short and medium-term. However, given the challenges in the third year of the Medium Term Financial Plan in particular, there would be a need for action to start to be taken in respect of the 2023/24 budget and 2023/24 to 2025/26 Medium Term Financial Plan as soon as the 2022/23 budget had been agreed.

The Board subsequently discussed the content of the report in detail and, in doing so, highlighted the following points:

· The estimate that had been included in the report that staff would receive a 2% pay rise and the extent to which this was appropriate given that nationally inflation rates were closer to 5%. Officers explained that inflation in some areas of the budget were higher than in others and most Councils were anticipating a 2% pay increase. A 5% pay increase would add a pressure of approximately £400,000 – 600,000 to the budget.

· The Council’s involvement in national pay bargaining and the extent to which it was likely that the 1.75% pay offer, backdated to 1^st April 2021, for 2021/22, would be accepted by the Trades Unions on behalf of their members.

· The authority’s approach to estimating pay inflation and pay bargaining, which involved working with other Councils.

· The importance of Council balances to covering any unexpected costs that might arise during a financial year.

· The action that could be taken by the Council to improve the financial position of the authority moving forward. Members were advised that there were actions that could be taken, including making efficiency savings and introducing additional income. Some difficult decisions might also need to be made by Members.

· The potential to influence the Government to provide greater clarity about future funding arrangements for local government. Members were advised that the Council was lobbying the Government for greater certainty about local government funding. The authority was also working with the Local Government Association (LGA) and District Councils Network (DCN), which lobbied the Government on Councils’ behalf.

· The significant range of efficiency savings that had already been achieved by the Council over the previous 10 year period and the extent to which there was the scope to achieve any further efficiency savings. Officers acknowledged that a lot of progress had already been made with efficiency savings, but circumstances changed, and this could create opportunities for further efficiencies.

· The impact that increasing fuel costs would have on the Council’s budget. The Board was informed that fuel costs had implications for a range of service areas, particularly refuse collection services and on property management costs. The Council was aiming to manage the Council’s property assets in a more efficient way moving forward to help address the impact.

· The extent to which it was appropriate to describe the 2022/23 budget as balanced when this had only been achieved by using funding from balances. Officers advised that there was a statutory requirement for the Council to set a balanced budget each year. The Section 151 Officer could use all resources at the Council’s disposal to achieve a balanced budget and as part of this process it was possible to use balances and funding from reserves to balance a budget.

· The impact that decisions taken by Members, particularly at meetings of the Planning Committee, could have on the Council’s financial position in cases where decisions were overturned at appeal.

· The impact that Covid-19 had had on footfall at Leisure Centres in the District, which meant that income from Leisure Services would be lower than anticipated prior to the pandemic.

· The pressure that had been placed on the Finance team when working on the budget and the recent capacity issues within the team. Members thanked officers in the team for their hard work in difficult circumstances.

· The format of the report, which was different to the style that had been adopted in previous years. Members commented that the content was clearer than it had been in previous years and thanked officers for making these changes.

RESOLVED that the report be noted.

Supporting documents: