Agenda item

The Deputy Chief Executive presented the Medium Term Financial Plan 2024/25 to 2026/27 (Including Worcestershire Regulatory Services Board Recommendations, Treasury Management Strategy, Capital Strategy, Minimum Revenue Provision and Investment Strategy (Tranche 2) for Cabinet’s consideration.

 

It was reported that the Council had set the budget in two Tranches as had been done in the previous 2023/24 financial year. The first Tranche had been approved by Full Council in Autumn 2023. Due to the timing of the second Tranche, Officers had been able to take in to account the final Local Government Settlement figure which had been confirmed in December 2023.

 

Members were reminded that, at Tranche one, the Council’s Revenue position had a projected overall deficit of £795,000 of pressures to mitigate. It was reported that this deficit had now been mitigated and at Tranche two a £27,000 surplus was forecast.

 

The financial settlement, which had been confirmed on 18th December 2023 by the Government, had allowed the following opportunities for additional funding to be considered. These opportunities included:

 

·       Increasing Council Tax from 1.99 per cent to 2.99 per cent resulting in additional funding of £91,000.

·       Increasing Planning fees for small applications by 25 per cent and other applications by 35 per cent. This would recoup £145,000 at present activity levels.

·       Additional Business Rates Income, linked to the Local Government Settlement and also being in the Worcestershire and Herefordshire Business Rates Pool of grant funding of £427,000.

 

By February 2024, the Council fully understood the implications of the 20232/23 and 2023/24 pay awards to staff following the pay award implementation in December 2023. As a result of this clearer picture, £125,000 could be released from the 2023/24 Pay Award contingency budget which had been approved as part of the Tranche one budget setting process.

 

Members were advised that were additional pressures amounting to £649,000 that would need to be accounted for. The pressures were highlighted as follows:

·       Increase in staffing numbers in Worcestershire Regulatory Services (WRS) due to higher levels of Food Safety compliance testing requirements by the Food Standards Agency at a cost of £33,000.

·       Increased Parking SLA charges with Wychavon District Council to take account of staffing cost increases over the past two years at a cost of £60,000.

·       The use of WRS Officers for Planning and Environmental Enforcement case at a cost of £85,000

·       A Play Audits and Investment Strategy and associated revenue cost implications.  These estimated revenue costs were expected to start at £10,000 rising to £50,000.

·       A Housing Strategy Review at a cost of £71,000

·       The cost of additional Committee support of £40,000 which was approved by Council in September 2023, as part of the Governance Review.

·       Following the approach from Wyre Forest to disband the North Worcestershire Economic Development and Regeneration (NWEDR) service, Officers had been working on the exit agreement to ensure that Bromsgrove was protected from any claims brought as a result of the break-up of the service and any decisions made by NWEDR prior to the split. Members were reminded that a separate report was due to be considered by Cabinet at this meeting. The proposed increased costs for the Council were £72,000.

·       In light of the Local Government Settlement, although there was a significant increase in Business Rates income, there was a small £30,000 reduction in Grant income compared to budget.

·       The yearly Independent Remuneration Panel recommendations which were due to be considered at Full Council on 21^st February 2024 and the impact of accepting their recommendations was £33,000.

·       Funding for the Citizens Advice Bureau (CAB) would be put back to a level of £10,000 of funding. This amount had been reduced in 2020/21 Budget. This proposed level put back the £10,000 of funding reduced over the past four years.

·       As recommended earlier at this meeting in respect of the administration of Parking, a full District wide review of the function be implemented (following agreement with Full Council).  This would result in a one off cost of £50,000 and had been included in the 2024/5 financial year for this review.

·       Although 3% was now included for the 2024/5 Local Government Pay Award, and inflation was now at 4% as at December 2023.  It was noted that Local Government negotiations were just about to start with the Unions in March 2024. Therefore, it was prudent to increase the Pay Award to this level, at a cost of an additional £154,000 a year.

·       That £150,000 be transferred to an Earmarked Reserve in order to seed fund approved District wide Capital Regeneration priorities.

·       That an ongoing capital budget of £20,000 be set up for Landlord obligations for The Artrix, with revenue impacts being £1,000, £3,000 and £5,000 in the initial three years.

 

Cabinet was asked to note that on 23rd January 2024, the Government announced additional measures for Local Authorities worth £600m. As part of these measures, the Government were asking Local Authorities to produce productivity plans which set out how to improve service performance and ensure every area is making best use of taxpayers’ money.  The Government would monitor these plans, and future funding Settlements would be informed by performance against these plans.  The magnitude of these additional sums will not be confirmed by the Government until early February 2024, however initial estimates indication that Bromsgrove would benefit by £126,000.

In addition to this, it was reported that the departmental changes as highlighted above would result in an overall £42,000 surplus in the 2024/5 with slight deficits of £8,000 and then £7,000 in the following two years.

At present the General Fund sat at a value of £5.708m (taking account of the Tranche 2 position) at 31^st March 2027.  This sum being approximately 14.5% of gross expenditure and above the 5% benchmark quoted by the Government as being a minimum requirement.  If Housing Benefit payments, which were passported through the Council were ignored then this percentage rose to 23.1% of expenditure.

 

Officers explained that there was a proposal to set up an earmarked Reserve, following discussion at Bromsgrove Overview and Scrutiny Committee on 16th January 2024.  The proposal was that this reserve be earmarked for a Pilot scheme allowing individual ward members £2,000 per year for appropriate allocation, at a total cost of £62,000 a year.  Along with the estimated administration costs of £16,000 a year, the proposed Members’ Ward Budget Pilot would be at an annual cost of £78,000, or £234,000 over the three year period. Further details of this scheme were provided to Members in an appendix to the main report.

 

Significant Council spending continued to be the Fleet Replacement Programme. However, it was noted that this was slipping into the future due to the delays experienced in the confirmation of the Government’s final Environment Bill and confirmation of the type of vehicles required after 2030.  The Council had applied for an extension to its Levelling Up funding for the Market Hall development following conversations with Department for Levelling Up Housing & Communities (DLUHC).  This was provisionally approved by DLUHC on 5^th February 2024 and would result in the deadline for completion of use of Levelling Up Funding as being September 2025 rather than March 2025.

 

A number of additional Capital Bids were approved in Tranche one of the budget.  Given that the Council moved to a five year ongoing Capital Programme Members were informed that the key additions/changes were as follows:

 

·       Fleet replacement was backed up by a full listing of all assets.

·       Wheely bin purchases were set at £120,000 a year.  This would be reviewed over the next financial year.

·       A bus shelter budget be reinstated at £18,000 a year.

·       Significant investment was required in ICT to ensure this core enabling service was kept up to date.  This included updating networks, Hardware and ensuring Cyber Security be continually improved.

·       A £20,000 budget to fund landlord obligations of the Artrix.

 

It was confirmed that both the Treasury Management Strategy and Capital Strategy were closely linked and had been considered by the Audit, Standards and Governance Committee.

 

The Deputy Chief Executive, in his role as Section 151 Officer reported in his robustness statement that the budget was sustainable over the medium term however more would be needed to embed financial sustainability across the organisation. Furthermore, there were risks that could not be predicted at this time such as the calling of a General Election and the potential financial uncertainty this might bring. Levels of future Local Government Settlements and potential increase in pay awards for staff too remained a risk and more difficult to predict.

 

Following the presentation of the report Members thanked Officers for their detailed and comprehensive report of a particularly complex process. Members stated that they were pleased that the Council seemed in be such a good financial position.

 

There were several questions from Members including:

 

·       Pension Fund assumptions - It was noted that the assumptions took into account the latest triennial valuation received in September 2022. It was agreed that this could be a risk if the next revaluation due to be actioned in 2026 was significantly different and as such the 2026/7 figure could well change pending the outcome of that exercise. It was therefore discussed that this review may be undertaken during the next financial year (a year earlier than anticipated) in order to mitigate any risks involved.

·       The ‘actual’ cost impact to residents of the increase in Council Tax in the District – Members were informed that this would be approximately £9 (Band D).

·       Car Parking charges – Members were pleased that a solution had been found by Officers and that no parking charges for visits under 30 minutes, no parking charges after 6.00pm and no parking charges for Blue Badge holders would be implemented as part of the Budget.

 

The Chairman invited Councillor R. Hunter to speak in respect of this report and in doing so he stated that he was pleased to see some of the proposals included in the MTFP. Particularly in light of the support given by the Liberal Democrat Group in areas such as bus shelters and Blue Badge Holders previously. It was requested that further details be provided in respect of the car parking charges framework. Officers confirmed that clear signage and communications would be provided when the changes were implemented. Some Members noted that this might be useful information to have prior to the Full Council meeting on 21^st February 2024.

 

Councillor Hunter expressed his disappointment that the Play Audit report had not been received prior to consideration of the Budget. However, it was reported that the estimated costs contained within the MTFP were set at £1m. This was based on data provided to Redditch Borough Council’s Executive Committee in January 2024.

 

There was a detailed discussion regarding a potential increase in funding for The Artrix. It was suggested that some of the monies set aside for the proposed Ward Members Budget Pilot Scheme could be used to provide additional funding to The Artrix. It was highlighted that there needed to be more information in relation to how successful the proposed model of running of The Artrix over the next nine months had been. With a view to potentially review operations with a further business case after this nine month period had passed. Furthermore, it was stated that there needed to be significant rigour under Local Government legislation when awarding subsidies with public money and that robust and assurance be given around governance in case of any future challenge to the Council by other organisations. Members commented that although further funding was not being proposed as part of Tranche two of this Budget (with the exception of the Landlord obligations as discussed earlier at this meeting) there might be an opportunity to look at this further when Tranche one was prepared later in 2024.

 

Officers provided reassurance that the Ward Members Budget Pilot Scheme would have a robust governance structure and monies awarded following a rigorous process.

 

RECOMMENDED that

 

1)              The Tranche 2 growth proposals be agreed.

2)              The additional funding to the Council as per the final Local Government Settlement on the 5th February 2024, including the estimated levels for 2024/5 and 2025/6 be agreed.

3)              The Tranche 2 savings proposals, including an increase of Council Tax of 2.99% be agreed.

4)              The updated five year Capital Programme 2024/5 to 2028/29 along with its ongoing revenue costs be agreed.

5)              The levels of Earmarked Reserve being carried forward into future years be agreed.

6)              That a new Earmarked Reserve for Ward Budgets be set up and £234k allocated to it.

7)              That a new Regeneration Reserve to seed fund projects linked to district wide capital regeneration priorities be set up for £150,000.

8)              The level of General Fund balances following additions from the 2024/5 MTFP be agreed.

9)              Members take account of any feedback from the Tranche 2 consultation process undertaken.

 

RESOLVEDthat

 

10)           Members understand and accept the implications set out in the S151 Officers Robustness (S25) Statement of this 2024/25 to 2026/27 Medium Term Financial plan in moving the Council to financial sustainability.