Agenda item

Finance, Qualis Client and Economic Development – (C-014-2021-22) - To set a framework within which the Council can develop and set a balanced budget for 2022/23 and update its MTFP through to 2026/27.

(1)        The Cabinet noted the backdrop to the Financial Planning process for 2022/23 to 2026/27, including the impact of the Covid-19 pandemic, declining General Fund reserves and emerging changes in local authority finance; and

(2)        The Cabinet agreed to the proposed approach to Financial Planning for 2022/23 to 2026/27, including the reporting and governance timetable as summarised in Appendix A of the report.

The Finance, Qualis Client and Economic Development Portfolio Holder, Councillor Philip, introduced the Financial Planning Framework report. This was a report for the beginning of the budget setting process for next year. Like most local authorities, the Council was facing increasing financial pressures, especially in the light of the Covid-19 pandemic. Although last year was difficult from a budget setting point of view but that was offset by significant support from the Government. Next year will be much more difficult and he did not seen any option to having a Council Tax rise.

Maintaining a balanced General Fund budget was becoming especially challenging in the light of a range of income, expenditure and funding pressures.

A declining balance on the General Fund Reserve reduces the available short-term options for managing budget gaps. Consequently, tackling a likely budget gap would need to be given a high priority if the Council was to set a balanced budget for 2022/23. Difficult choices would need to be made to ensure that net expenditure was brought into line with available funding.

They would like to maintain the general fund reserves to at least £4million but that would be very tight. They were already being proactive and were trying to reduce the pressure on the general account as they would need to be financially prudent in the coming year.

General Fund borrowing had been steadily growing since 2019/20, with further plans to borrow in 2021/22 and beyond; most notably to meet the capital commitments in respect of the Council’s regeneration aspirations, delivered via Qualis (which drives additional revenue streams to the Council, as well as enabling the delivery of key priorities).

Given the usual pattern whereby the Local Government Finance Settlement is announced just before Christmas, definitive figures for 2022/23 may not be available until December 2021.

Councillor Murray said the report came as a shock to him. If it was going to be as difficult as stated, he would encourage the Cabinet members to really look at their budgets. And would the 6 December meeting be the one that set out more details on the budget and have more member involvement in this. Councillor Philip reiterated that it would be a very difficult budget due to a whole combination of things coming together. They would also, as an example, not have business rate retention in place. If members had suggestions on how to make savings, then he would always be available to listen.

Councillor Jon Whitehouse said it would be helpful, when a report goes to the Stronger Council Select Committee, there was a clear setting out of the variations of the budget as they happened so that members could see it was different from the situation when it was first discussed. Unless we knew how the budget had changed it would be difficult to make future decisions. The section on the capital programme states the purpose of the capital programme was to improve future revenue receipts. We need to be very clear what was to be permanent and what was just a cash flow phasing issue with money coming back to council in the medium term. Councillor Philip replied that on inspection they were expecting some deviations but there were others that we were not expecting such as the waste contract and the pressure on it. Although that was not surprising given we were collecting a lot more waste because of working from home etc. Also, investing capital for revenue was a good way of doing things such as renting the second floor of this building.

Councillor Patel asked about the General Fund balance and the pressure we were likely to have moving forward. How much of the commitments we made in previous years was likely to impinge on us now, were we likely to have ongoing costs. He was told that yes there would be.

Councillor Sunger noted that in relation to saving costs with Covid and post Covid, we must have learnt some lessons about hybrid working and working from home etc. Have we investigated job sharing with our neighbouring councils? He was told that this had been looked into and we have asked if we could offer our services to other councils. As for working from home and hybrid working, we have come down to occupying one floor of one building.

Councillor Chris Whitbread noted that the report set out the honest position of where we were today and sets out the challenges that was ahead of us in rethinking the way we did somethings. We were in a stronger position than any other council of our size and have opportunities such as the airfield and an ongoing plan for the district. We also have Qualis who will start paying dividend in the near future.

Decision:

(1)        The Cabinet noted the backdrop to the Financial Planning process for 2022/23 to 2026/27, including the impact of the Covid-19 pandemic, declining General Fund reserves and emerging changes in local authority finance; and

(2)        The Cabinet agreed to the proposed approach to Financial Planning for 2022/23 to 2026/27, including the reporting and governance timetable as summarised in Appendix A of the report.

Reasons for Proposed Decision:

To set a framework within which the Council can develop and set a balanced budget for 2022/23 and update its MTFP through to 2026/27, ensuring that corporate priorities continue to be delivered in a financially sustainable way.

Other Options for Action:

None