Agenda item

Draft Budget Proposals 2021/22

Report from the Cabinet Member for Finance and Resources.

Decision:

Decision

 

1.          Cabinet considered the budget proposals for 2021 in respect of:

 

·       General Fund – Revenue and Capital

·       Housing Revenue Account – Revenue and Capital

 

2.          Cabinet approves that consultation be carried out in respect of proposed Council Tax levels for 2021/22 for the period 13-26 January 2021 (inclusive).

 

3.          Cabinet approves the cessation of the Deepings Special Expense Area from 1 April 2021.

 

4.          Cabinet considered the proposed fees and charges for 2021/22 as set in the supplementary Appendix D of the joint report from the Cabinet Member for Finance and Resources and the Cabinet Member for Housing and Planning.

 

5.          Cabinet approves the increase of the regeneration reserve by £500k by the following movements:

 

·       £250k movement from the Commercial reserve.

·       £250k movement from the Invest to Save reserve.

 

6.          Cabinet approves the Climate Change reserve be included in the 2021/22 budget framework proposals at a minimum level of £20k.

 

Considerations/reasons for decision

·             Joint report from the Cabinet Member for Finance and Resources and the Cabinet Member for Housing and Planning on the Budget Proposals for 2021/22 and indicative budgets for 2022/23 and 2023/24 giving details of the draft budget estimates for 2021/22, revenue and capital for both the General Fund and the Housing Revenue Account (HRA).

·             The Council had approved a Corporate Plan that sets out a clear vision and key actions over the period of the Plan 2020 - 2023.  The budget proposals had been formulated within the context of the Corporate Plan ambitions and alignment to the five priorities; Growth and our economy; Housing that meets the needs of all residents; Healthy and strong communities; A clean and sustainable environment; A high performing Council.

·             The budget proposal had been built against a backdrop of financial challenges; the delay in the national review of the local government funding formula and the detrimental impact the Covid-19 pandemic has had on the Council’s resources.

·             The proposals had been formulated by the Cabinet, working closely with senior officers, through a number of budget sessions.  Workshops had been held which focused on the spending ambitions of the Council to drive forward the Corporate Plan within financial parameters.

·             The financial outlook for 2021/22 remained uncertain and the budget proposal were underpinned by a number of assumptions relating to the recovery of income levels and future expenditure projections.

·             The Provisional Settlement from Government had included a number of financial measures to support the financial assumptions which included the income losses compensation scheme which would continue to June 2021 and a one year lower tier un-ring fenced grant.

 

General Fund – Revenue

·             An increase in Local Government core spending power of 4.5% for 2021/22. The increase was calculated on the assumption that Council’s will maximise the Council Tax increases available.

·             A new lower tier services grant of £365k had been allocated to the Council for 2021/22 only.

 

Council Tax

·             Indicative income from Council Tax based on proposals which would be subject to public consultation from 13 January 2021 to 26 January 2021; a £5 increase on a Band D property,  a 3% increase on a Band D property, a 2% increase on a Band D property or no increase.

·             Budget proposals compiled on the assumption that the Cabinet recommended a £5 increase on a Band D property for 2021/22 in order to take advantage of the limited availability of the high level.

 

Fees and Charges

·             A summary of draft fees and charges proposals for 2021/22 as set in the report of the Cabinet Member for Finance and Resources and shown within the supplementary Appendix D circulated.

·             Highlighted proposals were the £3 increase on the annual collection charge for Green waste, Grantham Pay and Display car parking, 10p increase per tariff up to and including 3 hours and Stamford Pay and Display car parking, 30p increase per tariff up to and including 3 hours

 

Housing Revenue Account

·             The Housing Strategy 2017-2021 continued to provide the overarching framework for the budget proposals.

·             The budget formation had taken into consideration the deliverables arising from the Compliance Audit Action Plan.

·             Following a reduction in the (Consumer Price Index) CPI in September 2020 to 0.5%, budget income for the next financial year had been reduced by approximately £1.1m and cumulatively over £5m for the next three financial years.

·             Due to a number of competing factors it had only been possible to present a one-year balanced revenue account, following years are projecting a revenue deficit.

·             The rent increase is proposed at 1.5% and garage rents are proposed to increase by 3%.

 

Capital Programme (General and Housing Revenue Account)

 

·             The detailed Capital Programme attached to the report from the Cabinet Member for Finance and Resources and the Cabinet Member for Housing and Planning at Appendix B.

 

·             The Council’s ambitions of growth and investment in its assets and to support the delivery of quality services.

 

·             The capital programme focused on investing in Council assets to improve the service offer and particularly in relation to the arts offer with a combined investment programme of £390k across the two arts venues. Other investments included the Street Scene Fleet and the car parking offer with maintenance required at Welham Street car park, Grantham.

 

·             The Housing Investment Programme focussed on the new build and stock acquisition programme and the objectives of the HRA Business Plan.

 

·             A new build programme which outlined a 3-year capital programme totalling £44.3m and anticipated the delivery of 412 properties.

 

·             The investment programme may need reviewing once the full details of the Stock Condition Survey was analysed, other priority investment areas could be identified.

 

Reserves and Balances

 

·             Details of the reserves, used to meet known and predicted liabilities.

 

·             Reserve movements outlined within Table 17 and 18 of the report and shown within Appendix C.

 

Collection Fund

 

·             Recognition by the Government that the Collection fund would be under pressure due to the challenges in collection rates for both Council Tax and Business Rates. New legislation introduced to allow billing authorities to spread the anticipated deficit over a three financial year period. The change affected all three major precepting authorities proportionally from 2021/22.

 

Minutes:

The Cabinet Member for Finance and Resources presented the report on the Draft Budget Proposals for 2021/22, the General Fund and the Housing Revenue Account. A Stakeholder consultation was being launched between 13-26 January 2021.  He referred the Cabinet to the amended Fees and Charges proposal that had been sent out by email that morning.  The proposals before Members were based on the draft Local Government’s Finance Settlement funding proposals which had been published on 17 December 2020.  The final settlement would be known in February 2021.   The budget had been formulated within the context of the actions outlined in the recently approved Corporate Plan, to reflect the costs and income impact of the Covid-19 pandemic, and the current financial landscape, which was underpinned by a prudent financial approach.  Variations to the budget were likely and therefore, it was possible that an amended budget would be required later in the year, but was being kept under review.

 

Funding levels were similar to that of 2020/21, however a one-off lower tier services grant had been allocated of £362k, it was proposed that the grant be moved to the Budget Stabilisation Reserve.

 

Table 5 of the report listed key budgetary proposals to ensure that a balanced position was achieved and to support the ongoing transformation of services to ensure efficiency and value for money. 

 

Also detailed within the report were the levels of investment and fees for the Council owned companies. The funding levels were aligned to the business plans of the Companies, which had been considered by the Companies Committee. The Cabinet Member for Finance and Resources urged caution in respect of the management fees for LeisureSK Ltd, which had been completed before the current lockdown and closure of all leisure centres.

 

Assumptions within the budget had been made in relation to a Council Tax increase of £5 for Band D properties to £168.62.  A final decision would be made by Cabinet following the results of the consultation at its next meeting in February 2021 to make a recommendation to Council.

 

A key element of the budget setting income for the Housing Revenue Account (HRA) was rental income.  The Government’s rent setting guidance formula was Consumer Price Index (CPI) +1%.  The Government had reduced the CPI to 0.5% in September 2020 and the rent increase for 2021/22 was 1.5%.  This had resulted in a lower than projected rental income within the HRA Business Plan.

 

It had only been possible to present a one-year balanced revenue account budget due to the pressures of rising expenditure and the forecast reductions in income.   Reserves would need to be used to maintain service levels.  Work would be done with the Cabinet Member for Housing and Planning to address the issues for the budget setting for 2022/23.

 

A summary of the Capital Programme was shown at Tables 15/16 along with Appendix B for both the General Fund and the Housing Revenue Account.   The General Fund was focused on investment in the Council’s assets and the HRA was focused on investment in the housing stock and investment plans for the new build programme.  A review of the HRA Capital Programme would need to be reviewed, once the amount of Homes England funding was known.

 

Details of the Council’s reserves were also contained within the report and the budget had been prepared without the reliance on the use of reserves for the day to day expenditure.  The Budget Stabilisation Reserve would be retained including the one-off grant. The on-going pandemic presented a risk to the Council in relation to expenditure and the reduction of income from fees and charges and commercial income that fell outside the scope of Government income compensation scheme. 

 

Transformation savings were contained within the budget and these would be delivered, however some had been diverted away to deal with the on-going issues from the pandemic.

 

The Leader stated that the last year had been difficult for many people and that the Cabinet had worked hard to develop the budget proposals for 2021/22.  He thanked everyone for their hard work, especially the Cabinet Member for Finance and Resources and the Section 151 Officer.  The Government had recognised the significant role that Local Authorities had in the response to the pandemic and this had been shown by the one-off grant and the option to have a £5 increase in the Council Tax for Band D properties.  The budget had been formulated recognising the ambitions of the Corporate Plan and the continued delivery of quality services.  Views from the Joint Budget Overview and Scrutiny Committee who were looking at the budget on 13 January 2021 would be considered at the next meeting of the Cabinet.  Funding was in place within the HRA to address issues following the Compliance Audit.  The proposals contained within the report were seconded.

 

Members congratulated the Cabinet Member for Finance and Resources on putting together a budget in uncertain times and supported the proposals contained within the budget for 2021/22.  A comment was made in connection with room hire for Studio 4 at Grantham Arts Centre and the Section 151 Officer confirmed that it was a typographical error.  A Non-Cabinet Member congratulated the Cabinet Member for Finance and Resources and Section 151 Officer on presenting a balanced budget and asked about the proposal to stop funding for the Grantham Carnival.  The funding was being diverted elsewhere and it was suggested that Grantham Ward Members could use their Member Grants to contribute to the Carnival.  It was noted that there were still 23 Councillors who had yet to access their Member Grant funding for 2020/21, applications from Councillors should be in before the deadline of 31 March 2021.

 

On being put to the vote, it was AGREED:

 

 

1.          That Cabinet considered the budget proposals for 2021 in respect of:

 

·              General Fund – Revenue and Capital

·              Housing Revenue Account – Revenue and Capital

 

2.          That Cabinet approves that consultation be carried out in respect of proposed Council Tax levels for 2021/22 for the period 13-26 January 2021 (inclusive).

 

3.          That Cabinet approves the cessation of the Deepings Special Expense Area from 1 April 2021.

 

4.          That Cabinet considered the proposed fees and charges for 2021/22 as set in the supplementary Appendix D of the joint report from the Cabinet Member for Finance and Resources and the Cabinet Member for Housing and Planning.

 

5.          That Cabinet approves the increase of the regeneration reserve by £500k by the following movements:

 

·              £250k movement from the Commercial reserve.

·              £250k movement from the Invest to Save reserve.

 

6.          That Cabinet approves the Climate Change reserve be included in the 2021/22 budget framework proposals at a minimum level of £20k.

 

 

 

Supporting documents: