Agenda item

Budget Proposals for 2023/24 and Indicative Budgets for 2024/25 and 2025/26

This report presents to the Budget – Joint Overview and Scrutiny Committee the draft Budget estimates for 2023/24 for both the General Fund and the Housing Revenue Account and provides the details that have been included in the budget proposals.


The Chairman requested the Joint Budget Overview and Scrutiny Committee follow the order of items for discussion to effectively scrutinise each area of the report:


1.    Spending overview and provisional settlement

2.    General Fund - Revenue

3.    Housing Revenue Account - Revenue

4.    Fees and Charges

5.    Capital Programme and Financing – General fund and Housing Revenue Account

6.    Reserves and Balances – General Fund and Housing Revenue Account

7.    Risk register


Spending overview and provisional settlement


The Deputy Leader of the Council presented the area of the report that set out the notification of the pre-provisional settlement to which the Council were informed of on the 19 December 2022. The settlement was largely in line with previous expectations.


There had been no specific allocation to deal with the rising energy and inflationary costs, there had been an expectation from Government for Local Authorities to utilise reserves to fund any shortfalls of imbalance within their budgets. This is the approach the Council would need to consider as previously established within the report, the budget stabilisation reserve served this purpose.


It was noted that the final settlement would not be known until end of January 2023. The Chief Finance Officer outlined previously discussed items at the Finance, Economic Development Corporate Overview and Scrutiny Committee in relation to the confirmation of settlement information as set out in the report.


One Member queried whether the blend of all financial factors was a balanced position. The Member noted savings outlined within the report and suggested whether further improvements could be made when considering the budget proposals. The Council’s Budget Stabilisation Reserve was commented on.


Clarification was sought on the method of payment and when the money owed to the Greater Lincolnshire LEP would be paid back by.


The Chief Finance Officer highlighted that the report referenced the difficulties with the timeline of the settlement information to the Council, which was wholly outside the Council’s control because due to external influence playing on Council’s finances.


The Budget Stabilisation Reserve of £1.5 million was a prudent estimation due to the Council being cautious on budget proposals that Cabinet have considered in terms of an outlook on utilities, fuel and pay. It was hoped that in 2024, the £1.5million Budget Stabilisation Reserve could be replenished should the actual costs be less than the budgeted levels.


Information regarding the grant repayment owed to Greater Lincolnshire LEP would be considered at the next Full Council meeting on 26 January 2023.


General Fund - Revenue


The Deputy Leader of the Council presented the area of the report (table 3) that outlined the overall General Fund Reserve account which included: costs of services, investment income, use or reserves, grant income and projected income from the Council tax and business rates for the next year 3 years.


The 2023/24 budget showed a balanced position after using reserves but there was an unbalanced position for the following years based on the current financial forecast.


Tables 4,5 and 6 in the report summarised pressures the Council was facing, which came to a total of £3.2million. The figures ranged from inflationary and energy budget increases, fuel, pay award, external audit fee increases, fleet maintenance cost increases and LeisureSK Ltd’s request for a management fee for 20223/24 to deliver leisure services.


A breakdown of the £3.2million was listed on table 3. The table highlighted some savings, with the biggest saving being the relocation of the Council offices from St. Peter’s Hill to the Picture House. There had been more modest savings in the reduction of the festival programme and an amalgamation of a review of Street scene and Waste Services. 


Fees and Charges


Fees and charges had been separately identified as an appendix. A £5 increase in the green waste annual collection service was being presented to Full Council on the 26 January 2023. This increase would bring an annual collection charge to £49. There would be no increase for residents that paid via cheque, over the phone or face-to-face. The proposed £5 increase would apply to residents who paid by direct debit or card only.


In terms of the Council’s companies, Grounds Maintenance was currently being delivered by EnvironmentSK Ltd, a Joint Scrutiny meeting had been arranged for the 6 February 2023 to discuss the Grounds Maintenance options appraisal. The budget proposals for Grounds Maintenance made no assumptions of the future of the service, however, a budgetary change may be necessary after the recommendations made to Cabinet from the Joint Scrutiny Committee.


LeisureSK Ltd had made a proposal to Companies Committee to recommend a £500,000 management fee for the next financial year. Utility costs were massively impacting on the delivery of leisure services and an updated business plan had identified a requirement to fund leisure for the next financial year which would be paid for via the minimum guarantee grant.


General funds figures included budget assumptions which were yet to be confirmed for the Drainage Board.


The Chief Finance Officer confirmed that the Council was expecting more information on utility costs for the business sector, which the Council were included in as of April 2023. There was an expectation of utility costs to increase between 100-300%, which could result in a £1.2million additional costs. The Rural and Communities Overview and Scrutiny Committee had been reviewing certain aspects, such as street lighting and other initiatives that the Council may consider in order to reduce energy usage and thereby decrease utility costs.  


A positive increase could be seen in relation to interest rates. In the previous financial year, 0.5% increase was expected in base rate on the Council’s investment income rates. In the next financial year, the Council were forecasting a 4% increase which provided a budget of £700,000 in investment income, which had reduced further reliance on reserves.


The Chief Finance Officer noted the Council Tax Base increase had been set to 1.2% which was broadly in line with the Council’s medium-term outlook. This increase would drive the Council’s ability to generate higher receipts from Council Tax income.


The following questions were raised by Committee Members:


·       How the 2023/24 figures at this meeting coincided with the figures proposed at the Budget meeting on 3 March 2022 for 2023/24. It was noted that the table headings had changed since the previous Budget meeting.

·       Clarification was sought on the figures within the directorate area of the table and whether the budget changes within the directorate area had in-year amendments.  

·       One Member queried whether the £500,000 LeisureSK Ltd management fee proposal would be taken from an overall amount given to LeisureSK Ltd or whether the minimum guarantee grant would cover the costs. Concern was raised around the disappointment residents living in the Deepings may feel, due to the closure of Deepings Leisure Centre.

·       Why were those who paid by direct debit for the green bin service facing a £5 increase?


The Chief Finance Officer confirmed that in terms of the comparison, the 2022-2023 report, presented in March, drainage rates were shown after the net cost of each service.  In the more recent report these figures were shown above the net cost, showing the increase in cost.  The management fee was a direct payment from the Council to the company of LeisureSK Ltd.  As the business plan was updated due to utility cost pressures, it had been identified that the company was unable to balance its income and expenditure for the next year without a management fee from the Council. This updated business plan was due to be considered at the next Companies Committee meeting.


The Officer informed Members that the green waste service needed to keep pace with the cost of delivering that service, particularly the increasing cost of fuelling the vehicles and labour costs.  A previously used charging system had been queried by some residents who didn’t have access to some forms of payment, namely card or direct debit.  There was to be no change to the green waste collection service over the winter period.  Staff were redeployed to other areas such as the Street scene service or adverse weather response.


The Deputy Leader of the Council informed that Appendix D on page 91 showed the General Fund Reserve Statement after the movements from Table 3.


The Chief Finance Officer clarified that there was an element of uncertainty at forecasting 36 months in advance.  Year-end balances were reviewed as part of the outturn position and modified as necessary as part of the budget-monitoring process.  The Council approved a one-off funding of £400,000 during 2022/23 to facilitate maintenance of Council assets, particularly Arts Centres and car parks as part of continuing investment.


One Member queried why the £200,000 contribution to replacing the unmaintained and currently condemned 3G pitch in Deepings had not been set out in the budget.


At the last Full Council meeting held on 24 November 2022,it was recommended that the Council withdrew from the management of Linchfield Road and no longer proceeded with an application to the Football Foundation for the 3G pitch, which was the reasoning for the £200,00 contribution not being set out in the budget.


It was noted that the draft settlement was received from Government on the 19 December 2022. The Committee thanked The Chief Finance Officer and the Finance Team for the work on the report presented to the Joint Budget OSC meeting. Concern was raised that the recommendations were to be considered by Cabinet the following day, and a bigger timeframe would be preferred.


Queries were raised in relation to the £500,000 management fee for LeisureSK Ltd:


·       What percentage of the £500,000 would be expected to be paid by Deepings residents?

·       What benefit Deepings residents would receive from the £500,000 management fee for LeisureSK Ltd?


It was proposed and seconded that Cabinet revisit the possibility of reimbursing the £200,000 for the 3G pitch in the Deepings. On being put to the vote, this proposal was lost.


Clarification was sought on table 4 of the report in relation to the £150,000 one-off maintenance workshop costs and what type of workshop work was being undertaken.  


The Chief Finance Officer described the one-off increase in maintenance costs due to specific pressures including the cost of materials and labour costs.


Some maintenance activities had to take place externally due to specialist nature and some works take place in house in the Council’s workshop. The Council owned and maintained over 130 vehicles; however, some would be dealt with externally.


A Member informed the Committee that the Council’s green bins additional annual charge applied when more than one green bin was collected. This information was set out in page 57 of the report.


Concern was raised on the short-term nature of budgeting from Local Government for Local Authorities which does not balance the needs of SKDC going forward over a long period of time.


One Member explored costings of certain aspects where savings could be made, for example, SK Today.


It was noted that the Councilno longer had an engagement PDG, where the Council would engage with the public. It was further discussed that SK Today becoming online would save money and prevent trees from being felled.


The Deputy Leader of the Council clarified that SK Today was posted out to residents in the District quarterly. The Climate Action Plan was currently going through Scrutiny process.


The Leader of the Council emphasised that certain assets and buildings would be best run on a local-level by Parish/Town Councils. An asset management plan had been created which included the Council’s assets and how to receive the best value for them, for example, refurbishing, letting or disposing of assets.


It was highlighted that SK Today was already available to be read online, however, there could be an opportunity for the Council to enhance the Council’s electronic communications. It was suggested that a number of locations around the District hold paper copies of SK Today to allow residents without technology to access.


One Member clarified their point around managing assets at a local level. An analysis of what financial implications that transferring land would have on the future for the Council.


It was proposed, seconded and AGREED that the Budget Joint Overview and Scrutiny Committee


·       Ask Cabinet to consider the Council’s communications budget and its longer-term plans for climate change.


One Member queried the financial breakdown of leisure services within the Toller Ward. The Chief Finance Officer clarified that budgets were not allocated by Wards but at District level.  


It was noted that many services were not provided within the rural areas of the District, other than bin collection, enforcement and licensing.


The Chief Finance Officer clarified that the current charges for green waste collection was £44 for those that paid by direct debit and £49 for those customers who paid by other means. The recommendation in the report was to align the two figures to create in single annual charge of £49.


Clarification was sought on table 4 of the report and the reasoning for the transfer of previous reserve allocation of external repairs to an annual budget to fund climate change initiatives. 


A precise definition of whether the removal of the festival programme including grant donations inferred that grant donations would no longer be provided via the culture budget. 


The Chief Finance Officer confirmed that the Community Fund was to continue to exist so external bodies and community groups who wished to bid for monies could still do so and the festival budget was used to fund specific festivals held by third parties.


A Member queried whether the Stamford Georgian and Gravity Field Festivals were to continue.


The Chief Finance Officer confirmed that the whole programme was proposed to be removed.


The Deputy Leader informed that a large contribution of funds came from the Arts Council in the past and this was unable to continue, therefore the budget had been removed.


A Member asked how much of the £80,000 funding related to the two Council-organised festivals and considered that a separate decision should be made regarding the continuation of them. 


The Deputy Leader confirmed that the £80,000 was for the whole programme.


A Member requested that it be considered by Cabinet that each of the four towns received an amount of money to develop their own festivals and cultural programmes.  The festivals were a positive way to bring money into each community and deserved the Council’s support.


The Chairman added that the UK Prosperity Fund may be used as a contribution to this funding.


One Member clarified that the Council still had access to the community fund and many community groups had benefitted from the Council supporting match funding their events and festivals.


It was noted that some residents were low income, had varied degrees of literacy and had no access to IT equipment to possibly access SK Today virtually.


One Member queried where the Member’s Training Budget was outlined within the report.


It was also requested whether Cabinet could consider a more efficient way of running Grantham Market due to the market losing out on £80,000 a year. The owners of the Market Rights were charging the Council £12,000 in order to hold the market whilst receiving financial gain from the Future High Street Fund for shopfronts.


It was queried as to why there had been an excess of 10% fee increase for the burial of individuals at Grantham cemetery.


The Deputy Leader of the Council outlined that discretionary charges were increasing, in line with inflation on a cost recovery basis.


The Acting Director of Housing confirmed that budgets were in place for asbestos removal and asbestos monitoring. Two new contracts had been recently awarded at Cabinet, and works were ongoing. Once properties were void, full surveys were undertaken to understand all locations where asbestos may be present. 


Asbestos surveys would be undertaken when required, once they became void or before any intrusive works took place.


It was proposed, seconded, and AGREED that the Budget – Joint Overview and Scrutiny Committee considered and put forward any recommendations to Cabinet in respect of the budget proposals for 2023/24 for:


• General Fund – Revenue and Capital

• Proposal of a Band D Council Tax Increase of £5


Housing Revenue Account – Revenue


The Deputy Leader of the Council outlined that Section 5 of the report contained details relating to rent setting proposals and building in budgets in order to meet the ongoing compliance requirements of maintaining investment into the Council’s housing stock.


Table 11 contained the proposal of bids to ensure that the service to the Council’s tenants remained at the highest quality. The further investment included a 7% increase of rents that followed Government guidance, the increase was considered to ensure the ongoing expenditure pressures could be met from the income received by the HRA via the rental income. Tenants that received welfare financial support would receive a level of support, the benefit support will increase by over 10% which would enable the rent increase to be met.


The Capital Programme and Financing – General Fund and Housing Revenue Account


The focus of the General Fund had been on continued investment in the Council’s assets and the procurement of assets in order to maintain service delivery.


The programme also contained a number of projects funded by Government grants, including the Future High Street Fund, Heritage Action Zone, Disabled Facilities Grant and UK Shared Prosperity Fund.


The HRA capital programme was focused on investment into the Council’s housing stock, however, the programme would be driven by the knowledge and information received by the recently completed stock condition survey.


Both programmes would be funded from internal resources. Moreover, the General Fund would not be a long-term solution due to low levels of Capital reserves. In response to this, surplus assets were being marketed for disposal and over £1million receipts had been received from sales, allowing resources to be used to fund capital expenditure.


A query was raised on how proactively declaring specific assets surplus to its requirements in an attempt to generate capital receipts would be achieved via the Council’s assets.


The Chief Finance Officer noted that the surplus could be achieved by assets that the Council are responsible for via leasing arrangements.


The general fund capital programme was financed by a balance between borrowing monies to fund capital expenditure and where it can use its own reserves to fund capital expenditure. For example, a former museum in and vacant land in Stamford had been put on the open market and capital receipts had been generated. Those receipts could be utilised in the future to fund ongoing capital expenditure which would save the Council the cost of borrowing both from itself and from the market.


It was queried as to whether there had been any underspend on the Disabled Facilities Grant since the previous year’s figures.


The Disabled Facilities Grant was provided as an allocation by Lincolnshire County Council through demand. The grant demand may vary from year to year.


The Cabinet Member for Housing and Property clarified that the Disabled Facilities Grant position and outturn achievements would be presented to the Finance, Economic Development and Corporate Services Overview and Scrutiny Committee at the next meeting. Any underspends from the previous year would be carried forward and settlement advice from Lincolnshire County Council had not yet been received.


One Member suggested that the outturn figures being provided in the report from the previous financial year would be beneficial.


It was queried as to whether the £1-2 million would continue to be spent on compliance of the Council’s properties or whether this budget would be reoccurring or would decrease once the compliance checks were up to date. 


The rent increase process allowed the Council to increase rent by as much as 7%. It was noted that 60% of tenants received a level of welfare support which was scheduled to increase at a higher level meaning 40% of tenants were working and would have to find the 7% increase in their rent and would not receive financial support.


The Deputy Leader of the Council confirmed that a Joint meeting of of the Environment Overview and Scrutiny Committee and Rural and Communities Overview and Scrutiny Committee was due to take place to discuss the future of Environment SK Ltd and therefore grounds maintenance costs were not included within the budget.


A query was raised on whether there were any agreements in place with suppliers to issue penalty charges for incomplete housing repair contracts to guarantee quality delivery of service.


Assurance was sought on the overall costs of supplies and materials increasing by 30% and how the Council were managing the increase. It was further queried as to whether the Council were required to pay more for staff due to shortages and how this coincided with the expenditure. 


The Acting Director of Housing reassured the Committee that the team were working with contractors on effective contract management. The Council had penalty clauses in place with contractors and had a number of individual cases at present. The Council held monthly contract meetings with its contractors. 


Supply chain issues are a national problem. The Council had experienced a seasonal supply issue in relation to parts for gas boilers and heating systems. Clauses within the contract ensure that temporary heaters were supplied to tenants who experienced a loss of heating.


The shortage of materials supplies, and resources had been reported at Overview and Scrutiny Committees.


The Acting Director of Housing highlighted that each of the Council’s contracts with contractors had an annual CPI or RPI linked uplift within the contract. Certain material contractors had increased their costs due to fuel and staffing costs being increasing.


The Council were letting new contracts as a result of contractors being unable to fulfil the original signed contract, which resulted in an uplift of costs, in line with current inflation. The budget for the next financial year was prudent regarding uplifts and a 10% uplift could be seen due to the inflationary increase as of September 2022.


A Member asked that if there was a shortfall in the funding, where would the monies come from and how was that situation being monitored.


The Acting Director of Housing informed the Committee that monthly budget monitoring meetings took place with accountants and the relevant managers.  Decisions would be made that may require the delay of planned maintenance if the condition of those assets enabled such decisions to be made.  The data from the recent stock condition survey had enabled the Council to extend the life of some of the bathrooms and kitchens.  Energy efficiency works were being facilitated as a priority for tenants affected by the cost-of-living pressures alongside input from the Finance Team as necessary.


The Cabinet Member for Housing and Property confirmed that the integrated housing management system implementation was ongoing. A date was to be arranged for Members to see a demonstration of the new system to provide assurance of the value that it will bring. The Cabinet Member confirmed questions on the Stock Condition Report were to be answered at the next Finance, Economic Development and Corporate Services Overview and Scrutiny Committee in February 2023


A Member asked if it was correct that currently, approximately 80 void properties were empty at any one time.  The Member further asked if any progress had been made with regard to the lift manufacturer contract.  A Sheltered Housing complex in Bourne had been without a working lift for 4 weeks over Christmas – a great inconvenience for the residents.  The Member queried the possibility that this year’s target would be reached when the last two years targets on void properties had failed.


The Acting Director of Housing informed Members that the Council had always aimed to reduce the turnaround time for void properties.  Currently there were issues with contractor resources that caused delays of up to 6 weeks on the delivery of kitchens in particular.  The 1.5% target was considered to be achievable to prevent having to source additional funds from elsewhere within the budget. The Officer informed Members that contractors were currently onsite at Bourne to rectify the working of the lift.  A new lift contractor had been appointed to start imminently on any significant repairs across all lifts within the sheltered housing stock.


A Member queried that a target had been set that was poor in performance which was not good.  A challenging performance target was preferred.


The Acting Director of Housing clarified that the Voids Team were working very hard to reduce the turnaround times.  A target of 60 days had been set for the financial year which may not be reached as there had been staffing vacancies that were proving difficult to fill and supplier issues compounded this. The current backlog needed to be reduced before aiming ultimately for a sub 30 day average completion of voids.


The Cabinet Member for Housing and Property noted that a saving had been made via the Skyline magazine and ensuring 2 copies per year were produced and that hard copies could be requested but the publication would mainly be available via online channels.


It was reported that outturn figures for housing for the financial year were:


·       8058 repairs had been carried out

·       327 voids had been re-let

·       677 properties had received improvement

·       218 properties had received a new kitchen

·       169 properties had received new boilers

·       122 properties had received new bathrooms

·       150 properties had received new roofs


The outturn figure of capital works was £6,700,00. The outturn figures were available as part of the Skyline magazine.


It was suggested as to whether the Council could make savings in the Council’s housing stock by expediting energy efficiency measures. The current energy efficiency rating of the Council’s properties was queried.


The Acting Director of Housing reassured the Committee that a significant bid of £7.26 million had gone into the social housing decarbonization fund to target 332 of the Council’s lowest energy performing properties with a view to bringing those properties up to an EPC rating of C via a fabric first whole house approach.


Concern was raised around the social housing decarbonization fund and if successful, would enable to use external monies from specific investment schemes and therefore reduce the amount of the Council’s own reserves.


Clarification was requested as to whether energy efficiency measures would still be put into place irrespective of whether the bid was successful or not.


The Acting Director of Housing highlighted that the ability to bring external funding of the social housing decarbonization fund would expedite the work and would enable the Council to bring those 333 up to specification by the end of the spend deadline, which would be May 2025. If the funding was unsuccessful, the works may take longer in conjunction with the capital programme to ensure affordability.


The social housing decarbonization fund bid total was £7.26 million but would be 55% funded by the Council and 45% funded by the grant. There was not a definitive bid outcome date, however, the Council had been assured that an outcome would be known by March 2023.


A query was raised on what the Council’s budget for emergency accommodation was and what type of emergency accommodation was offered to people within the District.


It was confirmed that 53 of the Council’s properties within the HRA were utilised as temporary accommodation for individuals that had been at risk of homelessness or had not received a firm offer of accommodation. If a tenant required a high level of repairs to the property, the Council would decant the resident to another property to enable works to take place.


One Member queried whether there were provisions in place to repair double glazed windows.


The Cabinet Member for Housing and Property reassured the Committee that a window replacement programme was currently being undertaken.


It was queried what the compliance and radon testing of £800,000 would be utilised for and the reason for this figure be reoccurring.


The compliance and radon testing were an additional budget for fire compartmentation surveys that would be undertaken across the Council’s stock. Radon testing would take 2-3 months to complete, radon maps showed that the District included some high risk areas. The set figure was pragmatic until test results started to come through, remediation costs could be up to £10,000 per property.


Reserves and Balances


Table 16 provided a summary of movements over the next 3 years, which were subject to regular review depending upon the position of the outturn of the current financial year and any changes in the spending plans.


It was proposed and seconded that Cabinet consider reallocating the revenue reserves to create a specific reserve in order to potentially fund future Council or Community leisure facilities in the Deepings.


The Deputy Leader of the Council requested the reallocation figure and which capital reserves would be utilised for the proposal.


It was requested that Cabinet could look into the local priorities reserve, which was forecasted at £5.503 million at the end of March 2023. 


The proposal failed.


It was proposed, seconded and AGREED to extend the meeting.


Clarification was sought on what budget had been set aside regarding asbestos surveys on the Council’s properties and whether comprehensive surveys had been undertaken across all of the housing stock.


Risk Register


The risk register was subject to regular review dependant on the financial climate and outlook, which was regularly revised at Governance and Audit Committee.


It was proposed, seconded, and AGREED that the Budget – Joint Overview and Scrutiny Committee considered and put forward any recommendations to Cabinet in respect of the budget proposals for 2023/24 for:


·       Housing Revenue Account – Revenue and Capital

·       Proposed dwelling rent increase of 7% •

·       Proposed use of Reserves for both General Fund and Housing Revenue Account

·       Proposed Fees and Charges for both General Fund and Housing Revenue Account




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