The Leader’s Portfolio
To consider report FIN/508 of the Head of Corporate Finance, which was referred to the meeting of the Overview and Scrutiny Commission held on 23 November 2020.
The Cabinet recommends to Full Council the approval of the Budget Strategy 2021/22 to 2025/26 and to:
a) Note the outlook for Government funding for the period 2021/22 and future years as explained in the report and in particular the delay in Local Government Funding reforms and a one year only spending review.
b) Note the creation of a Covid-19 Support Reserve to provide resource cover for any ongoing impact of Covid-19 on the Council’s medium term financial position, should no further support from Government be received in future years. This is from reviewing existing earmarked reserves.
c) Note, for the purpose of projections, the current budget deficit of £2.250m for 2021/22 before use of reserves, on the basis of a Council tax increase of 2.37% which is £4.95 on a Band D in property 2021/22. This is before any savings are identified.
d) Work towards balancing this over a four year period, including putting back into reserves when the Budget is in surplus. There may be a need to use reserves over the next 3 years to balance the budget together with ongoing savings.
e) Agree that savings, efficiencies and increased income identified by officers are approved in order to reduce the budget gap.
f) Note that savings agreed to be taken forward will be worked up and included in the Budget and Council tax report to Cabinet in February 2021.
g) Note that items for the Capital Programme are driven by the need for the upkeep of council assets and environmental obligations and schemes will also be considered that are spend to save or spend to earn but that such prioritisation should not preclude the initial consideration of capital projects that could deliver social value. That due to the pandemic new capital schemes will be standalone and will reported separately to Cabinet meetings.
h) Approved the revised Crawley Homes capital investment plan in Appendix E which includes the financial year 2023/24.
i) Note that the Budget is aligned to the Council’s Corporate Priorities.
Reasons for the Recommendations
To continue with the implementation of the Council’s budget strategy and to deal with the Council’s projected budget deficit which is higher than previously projected due to
the impact of the pandemic on future Council tax and Business rates income projections.
The Leader presented report FIN/508of the Head of Corporate Finance, which set out the projected financial position for 2021/22 to 2025/26 for the General Fund, Housing Revenue Account, capital programme and the underlying assumptions. The report also set the policy framework for the budget process, recognising that there were a range of options for capital investment, income generation, savings and Council Tax levels; none of which can be considered in isolation. The overall objective was to work towards a balanced General Fund budget over a four year period, rather than previously three year period as a result of the impact of the pandemic.
The Leader commented that currently there was a current budget deficit of £2.250m for 2021/22 before use of reserves and before any savings are identified, on the basis of a Council tax increase of 2.37% which is £4.95 on a Band D in property 2021/22.
In presenting the report the Leader explained that there has been a great deal of communication over the Council’s current financial position as a result of the Covid pandemic, and its impact on the Council’s ability to generate income. As such there was the need, for the first time under his leadership of the Council, to make cuts to services to ensure that the Council had a balance budget. He commented that the Council had already been consulting with residents over potential savings and service changes and consideration of those findings were currently happening. He also explained where possible those and other savings and efficiencies would be taken as early as possible. That was because to reduce the need of the Council using its reserves as they were reducing and were not nearly the size that they previously were. It was also noted that there was a proposal to form a Covid 19 reserve, to deal with any further expenditures as a result of the pandemic.
Councillor T Belben presented the Overview and Scrutiny Commission’s comments on the report to the Cabinet following consideration of the matter at its meeting on 23 November 2020. The Commission received clarification on a number of points during the discussion included that
· whilst the town centre would require additional support post-Covid, the newly formed Town Centre BID intended to have a positive impact on all aspects of the Town Centre
· that the recommendation of working towards balancing over a four year period, rather than over three year period was solely due to the impact of the pandemic on the Council’s finances.
· it was confirmed that table 4 within section 6.2 should commence with years 2021/2022.
· in response to concern being raised that an earmarked reserved for the town centre market had transferring to a Covid support reserve, it was noted that the nature of the town centre as a result of the pandemic would be undergoing rapid change and this included the market.
Councillor Crow was invited to speak on the item. He confirmed that he and his party would be supporting ... view the full minutes text for item 7
To consider report FIN/508 of the Head of Corporate Finance.
The Commission considered report FIN/508 with the Leader of the Council, Head of Corporate Finance and Chief Accountant. The report set out the projected financial position for 2021/22 to 2025/26 for the General Fund, Housing Revenue Account, capital programme and the underlying assumptions. The report also set the policy framework for the budget process, recognising that there were a range of options for capital investment, income generation, savings and Council Tax levels; none of which were to be considered in isolation. The overall objective was to work towards a balanced General Fund budget over a four year period, this however may be difficult due to the impact of the Coronavirus pandemic.
The Commission received clarification on a number of points within the report during the discussion with the Leader of the Council, Head of Corporate Finance and Chief Accountant.
Councillors made the following comments:
· It was noted that the pension fund benefits from effective investment and there were advantages to keeping the pension fully funded. Whilst local government pay was negotiated nationally, should a pay freeze be agreed this would assist in the committed reserves.
· Confirmation that whilst the town centre would require additional support post-Covid, the newly formed Town Centre BID intended to have a positive impact on the area, to work hard to create a safer Town Centre for shoppers, businesses, their employees and grow the number of visitors. The Economic Development Team would work with the BID, retail, key partners and stakeholders within the town and continue to provide its services, using various different methods following the pandemic.
· Confirmation that whilst the overall objective had in the past been to work towards a balanced general fund budget over a three year period, due to the pandemic the recommendation was to work towards balancing this over a four year period.
· Explanation that the final year for New Homes Bonus for four years was 2019/2020, resulting in 2022/23 for the final legacy payments. The New Homes Bonus received for the current year was for one year only.
· Confirmation that the budget gap within the budget projections was a cumulative figure.
· Acknowledgement that table 4 within section 6.2 should commence with years 2021/2022.
· Recognition that the report had assumed that all contracts would be fully operational on 1 April 2021 with no financial impact. Whilst at this stage this was unlikely and a Covid reserve had been established.
· Confirmation that the government grant for ‘Transparency’ had not been ring-fenced and there were no conditions attributed to the grant.
· Explanation that the investment properties listed within the Capital Strategy linked to those within the Treasury Management Strategy and were purchased for the sole purpose of achieving a yield. Further properties still achieved a yield but were either already owned or purchased for another reason (Telford Place achieved a yield as a car park, however the primary purchase purpose was affordable housing). It was queried if the cost of acquisition could be included. However the cost price may not bear relation to ... view the full minutes text for item 5