Agenda and minutes

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The Chair referred Members present to agenda Item 1 as shown on the agenda in respect of filming at this meeting, and Members noted the information contained therein’.

Apologies for Absence were received from Cllr Simmons-Safo and Yvonne Denny.

There were no items of Urgent Business

There were no Declarations of Interest

None.

The Committee received the draft Treasury Management Strategy Statement for

2024/25 for comments, before it was presented to Full Council for final approval. The

report was introduced by Tim Mpofu, Head of Pensions and Treasury, as set out in the

agenda pack at pages 1-24. The following arose during the discussion of this item:

a)    The Committee sought clarification about the approval process for the Strategy Statement and whether it should have in fact been considered by Audit Committee first. In response, officers clarified that the CIPFA code set out that it had to be monitored by a body that oversaw treasury activities. It was the Council’s constitution that set out that it should also be considered by Scrutiny and that its comments be put forward to Audit Committee. The Strategy would be considered by Audit Committee at its meeting later that evening.

b)    The Committee sought clarification over what the key changes in the strategy were for next year. In response, officers advised that the strategy assumed that the cost of borrowing would increase significantly from 4.5% to 5.5%. The strategy also increased the limits of funds invested with counterparties from £5m to £10m. The short-term borrowing limits had reduced from £30m to £20m, in recognition that short-term borrowing had higher borrowing costs.

c)    The Committee sought assurances about the forecast bank rate at £5.25% and the degree to which these forecasts had been accurate in the past. In response, officers advised that the Council’s treasury management advisors provided the forecasts within an upper and lower limit and that the rates had stayed within those ranges in the past. The fact that the banking rate had peaked was widely agreed within the sector, but officers acknowledged that higher than expected inflation was still an issue.

d)    In response to a question, officers acknowledged that the levels of existing borrowing reduced year-on-year as a result of some of that borrowing maturing.

e)    In response to a question, the Members were advised that internal borrowing was the use of existing resources and cash balances that was used as part of the CFR but did not come from external sources of borrowing.

f)     The Committee sought assurances about the audit process. In response, officers advised that the strategy was audited in line with the Council’s annual external audit exercise, and that the Council also carried out internal audit exercises. Officers set out that the strategy made provision for what would happen if borrowing costs were reduced. In essence, the relative impact of cheaper borrowing would have to be considered against lower returns on investment.

g)    In response to a question about the affordability of significantly increasing borrowing rates, the Director of Finance advised that this was something that was best addressed as part of the wider MTFS report. The Director of Finance advised that borrowing in the General Fund Capital Programme had been scaled down by around £400m in recognition that the authority wanted to do all it could to reduce its  ...  view the full minutes text for item 6.

Appendix 1 – Scrutiny Role

Appendix 2 – Cabinet report – Budget and MTFS (5th December 2023)

Appendix 3 – P6 2023/24 Savings Tracker – To follow

Appendix 4 – New Revenue Growth Proposals

Appendix 5 – New Revenue Savings Proposals

Appendix 6 – Draft Capital Programme

Appendix 7 – Draft Budget Scrutiny Recommendations – To follow

*Clerk’s Note – As per Paragraph 9.2 of the Overview & Scrutiny Protocol – Cllr

Connor chaired the Budget/MTFS item, as a member of the largest opposition group*

The Committee received a report which set out the Council’s 2024/25 Draft Budget and 5 Year Medium Term Financial Strategy (MTFS) 2024/2029 proposals, for the Committee to consider and to make recommendations on the budget to Cabinet, for its meeting on 6th February. The report was introduced by John Warlow, Director of Finance as set out in the agenda pack at pages 25 – 100 and in the additional report pack at pages 3-58. Cllr Carlin, Cabinet Member for Finance and Local Investment and Josephine Lyseight, Assistant Director of Finance, were also present. Frances Palopoli, Head of Corporate Financial Strategy and Monitoring was present online.

The Director of Finance provided an introduction to the Committee. The key points are summarised below:

a)    The Committee was advised that it was a time of financial duress for local governments of all sizes and political compositions. The number of local authorities finding themselves either having to issue a Section 114 notice, or under pressure to do so, had increased markedly. The Director of Finance stressed that not being able to set a legal balanced budget was not a position that Haringey found itself in.

b)    The Director of Finance acknowledged the exceptional nature of the draft budget, given that there was a circa £16.3M gap and that the Council needed to effectively hold a second round of budget proposals in order to meet that budget gap.

c)    Since the publication of the draft MTFS report in December, Finance had been waiting for a number of developments that would influence the final budget position. One of which was the Autumn Statement. It was hoped that it might recognise the common challenges faced by local government in relation to adult social care demand and sector costs. However, the pressures faced in this area were not reflected in the Autumn Statement. The second development was identified as the Provisional Local Government Finance Settlement. The Director of Finance advised that after initially reviewing this, there were concerns that the corporate resources position could be £3.7m worse off than had been budgeted for, however after further analysis it is hoped that the impact would be less. The final settlement figure will be incorporated into the final MTFS report in February.

d)    The Director Finance advised that ultimately any budget gap in the final MTFS would have to be addressed through use of reserves, and that work was underway to try and ensure that the gap was as narrow as possible. The Director Finance cautioned that use of reserves was a legitimate mechanism to balance the budget if you had them, but that they could only be used once.

e)    The key pressures within the budget were identified as care services, temporary accommodation and the paucity of supply, and an increase in the costs of the capital budget, particularly in relation to  ...  view the full minutes text for item 7.

N/A

To consider any additions or amendments to the Committee’s current work

programme.

The Committee agreed to defer this item to a subsequent meeting.

·    1st Feb 2024 (7pm)

·    11th Mar 2024 (7pm)

·

1st Feb 2024 (7pm)

11th Mar 2024 (7pm)