Agenda item

* Clerk’s note – Cllr Connor, as the Chair of Budget Scrutiny, Chaired the meeting for agenda item 9.*

The Committee received a copy of the draft 5 year Medium Term Financial Strategy (2020/21 – 2024/25) along with a covering report which set out how the budget proposals had been scrutinised and also included the draft recommendations that had been proposed by the individual Scrutiny Panels. Members of the Committee were asked to consider and agree recommendations contained within this report so that these could be considered by Cabinet on 11 February 2019, along with the final MTFS proposals that would be put to Council on 24 February.

The report was introduced by Frances Palopoli, Head of Corporate Financial Strategy and Monitoring and Jon Warlow the Director of Finance, as set out in the addendum reports pack at pages 1-304. The Committee also received a late paper which set out additional information received by the Adults and Health Scrutiny Panel on the budget reductions proposals. This report was included for information purposes. The following arose during the discussion of the draft Budget/MTFS:

a.    The Director of Finance set out the headline position for the General Fund and advised that this contained a lower amount of budget reductions than was envisaged a year ago. The Committee noted that the proposals included growth in budgets for key areas and that Adults in particular still required further budget growth to meet current demands.

b.    The budget contained the maximum 1.99% increase in Council Tax as well as 2% increase in the Adult Social Care Precept

c.    The Committee was advised that there was still a budget gap of £0.6m in the December report. The gap was characterised as being relatively small and the Director of Finance advised that the gap would be met by changes to corporate and technical services and the Committee was assured that there would be no impact on front line services. The Director of Finance highlighted that the budget gap of £600k compared favourably with the £7m shortfall at the same point in last year’s budget process.

d.    The Director of Finance highlighted ongoing concerns around the recovery plans for the Dedicated Schools Grant and acknowledged that this was very challenging position that was being felt across local government.

e.    The Budget proposals for the HRA set out an increase in Council rents of the rate of CPI inflation plus 1%. The Committee was advised that further detail on the HRA business plan would be included in February budget paper to Cabinet.

f.     The Chair of Budget Scrutiny welcomed the overview given by officers on the budget and requested that further detail be provided in Section 5 of the report as part of future budget scrutiny reports, both to the Panel and the main Committee. The Chair of Budget scrutiny highlighted the information that was included in the late handout as a template of the type of information to include in future, including information on the current position on un-earmarked and earmarked reserves.

g.    The Committee sought further assurance around the DSG recovery plan and queried how important further engagement with OSC was on this issue. In response, officers reiterated that this was a particularly challenging area and welcomed the fact that local authorities were pushing back to the Government on education funding. Officers also acknowledged that this maybe something that OSC would like to receive further information on going forwards.

h.    In response to a question on what modelling had been done on the impact of rent increases, officers advised that previous decisions to freeze rent increases had a significant impact on the availability and quality of housing stock. Officers also set out that the Council was about to enter in to its third year of a pooled business rates arrangement across London and the amount available to retain by the Council had changed again for the third year.

i.      In response to a question around increased borrowing costs from the PLWB, officers advised that they were continuing to explore alternative sources of borrowing, including more loans from other local authorities. Officers advised that there was no immediate pressure to find alternative sources but that they would do so when it was considered prudent.

j.      In response to a question around the main driver for increased Tax Receipts, officers advised that this was calculated on the basis of increased numbers of residential and commercial properties being built and the corresponding increase in Council Tax and Business Rates being collected.

k.    In response to a question, officers advised that they satisfied  that the levels of borrowing as  set out could be afforded within the Budget and MTFS and advised that the now extended five-year time frame for the debt reporting within the  MTFS was beneficial as it showed the full increase over the period.

l.      In relation to fees and charges and the level of income generated, officers advised that these provided an increasingly important contribution to the Council’s budget of around £17/18m and the level of reliance on income from this was unlikely to change in the near future.

m.  The Committee sought assurances about the level of reserves and whether there was a budget resilience reserve in place for 2020/21. Officers advised that the £7m resilience contingency would remain in place for next year and advised that the setting of this was proportionate to the level of risk. Last year’s budget assumption required a £5m draw down from corporate reserves to balance the budget and that there was no such assumption for 2020/21. Officers set out that the £15m General Fund Balance (an unearmarked reserve) would remain the same and that they  considered the overall level of reserves was adequate..

n.    The Chair of Budget Scrutiny requested that future budget scrutiny reports to both Panels and the main Committee include the following information (Action: Jon Warlow):

·         Comment by finance officer on MTFS savings over 5 years

·         Pressure on the Councils budget – as per table produced by Adults under Late Business item 4^th table, headed Policy Growth.

Also Total growth (new grants etc.).

·         Actual savings both new and ongoing for each of the five panel areas (so Children’s, Adults, Environment etc.)

·         Information on Budget reserves both Earmarked and Un-earmarked

·         An account of the position of the Housing and Revenue Account

·         Any particular pressures on the Councils position – for instance DSG

·         Comment by finance officer on overall Capital budget over the five year MTFS

·         Actual capital budget spend within each of the panel areas, both new and ongoing high level information (see revenue point 4)

·         Include Capital budget (on page 46 at 3.3 and 3.2, 3.3 and 3.4 within Treasury Management report item).

·         Include Revenue Budget Implications already stated within TMR page 64 at section 12, 12.1 to 12.3 – include table.

The Director Finance noted that it would be important to ensure that the December Cabinet Budget Report went in full, rather than excerpts, to future year’s Budget Panel meetings as this would address many of the information requirements detailed by the Committee.

The following comments and amendments to the draft Budget Scrutiny recommendations were put forward by the Committee:

a.    EC08 Outdoor Media – The Chair of the H&R Panel advised that the recommendation should be changed to reflect that adequate assurance had been received around the type of companies that could be permitted to use  the advertising space.

b.    There were no changes proposed to the recommendations put forward by the Environment and Community Safety Panel in relation to Place.

c.    There were no changes proposed to the recommendations put forward by the Children and Young People’s Panel.

d.    There were no changes proposed to the recommendations put forward by the Adults and Health Panel.

e.    There were no amendments proposed to the recommendations proposed to Your Council.

The Chair reiterated that during future Budget Scrutiny sessions, OSC should be provided with information on the year-on-year position for savings proposals across the current MTFS period as well as the year-on-year ongoing position of the implementation of capital projects across each of the priority areas, in order to allow OSC to track the rolling position rather than just the new proposals. The Committee also requested that they would like to receive the MTFS savings tracker that was submitted to Cabinet as part of future budget scrutiny papers. (Action Jon Warlow).

RESOLVED

That the Overview and Scrutiny Committee:

1. Agreed the final budget recommendations to be put to Cabinet on 11 February 2020, following consideration of recommendations arising out of the budget scrutiny process, as set out in Appendix A of the report.
2.  Considered the additional information, attached at Appendix B of the report, requested during the December/January round of budget scrutiny meetings;
3. Noted the budget information and capital schemes proposals, attached at Appendix C of the report, considered by Scrutiny Panels and the Overview and Scrutiny Committee in December 2019/January 2020;