Agenda item

[Report of the Director of Finance. To be introduced by the Cabinet Member for Finance and Strategic Regeneration.]

 

Following public consultation and Scrutiny Review, this report will set out the details of the proposed budget for 2021/22 and MTFS through to 2025/26, including savings, growth and capital proposals. The report will also set out details of funding for 2021/22 and if available the remainder of the planning period and highlight areas of risk. The report will be for onward approval by Full Council on the 22 of February, and will include the details of the council tax resolution.

The Leader invited the second deputation from Paul Burnham, representing Haringey Defend Council Housing, to put forward his representations, in relation to the Budget report.

 

Mr Burnham began his representations by commending the Council for the role they played with tenant campaigners, in influencing a change of policy, by the Mayor London, to now use funding from government on all social rents. This was included in the next iteration of the affordable housing programme in London.

 

Mr Burnham called for a Council programme of converting affordable rent back to real Council rents and commented that this policy change did not feature in the current budget. He referred to the Budget report which advised that affordable rent tenants will have a social rent cap. However, this was still £50 a week above the current Council rent rates for a 2-bedroom property. Mr Burnham raised concern about the implications in the Budget report that the rule on the social rent cap was being applied to new homes being in the borough. He referred to government mandatory policy on social rent setting and having to use the rent formula. He further contested this formula as studies showed that, even after taking into account the higher house prices in the borough and having social rent outcomes, this would not provide the affordability needed for tenants. This could cause future issues for the Council with tenants who may not want their homes demolished to face higher rents in their new properties.

 

Mr Burnham continued to speak on:

• The service charges for tenants which were being taken forward without any consultation.
• Issues with the converted properties related to cleaning charges. Homes for Haringey having to refund a lot of the charges up to March of this year. The charges were 60% higher than they should be and there was a request that they be corrected.
• The need for financial reports, presented by Homes for Haringey, to show itemised service charge expenditure which they did not at present.
• Homes for Haringey to open their accounts and empower tenants and leaseholders to input on rent setting and service charges.

 

Mr Burnham concluded by requesting a meeting with the Cabinet Member for Housing and Estate Renewal to discuss these two key issues raised in the deputation on social rent setting and tenants and leaseholder cleaning charges.

 

The Leader invited the Cabinet Member for Housing and Estate Renewal to respond to the deputation and the following information was provided.

 

• Haringey rents were set in line with government guidance as prescribed by rent standards. The government allowed English local authorities to increase their rents by CPI + 1%. For 2021/22, rents would therefore increase by no more than 1.5%, with the average rent increase for 2021/2022 being £1.57 per week. These were for rents which are currently below formula rent.

 

• Formula rent was not just based on property value but also on number of bedrooms and average earnings in the local area. Haringey rents were in line with these.

 

• Haringey provides information to tenants and leaseholders regarding their service charges, also how it compares with prior years and how these are calculated. These were highlighted in the service charge leaflets and the FAQs that accompany the rent letters.

 

• There was no 60% increase in the converted properties cleaning service charge for 2020/21. The converted properties’ cleaning service charge for tenants actually reduced by 8.3% in 2020/21.

 

The Cabinet Member for Housing and Estate Renewal welcomed a meeting with Paul Burnham and his colleague from Haringey Defend Council Housing.

 

The Leader invited the Cabinet Member for Finance and Strategic Regeneration to introduce the budget for 2021 -22 and MTFS for 2021 to 2026.

 

The Cabinet Member for Finance and Strategic Regeneration introduced the report which sought approval to the proposals concerning the 2021/22 Budget and five-year Medium-Term Financial Strategy (MTFS). The budget aimed to provide a clear financial plan during this unprecedented period for local authority budgeting, in a global pandemic at a time of hardship, and financial uncertainty. The impact of the pandemic was considered with the gross financial impact of the pandemic at around £40millon compared to the planned budget.

 

The Cabinet Member outlined that this was a progressive budget a continued to draw attention to the relevant parts of the financial strategy concerning:

• Investment in the revenue budget.
• Capital investments - in particular: The Wood Green Hub , Youth services, school building improvement works, roads, pavements, environment, expansion of empty homes strategy, and the Pendarren youth facility.
• General Fund revenue assumptions.
• The use of reserves which was use of £1.7m as a one-off reserve. The Council were previously examining, at the consultation stage, to use £5.4m but as a result of the SR20 and number of improved grants, this had been reduced.
• Housing Revenue account , Business strategy, Dedicated Schools Budget,

 

The Cabinet Member concluded by referring to the public consultation completed and the consideration by Scrutiny of the budget .

 

Cllr Connor, Chair of Overview and Scrutiny, presented the Overview and Scrutiny recommendations produced by the main committee , scrutiny panels, with input from the public and support by officers. She referred to the doubling of capital spend from £1 billion over the last 50 years to £2billion in the next 5 years. This called for increased oversight of the budget and need for scrutiny to consider greater detail of this spend with a new approach to capital budget scrutiny . It was proposed that, going forward, there was more detail provided to each scrutiny panel, with projects grouped together, according to the panel’s responsibilities. This information could follow the quarterly budget monitoring reports considered by the panels and was requested to be supported by officers.

 

The Vice Chair of Overview and Scrutiny continued to highlight some of the key recommendations arising from the Scrutiny Panels:

 

• The Environment and Community Safety Scrutiny Panel produced some clear recommendations around considering the impact on small businesses when introducing Sunday parking charges and these seemed to have been not addressed in the response to this recommendation. It was requested that these issues are considered when the report on Parking Charges is compiled for key decision at Cabinet.
• The answers to questions by the Housing and Regeneration Panel raised further questions and there was request for the Panel to be provided with Officer support, prior to consideration of the quarterly budget reports, to

enable them to examine the future capital borrowing in much greater depth.

• The Children and Young People’s Scrutiny Panel recommendations were based on the pressures the service would face as a result of Covid. The answer to these recommendations were noted and it was expected that further scrutiny into these important areas would continue as the deficit of high needs block, need for social workers, access to free school meals, and addressing online school learning will continue to be of concern.
• With regards to the savings proposed to Learning Disabilities services, and mental health services, it was questioned whether these were sensible, especially during this time of increased service pressure due to the pandemic. A request was made for these decisions to be reconsidered.

 

• Within the ‘Your Council’ budget recommendations, there was a request to reconsider the loss of up to 7 jobs in the Libraries savings proposals.

 

In concluding her presentation, the Vice Chair of Overview and Scrutiny, reiterated the specific requests and recommendations for the further information required and new format for next year’s revenue and capital budget scrutiny. It was felt that as the Council’s capital borrowing doubled , this could put significant pressure on the revenue budget and the need for scrutinising these proposals would be even more important.

 

Cllr Adje responded briefly to the issues raised by Cllr Connor, thanking the Overview and Scrutiny Committee and the Scrutiny Panels for their work in scrutinising the budget. He emphasised that the same level of financial information, as previously provided, was maintained in this year’s process. He commented on the need to take into account the current new way of virtual working in presenting budget information. In the past there would have been physical papers to examine and more face-to-face meetings and the new experience may have contributed to this view of the need for increased information. It was important to note that the same information that had been provided to Cabinet, had also been provided to Scrutiny Members. In addition, the Cabinet Member himself , the Director of Finance and senior finance colleagues had attended the budget meetings and answered questions. However, going forward, the Council could look to improve upon the Scrutiny budget process, which was hopefully not in pandemic situation.

 

The Cabinet Member noted that all Councillors were elected to look after the interests of residents and he would consider some of the points made by Cllr Connor, in terms of the responses to the Scrutiny recommendations, and where the Council were able to deal with them, they would.

 

There was a need to consider that the Council were operating in very difficult financial environment where the government were not providing the Council with the adequate funding for reimbursement of required spending in the pandemic.

 

In responding to the issues raised on the scrutiny recommendations on Sunday parking charges, the Cabinet Member for Transformation, Public Realm and investment, advised that the template provided for response only enabled a short answer. Cllr Chandwani commented that parking was covered by the Road Traffic Act and there was a requirement to complete a statutory consultation. However, the Council were ensuring that they were working closely with the business support team with the implementation to ensure that there was not a contradiction of the efforts to support the economic challenges being faced. The Cabinet Member thanked the panel for raising this issue and it was an issue that the service was conscious of and was happy to provide a fuller response.

 

In response to a question from the Cabinet Member for Communities, concerning the current situation with the Covid funding gap, the Council continued to receive grants from the government, though not fully funding the impact on the as a result of COVID-19 spend. There was other external grant funding received that the Council had distributed, and this was ringfenced for a particular area i.e., funding for care homes, business grants schemes so there was not currently a 100% refund of Council spend.

 

The Cabinet Member for Housing and Estate Renewal commented that the increased spend on the HRA was to allow for the delivery of a significant Council house building scheme and provision of decent homes programme to counter the lack of investment in previous years which the Council had a duty to deliver and would mean increased spending. The concerns about the increased borrowing and spend were acknowledged and appreciated but there was a responsibility to residents on housing waiting lists to deliver Council housing and there was a duty to existing tenants to meet decent homes targets.

 

There were questions from Councillors: Brabazon, Gordon, Berryman, Tucker and Palmer with the following information provided:

 

• The agreement of the High Road West scheme in 2017, included reimbursement to the Council for land assembly costs from the developer. It was further noted that it was usual for land purchase and land assembly to take time to complete.
• The Director for Finance agreed to send a note to Cllr Brabazon responding to the queries raised about the difference in the capital figures provided in the Cabinet report to those provided at scrutiny meetings. This was likely to be related to the context within which the figures were provided to each meeting.
• In response to a supplementary question on the costs for assembling the land in HRW scheme increasing, and the query of whether this was viable for the third parties to continue in this scheme, it was not felt appropriate for Cabinet Members and Officers to speculate on this issue at a Cabinet meeting as these were considerations for the third parties.
• The High Road West scheme covered a number of sites, and the Cabinet Member could not comment on what the potential negotiations would be at the various stages of the scheme. The sum that was included in the budget and in the capital, lines was for land assembly and officers would deal with this at the appropriate time.
• With regards to the CO2 emissions from any demolition of blocks for new homes in HRW scheme, the Council had a CO2 strategy, and this issue would be discussed with Councils departments. Their advice would be taken into account when this phase of building the replacement blocks was reached.
• The Council budget included anticipation of a pay rise for staff and this was included prior to the government announcement of a pay freeze for public sector staff. There were ongoing negotiations with the trade unions and if there was a pay freeze, this would have a positive financial impact on the budget.
• The report contained a section on the forecast for the CTRS [ Council Tax Reduction Scheme] and documented the experience of claims over the COVID-19 period. It was noted that the number of pensioners claiming CTRS had decreased, but the number of working age people claiming CTRS had increased substantially. The budget was factoring in a substantial increase in claims for CTRS in the next year and collection forecasts had been adjusted in view of such payments . With regards to affordability the government was putting in place additional grants to help local authorities fund this and this was expected to cover the increase in claimants for CTRS in the next year.
• In response to the acknowledgement of the need to council homes, the Cabinet Member  for Finance and Strategic Regeneration reiterated the  need for Council investment in social housing and progressive budget for the benefit of residents.
• With regards to a decision around the Library service concerning the reduction of staff and delaying the budget decision on this until a strategy was in place , there was investment in libraries and the Council were considering different ways of working in terms of simplification. With regards to specialist Library staff, they could be redeployed and retrained. The point of having a libraries strategy was acknowledged and the Council would ensure a holistic approach is taken on this . There was a pause on the Wood Green Library projects as well as other projects in the Wood Green area due to Covid and new ways of working.
• The Civic Centre refurbishment were the main works taking place in Wood Green, there was no choice but to spend money on this grade two listed building. Therefore, instead of spending money and stand still , it was felt prudent to invest and bring it into good use. This would support the strategy of locality working and bring in the community to use the building. The reprofiling of the budget, which was a method used by local authorities, allowed this type of investment and spend. This was within local government finance regulations and met with CIPFA requirements. There was also audit of the Council finances by the external auditors and assurance process. There was a need to consider investments in schools, housing and Council buildings to safeguard future use and availability and capital spend enabled this.

 

 

RESOLVED

 

1. To consider the outcome of the budget consultation as set out in Appendix 8, to be included in the report to Council. Having taken this into account this report does not propose any amendment to the Budget for 2021/22 nor to the MTFS 2021/26.

 

2. To approve the responses made to the Overview and Scrutiny Committee recommendations following their consideration of the draft budget proposals as set out in Appendix 9. Having taken this into account this report does not propose any amendment to the Budget for 2021/22 nor to the MTFS 2021/26.

 

3. To propose approval to the Council of the 2021/22 Budget and MTFS 2021/26 Budget Reduction Proposals as set out in Appendix 2.

 

4. To propose approval to the Council of the 2021/22 General Fund Revenue Budget as set out in Appendix 1, including specifically a General Fund budget requirement of £249.077m, but subject to final decisions of the levying and precepting bodies and the final local government finance Settlement.

 

5. To propose approval to the Council of the General Fund Medium Term Financial Strategy (MTFS) 2021-2026 as set out in Appendix 1.

 

6. To propose approval to the Council that the overall Haringey element of Council Tax to be set by London Borough of Haringey for 2021/22 will be £1,441.04 per Band D property, which represents a 1.99% increase on the 2020/21 Haringey element and with an additional 3% for the Adult Social Care Precept amount.

 

7. To note the Council Tax Base of the London Borough of Haringey, as agreed by the Section 151 Officer under delegated authority (Article 4.01(b), Part 2, of the Constitution), as 76,544 for the financial year 2021/22.

 

8. To propose approval to the Council of the 2021/22 Housing Revenue Account budget as set out in Table 9.4.

 

9. To propose approval to the Council of the Housing Revenue Account Medium Term Financial Strategy (MTFS) 2021-2026 as set out in Table 9.4.

 

10. To approve the changes to the rent levels for residents in temporary accommodation, Council tenants in General Needs, Sheltered/Supported, and Affordable homes reflecting the recent rent guideline requiring Councils in England to increase rent by no more than the Consumer Price Index (CPI) at September of the previous year plus 1%. This will increase the average weekly rents as set out in Tables 9.1 and 9.2.

 

11. To agree the changes to service charges to tenants as set out in Table 9.3.

 

12. To approve that the 18 currently Affordable properties, shown in Table 9.2, be changed to Social Rents from 5 April 2021.

 

13. To propose approval to the Council of the 2021/22 – 2025/26 General Fund capital programme detailed in Appendix 4.

 

14. To propose approval to the Council of the 2021/22 – 2025/26 Housing Revenue Account (HRA) capital programme detailed in Table 9.5.

 

15. To propose approval to the Council of the Capital Strategy detailed in Section 8 of this report.

 

16. To propose approval to Council of the strategy on the use of flexible capital receipts to facilitate the delivery of efficiency savings including capitalisation of redundancy costs (Appendix 6).

 

17. To propose to the Council the Dedicated Schools Budget (DSB) allocations for 2021/22 of £278.755m as set out in Appendix 7.

 

18. To note the funding to be distributed to primary and secondary schools for 2021/22 based on the figures advised to Schools Forum and submitted to the Education Funding Agency in January 2021 set out in Section 10.

 

19. To note the budgets (including the use of brought forward DSG) for the Schools Block, Central Services Block, High Needs Block and Early Years Block as per Appendix 7.

 

20. To delegate to the Director of Children Services, in consultation with the Cabinet Member for Children, Education and Families, the power to amend the Delegated Schools Budget to take account of any changes to Haringey’s total schools funding allocation by the Education and Skills Funding Agency.

 

21. To delegate to the Section 151 officer, in consultation with the Cabinet Member for Finance, the power to make further changes to the 2021/22 budget proposals to Full Council up to a maximum limit of £1.0m.

 

 

Reasons for decision

 

The Council has a statutory requirement to set a balanced budget for 2021/22 and this report forms a key part of the budget setting process by setting out the forecast funding and expenditure for that year. Additionally, in order to ensure the Council’s finances for the medium term are maintained on a sound basis, this report also sets out the funding and expenditure assumptions for the following four years in the form of a Medium-Term Financial Strategy.

 

Alternative options considered.

 

The Cabinet must consider how to deliver a balanced 2021/22 Budget and sustainable MTFS over the five-year period 2021/26, to be reviewed and ultimately adopted at the meeting of Full Council on 1st March 2021.

 

Clearly there are options available to achieve a balanced budget and the Cabinet has developed the proposals contained in this report after determining levels of both income and service provision. These take account of the Council’s priorities, the extent of the estimated funding shortfall, estimated impact of Covid-19, Brexit and the Council’s overall financial position.

 

These proposals reflect feedback received as part of the consultation both externally and through the Overview & Scrutiny process and the outcome of the Equalities impact assessments.