Agenda item

Report of the Director of Finance. To be presented by the Cabinet Member for Finance and Local Investment.

The report sets out details of proposed budget for 2023-24 and MTFS to 2027-28, including savings, growth and capital proposals. The report will also set out details of provisional funding for 2023-24 and, if available, the remainder of the planning period and highlight areas of risk. The report recommends that the budget proposals be released for public consultation and Scrutiny consideration. The report also includes details of the proposed HRA budget for 2023/24 and MTFS to 2027/28, including proposed 5-year capital investment and funding. It sets out the proposed changes to the rent levels for Council tenants in General Needs and Sheltered/Supported homes, and residents in temporary accommodation.

The Cabinet Member for Finance and Local Investment introduced the report which set out details of the draft General Fund (GF) Budget for 2023/24; the Medium Term Financial Strategy (MTFS) 2023/28; the draft HRA Budget 2023/24 and it’s draft Business Plan including estimated income (funding) and expenditure adjustments, as well as the draft capital programmes for both funds.

The Cabinet Member highlighted that the budget was being developed against a backdrop of unprecedented economic uncertainty and high inflation. The administration recognised the cost of living crisis and impact on residents, businesses and communities and would also be focused on getting information, advice and support to those that needed it the most and achieving the best possible outcomes.

In the context of the limited resources available to the Council, the Cabinet Member outlined the budget priorities and these were summarised as follows:

-       Continuing collaboration with the community on service provision.

-       Investment in Children’s Services and Adults Services.

-       Utilising funding to support to residents through the Council Tax Reduction scheme and Household Support Fund.

-       Identifying Capital programme opportunities to meet needs in communities.

-       Active life programme.

-       Ongoing investment in Council homes.

In response to questions from Cllr Brabazon, Cllr Brennan and Cllr Connor, the following information was provided.

-       There was no further announcements or information supplied from the government, since the report had been published, on the areas that were listed as awaiting further information.

-       With regards to the Council applying Formula Rent to all housing schemes when economic circumstances were better and reviewing this position annually or even awaiting the government financial settlement before taking the decision on London Affordable rents, it was noted that the London Affordable Rents would only apply to the 870 properties in the new build developments. These were being built under grant funding obtained through the Mayor’s Building Council Homes for Londoners scheme and were those that needed to be onsite by March 2023. Therefore, this did not affect any other policy decision or other rent levels. This position could not be reviewed annually as this only applied to a specific housing programme which would expire next year. It was reiterated that there were no plans for any of the homes that were being delivered in the GLA’s 2021 to 2026 Affordable Homes Programme to be delivered at London Affordable Rent.

-       With regards to the indication of social housing rent being increased and capped at 7% and whether this should go forward due to the cost of living crisis, this was a modelling assumption which had been used by officers to inform the report and based on the government’s announcements on what was possible. This potential increase was a decision for Cabinet to make in the 2023/24 year. However, it was noted that a 7% increase would still represent a lower than inflation level increase.

-       It was noted that both Formula Rent and London Affordable Rent could apply to the Cranwood housing development scheme as set out in the committee report considered by Planning Sub Committee. Both these rent polices were considered as social rent schemes under the Mayor’s Building Council Homes for Londoners scheme. It was explained that, under the Council’s current financial planning, the Cranwood scheme would be a considered as a scheme moving to London Affordable Rent. However, this would require final decision, either through Planning Sub Committee Chair’s delegated decision or through the Planning Sub Committee meeting.

-       In relation to potential increased costs on the revenue budget and in turn impact on service areas as a result of external economic and market conditions, the drafting of the attached report recognised the current treasury market conditions and was describing the relevant rates that would be factored in. The report did make clear that there were higher treasury forecasts than actually currently built into the base budget and was highlighting the potential additional £3 million to be added to the base budget. However, there was still a 3 month period, before the final decision on the budget and MTFS in February 2023, to work through these costs. The Section 151 Officer considered regular advice from Treasury advisors and would ensure that the final report had the best estimate in place.

RESOLVED

1.    To note the draft General Fund revenue and capital budget proposals and financial planning assumptions set out in this report and note that they will be refined and updated after the final Local Government Finance Settlement is received in January 2023 and to incorporate further budget changes as required;

2.    To note the Draft General Fund 2023/24 Budget and MTFS 2023-28 detailed in this report and Appendix 1;

3.    To note the Draft revenue and capital budget growth proposals summarised in Sections 7 and 8 and Appendices 2 and 5 and note the draft revenue savings proposals summarised in Section 7 and Appendix 3;

4.    To note the Draft General Fund Capital Programme for 2023/24 to 2027/28 as set out in Appendix 4;

5.    To note the Draft Housing Revenue Account (HRA) Revenue and Capital Programme proposals and HRA Business Plan as set out in Section 9;

6.    To note the 2023/24 Draft Dedicated Schools Budget (DSB) and update on the DSG reserve position set out in Section 10;

7.    To note that the detailed proposals will be submitted to Overview and Scrutiny Committee / Panels in December 2022 and January 2023 for scrutiny and comments;

8.    To agree to commence consultation on the 2023/24 Budget and MTFS 2023-28;

9.    To note that an updated General Fund and HRA 2023/24 Budget and MTFS 2023-28 will be presented to Cabinet on 07 February 2023 to be recommended for approval to the Full Council meeting taking place on 02 March 2023;

10. To delegate the final decision on whether or not to participate in the proposed 8 borough business rates pool from 1 April 2023 to the Director of Finance in conjunction with the Lead Member for Finance and Local Investment;

11. To agree that some of the new homes delivered under the GLA’s 2016-23 Affordable Homes Programme, ‘Building Council Homes for Londoners’ be let at London Affordable Rent (LAR) levels.

Reasons for decision

The Council has a statutory requirement to set a balanced budget for 2023/24 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 2023/24 Budget and sustainable MTFS over the five-year period 2023-28, to be reviewed and ultimately adopted at the meeting of Full Council on 02 March 2023.

Clearly there are options available to achieve a balanced budget and the Council 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, the estimated impact of wider environmental factors such the Cost of Living crisis, inflation and legacy Covid-19 pandemic and the Council’s overall financial position.

These proposals are subject to consultation, both externally and through the Overview and Scrutiny process, and the outcomes of these will inform the final budget proposals.