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COMMUNITIES HOUSING AND ENVIRONMENT COMMITTEE |
14 January 2020 |
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Medium Term Financial Strategy and Budget Proposals |
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Final Decision-Maker |
Council |
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Lead Head of Service/Lead Director |
Mark Green, Director of Finance and Business Improvement |
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Lead Officer and Report Author |
Mark Green, Director of Finance and Business Improvement |
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Classification |
Public |
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Wards affected |
All |
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Executive Summary |
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This report forms part of the process of agreeing a budget for 2020/21 and setting next year’s Council Tax. Following agreement by Council of an updated Medium Term Finance Strategy at its meeting on 18 December 2019, this report sets out budget proposals for services within the remit of this Committee. These proposals with then be considered by Policy and Resources Committee at its meeting on 12 February 2020, with a view to determining a budget for submission to Council.
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This report makes the following recommendations to this Committee: |
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1. That the revenue budget proposals for services within the remit of this Committee, as set out in Appendix A, be agreed for submission to Policy and Resources Committee. 2. That the capital budget
proposals for services within the remit of this Committee, as set out in
Appendix B, be agreed for submission to Policy and Resources Committee. |
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Timetable |
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Meeting |
Date |
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Communities, Housing and Environment Committee |
14 January 2020 |
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Policy and Resources Committee |
12 February 2020 |
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Council |
26 February 2020 |
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Medium Term Financial Strategy and Budget Proposals |
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1. CROSS-CUTTING ISSUES AND IMPLICATIONS
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Issue |
Implications |
Sign-off |
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Impact on Corporate Priorities |
The Medium Term Financial Strategy and the budget are a re-statement in financial terms of the priorities set out in the strategic plan. They reflect the Council’s decisions on the allocation of resources to all objectives of the strategic plan. |
Section 151 Officer & Finance Team |
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Cross Cutting Objectives |
The MTFS supports the cross-cutting objectives in the same way that it supports the Council’s other strategic priorities. |
Section 151 Officer & Finance Team |
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Risk Management |
This has been addressed in section 5 of the report. |
Section 151 Officer & Finance Team |
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Financial |
The budget strategy and the MTFS impact upon all activities of the Council. The future availability of resources to address specific issues is planned through this process. It is important that the committee gives consideration to the strategic financial consequences of the recommendations in this report. |
Section 151 Officer & Finance Team |
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Staffing |
The process of developing the budget strategy will identify the level of resources available for staffing over the medium term. |
Section 151 Officer & Finance Team |
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Legal |
Under Section 151 of the Local Government Act 1972 (LGA 1972) the Section 151 Officer has statutory duties in relation to the financial administration and stewardship of the authority, including securing effective arrangements for treasury management. The Medium Term Financial Strategy demonstrates the Council’s commitment to fulfilling it’s duties under the Act. The Council is required to set a council tax by the 11 March in any year and has a statutory obligation to set a balanced budget. The budget requirements and basic amount of Council Tax must be calculated in accordance with the requirements of sections 31A and 31B to the Local Government Finance Act 1992 (as amended by sections 73-79 of the Localism Act 2011). The Council is required to determine whether the basic amount of council tax is excessive as prescribed in regulations - section 52ZB of the 1992 Act as inserted under Schedule 5 to the Localism Act 2011. The Council is required to hold a referendum of all registered electors in the borough if the prescribed requirements regarding whether the increase is excessive are met. Approval of the budget is a matter reserved for full Council upon recommendation by Policy and Resources Committee on budget and policy matters. |
Mid Kent Legal Services |
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Privacy and Data Protection |
Privacy and Data Protection is considered as part of the development of new budget proposals. There are no specific implications arising from this report.
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Policy and Information Team |
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Equalities |
The MFTS report scopes the possible impact of the Council’s future financial position on service delivery. When a policy, service or function is developed, changed or reviewed, an evidence based equalities impact assessment will be undertaken. Should an impact be identified appropriate mitigations with be identified.
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Equalities and Corporate Policy Officer |
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Public Health
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The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy. |
Public Health Officer |
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Crime and Disorder |
The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy. |
Section 151 Officer & Finance Team |
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Procurement |
The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy. |
Section 151 Officer & Finance Team |
2. INTRODUCTION AND BACKGROUND
Medium Term Financial Strategy
2.1 At its meeting on 18 December 2019, Council agreed an updated Medium Term Financial Strategy (MTFS) for the next five years. The MTFS sets out in financial terms how the Strategic Plan will be delivered, given the resources available.
2.2 The MTFS builds on the previous year’s MTFS, which was developed in parallel with the Council’s new Strategic Plan. There were relatively few new developments to be incorporated in the updated MTFS, given the recent adoption of a Strategic Plan and the delay in the introduction of a new local government funding regime from 2020/21 to 2021/22. This means that, broadly speaking, a real terms ‘stand-still’ budget could be set for 2020/21. Members have agreed that the principle of maintaining the level of Council Tax in real terms be adopted.
2.3 The financial projections underlying the MTFS were prepared under three different scenarios – adverse, neutral and favourable. All three scenarios assumed that budget proposals for future years which have already been agreed by Council will be delivered, and that Council Tax is increased by 2% in 2020/21. Existing budget savings proposals are shown in Appendix A for this Committee and total £3.4 million for all Committees over the MTFS period.
2.4 The Provisional Local Government Finance Settlement for 2020/21 was announced on 20 December 2019. This confirmed the key assumptions incorporated in the MTFS:
- Retained business rates income will be £3.260 million (the MTFS projection was £3.269 million)
- New Homes Bonus has been retained for another year, giving £4.472 million to help fund our capital programme
- The Council Tax referendum limit will be 2%
- There will be no negative Revenue Support Grant.
2.5 The outcomes for the Council’s budget gap, before allowing for any further growth or savings, are set out below.
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20/21 |
21/22 |
22/23 |
23/24 |
24/25 |
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£000 |
£000 |
£000 |
£000 |
£000 |
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Scenario 1 – Favourable |
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Budget gap / (surplus) |
-179 |
774 |
1,121 |
1,385 |
1,177 |
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Scenario 2 – Neutral |
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Budget gap / (surplus) |
-96 |
946 |
1,568 |
2,119 |
2,212 |
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Scenario 3 – Adverse |
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Budget gap / (surplus) |
400 |
1,923 |
3,276 |
4,604 |
5,525 |
2.6 It can be seen that next year’s budget showed a small surplus in the neutral scenario, given the various assumptions underlying the projections. However, in 2021/22 the budget gap will be significant under all three scenarios. It is essential that the Council starts planning now for 2021/22, taking account of announcements from central government about the likely shape of future local government funding.
Revenue Budget Proposals
2.7 As the MTFS ‘neutral’ revenue projections indicate a broadly balanced position for 2020/21, no specific targets were set for savings or increased income generation in this year. Service pressures, or new initiatives with revenue expenditure implications, will have to be funded from within the overall budget envelope, meaning savings or additional income growth to offset the expenditure growth.
2.8 In subsequent years, the projections indicate a likely requirement either to make savings or generate increased income. The MTFS strategic revenue projections include a contingency for future pressures of £1.6 million that can potentially be released in 2021/22 to avoid a cliff-edge where savings need to be made at short notice.
2.9 Amended and new budget proposals for services within the remit of this Committee are set out in Appendix A. As indicated above, they are confined to changes required to address new initiatives or budget pressures that cannot be accommodated.
CCTV
- Following consideration by this Committee of how the CCTV service is to be delivered in future, arrangements are now in place for it to be brought in-house. The ongoing costs of the in-house service can now be quantified and an additional budget of £30,000 as compared to previous projections, will be required. This can be funded by releasing budgets not required elsewhere in Housing and Community Services.
Biodiversity and Climate Change
- Policy and Resources Committee agreed last year to set up a working group to produce a Council wide, Member led, action plan for 2020/21. It is anticipated that the action plan and the embedding of Biodiversity and Climate Change across the organisation will need officer support and budget growth of £60,000 per annum has been included for this purpose.
2.10 Budget amendments have been developed, following the same principles, for services within the remit of the other Service Committees. Taken in total savings proposals will allow a balanced budget to be set for 2020/21.
Capital Budget Proposals
2.11 Capital investment helps the Council to deliver its strategic priorities. Accordingly, the capital programme includes a number of projects that support the ‘Homes and Communities’ and ‘Safe, Clean and Green’ priorities that are of particular concern to this Committee. The capital budget proposals update the existing capital programme and meet the strategic priorities as follows:
Homes and Communities
- The Union Street and Brunswick Street schemes will be completed over the next two years. The capital programme has been updated to reflect latest projected expenditure and income from sale of housing units.
- The Council agreed to acquire a new development of 14 flats at Springfield Mill in January 2019 for letting on the private rented market. Funding was drawn from the capital programme line ‘Indicative Schemes’ and budgets have been adjusted accordingly.
- Further direct investment in property for temporary accommodation of £2.19 million is proposed, which would allow the purchase of 6 further three bedroom houses and one large property to support the Rough Sleeper initiative.
- The ‘Housing Delivery Partnership’ programme has been replaced by the ‘Council Affordable Housing Programme’ as discussed by this Committee at its meeting in September 2019. A further capital investment proposal envisages the recruitment of an Acquisitions Officer to ensure delivery of 200 homes as part of the programme, with the costs of the post capitalised and charged to the programme.
- The current rent and housing management IT system, provided by Capita, will no longer be supported from September 2020 and a proposal has therefore been made for capital funding for a replacement system.
Safe, Clean and Green
- The existing vehicle replacement programme does not provide sufficient funding to cover the higher cost of electric vehicles. It is proposed to expand the vehicle replacement programme by £100,000 to enable the purchase of five electric vehicles for environmental services and infrastructure.
- A capital budget is proposed for the installation of three water fountains – two in the Town Centre and one at Mote Park – as part of an initiative to reduce plastic waste within the borough, Water Refill. The scheme involves providing free tap water and the installation of three water fountains for refilling bottles.
Capital budget proposals are set out in Appendix B.
3. AVAILABLE OPTIONS
3.1 Agree the budget proposals relating to this Committee as set out in Appendix A and B for onward submission to the Policy and Resources Committee.
3.2 Propose changes to the budget proposals.
3.3 Make no comment on the budget proposals.
4. PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS
4.1 The Policy and Resources Committee must recommend to Council at its meeting on 12 February 2020 a balanced budget and a proposed level of Council Tax for the coming year. The budget proposals included in this report will allow the Policy and Resources Committee to do this. Accordingly, the preferred option is that this Committee agrees the budget proposals at Appendix A.
5. RISK
5.1 The
Council's MTFS is subject to a high degree of risk and uncertainty. In order to
address this in a structured way and to ensure that appropriate mitigations are
developed, the Council has developed a budget risk register. This seeks to
capture all known budget risks and to present them in a readily comprehensible
way. The budget risk register is updated regularly and is reviewed by the
Audit, Governance and Standards Committee at each of its meetings.
6. CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK
6.1 Policy and Resources Committee received an initial report on the MTFS at its meeting on 23 July 2019 and it agreed the approach set out in that report to development of an MTFS for 2020/21 - 2024/25 and a budget for 2020/21.
6.2 Service Committees and Policy and Resources Committee then considered a draft MTFS at their meetings in November 2018, and this was agreed for submission to Council. Council agreed the MTFS at its meeting on 18 December 2019.
6.3 Public consultation on the budget has been carried out. Details are set out in Appendix C. It can be seen that slightly more residents agreed that the Council’s budget provides value for money than disagreed.
6.4 There was resistance to the idea of Council Tax increases; this is an understandable stance to take, but if applied in practice would risk cuts to services, given that Council input costs continue to increase in line with inflation. The Council’s position is that we will maintain a constant level of Council Tax in real terms, in other words it will increase by no more than the projected rate of inflation.
6.5 The most popular area for new investment was infrastructure. This will be addressed as part of the updated capital programme, which will be considered by Policy and Resources Committee at its meeting on 22nd January.
7. NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION
7.1 The timetable for developing the budget for 2020/21 is set out below.
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Date |
Meeting |
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January 2020 |
All Service Committees |
Consider 20/21 budget proposals |
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12 February 2020 |
Policy and Resources Committee |
Agree 20/21 budget proposals for recommendation to Council |
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26 February 2020 |
Council |
Approve 20/21 budget |
8. REPORT APPENDICES
The following documents are to be published with this report and form part of the report:
· Appendix A: Revenue Budget Proposals 2020/21 – 2024/25
· Appendix B: Capital Budget Proposals 2020/21 – 2024/25
· Appendix C: Residents’ Survey
9. BACKGROUND PAPERS
There are no background papers.