Agenda item - Budget 2021/22 and Medium Term Financial Outlook

Agenda item

Budget 2021/22 and Medium Term Financial Outlook

Report of the Portfolio Holder for Finance, Growth and the City Centre

Minutes:

The Chair of the Board agreed that this item, although not on the agenda, could be considered as a matter of urgency in accordance with Section 100B(4)(b) of the Local Government Act 1972, because the Council is legally required to set a balanced budget each year and so this is the last Executive Board meeting before the March Council meeting, which is the latest opportunity to do so.

 

Resolution 4 is not subject to call in because the Chair of Overview and Scrutiny agreed that the decision is reasonable in all circumstances and should be treated as a matter of urgency because the Housing Act 1985 requires tenants to receive 28 days notice of rent increases  (due date 29 March 2021). Production and postage of the notifications following a call in period would mean that the Council may be in breach of its statutory duty by giving less than 28 days notification. Postage of the notifications to tenants has to take place by no later than 24th February to ensure they reach tenants in time.  

 

The Board considered the report of the Portfolio Holder for Finance, Growth and the City Centre outlining the Council’s Revenue and Capital budget proposals for the General Fund, Housing Revenue Account (HRA) and Schools budget for 2021/22.

 

During discussion the following points were raised:

 

(a)  This budget has been set in the context of 10 years of sustained cuts from Central Government, the Covid pandemic and its financial impact on the Council, businesses, and citizens across the city, and a difficult year for the organisation. Despite these difficulties the Council remains ambitious for its citizens and for the city and is committed to providing good quality services;

 

(b)  The main focus for the Council this year has been responding to the Covid pandemic and ensuring that services remain accessible to citizens. The cost of the pandemic for the Council has now reached £78 million. £50million of government funding has been received, leaving a shortfall of £28million;

 

(c)  The in-year budget process in 2020/21 achieved savings of £12.5million through a recruitment freeze, a voluntary redundancy programme and the use of reserves;

 

(d)  The report reflects a financial outlook for three years, however with financial uncertainties associated with Covid 19 combined with the action arising from the Recovery and Improvement Plan forecasting beyond 2021/22 is currently difficult. The budget reflects a one-year position with commitment to addressing the financial challenges ahead;

 

(e)  Particular pressure on the budget comes from the cost of Children in Care costs. This will continue to rise as companies continue to increase cost of placements. The Council is working hard to mitigate these costs, where possible, using block contract placements and independent fostering agencies. The Council is also working with the D2N2 partners and lobbying government to address the issue of increasing children in care costs;

 

(f)  The Council is proposing to implement the 3% adult care precept on Council tax in order to help fund adult social care. Authorities across the country are lobbying government to bring forward the proposed reforms to Adult social care funding as it is widely felt that this is not a sustainable way to fund adult social care;

 

(g)  Following 4 years of rent reductions introduced by Central Government the Council in implementing a 1.5% rent increase. For a 2 bedroom house this will equate to £1.21 increase a week. This will help to improve the HRA allowing a balanced budget for repairs, maintenance and improvements to the public realm as well as many other housing related services. The tenancy sustainment team continues to work well with tenants experiencing difficulties ensuring they are claiming all of the benefits they are entitled to, and offering other advice;

 

(h)  Domestic waste disposal costs have risen as more domestic waste is created through people working at home. Income from the commercial Business Waste activities has reduced as businesses have been closed or dramatically reduced waste output as a result of limited trading due to the Covid pandemic. This is one of many smaller ways that the financial pressure of Covid has impacted the Council;

 

The Board extended their thanks to all staff, colleagues and partners who have worked throughout the pandemic to ensure that services have continued to be offered to the most vulnerable citizens and to staff and colleagues who have worked hard to contribute to the difficult budget process.

 

Resolved to:

(1) 2020/21 Forecast Outturn

a)  note the current forecast outturn for 2020/21;

b)  approve budget virements and reserve movements set out in Appendices B and C of annex 1 of the published report;

c)  approve the proposal that underspends in 2020/21 are used to replenish reserves

 

(2) Revenue budget 2021/22

a)  recommend to City Council approval of the proposed General Fund revenue budget for 2021/22 with a net budget requirement of £243.7m.

b)  endorse proposals to set a Council Tax level (Band D) of £1,898.55

 

(3) Recommend to City Council approval of the proposed Capital Programme for 2021/22 as detailed in Annex 3 of the published report

 

(4)  HRA budget 2021/22

a) recommend to City Council approval of the proposed HRA budget for 2021/22 as set out in Annex 4 of the published report.

b) Approve the:

i.  Proposed rent increase of 1.5% for 2021/22.

ii.  Continuation of the tenant incentive scheme in 2021/22 of up to £100 per annum and its removal from the budget from 2022/23 onwards.

iii.  Proposed increase in general service charges of 1.5%.

iv.  Proposed increase to garage rents of 0.5%.

v.  Delegation of authority to Nottingham City Homes (NCH) to award capital contracts up to the value of the scheme/programme as set out in Appendix B.

 

(5)To note the report of the Council’s Section 151 Officer in respect of the robustness of the estimates within the budget and the adequacy of reserves.

 

(6) To note the outcomes of the budget consultation.

 

(7) Schools Budgets

a) Approve the in-year budget transfers and payments associated with the grant funding and the use of the reserve included in this report. This will not exceed the grant value.

b) Delegate the authority to the Portfolio Holder for Finance, Growth & the City Centre and the S151 Officer to approve any final budget adjustments in conjunction with the Portfolio holder for Regeneration, Schools & Communication and the Corporate Director (People).

 

Reasons for the decision

The council has to set a balanced budget each year, these proposals allow the Executive Board to recommend this budget to Council for approval at its March meeting. It also allows approval of the HRA and Schools Budget elements of the budget process.

 

Other options considered

A range of different options have been considered throughout the budget setting process including variations of council tax level, investments and cost reductions. These have all been rejected as these proposals offer balanced levels of investment, income, cost reduction and Council Tax. 

Supporting documents: