Agenda item

Report of the Portfolio Holder for Finance

Resolution 8 is exempt from Call-in.

The Portfolio Holder for Finance presented a report on the draft Medium Term Financial Plan (MTFP) 2023/23 to 2026/27. The following points were discussed:

a)  The budget process this year had been particularly challenging due to increasing demand and increasing costs but the proposals have achieved a balanced position. Officers were thanked for their hard work in developing the MTFP.

b)  Due to the challenging financial situation it is proposed that Council Tax is increased by the maximum amount permitted without having to go to a referendum.

c)  A consultation on the proposals had been conducted and the feedback considered and detailed in the report. Efforts are being made to mitigate the impact of the proposals.

d)  In order to reach a balance and robust position the report proposes a temporary repurposing of off earmarked reserves to the value of £20 million. This will need to be fully repaid from future MTFP savings. Capital projects will need to be temporarily decommissioned until the Council has sufficient capital receipts to fund them. Projects that are funded, for example through grant funding will continue.

e)  Annex 10 to the report is a statement from the Chief Finance Officer on the robustness of estimates and reserves.

Resolved:

1)  On the Quarter 3 2022/23 Forecast Outturn (Annex 1)

a)  To note the Quarter 3 2022/23 General Fund forecast adverse variance of £13.6 million;

b)  To note the General Fund Directorate service variances and explanations as set out in Annex 1;

c)  To note that any final over spend in 2022/23 will be funded as a first call upon the Financial Resilience Reserve;

d)  To note the planned net use of reserves of £7.1 million;

e)  To approve the creation of a budget rebasing reserve to support continued due diligence in relation to the Council’s Financial Improvement Plan;

f)  To approve budget virements of £50.2 million mainly reflecting the senior management restructure.

2)  On the Revenue Medium Term Financial Plan 2023/24 to 2026/27 (Annex 2)

a)  To recommend to City Council the approval of the proposed General Fund revenue budget for 2023/24 with a net budget requirement of £261.8 million;

b)  To endorse proposals to set a Council Tax level (Band D) of £2,052.89.

c)  To approve the s151 Officer’s recommendation to temporarily repurpose £20.0 million of earmarked reserves in 2023/24 in order to establish an adequate balance on the Financial Resilience Reserve. These are to be repaid at the earliest opportunity within the period of the MTFP and by no later than 31 March 2027. The MTFP assumptions are set out in Table 2a and 2b. Details of the reserves to be temporarily repurposed are detailed in Table 24 of Annex 2.

3)  On the Financial Reserves Policy (Annex 3)

a)  To approve and formally adopt the Council’s policy on Financial Reserves.

b)  To note that the policy will be subject to an annual review at budget setting and will be updated to reflect changes in risk and/or external standards that the Council needs to adhere to or changes in the Council’s approach

c)  To note that the annual reserves policy in future will form part of the MTFP report to Executive Board which will then be subject to Full Council approval in March annually

d)  To note the balances on reserves as at 31 January 2023 of:

·  General Fund balance £13.6 million

·  Earmarked reserves £183.3 million

·  HRA general revenue reserves £45.5 million

·  HRA Major Repairs Reserve (MRR) £38.8 million.

4)  On Fees & Charges (Annex 4)

a)  To approve and formally adopt the Council’s policy on Fees & Charges

b)  To note the schedule of fees and charges arising from the application of the approved policy for 2023/24.

5)  On the Transformation Programme (Annex 5)

a)  To approve the strategies being applied to the transformation programmes

b)  To note the planned expenditure of £10.4m on transformation initiatives over the period 2023/24+ is to be funded via application of capital receipts under the Council’s Flexible use of Capital Receipts Policy. As set out Annex 5 Table 2.

c)  To note the associated delivery of transformation savings for all funding streams totalling £59.8million (£58.3 million revenue only) over the same period. As set out in Annex 5 Table 1.

d)  To note that costs associated with feasibility activity for future transformation savings with be funded from revenue resources.

e)  To note that proposals are subject to consultation where appropriate.

f)  To note that as these strategies are adopted, the outcomes and impacts will form part of further consultation and appropriate approval.

6)  On the Budget Consultation (Annex 6)

a)  To note the outcomes of the public budget consultation, written submissions from Overview and Scrutiny committees.

b)  To approve the Council’s recommended response to the consultation as set out in Annex 6.

7)  On the Capital Programme 2023/24 to 2026/27 (Annex 7)

a)  To recommend to City Council the approval of the proposed 2023/24 – 2026/27 Capital Programme totalling £392.2m for the General Fund (detailed in table 5) and £210.5m for the HRA (detailed in table 7).

b)  To approve the temporary decommissioning of capital schemes totalling £22.8 million as set out in Annex 7 Appendix C due to insufficient availability of capital receipts to meet the planned expenditure.

c)  To seek approval from the City Council to delegate authority to the Executive Board to approve the re-inclusion of the total of £22.8 million of decommissioned schemes as set out in Annex 7 Appendix C, subject to the s151 Officer being satisfied that sufficient capital receipts have been realised to fund the expenditure on those schemes.

d)  To approve that the first call upon any new capital receipts secured by the Council will be applied to meeting the £22.8 million of temporary decommissioned schemes detailed in Annex 7 Appendix C.

8)  On the HRA budget 2023/24 (Annex 8) Exempt from call in)

a)  To approve the:

i)  Proposed rent increase of 7% for 2023/24;

ii)  Continuation of the tenant incentive scheme in 2023/24 of up to £0.5 million per annum;

iii)  Establishment of a hardship support fund of £0.5 million, initially for one year and to be reviewed annually thereafter.

iv)  Proposed base level of increase in general service charges of 7%, while continuing to work towards full cost recovery.

v)  Proposed increase to garage rents of 7%.

vi)  To recommend to City Council approval of the proposed HRA budget for 2023/24 as set out in Annex 8.

9)  On the Schools Budget (Annex 9)

a)  To approve the in-year budget transfers and payments associated with the DSG Schools Budget 2023/24, provisionally set at £344.9 million, as detailed in Annex 9.

b)  To delegate authority to the Corporate Director for Finance and Resources and S151 Officer in consultation with the Portfolio Holder for Finance & Resources, the Portfolio Holder for Children, Young People and Schools and the Corporate Director (People) to approve any final budget adjustments in relation to the Schools Budget.

10)On the Robustness of the Medium-Term Financial Plan (Annex 10)

a)  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.

·  Reasons for Decision

The report sought approval of the proposed 2023/24 – 2026/27 MTFP and specific approval of HRA budget proposals with a recommendation of approval of the proposed MTFP by the City Council on 6 March 2023. This MTFP covers a 4 year period to meet its objective of agreeing a longer term financial planning framework within which value for money decisions relating to services can be taken. The report set out the assumptions and plans for revenue and capital elements of the MTFP as well as proposals to reduce costs that will contribute towards the delivery of a provisionally balanced budget for all 4 years. The Transformation Programme will be the Council’s key strategy for achieving long term service improvement and financial sustainability and is critical to delivering a balanced Medium Term Financial Plan. It will be funded primarily under the Council’s Flexible use of Capital Receipts policy. Proposals that include workforce reductions will be subject to internal consultation with Trade Unions and affected colleagues. Details of such proposals may, therefore, be amended during the consultation period and may impact on the way in which identified proposals will be delivered.

·  Other Options Considered

Throughout the budget process a range of different options have been considered including various levels of council tax, investment and cost reductions. This is a complex process with many iterations and possibilities too numerous and detailed to present as discrete options here. This report presents the overall set of current draft proposals which together seek to balance levels of investment, income, cost reductions and an appropriate level of council tax.