Agenda item

Report number:     CAB/WS/21/008

Portfolio holder: Councillor Sarah Broughton

Lead officer: Rachael Mann

Recommended to Council (23 February 2021):

That:

1.       the revenue and capital budget for 2021 to 2025, plus 2020 to 2021 capital projects that subsequently require to be carried forward at the year end, attached at Attachment A and as detailed in Attachment D (Appendices 1-5), Attachment E (Appendices 1-3) and Attachment F to Report number: CAB/WS/21/008, be approved.

2.       Having taken into account the conclusions of the Assistant Director’s (Resources and Performance) report on the adequacy of reserves and the robustness of budget estimates (Attachment C) and the Medium Term Financial Strategy (MTFS) (Attachment D), particularly the Scenario Planning and Sensitivity Analysis (Attachment D, Appendix 5) and all other information contained in Report number: CAB/WS/21/008, the Cabinet recommends an average £4.99 increase in Band D council tax across both predecessor areas of St Edmundsbury and Forest Heath.  This assumption is based on the option to harmonise the two predecessor areas by April 2022.  The level of Band D council tax for 2021 to 2022, therefore, be recommended to be set at £185.40 for the predecessor area of St Edmundsbury and £175.59 for the predecessor area of Forest Heath. (The level of council tax beyond 2021 to 2022 will be set in accordance with the annual budget process for the relevant financial year).

3.       The Assistant Director (Resources and Performance), in consultation with the Portfolio Holder for Resources and Performance, be authorised to vire funds between existing Earmarked Reserves (as set out at Attachment D, Appendix 3) as deemed appropriate throughout the medium term financial planning period.

4.       Approval be given to the Flexible Use of Capital Receipts Strategy (as set out in Attachment G).

The Cabinet considered the above report, which presented the proposals for Budget and Council Tax Setting in 2021 to 2022 and the Medium Term Financial Strategy (MTFS) 2021 to 2025.

Councillor Sarah Broughton, Portfolio Holder for Resources and Performance drew relevant issues to the attention of the Cabinet, including that Report number: CAB/WS/21/008 provided details of the Council’s proposed revenue and capital budgets for 2021 to 2022 and in the medium term, and the Cabinet was required to recommend to Council approval of the 2021 to 2022 budget for the authority, including establishing the level of council tax required to help fund the Council’s activities over the next year. 

As minuted under minute 220. above, the Cabinet supported the key budget assumptions and proposals for securing a balanced budget for 2021 to 2022, as previously considered and recommended by the Performance and Audit Scrutiny Committee and incorporated into Report No: CAB/WS/21/005.

The 2021 to 2022 budget had been prepared in the context of not only the significant challenges facing local government, such as reductions in national funding streams, but also a national and worldwide Covid-19 pandemic. Since the outbreak of Covid-19 in the UK, a number of events had occurred which had had a significant impact on all local government, including West Suffolk Council’s financial position in the current financial year and these were expected to continue into 2021 to 2022. Some of these had been restrictions imposed by Government which would continue to affect the Council’s investments, assets and services; and other events had been announcements of Government financial support.

The Council had played a vital role in responding to the pandemic, in supporting businesses and communities for example, as well as running essential services during challenging conditions. Further details were provided in section 1 of the report, including the impact of Covid-19 on the Council’s financial position which would not be fully known for a significant time.

The medium term plans had also been prepared in the context of significant uncertainties around Government policy, examples of which were contained in section 1.8 of the report, while continuing to acknowledge the economic impact, challenges, uncertainties and unknowns of the Covid-19 pandemic.

Councils nationally were expected to achieve a balanced budget through savings and producing local income to fund services due to reduced Government funding. This year, as a one off to assist with the expected continued impact of Covid-19, the Council would see an increase in funding from the Government.  However, members noted this would not completely neutralise the impact expected from the pandemic. Nor would it address the financial challenges that already existed for local government following a decade of funding reductions and increases in the demand for services such as housing and homelessness support.

Despite this and the additional pressures presented by Covid-19, through prudent budgeting, a review of the Council’s vacant posts, investment as well as transformation, West Suffolk Council was in a good financial position. However, while this meant a balanced budget could be set for 2021 to 2022 there were gaps to be met in later years, as set out in the report.

Members considered the report in detail, which included the following issues for securing a balanced budget for 2021 to 2022 and plans for the medium term from 2021 to 2025, together with corresponding detailed appendices:

Section 1:    Background and context, which included reference to the Council’s ‘Investing in our growth agenda’ and the proposed transformation of West Suffolk Council 

Section 2:    Provisional Local Government Finance Settlement, which included reference to the Revenue Support Grant and Rural Services Delivery Grant; the new Lower Tier Services Grant; the future of New Homes Bonus; the homelessness and rough sleeping funding allocation; Covid-19 support funding;  funding from the sales, fees and charges lost income reimbursement scheme; funding from the National Leisure Recovery Fund; business rates and business rates reliefs; Collection Fund deficits; funding for council tax support; and council tax referendum limits.

Section 3:    Council tax for 2021 to 2022

Section 4:    Setting the budget – 2021 to 2022 and across the medium term to 2024 to 2025

Section 5:    Capital programme 2020 to 2025 (including disposal of surplus assets)

Section 6:    Minimum revenue provision (MRP)

Section 7:    General fund balance

Section 8:    Earmarked reserves

Section 9:    Strategic priorities and MTFS reserve

Section 10: Adequacy of reserves

Having acknowledged the issues highlighted above, the Cabinet also noted that currently, council tax made up approximately one fifth of the authority’s budget (exclusive of housing benefit) and therefore only contributed to a fifth of service delivery. West Suffolk Council charged around 11 percent of a local council tax payer’s bill with the rest comprising precepts from the County Council, Police and Crime Commissioner as well as the relevant Parish or Town Council. It was recognised that any increase in council tax would place an extra burden on tax payers but it meant vital services would be protected. Covid aside, bridging the gap between income and demand remained the single biggest challenge facing local government across the country.

To help secure a balanced budget for 2021 to 2022, the Cabinet was recommending an average £4.99 increase in Band D council tax across both predecessor areas of St Edmundsbury and Forest Heath.  The budget for council tax for 2021 to 2022 and future years was based on the option to harmonise the two predecessor areas (St Edmundsbury and Forest Heath) using the average Band D rate across both predecessor areas, harmonising the council tax bills by 2022 to 2023, whilst maximising the council tax receipts to protect services and to support the Council’s investment plans. For 2021 to 2022 this represented an average Band D weekly increase of 22 pence (for the predecessor area of Forest Heath) and three pence (for the predecessor area of St Edmundsbury).

Therefore, the level of Band D council tax for 2021 to 2022, was recommended by Cabinet to be set at £185.40 for the predecessor area of St Edmundsbury and £175.59 for the predecessor area of Forest Heath. Noting that just over 70 percent of West Suffolk residents were in bands A to C, these would actually see a lower increase.

Councillor Broughton commended the finance team and the Performance and Audit Scrutiny Committee, together with staff and other members across the authority for their work in securing a balanced budget for 2021 to 2022 and for developing plans in the medium term.

The Cabinet acknowledged that despite the financial challenges being faced including the added pressures of Covid-19, the Council had made, and were continuing to make, successful investments in services; growth and health and well-being projects; together with creating efficiencies, resilience and ensuring the effective management of resources, all of which and more would enable West Suffolk Council to secure a balanced budget for 2021 to 2022.

Recommended to Council (23 February 2021):

That:

1.       the revenue and capital budget for 2021 to 2025, plus 2020 to 2021 capital projects that subsequently require to be carried forward at the year end, attached at Attachment A and as detailed in Attachment D (Appendices 1-5), Attachment E (Appendices 1-3) and Attachment F to Report number: CAB/WS/21/008, be approved.

2.       Having taken into account the conclusions of the Assistant Director’s (Resources and Performance) report on the adequacy of reserves and the robustness of budget estimates (Attachment C) and the Medium Term Financial Strategy (MTFS) (Attachment D), particularly the Scenario Planning and Sensitivity Analysis (Attachment D, Appendix 5) and all other information contained in Report number: CAB/WS/21/008, the Cabinet recommends an average £4.99 increase in Band D council tax across both predecessor areas of St Edmundsbury and Forest Heath.  This assumption is based on the option to harmonise the two predecessor areas by April 2022.  The level of Band D council tax for 2021 to 2022, therefore, be recommended to be set at £185.40 for the predecessor area of St Edmundsbury and £175.59 for the predecessor area of Forest Heath. (The level of council tax beyond 2021 to 2022 will be set in accordance with the annual budget process for the relevant financial year).

3.       The Assistant Director (Resources and Performance), in consultation with the Portfolio Holder for Resources and Performance, be authorised to vire funds between existing Earmarked Reserves (as set out at Attachment D, Appendix 3) as deemed appropriate throughout the medium term financial planning period.

4.       Approval be given to the Flexible Use of Capital Receipts Strategy (as set out in Attachment G).

(Councillor Ian Houlder left the meeting at the conclusion of this item.)