To consider the Draft General Fund and Housing Revenue Account 2022/23 revenue and capital estimates and the Draft Financial Medium Term Strategy (for consultation) (report of the Deputy Chief Executive – Corporate Development enclosed).
Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151 Officer) which requested that the Cabinet consider, and release for consultation the 2022/23 Draft Budget, Medium Term Plan and Strategy.
It was advised that an informal briefing had taken place earlier in the week to give members who could not attend the Cabinet meeting the opportunity to consider the information and ask questions. The following points from the informal briefing and the formal meeting of Cabinet were raised:
· Members asked why there was no allowance for inflation within the Key Budget Principles.
o Officers explained that for those areas where an exceptional increase was anticipated, inflationary increases had been factored in, for example the cost of utilities is increasing significantly and a 30% increase had therefore been included. Allowances for inflationary change were provided for on a cost by cost basis and were bespoke to the area involved – there was no inflation rise built into the basic budgets, but it had been for relevant contracts.
· Members asked why the authority had previously left the Lincolnshire Business Rates Pool and now re-joined it.
o Officers advised that the authority had originally withdrawn due to a risk at the time relating to a power station appeal which could have impacted on the pool. The authority had withdrawn so as not to bring this risk to the Pool however, this risk was no longer in place and the authority had re-joined the Lincolnshire Business Rates Pool for 2022/23.
· Members asked if the anticipated increase in utilities was also being passed on to the other services renting office space at the Council Offices at Priory Road?
o Officers would provide a response following discussion with the appropriate service manager.
· Members questioned whether any issues of concern were included within the Risk Register. The issue of utilities was provided as an example, as it was impossible to know the true figure of increases in the future.
o Officers responded that this was listed within the risk register, included as part of the Cabinet report, under ‘Inflation rises by more than budgeted projections’. It had been given a medium risk as a reasonable allowance for a 30% increase had been included, and this was felt to be realistic.
· Members commented that this would be the last year that the authority would be in receipt of the Revenue Support Grant and New Homes Bonus – how would this affect the budget going forward?
o Officers advised that the New Homes Bonus was not built into the base budget and went straight into reserves. The Revenue Support Grant and the lower tier services grants were built into the budget. There would be concerns nationwide regarding the loss of income streams, and it would be important to continue to drive savings.
o The Leader clarified that these income streams would not disappear completely – they had been introduced as a temporary solution to the loss of the Fair Funding Review. He reiterated however that the New Homes Bonus had always been a temporary arrangement, and that SHDC had been prudent in not including it within its base budget, and by finding savings elsewhere.
· With regard to Fees and Charges, members commented that the authority was becoming increasingly reliant on IT regarding fees in certain areas. The example of garden waste collections was given – a commitment had been given to invest in the purchase of a third vehicle however, there was an issue with the potential to meet deadlines, to capitalise on the maximum impact of opening up a third collection round. A projection of a significant amount had been planned however, this could potentially not be realised if deadlines were not met by all those involved in the project. Had this issue been included within the Risk Register?
o Officers responded that as this risk had been identified, it would need to be addressed by ensuring support was provided to relevant areas where there was an issue.
· Members commented that there had been a reduction of £64,000 in the homelessness budget – had the NSAP and RSAP contributed?
o Officers commented that there had been a budget error in the budget line that had caused this reduction. However, NSAP and RSAP may have contributed to a reduction as the increase in demand may have been higher if the properties had not been available. It was important therefore to monitor the level of demand going forward.
· Members requested information on how NSAP and RSAP affected the homelessness budget, and it was confirmed that this information would be provided in due course.
· Members were aware of government funding, as part of the ‘green’ agenda, to update properties within the authority’s housing stock – what were the figures and timescales around this?
o Members were advised that SHDC, East Lindsey District Council and Boston Borough Council had submitted a successful joint bid for funding via the Green Homes Deal. This was a large programme, and a programme of work would be undertaken over a number of years, with completion by 2030. Some properties within the housing stock would require more money to be spent on them than others but the authority had started this work early and good progress was being made.
· Members commented whether it was appropriate to continue with the use of reserves.
o Officers responded that sometimes the Authority was in a position to contribute to its reserves, and in other years it had to be drawn on. Use of reserves was normal practice, as long as the underlying revenue position balanced.
· Members commented that within the Risk Register it was stated that ‘PSPS may be unable to deliver an effective service within the agreed reduced contract price’ – members asked when the Service Level Agreements were reviewed.
o Officers responded that this was currently a low risk with medium impact – the Service Level Agreement with PSPS was reviewed yearly and it was felt that there was currently no risk.
· Members were advised that the Deputy Chief Executive (Corporate Development) would shortly be undertaking an initial meeting with representatives from three Government departments to explain how the Drainage Board levy was embedded in the Authority’s finances, and the issues for SHDC and neighbouring authorities. The Leader felt that this meeting constituted some progress and it was hoped that it would explain the disproportionate effect of levies on a few councils.
· Members commented that it was regrettable that the cost of repairs and maintenance had gone up considerably however, it was necessary in order to maintain excellent housing quality and the 100% Decent Homes standards.
· Members also commented that the maintenance programme for the Council’s housing stock had fallen behind as a result of the pandemic, but this work was now well underway and there were ample funds within the HRA to undertake the work.
· Members commented that there had been a rise in the cost of red diesel and asked whether any of the authority’s vehicles used it?
o Officers advised that they did not.
· Members responded that although the authority did not use red diesel, the Internal Drainage Boards did and this could have an impact, despite a proposed government concession.
· Members confirmed that the cost of red diesel had contributed to the majority of the increases proposed by the Internal Drainage Boards. Through the ADA and Drainage Boards Management Structure, these amounts may be reduced slightly.
· Members commented that nationally, there had been a shortage in drivers and it had therefore been necessary to increase the pay for the drivers of waste vehicles. However, the Authority realised that this area of the workforce as a whole should be dealt with in the same way, and loaders had also received an increase. The increases had resulted in a substantial cost to the Authority however, it had made a difference and the shortages seen by some councils had not been seen at SHDC.
· Officers stated that a lot of hard work had been undertaken in the last few years to drive out savings, which had contributed to bringing down costs. Savings from joint working, and grants from central government had all fed into and had a positive impact on the draft budget position for 2022/23.
· Members congratulated officers in delivering what had been a difficult budget. The loss of the Revenue Support Grant next year and the uncertainty of monies received from central Government made it difficult for the finance team, and their efforts were appreciated.
That the Draft Budget for 2022-23 and the Medium-Term Financial Plan be recommended for Public Consultation.
(Other options considered:
· To amend the draft Medium Term Financial Strategy before releasing for consultation.
Reasons for decision:
· To comply with the budgetary and policy framework).