Agenda item

The report set out the final revenue budget (2022-23) and Medium-Term Financial Plan for North Northamptonshire Council.

 

The draft budget proposals were originally considered by the Executive on 23^rd December 2021. There was an Addendum to the report at the same meeting which provided an update to Members following the Provisional Local Government Finance Settlement, which was published on 16^th December 2021. The Settlement set out the funding for individual Councils following the Spending Review which was announced on 27^th October 2021.

 

The budget consultation period commenced on 23^rd December 2021 and ended on 28th January 2022. The consultation offered residents, local partners and other stakeholders the opportunity to review the draft budget proposals and provide feedback during the five-week consultation period. The draft budgets had also been subject to scrutiny by the Finance and Resources Scrutiny Committee.

 

The budget was further updated for the latest position and presented to the Executive at its meeting on 10^th February, for approval and recommendation on to Council.

 

The Final Local Government Settlement was announced on 7^th February 2022 (after the report to the Executive on 10^th February had been published) and largely remained unchanged to the provisional settlement with the exception of an increase of £8k for the Lower Tier Services Grant – the final budget proposals included this change.

 

The report set out the final revenue budget for 2022-23 and the forecast Medium-Term Financial Plan for North Northamptonshire Council, including the proposed Council Tax level for 2022-23, for approval at Full Council.

 

The Revenue Budget 2022-23 and Medium-Term Financial Plan formed part of a full suite of budget reports being presented to Full Council. Separate reports were included on the agenda for the Housing Revenue Account Budget 2022-23 and the Capital Strategy and Capital Programme Budget. These reports together provided a framework for revenue and capital planning for 2022-23 and into the medium term. The Council Tax Resolution for 2022-23 was included within the report.

 

The Government announced a three-year national spending review on 27^th October 2021, however, the Provisional Local Government Finance Settlement published on 16^th December 2021 was a one-year settlement only. It assumed an increase of 6.9% in the Core Spending Power for Local Authorities to meet demand and cost pressures and contained the expectation that each Council would increase its Council Tax precept by the maximum amount allowable, i.e., 2.99%, inclusive of a 1% precept for Adult Social Care.

 

Whilst the additional funding provided within the Settlement was welcomed, this alone was insufficient to address the pressures and funding risks facing local authorities during a time of high inflation and increasing demand, particularly whilst COVID was still present. Further service efficiencies and an increase in the level of Council Tax would enable a balanced budget to be set for 2022-23 as well as supporting the medium-term position.

 

The proposed budget for North Northamptonshire Council included a core Council Tax increase of 1.99% and applied the maximum allowable social care precept increase of 1%. This would contribute around £5.2m per annum towards services and represented a Band D level of Council Tax for North Northamptonshire Council of £1,578.73 in 2022-23 an increase of £45.83 equivalent to £0.88 per week from 2021-22. This Band D figure did not include the Council Tax for individual town and parish councils or the Council Tax set by the Northamptonshire Police, Fire and Crime Commissioner.

 

The Final Local Government Finance Settlement was laid before Parliament on 7^th February 2022 and was unchanged to the provisional settlement except for the Lower Tier Services Grant which was increased by £8k and this had been reflected in the final budget proposals.

 

The Medium-Term Financial Plan had been updated to reflect the latest forecasts within the 2021-22 budget position which would impact in future years, as well as further expected changes from 2022-23.

 

The budget proposals supported a wide range of services to residents and businesses across the area including care to vulnerable adults and children, education, the disposal and collection of waste, household waste recycling, economic development, housing and support for the homeless. The budget would underpin the priorities contained within the Council’s Corporate Plan which had been approved by Council at its meeting on 1^st December 2021.

 

The report indicated that the budget was set in the context of an uncertain economic picture, predominantly due to the global and local challenges posed by the continuing pandemic.

 

Members noted that unitarisation brought with it both opportunities and challenges. The opportunity to create a new single tier authority to collaborate with residents, businesses, and other partners to help strengthen the local economy, create jobs, improve infrastructure and transport links, protect vulnerable people and improve life chances through education and training – supporting greater resilience within families and communities. Financially, the new Council could benefit from economies of scale, and, through the aggregation of the previous sovereign councils, it had the opportunity to streamline processes, consolidate and reduce the number of contracts, better manage assets for the benefit of the area and improve end to end service delivery.

 

The report stated that Transformation would play a key part in maximising those opportunities, helping to re-imagine the shape of the Council and how it interacted with the community and other stakeholders whilst recognising the need to ensure the Authority could demonstrate value for money, improve services and achieve efficiencies. Over time transformation could deliver positive change, however, there was a need to first stabilise the position and create a solid foundation on which to build. Inevitably this takes time and was one of the major challenges facing new Councils such as North Northamptonshire.

 

Whilst it was envisaged that stabilisation of the finances would continue into the second year of the Authority, the Council would bring forward a greater number of transformation opportunities - helping to create a strong and modern Council delivering quality, cost effective services for the benefit of its residents.

 

The Council would continue to face financial challenges, risks and uncertainties over the short and medium term, like many other Local Authorities. This was not only from the challenges brought about by COVID-19, but also the general upturn in demand for services which was taking place prior to the pandemic, inflation and the fundamental changes to how local government was funded including a business rates baseline reset. These funding changes seemed highly likely to be implemented from 2023-24 and had a potentially significant detrimental impact on the funding for areas such as North Northamptonshire when funding was re-distributed. It was expected that time-limited damping or transitional support would help soften losses in funding, however, this was difficult to predict without further information from Government on its intentions and formal details of proposals.

 

The full details of the Council’s revenue budget and the Dedicated Schools Grant was set out in the report.

 

The budget report had been updated to reflect any changes identified subsequent to the draft proposals considered by the Executive at its meeting on 23^rd December and also considered a number of items raised through the Scrutiny process. The main points within the budget proposals were:

 

·           A balanced budget for 2022-23

·           Further net investment in services to both protect vital services and invest in service change of £11.3m, including removal of previous one-off funding predominantly related to COVID-19

·           Efficiencies and income generation of £7.9m

·           Investment in the Children’s Trust to protect and increase the baseline funding from 2021-22 into 2022-23. Further to this there is potential additional one-off revenue and capital investment of £3.65m countywide (£1.6m from the North) to help deliver service improvements for some of our most vulnerable children and young people.

·           Planned savings and pressures from previous Medium Term Financial Plans will remain to be delivered, unless there is a requirement to change the assumptions following review

·           The use of reserves to support non-recurring investment in service improvement, fund time limited projects, pump-prime invest to save schemes and help manage risk.

·           An investment of £1m spread over three years to forward fund initiatives to help address the climate crisis.

·           Investment in Social Care to recognise the increase in the National Living Wage to £9.50 per hour and a 1.25% increase in national insurance contributions for care providers.

·           An investment of £0.8m recurringly to consolidate the increase in pay for the Council’s lower paid staff to the real living wage in 2021-22, together with improved incremental progression

·           An increase in Council Tax consisting of 1.99% for the “core” council tax and 1% for the Adult Social Care precept, resulting in a Band D equivalent charge of £1,578.73 in 2022-23 which is an annual increase of £45.83 from 2021-22, and an average weekly increase of 88 pence.

·           No change to the Local Council Tax Support Scheme which will continue at 25%.

·           Inclusion of a contingency to mitigate against uncertainty.

·           Officers will continue to seek efficiencies in order to help address the budget requirement from 2023-24.

 

Appendix A accompanying the report set out the summary position for the budget.

 

Work had been undertaken to review the budget requirement across all service headings and seek mitigating actions (or savings) in order to remain within the funding envelope and set a balanced budget for the Council in line with statutory requirements. The content of the report, along with the detail in Appendix B, outlined the pressures and savings for each of the Directorates. These had been the subject of scrutiny by the Finance and Resources Scrutiny Committee in accordance with the budget strategy paper that was presented to Executive on 18^th November 2021.

 

As part of the 2022-23 budget setting process a number of Budget Challenge Sessions were held to help inform the budget process, these consisted of Officers and Members and the objective of these sessions were as follows:

 

·                To remind all Service areas of the financial position of the Council and the need to ensure effective and efficient operations (value for money).

 

·                To understand and quantify the risks and pressures in the budget and identify efficiencies to offset against these.

 

·                To understand each Service position for 2021-22 in terms of finance, HR and performance.

 

·                To review the existing MTFP for 2022-23 onwards (from previous year’s budget strategy) – considering the pressures and savings and the ability of services to achieve these for inclusion in the budget plans.

 

·                To utilise the information gathered to date during 2021-22 monitoring to inform the budget setting for 2022-23.

 

·                To understand the planned transformation projects and associated costs/benefits with timing – to include disaggregation and continuing aggregation/service improvement and the impact on the budget.

 

The outcome was to achieve an agreed way forward on the service proposals for 2022-23 and beyond for consideration as part of the Medium-Term Financial Plan and formed the basis of the contents of this report.

 

As part of the budget process a total of eight Budget Task and Finish Scrutiny Sessions were held, consisting of two sessions for each of the following main service areas:

 

·           Place and Economy

·           Adults, Communities and Wellbeing Services, including the HRA

·           Children’s and Education Services – including the Children’s Trust

·           Enabling and Support Services – Finance, Transformation and ICT, and Legal and Democratic Services including HR.

 

The Council also held two all Member Budget Briefing Sessions, separate Group meetings and discussed the budget with Trade Union representatives (as part of the Joint Consultative Forum).

 

The Spending Review and Autumn Budget 2021 set out the funding for Local Government at a national level for 2022-23 to 2024-25. The table within the report provided a high-level summary of the main funding changes for Local Government (as indicated through changes to its Departmental Expenditure Limit (DEL)). Further commentary on the Spending Review and Autumn Budget was set out in Section 4 of the report.

 

	2022-23	2023-24	2024-25	Total
	£m	£m	£m	£m
Local Government funding (to be distributed in settlement)	1,500	1,500	1,500	4,500
Family help	40	70	90	200
Cyber resilience	12	13	13	38
Funding for social care reform	200	1,400	2,000	3,600
Unallocated	48	17	(3)	62
Cumulative increase in LG DEL	1,800	3,000	3,600
Annual increase in LG DEL	1,800	1,200	600

 

Whilst the additional funding was welcomed for Local Government and the Spending Review 2021, announced on 27th October, covered a period of three years, the Local Government Finance Settlement was for one year (2022-23) only. There were no projected or indicative details about individual Council allocations for the remainder of the spending review period (2023-24 and 2024-25) which, obviously, created uncertainty around the future funding for the Council.

 

More fundamental changes in Local Government funding had been clearly signalled from 2023-24, so the one-year settlement, which was predominantly a rollover from the previous year, was generally focussed on “stability” for 2022-23.

 

The settlement itself was relatively good for Local Government when compared to the settlements the sector received before 2020-21. Core Spending Power (i.e., the general funding to Councils including Council Tax, Business Rates and grants) was increased by £3.5bn (6.9%, cash), well above inflation.

 

Local Government was allocated £1.5bn in additional funding as part of the Spending Review 2021. Around 40% of this funding increase had been allocated to social care. Inflation had been applied to the Improved Better Care Fund, and £636m added to the Adult Social Care Support Grant. This had taken North Northamptonshire’s Adult Social Care Grant to £11.427m.

 

The remainder of the £1.5bn had largely been allocated through the new one-off 2022-23 Services Grant (£822m), of which North Northamptonshire received £3.914m. The Secretary of State, in his written statement to Parliament, stated that the funding from the new Services Grant was one-off and that the Government would “take the time to fully consider its future distribution in consultation with councils,” and further that this funding would be excluded from any proposed baseline for transitional support as a result of any proposed system changes.

 

More fundamental changes in the distribution of funding could be implemented as early as 2023-24, with work starting “in the coming months” to work out “with the sector” how to update funding distribution and “challenges and opportunities facing the sector”.

 

These changes in funding could be significant and would make forecasting for 2023-24 and beyond difficult. Some or all of the Fair Funding Review could be resurrected, and a business rates baseline reset seemed likely which had a potentially significant detrimental impact on the funding for previous growth areas such as North Northamptonshire. It was hoped that damping or transitional support would help soften losses in funding and that the Government would provide details early in 2022 on how such a scheme would work to assist authorities in Medium Term financial planning.

 

The Government had previously stated that it had abandoned its original plans to allow Councils to retain 75% of their growth in business rates as it was felt that it would conflict with the Government’s ‘levelling up’ agenda. The Government would now look at the mechanism for redistributing funding to the authorities most in need. Since 2013-14 the majority of local councils had retained 50% of business rates through the business rates retention scheme (and this was the position for North Northamptonshire Council). The government originally announced its intention to allow councils to retain 100% of business rates in 2015, in a bid to encourage them to boost economic growth, and this was subsequently reduced to a target of 75% retention. Currently only a small number of pilot authorities have 100% retention.

 

An increasing share of the growth in the Core Spending Power would come from local taxpayers. Although the maximum increase in “core” Band D would remain at 1.99% in 2022-23, a number of bodies would be able to increase their Band D by more than this. The Council Tax principles for 2022-23 were detailed as follows:

 

•      Core principle of a maximum increase of 1.99% in Band D - This applies to unitary councils, county councils, London boroughs, GLA precept, and fire and rescue authorities.

 

•      Continuation of the adult social care precept, allowing an additional 1% of Band D in 2022-23.

 

•      Shire district councils will be able to increase Band D by the higher of 1.99% or £5.

 

•        Police and Crime Commissioners will be able to increase their precept by a maximum of £10 in each of the next 3 years. The maximum increase in precept was £15 in 2021-22, £10 in 2020-21, and preceded by £24 in 2019- 20 and £12 in 2018-19.

 

•      Fire authorities will be able to increase their precept by 2% (except those with the lowest precepts, who will be able to increase by £5).

 

To help maintain and protect levels of service provision the Council’s proposed budget for 2022-23 included a core Council Tax increase of 1.99% which was up to the level set by the government without triggering a referendum and applied the maximum allowable social care precept of 1% in full – resulting in an overall increase of 2.99% for 2022-23. This would contribute around £5.2m per annum towards service priorities and would represent a Band D level of Council Tax for North Northamptonshire Council of £1,578.73 which was an increase of £45.83 (equivalent to £0.88 per week) from the Band D Council Tax level of £1,532.90 in 2021-22. This Band D figure did not include the Council Tax for individual Town and Parish Councils or the Council Tax set for Fire and Police by the Northamptonshire Police, Fire and Crime Commissioner.

 

Following consultation, the Council made the decision last year to harmonise Council Tax levels across North Northamptonshire in a single year as part of the creation of the new Unitary Council from 1^st April 2021. Therefore, there would be no further adjustments for Council Tax harmonisation in 2022-23.

 

Council Tax income remained the most stable form of income to the Local Government Sector, and it would continue to be key to the ongoing financial sustainability of the Council and the delivery of vital services to its residents, a number of which were vulnerable, alongside investment in its Neighbourhoods; this was particularly important when there was such significant uncertainty regarding the funding and pressures for Local Government services in future years.

 

The Council initially had a forecast funding gap of £18.5m for 2022-23 which included an estimate for the loss of income from funding reforms. Having incorporated the announcements made as part of the Local Government Finance Settlement, applying a Council Tax increase of 2.99% (including 1% for Adult Social Care) and revising the budget assumptions for 2022-23 including a number of new spend pressures and savings, the Council’s budget remained in a balanced position for 2022-23.

 

Whilst the budget was balanced for 2022-23, significant pressures remained in the medium term, most notably due to the assumed changes to Local Government funding following a Business Rates reset which could see the Council potentially lose a significant proportion of the Business Rates growth that it had benefited from over several years.

 

To help address the longer-term deficit the Council would continue to review its service delivery for the future and had dedicated transformation resources working to deliver the changes required, bringing services together in to more efficient and effective operating models. This would help contribute towards the financial requirements of the Council over the Medium-Term. This included reviewing how the Council interacted with its customers, residents, partners, and other stakeholders and would consider service delivery, contractual arrangements, opportunities to expand and enhance the digital experience and realising property efficiencies, thereby reducing costs and improving services going forward. The transformation plan was reported to the Executive meeting on 23^rd December 2021.

 

It was noted that the budget was not just about how to manage within available resources but also where funding should be invested, recognising residents’ priorities and collaborating with partners to jointly develop service delivery proposals, giving families strength and self-reliance so they would benefit from greater self-determination and improved life chances. There was a balance to be maintained between encouraging growth, providing high quality universal services and protecting those that were the most vulnerable.

 

The report indicated that it would be important to ensure that the position was closely monitored and reviewed throughout the year with mitigating actions taken as necessary. There would be a three-way push to keep the basics on track, prevent problems down the line and tackle complex problems together.

 

 

 

 

Councillor Bunday formally MOVED the recommendations detailed in the report. Councillor Roberts formally SECONDED the recommendations detailed in the report.

 

Councillor Rielly on behalf of the Labour Group and Councillor Fedorowycz on behalf of the Green Alliance Group provided a response to the presentation of the report.

 

The Chair invited Councillor Rielly on behalf of the Labour Group to move amendments relating to the report. Councillor Addison seconded these. The amendments related to a proposal to increase expenditure on community wardens and the creation of an emergency fund to support local foodbanks and other agencies supporting vulnerable residents.

 

The proposed amendments were put to the vote. The amendments fell.

 

The Chair invited Councillor Fedorowycz on behalf of the Green Alliance Group to move amendments to the report. Councillor Hakewill seconded these. The amendments related to the creation of a 3-person Sustainability Team, an Energy Efficiency Officer post, the creation of a Citizen’s Assembly, expenditure towards additional climate change training in schools, the purchase of an electric refuse truck and the installation of enforcement cameras on Newland Street, Kettering. In addition, the amendments included one-off expenditure on grants and a budget for the delivery of a range of climate change initiatives.

 

The proposed amendments were put to the vote. The amendments fell.

 

Members then debated the substantive recommendations.

 

(Councillor Anslow left the meeting at this point).

 

The recommendations had previously been MOVED by Councillor Bunday and SECONDED by Councillor Roberts.

 

RESOLVED that: -

 

1.         a) The 2022-23 revenue budget be approved as set out in the report, which sets:

 

i.              a budget requirement of £628.1m including Dedicated Schools Grant of £332.3m resulting in a net revenue budget requirement of £295.9m (set out in Appendix A);

ii.             a total Council Tax requirement for the Council’s own purposes of £178.471m as contained in paragraph 5.29 of the report;

iii.            an average Band D Council Tax of £1,578.73 for North Northamptonshire Council, representing a 1.99% increase in the “core” Council Tax and a further 1% for the Adult Social Care Precept, as set out in paragraph 5.31 of the report, noting a separate Council Tax Resolution report attached at Appendix K;

iv.           the detailed proposals of savings, pressures and income generation for 2022-23 as set out within the report and Appendix B;

v.             the provisional dedicated schools grant budget of £332.3m for 2022-23, as detailed in Appendix C, and summarised in paragraphs 5.47-5.58 of the report, noting that there is a further one-off Schools Supplementary Grant allocation of £7.32m in addition to this;

vi.           the draft planned use of, contribution to, and movement in, reserves as identified in paragraph 5.61 and Section 9 of the report, subject to the final call on reserves after any changes are required to account for final charges etc;

vii.          the corporate budget requirements as set out in paragraph 8.1 of the report, including a contingency sum of £4.750m as set out in paragraph 8.2;

viii.         the Treasury Management Strategy for 2022-23 as set out in Appendix H, including the Authorised Borrowing Limit of £859m, and to note a further update to the Strategy will be provided once the disaggregation of Northamptonshire County Council’s Balance Sheet has been finalised, subject to the External Audit of the former County Council’s accounts;

 

b)           that the financial position is based on the Final Local Government Finance Settlement announced on 7^th February 2022 be noted;

c)           that the consultation feedback as at Appendix E for consideration be noted;

d)           the outcome from the Finance and Resources Scrutiny Committee, as detailed at Appendix G and the representations to Executive be noted;

e)           the Equality Impact Summary as at Appendix F as having been taken into consideration be noted;

f)            the Section 25 Report of the Executive Director of Finance (Section 151 Officer) as set out in Section 15 of this report, including the Director’s review of the robustness of the estimates and the adequacy of the reserves be noted;

g)           a transfer of £6.585m from reserves relating to a timing issue in respect of Business Rates Reliefs to support businesses through COVID-19 be noted. This was a timing issue which recognised that these grants were awarded and accounted for in the General Fund in 2021-22 but the reduced yield in Business Rates will not be reflected in the Collection Fund until 2022-23;

h)           delegated authority be granted to the Executive Member for Children, Education and Skills and the Executive Member for Finance and Transformation, in consultation with the Executive Director of Children’s Services and the Executive Director of Finance (Section 151 Officer), to approve North Northamptonshire’s Schools Funding Formula and to finalise the funding allocation for schools, in line with North Northamptonshire’s Schools Funding Formula;

j)             delegated authority be granted to the Executive Member for Finance and Transformation, in consultation with the Executive Director of Finance (Section 151 Officer), to agree the use of the following reserves which will provide the flexibility to manage the overall budget during 2022-23: –

 

·         Social Care Reserve;

·         Transformation Reserve;

·         Public Health Reserve;

·         Waste Management Reserve; and the

·         Risk Reserve which includes the capacity to support any further/residual issues associated with the COVID-19 pandemic

 

k)           delegated authority be granted to the Executive Member for Finance and Transformation, in consultation with the Executive Director of Finance (Section 151 Officer), to conclude the disaggregation of the predecessor Councils, Northamptonshire County Council’s accounts following certification and final sign off by the External Auditor.

 

2.         a)           approves the Council Tax Resolution attached as Appendix K to this report              which is based on the budget proposals, and which:

 

·         Calculates the Council Tax requirement in accordance with Section 31A of the Local Government Finance Act 1992 as amended by the Localism Act 2011;

·         Calculates a basic amount of Council Tax and an amount of tax for each valuation band (the Council element) in accordance with Sections 31B and 36 of the Local Government Finance Act 1992 as amended; and

·         Sets an amount of Council Tax for each category of dwellings in each valuation band in accordance with Section 30 of the Local Government Finance Act 1992.

 

As required by statute, a recorded vote was conducted on the resolution.

 

Those voting FOR the resolution – Councillors Allebone, Binley, Bone, D Brackenbury, W Brackenbury, C Brown, S Brown, Bunday, Carr, Carter, Dearing, Edwards, Fedorowycz, Griffiths, Hallam, Harrington, K Harrison, H Harrison, Henson, Howell, Howes, Jackson, Jelley, B Jenney, D Jenney, Lawal, G Lawman, L Lawman, Levell, Marks, Maxwell, A Mercer, G Mercer, Nichol, Pandey, Partridge-Underwood, Pentland, Roberts, Rowley, Shacklock, Smithers, Smith-Haynes, Smyth, Tebbutt, Thurland, Tubbs, Tye, Ward, Wetherill and Wilkes.

 

Those voting AGAINST the resolution – Councillors Addison, Armour, Leanne Buckingham, Lyn Buckingham, Colquhoun, Dalziel, Hakewill, Lee, J McGhee and Rielly.

 

Those who ABSTAINED from voting – Councillors Bell and Best.

 

(The meeting adjourned at 12:54 and resumed at 2:00 pm. Councillor O’Hara joined the meeting at this point).