Agenda item

General Fund Budget 2023-24 and Medium-Term Financial Plan

Decision:

RESOLVED

KEY DECISION

That the Executive endorsed the contents of the report and recommended the budget proposals on to Council for approval. This included:

a) the 2023-24 revenue budget for approval and adoption as set out in this report, which sets:

i. A budget requirement of £691.458m including Dedicated Schools Grant of £354.963m resulting in a net revenue budget requirement of £336.495m as set out in Appendix A of the report.

ii. A total Council Tax requirement for the Council’s own purposes of £189.419m as contained in paragraph 5.27.

iii. An average Band D Council Tax of £1,657.51 for North Northamptonshire Council, representing a 2.99% increase in the ‘core’ Council Tax and a further 2% for the Adult Social Care Precept, noting that a separate Council Tax Resolution Report will be presented to Full Council.

iv. The detailed proposals of savings, pressures and income generation for 2023-24 as set out within the report and Appendix B of the report.

v. The provisional dedicated schools grant budget of £354.963m for 2023-24, as detailed in Appendix C of the report, and summarised in paragraphs 5.47 – 5.58.

vi. The draft planned use of, contribution to, and movement in, reserves as identified in paragraph 5.60 and section 9 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, including a contingency sum of £3.651m as set out in paragraph 8.2.

viii. The Treasury Management Strategy for 2023-24 as set out in Appendix H of the report, including the Authorised Borrowing Limit of £798m, 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.

ix. That Council delegate authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to agree any necessary variations to the budget prior to 1^st April 2023.

x. That Council delegate authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to agree the use of the following reserves which will provide the flexibility to manage the overall budget during 2023-24.

• Social Care Reserve

• Transformation Reserve

• Public Health Reserve

• Waste Management Reserve

• General Risk Reserve

b) the forecast financial position for 2024-25 and 2025-26, noting that this will be reviewed as further information becomes available and updated as part of the budget process for 2024-25 onwards.

That the Executive:

a) Noted that the financial position has been based on the Provisional Local Government Finance Settlement announced on 19^th December 2022 together with any further announcements as at the date of the publication of this report;

b) Noted that the Final Local Government Finance Settlement is yet to be published and, therefore, some figures may be subject to change;

c) Considered the consultation feedback as summarised in the report and attached at Appendix E of the report;

d) Considered the outcome from the Finance and Resources Scrutiny Committee, as detailed at Appendix G and any subsequent representations to this Committee;

e) Noted the Equality Impact Screening Assessment as at Appendix F as having been taken into consideration;

f) Considered the Section 25 Report of the Executive Director of Finance and Performance (Section 151 Officer) as set out in Section 15, including her review of the robustness of the estimates and the adequacy of the reserves;

g) Delegated authority 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 and Performance (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 and following confirmation of the funding allocation mechanism for Maintained Nurseries;

h) Delegated authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to draft the recommended budget resolution for Council in accordance with the necessary legal requirements and to take into account the decisions of the Executive and any final changes and other technical adjustments that may be required;

i) Noted that the transfer of £3.879m from reserves relates to a timing issue in respect of Business Rates Reliefs. This is a timing issue which recognises that these reliefs were awarded and accounted for in the General Fund in 2022-23 but the reduced yield in Business Rates is not reflected in the Collection Fund until 2023-24;

Reason for Recommendations:

· To ensure that the Council complies with its Constitution and legislative requirements in setting the budget for North Northamptonshire Council from 2023-24.

Alternative Options Considered – The Budgets have been subject to a formal budget consultation and comments from the consultation have been considered as part of this process.

Minutes:

The Chair, Cllr Jason Smithers invited Cllr John McGhee to address the Executive. Cllr McGhee queried whether the finances set aside for a 4% pay increase for staff would be sufficient and noted that additional finances may be required and asked the Executive to re-examine this figure. Cllr McGhee also referenced the staff vacancy rate within social care and noted the high cost of utilising agency staff.

The Chair thanked Cllr McGhee for his contribution and noted that setting a balanced budget going forward would be extremely challenging, however with the Council’s very experienced officer team it would be achievable.

The Chair then invited the Executive Member for Finance and Transformation, Cllr Lloyd Bunday to introduce a report that set out the final revenue budget 2023-24) and Medium-Term Financial Plan for North Northamptonshire Council. The draft budget proposals had been considered by the Executive on 22^nd December 2022 along with an addendum to the main budget report which provided an update following the provisional Local Government Finance Settlement, published on 19^th December 2022. The settlement set out the funding for individual councils following the Autumn Statement announced earlier on 17^th November 2022. The final settlement figure announced had seen a £95,000 increase in funding and it was proposed to add this amount to the Council’s contingency fund for 2023/24.

The meeting noted that the draft budget had gone through a consultation period commencing on 22^nd December 2022 and ending on 27^th January 2023. The consultation had provided residents, local partners and other stakeholders with the opportunity to review the budget proposals and provide feedback during the five-week consultation period. A total of 449 responses had been received and Cllr Bunday thanked those who had taken the time to respond. The draft budgets had also been subject to extensive scrutiny by the Finance and Resources Scrutiny Committee.

The report set out the revenue budget for 2022-23 and the Medium-Term Financial Plan for North Northamptonshire Council, including the proposed Council Tax level for 2023-2024 with the Executive requested to recommend these proposals to Council for approval at its meeting on 23^rd February 2023 having considered the results of the consultation, and the deliberations of the Finance and Resources Scrutiny Committee.

The meeting heard that during September 2022 each directorate had entered into Capital Programme challenge sessions, reviewing capital plans and aspirations to enable the Council to provide a better forecast of planned borrowing and serviceability of funding for the general fund going forward. Following these sessions, each directorate had embarked upon a budget challenge session with each one offering economies, savings and sharing the challenges envisaged over the next year and into the medium term. Forecasts for this were based upon the results for the financial year 2021/22 and the forecast as at Period 6 of 2022/2023. A further Scrutiny review for the current year also took place in November 2022 for each directorate.

Consequently, it was reported that the draft budget had been the subject of over 36 hours of scrutiny prior to the consultation period, with a further ten hours of scrutiny sessions by directorate during the consultation period.

The report before members focused on the General Fund, also noting the planned use of the Dedicated School’s Grant, a ring-fenced grant allocated to the authority by the Government to support a range of education related services. The level of funding received for North Northamptonshire Council amounted to £354.936m.

Cllr Bunday referenced the Council’s Reserves Strategy noting that it was a statutory requirement to hold reserves at a level needed for meeting estimated future expenditure. CIPFA and the Local Authority Accounting Panel did not accept that there was a case for introducing a generally acceptable minimum level of reserves and councils, on the advice of their Chief Financial Officers, should make their own judgements as to the level of reserves held. Given the financial pressures faced by the Council’s demand-led services and external factors stemming from global and national events setting a contingency and holding healthy reserves would assist in mitigating against unexpected events, smooth peaks and troughs in expenditure requirements and help to mitigate risk.

The meeting received details of the Treasury Management Strategy Statement, Minimum Revenue Provision Statement and Annual Investment Strategy (2023/24). It was heard that treasury management appertained to authority’s cash flows, borrowing and investments, and the associated risks. The Council had borrowed and invested substantial sums and was therefore exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of financial risks were therefore central to the Council’s prudent financial management.

It was noted that the revenue account for the Council had five main income sources; Council Tax, Business Rates, Government grants, fees and charges and, where necessary, the use of reserves. Cllr Bunday stated that it was imperative that the Council did everything possible to maintain and grow local resources that were within its control. Council Tax revenue was the most stable form of income that the Council had and there was a very clear assumption by Government that councils would set their Council Tax to the maximum allowed.

Although there was a balanced draft budget for 2023/24, there was a forecast budgetary gap of nearly £18m for 2024/25, rising to nearly £54m in 2025/26. By not raising Council Tax, the Council would forgo £36m of income over the medium term to 2026/27. It was noted that the Council was in the bottom third of unitary councils when comparing Band D Council Tax, although the majority of properties within the Council area were Band A, which would result in a weekly Council Tax increase of £1.01.

Cllr Bunday made reference to the Council’s revised strategy for the flexible use of Capital Receipts. It was reported that in December 2021 the Government had announced a three-year extension from 2022-23 onwards of the existing flexibility for councils to use capital receipts to fund transformation projects that produce long term savings or reduced the costs of service delivery and attention was drawn to a list of identified projects that were potentially eligible.

Cllr Bunday concluded by stating that the draft budget was the culmination of months of hard work and therefore there were no reasonable arguments for Full Council to accept any amendments to the recommendations on the day of the meeting had they not been brought forward during the consultation period, which elected members had been encouraged to take part in. The meeting heard that to be successful, the proposed budget would require the buy-in of every member, officer, employee and partner of North Northamptonshire Council and was offered not as the aspiration of the Finance department, but as the intentions of each directorate and as such the whole Council.

Cllr Harrison, referencing a comment made by Cllr McGhee regarding vacancies in Adult Social Care, noted that a percentage of these were being held over due to the transformation consultation process, with recruitment paused for posts that may no longer exist or be substantially altered in the near future. Cllr Harrison stated that it was positive that a difficult budget setting process had highlighted the importance of Adult Social Care with significantly increased budgets, and thanks were extended to the Finance Team for identifying this funding for North Northamptonshire’s most vulnerable residents.

Cllr Harriet Pentland welcomed the extensive scrutiny of the balanced budget that would continue to deliver services for the residents of North Northamptonshire despite challenging financial times. It was also pleasing to see priorities relating to sustainable, greener environments being delivered as well as the maintenance of statutory duties.

Cllr Helen Howell noted the difficult financial climate the budget had been set in, with the leisure sector especially being impacted by increased utility costs. No-one wished to raise Council Tax rates, but it was considered to be a necessary course of action to maintain both a balanced budget and services for residents.

Cllr Lawman spoke to welcome investment in his area, with reference made to home-to-school transport and the highways investment plan. Cllr Lawman thanked all officers involved in formulating the budget for their hard work.

The Chair concluded the debate by noting that the Local Government Association had worked to address national issues for local authorities struggling to recruit into Adult Social Services. The Council was also working to manage vacancy levels and it was anticipated that these should start to reduce, and a more balanced picture emerge as a result.