Agenda item

To consider and make any appropriate recommendations to Cabinet on the Draft Medium Term Financial Strategy, Draft General Fund Budget 2023/24 and Draft Capital Programme 2023-2026 for consultation.

Members considered the Budget Report presented by Councillor Boden.

Councillor Boden paid tribute to the work done by Mark Saunders, stating his expertise and knowledge is second to none.

Members made comments, asked questions and received responses as follows:

1.    Councillor Mason said in his presentation, Councillor Boden referred several times to the word ‘assumptions’ but there are realities in there such as core spending power, new homes bonus decreasing and business rates shortfalls. He said that Councillor Boden had indicated that over the years we have over budgeted so therefore assuming we have reserves, would he be correct in saying that these would counter those shortfalls which are identified in the report as major risks?

2.    Councillor Boden said there are two different types of reserves. The first is the general reserve but the reserve he was talking about is budget equalisation which is kept separate because it is specifically related to systemic budgeting issues where the outturn ended up being a surplus, even if on occasion we were budgeting for a deficit over the year. He cannot give a positive answer to the question because he cannot guarantee what will happen in the coming years. It is possible that there will be substantial business rates changes in 2025/26 or that fairer funding will come in which may harm district councils as opposed to county councils in two-tier areas. Lots of things will change and risk is not always a one-way thing, i.e., it will not always be negative. We should bear in mind that as a council we are in a much better financial position than many other district councils across the country because we have been prudent over the last 14 years. Councillor Boden said he has confidence about how we will be able to address the future because we are not in control of the way government makes changes to do with regulations which affects they way we receive money, but central government will not go out of its way to bankrupt local government and they will change regulations to ensure councils can continue to operate financially. Since we are in a better position than many, Councillor Boden said he is confident they will be sufficient for us to continue.

3.    Councillor Mason asked for more clarification on core spending power because it appears we are well down on the national average, and he would like to know why. Mark Saunders replied that core spending power is the measure the government uses to determine what resources and funding authorities have and compare for one year to the next. This includes all the items listed on page 31 of the report. Historically what is also included is the level of council tax increases. Because FDC has not increased its council tax over the last five years, we have not increased our core spending power as have those that did.

4.    Councillor Mason asked if that meant that FDC was being penalised as a result. Mark Saunders responded that was not the case. Councillor Boden said it is good that FDC has kept spending down whilst still maintaining services. Peter Catchpole added that for clarity, it is assumed that every council is going to raise their council tax by their permitted amount and that is why the league tables can look different. Councillor Mason thanked Peter Catchpole for that information.

5.    Councillor Booth asked in that case, what is the purpose of that indicator? Councillor Boden responded that we often question the purpose of a lot of the numbers that government produce for us or that we produce for them. It does give an idea to central government about what is likely to be in their accounts for the forthcoming financial year, but he had to agree that they do not have a great deal of use.

6.      Councillor Booth said it looks like we are getting additional funding from central government through the budget settlement so is it correct that the shortfall would be about £109k taking the two figures together? Councillor Boden said there have been many other amendments to the projected budget for 2023/24 and they are still coming through. He is hoping that ARP will come up with the NNDR1 number and he thinks that may produce a significant positive sum; overall he would be disappointed if we do not end up with a surplus figure rather than a deficit based on the numbers and information received so far.

7.      Councillor Mason asked for assurance that in order to balance the books we are not going to cut services next year. Councillor Boden replied that there is no intention to cut front line services to balance the books. It is appropriate however, for the new council to take its own view about what services there should be and at what level. They may wish to spend more money or less money on services, and it is totally appropriate for them to do what they need with the mandate they will have as a result of the election. Councillor Boden repeated that there is no intention to cut services to balance this budget. Councillor Mason thanked Councillor Boden for the reassurance.

8.      Councillor Booth observed that the Fairer Funding Review should have been introduced about two years ago and asked if this is going to be the new equivalent of the revaluation where the Government keeps kicking it into the long grass. It brings uncertainty for local government and the issue it creates when trying to balance budgets. Councillor Boden said the fairer funding issue has been in abeyance for some six or seven years; the idea behind it is to change the balance of where money goes but he cannot say when that will be resurrected. As far as business rates are concerned, we are told that change will take place in 2025/26 but this is a difficult issue. If he could, he would abolish the whole business rating system, including the valuation office agency and put in a corporation tax increase to give a greater opportunity for business premises operating from physical premises to be more competitive as opposed to those operating online. It would also remove an enormous amount of complicated administration. Councillor Boden said Councillor Booth was right in that we cannot tell when they are going to happen, we have been promised some for years but whatever happens, ultimately central government will not allow local government to go bankrupt and we are more resilient than many other councils.

9.      Councillor Mason asked if a contingency plan is in place should the worst happen, and Freedom Leisure go to the wall. Councillor Boden said that it would be a matter of FDC taking a considered opinion at the time. There was a time when this looked likely and that is why we and other authority customers provided support. There is no reason to believe now that Freedom Leisure is in a position where that outcome is likely, but it is possible and if so FDC will be obliged to take on the responsibility for those leisure centres. Ultimately, it will be a matter for the new administration to decide what to do; however, it is not in our interests or in the interest of the leisure centre customers to allow Freedom Leisure to go to the wall. Councillor Mason said he is not suggesting we are but just wants to see that contingency plans are in place.

10.  Councillor Wicks queried risk registers and mitigating factors within the corporate register and asked if they exist. Councillor Boden said they do exist however members and members of the Audit & Risk Committee only see the top level of the risk management system which exists. The value of the risk management procedure that we have is not in what we see but what happens at a lower level. They are fully supported by a whole raft of risk analysis at operational level monitored carefully by a group of senior offices and managed by individual operational departments. It is thorough and substantial. Paul Medd said that there is a corporate risk methodology for everything that we do in order to be proactive in terms of how we quantify risk and mitigate against it. Whilst it is thorough, we can never entirely capture all the risks that exist, for example the pandemic. When confronted with issues that we are unable to predict, it is about the robust systems we have in place to respond accordingly and to have agility to react and deal those unseen risks if and when they occur in the future.

11.  Councillor Booth raised the issue of the Planning Department and its resources. He gets the impression that statistically there is a delivery failing and so he asked if more resources need to be put into that. Councillor Boden said there is a high level of demand on the planning service, and we have been looking at a root and branch analysis of work being done with a view to a significant reorganisation within the planning team. There are clear opportunities for efficiency savings which means we will be able to get more from the same number of staff we have currently. For example, we have some senior, highly qualified members of the team spending too much of their time on administrative work. Changes in processes will make a difference and lead to a significant potential saving, spending less on planning and getting better results. Paul Medd agreed and said essentially we have a substantive structure fit for purpose. However, the key issue is that there is a national skills shortage of planners. However, we have a good name and a good track record and are working hard to retain the talent we have.

The Overview and Scrutiny panel AGREED to:

·         note the revised General Fund Budget and Capital Programme for 2022/23

·         send the Draft General Fund Budget Estimates 2023/24 and the Draft Medium Term Financial Strategy 2023/24 to 2027/28 for consultation

·         approve the Capital Programme 2023-2026.