Agenda item

This report presents the Council’s draft capital and revenue budgets for 2022/23. In accordance with the Constitution, Cabinet is required to develop ‘initial budget proposals’ approximately three months before finalising the budget and setting council tax levels at the end of February 2022.

The draft budget is based on the principles set out in the Financial Outlook 2022/23 reported to Cabinet on 28 September 2021.

Discussion:

The Committee considered a report presenting the Council’s draft capital and revenue budgets for 2022/23 noting that it was based on the principles set out in the Financial Outlook 2022/23 reported to Cabinet on 28 September 2021.

Members raised the following questions and comments:

• Clarification on the Council tax base: With reference to new housing development, clarification was sought on the reduction in the Council’s tax base due to the pandemic. The Head of Finance Strategy explained that the number of properties was not the only factor in calculating the tax base. For example, it would be reduced by the number of people claiming under the Council Tax Reduction Scheme. Colleagues in Planning Services had assisted in reaching a prudent assumption about the number of dwellings that would be completed and occupied over the course of the year, and therefore liable to Council Tax, based on the number of outstanding planning consents.

The Head of Finance Strategy added that, although there were impacts of Covid that would reduce the Council’s tax base, there were also significant residential development opportunities which would increase the tax base.

The projected increased cost of adult and children’s social care as a result of the pandemic was also highlighted by Members and it was requested that this, as well as the housing development issue, be included in a briefing note on the impact of the pandemic on the Council tax base. The Head of Finance Strategy advised that the adult social care precept was an additional 1% on a resident’s council tax bill.

• Shortfall in income from the Pentagon Centre: The Head of Finance Strategy advised that the draft budget represented a set of assumptions made in November that had now been reviewed. Over the next two years, the shortfall in income from the Pentagon Centre would be in relation to improvement works for its better future use. It was therefore anticipated that this shortfall would be reduced for 2023/24.

• Reduction in Business Rate retention: The Head of Finance Strategy said that Medway not benefiting from 100% business rate retention, as a result of a recent Secretary of State announcement in relation to levelling up, would hopefully be offset by increased national grant allocation due to Medway’s higher position on the indices of deprivation than previously.

• Concerns regarding the Health and Social Care Levy: Concern was expressed that residents might conclude that they were paying twice for adult social care and might still have to sell their homes to contribute towards their care. However, the Council would not receive the extra funding collected through this levy. The Head of Finance Strategy responded that every individual would be paying an extra 1.25% from April as a result of this levy and the allocations from it would be ringfenced for the NHS for the first three years. Separately, the Government had announced a series of relatively small funding pots for local authorities with Medway’s allocation amounting to around £630,000. The Council was modelling the impact of these changes but the presumption within the budget was that the impact would be contained within this year’s grant funding.  

• Income from Local Taxation – The Collection Fund: In response to a question on whether the Council was losing support for the collection fund, the Head of Finance Strategy, said that this was in part a timing issue. Some Covid funding allocations had been provided up front with two years funding received in the same year. Conversely, the impact from other funding allocations might not be seen until the following year. This complication meant that there were occasions when funding had been passed on the residents before it could be reflected in the Council’s collection fund accounts.

• Schools Grants: Asked if the situation on these allocations was still uncertain, the Head of Finance Strategy said that they had now been confirmed and at its meeting on 8 February, Cabinet would receive the final schools funding report.

• Funding pressure on SEND transport: It was noted that the Council Strategy report which would be considered later in the meeting, mentioned significant funding pressure on SEND transport and further information on this was requested. The Head of Finance Strategy advised that the dedicated schools grant did not cover school transport costs which therefore became a pressure on the general fund and this pressure was growing as the SEND cohort increased. Although routes had been rationalised to reduce the number of vehicles needed for school transport, social distancing requirements during the pandemic had meant that this rationalisation could not be sustained. SEND Transport was included as a line within the Children and Adults Directorate budget summary at Appendix 2A of the report.

• Reduction in funding allocation for homelessness: The Head of Housing Strategy advised that Government funding for the rough sleeping initiative would be reduced by 25% for quarter 1 of 2022/23. The current level of service would be maintained during this time from reserves, and any rolled forward money from the second phase of the Everyone In fund. Discussions with the Ministry were continuing on what the level of funding might be beyond quarter 1. This information had been received after the draft budget had been prepared but it would be reflected in the final budget.

Decision:

a)   The Committee noted that Cabinet has instructed officers to continue to work with Portfolio Holders in formulating robust proposals to balance the budget for 2022/23 and beyond.

b)   The Committee commented on the proposals outlined in the draft capital and revenue budgets in so far as they relate to the services within the remit of this committee. It considered the comments from the individual Overview and Scrutiny Committees, as set out in Appendix 5, and forwards them to Cabinet, contributing to the overall comments that the Committee feeds back to Cabinet on behalf of the other O&S Committees.