Agenda item

This report sets out the Council’s draft capital and revenue budgets for 2023/24. 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 2023.

Discussion:

The Chief Finance Officer said that the previous report considered by the Committee on 25 November 2022 had been written prior to the Chancellor of Exchequer’s autumn statement.

Appendix 5 of the report outlined the discussions held at the other Overview and Scrutiny Committee’s on the draft budget.

Appendix 6 of the report was the Local finance settlement report to Cabinet. This was more favourable than had been anticipated and as a result the budget deficit would be smaller than expected.

Members raised a number of issues which were responded to by the Chief Finance Officer as follows:

·        Uncertainty over the social care budget: Concerns were expressed about assumptions that had been made in the budget process. The officer responded that in the Chancellor’s autumn statement and the provisional settlement, the Government had not been clear about which element of the adult social care reforms were being deferred. The absence of the charging reform element implied that this was the deferred element. Although there was certainty about the flexibility to increase Council Tax by the 2% adult social care precept, it remained necessary to make some funding assumptions so there would continue to be an element of uncertainty and risk until the final settlement was published.

·        High needs block/safety valve programme: Asked for an update, the officer said that there had been some clarity as the Minister had confirmed £17,000,000 of revenue funding and £8,000,000 SEND capital funding in principle. This was backed by a deficit recovery plan which would return the high needs block to a breakeven point by 2025/26. The statutory override which allowed the Council to have the reserve in a deficit position had been extended for another 3 years which would cover the deficit recovery period.

·        Savings and efficiencies identified by Directorates: Asked how satisfied the Finance Team were, in building the budget, that these identified efficiencies were reasonable, two examples being the predicted increased capacity of Aut Even and the Old Vicarage, the officer said that the budget was a set of estimates based on projections of placement numbers and predicted costs which made it precarious to a degree. The calculations of the assumptions that underpinned the changes that had been put into the budget had been made through close working between the services and Finance Team and the logic had been tested by senior Members and officers and by Finance Managers. The identified savings were more proportionate in terms of risk and demand than in previous years.

·        Update on Cornwallis School: The officer advised that further information would be within the round 3 capital budget monitoring report.The anticipated opening of the school was in 2024/25.

·        Assumptions on Legal Services savings: Asked about the increase in the cost of the service, the officer said that this service was a pressure in the current year as it had been necessary to use locum staff to cover vacant posts in the permanent establishment, however the budget for Legal Services for 2023/24 remained unchanged from 2022/23 in the Draft Budget.

·        Prudential borrowing for the capital programme: Asked how the debt was being serviced, particularly the £1,600,000 in relation to Splashes, the officer said that in the current year, there was a budget of £12,300,000 for the cost of interest and financing. The Draft Budget reflected pressure from the growth of the programme (including the Splashes addition) and the increased interest rates, increasing the budget requirement by c£8m.

·        The Government’s levelling up process: Concern was expressed about the amount of officer time that had been spent on this process where it later transpired that there was no chance of success, for example in relation to Gillingham and Innovation Park Medway. The officer said that the Council continued to lobby Government for longer term settlements with less competitive processes.

·        Risk management rating: Reference was made to the risk rating in the report that there was a high likelihood that there would be a failure to deliver a balanced budget. The officer said that prior to the Chancellor’s statement and in the absence of any Government guidance, this had been correct given the scale of the budget gap. However, the report to Cabinet would include a smaller gap and therefore would almost certainly include a lower risk management rating.

Decision:

1.      The Committee noted that Cabinet had instructed officers to continue to work with Portfolio Holders in formulating robust proposals to balance the budget for 2023/24.

2.      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 forwarded them to Cabinet, contributing to the overall comments that the Committee fed back to Cabinet on behalf of the other O&S Committees.