Issue - meetings

To recommend the Budget and Capital Programme to Council.

RECOMMENDED that:

(i)              A Revenue budget requirement of £24.460 million for 2020/21 as set out in the report to Executive and supported by the Updated Medium-Term Financial Plan at Annex 1, which includes:

·       Revenue Budget Growth Proposals of £0.074 million (at Annex 1.1) in addition to the £2.12 million (net) that was previously reported in the November 2019 Budget report; and

·       An advance payment of £6.204 million for the secondary element of the employer’s Local Government Pension Scheme contribution for 2020/21 to 2023/24;

(ii)            An increase in Reigate & Banstead’s Band D Council Tax of £5.00 (2.20%);

(iii)          The planned use of £5.671 million (net) from the General Fund Balance; comprising:

·       Drawing £1.256 million from the General Fund Balance to support the 2020/21 Revenue Budget; and

·       Drawing £6.204 million from Reserves to fund the cost of the advance payment of the employer’s secondary pension contribution for the three-year period to 2022/23

·       Transferring the £1.789 million allocation of New Homes Bonus funding for 2020/21 into Reserves.

(iv)          The recommended re-allocation of funds between Earmarked Reserves in 2020/21 as detailed in the report and at Annex 2;

(v)            The latest Medium-Term Financial Plan at Annex 2

(vi)          A Capital Programme of £176.328 million for 2020/21 to 2024/25 as set out in the report and at Annex 3, including additional Capital Programme Growth Proposals of £82.655 million, supported by the Capital Strategy for 2020/21 at Annex 3;

(vii)        The Chief Finance Officer’s report on the robustness of the Budget estimates and adequacy of Reserves.

RESOLVED that the Chief Finance Officer to make any necessary final technical adjustments to the budget and Council Tax arising from final budget refinements or changes to Government funding.

The Executive Member for Finance, Councillor Schofield, introduced the final revenue and capital proposals for 2020/21, which included a Council Tax increase of £5 for an average Band D Property, for recommendation to Council. The proposals had been carried out by Executive Members, supported by the Management Team and the Budget Advisory Group. The proposals had been subject to comprehensive review by Members of the Budget Scrutiny Panel and the Overview and Scrutiny Committee.

The Executive Member for Finance highlighted:

·       That the Council had not received any revenue support grant for several years, which continued to present a short-term shortfall in income until regeneration and income regeneration projects became operational. Ring-fenced reserves had been established in recent years, as a mitigation, in recognition that commercial activities would be established.

·       The budget proposals allowed for the continuation and growth of the high-quality services delivered by the Council, along with providing the capacity to deliver the ambitions set out in the new Corporate Plan.

·       The Government’s Provisional Settlement announcement in December 2019 had mitigated the previously anticipated impact of reduced business rates receipts in the short term, but the Council would still need to draw on £1.256m from reserves to present a balanced budget for 2020/21. The specific sum would be adjusted according to the outturn position for the forthcoming financial year. There had been a budget underspend in recent years which had made funds available in reserves for use next year, if required.

·       The Council held a healthy level of reserves that would be available to mitigate future budget risks. This year, funds had been re-allocated between Earmarked Reserves and the General Fund Balance to ensure better alignment with forecast risks and opportunities. The healthy reserves position had enabled the Council to take advantage of the opportunity to make savings in the employer pension contribution by making advance payment for the next three years at a significant discount.

·       Capital Investment Plans included a significant investment in property assets, and the establishment of investment funds to support the delivery of the Corporate Plan, Commercial Strategy and the Housing Delivery Strategy.

In response to observations made by Visiting Members, it was noted that:

·       There had been consultation on the new five-year plan promoting the delivery of more affordable housing and that the Executive was satisfied with the approach that it had taken to funding that initiative.

·       The Executive was clear that it wanted to deliver homes for local people, and forthcoming developments would be a significant step toward that.

·       The targets for housing completions were for the period of the Local Plan, and were robustly monitored by Government. 

RECOMMENDED that:

(i)              A Revenue budget requirement of £24.460 million for 2020/21 as set out in the report to Executive and supported by the Updated Medium-Term Financial Plan at Annex 1, which includes:

·       Revenue Budget Growth Proposals of £0.074 million (at Annex 1.1) in addition to the £2.12 million (net) that was previously reported in the November 2019 Budget report; and

·       An advance payment of  ...  view the full minutes text for item 84

To consider the updated elements of the Budget 2020/21 and Capital Programme 2020 to 2025 Proposals.

Members considered the latest Budget proposals for 2020/21 and the Capital Programme 2020 to 2025 which were set out in a report to the Committee. This information was not yet available when the Budget Scrutiny Panel met in November. This gave Members an opportunity to provide any further feedback to the Executive for its meeting on 30 January 2020.

Portfolio Holder for Finance, Cllr T. Schofield, gave an overview of the report. He said that the proposals for Central Budgets were set out in considerable detail and he thanked the Finance team for providing this level of granularity.

The Central Budgets 2020/21 had been reviewed and rationalised and the recommended changes set out in the report. These included resetting the Headroom Contingency budget (set up in 2012 to address any significant unplanned expenses that might arise in-year) to £1m. The review recommended taking out the £0.5m revenue budget for contributions to the Capital Programme. It recommended removing the £100k budget for redundancy costs as there were no significant structural changes planned next year. A budget of £0.730m was included for forecast contractual pay increases. The New Posts Budget was to be replaced with an increase in the New Posts Reserve to accommodate mid-year staffing changes.

The Employer Pension Contributions budget had been updated to reflect the outcome of the 2019 Pension Fund Revaluation. The recommended approach was to maintain the primary employer contribution rate at 15% of salaries and to pay the secondary employer rate as a lump sum of £6.204m upfront rather than three annual instalments. This gave the Council a discount and saved £400k over three years.

The Capital Programme over the next five years was set out in the report. This included more investment in maintenance of Strategic Property and investment in IT services and the Harlequin. The Housing Delivery Strategy budget includes investment of £30m over three years from 2020/21 to 2022/23 funded in part through the allocation of resources equivalent to the value of New Homes Bonus receipts. The Commercial Investment Strategy proposals were to allocate a further £50m for investment in 2020/21 onwards, to enable the Council to start to generate the commercial revenue that would be needed.

Members made the following observations and comments in the debate that followed:

·         Employer Pension Contributions – it was confirmed that the up-front lump sum payment of three years of contributions would be funded from the earmarked reserve fund set aside for this purpose, plus a contribution from General Fund Reserves at the beginning of 2020/21. It would not be funded from borrowing. The Council would receive c1% interest a year if the funds remained  in Reserves. Paying up-front meant there would be the equivalent of a 4% discount, so it was in the interests of the Council to take this option offered by Surrey County Council. It was noted that the success of the largely equity-based pension fund investment depended on how the market performs over the next three years. The Council was making a judgement  ...  view the full minutes text for item 31