Agenda item

Related Committee agenda, reports and minutes are available here.

Councillor Biggs, the Leader of the Council, proposed the Budget & Capital Programme 2024/25 recommendations as set out in Minute 61 of the Executive meeting held on 1 February 2024. Thanks were given to the Chief Finance Office, the Finance Team, the Budget Scrutiny Review Panel, the Overview & Scrutiny Committee, Councillor Harrison in his capacity of the Overview & Scrutiny Committee, Members of Council and residents for their contributions to the development of the Budget & Capital Programme for 2024/25.

 

Councillor Lewanski, the Executive Member for Finance, Governance & Organisation seconded the motion and reserved the right to speak.

 

Councillor Harrison, in his capacity as the Budget Scrutiny Review Panel and Chair of the Overview & Scrutiny Committee, made the following observations about the Budget & Capital Programme for 2024/25:

·       Changes in the budget for savings, income and additional costs had been tested year on year along with the explanations provided. The panel had concluded the additional income and cost increases were reasonable and achievable based on sound financial practices and reasonable assumptions in terms of service delivery. The proposed savings were not expected to have a significant impact on service scope or quality.

·       A number of uncertainties related to assumptions and individual budgets lead to a further review in January 2024 after the Government’s funding announcement. The major areas of risk were recorded as homelessness, support for and provision of temporary accommodation, the housing benefit subsidy, recycling income, the Government’s proposals for the management of waste, Reinforced Autoclaved Aerated Concrete (RAAC) at the Harlequin theatre and inflation. Whilst the latter had reduced it appeared likely to be longstanding. Therefore, the Panel and Committee refused to make any firm conclusions.

·       The Commercial Strategy included additional income from the Rise when all the units were fully let. Additionally, a provision was made for credit losses associated with the investment in Pathway for Care.

·       The latest position as of January 2024 saw positive changes with a reduced call on earmarked reserves down from £1m to £700K.

 

Councillor Essex, in his capacity as the Leader of the Green Group, made the following observations about the Budget & Capital Programme for 2024/25:

·       Thanks were given to officers for the preparation of the budget and Councillor Harrison in his capacity as the Chair of the Budget Scrutiny Review Panel. Support was expressed for the Panel’s conclusions.

·       Called for the Council to focus on its own services rather than risky commercial ventures, citing Pathway for Care and Horley Business Park LLP for which there was credit loss provision in the accounts.

·       Welcomed the changes to the empty house property tax and the extension to the Council Tax Discount Scheme. However, called for more to be done to support affordable housing, recycling and action around climate change rather than boosting reserves. Funds allocated to reserves could be used to support residents, the work of Community Development workers and to guarantee continuation of the Household Support Fund for 2024/25.

 

Councillor Harrison, spoke again but this time in his capacity as the Leader of the Residents’ Association Group, making the following observations about the Budget & Capital Programme for 2024/25:

·       Reserves were being used at an unacceptable level. The Housing Benefit subsidy was an issue in 2023/24 and would continue to be in 2024/25. This needed to be addressed nationally by the Local Government Association with it being noted that it was expected that the Leader would press this issue.

·       The Residents’ Association had difficulty supporting the Capital Budget in particular the additional £4.3m allocation to Marketfield Way. It was acknowledged that this was a complex project, the biggest the Council had undertaken. Also, that it took place during the period of the pandemic which had been the source of additional costs. But as a large project, it should have been anticipated that there would be some change in the scope. The new housing provided by the project was welcomed along with the reduction in risk through the sale of assets. The ongoing shortfall was an additional £700K compared to the original business case. It has been an open secret since December 2022 that the project was running over budget. It had been reported that Portfolio Holders had been appropriately informed and briefed. This could not be verified and those involved were no longer Councillors. It was questioned if those involved had been sufficiently curious. The emphasis had been on regeneration when it should have also been about achieving a financial return.

·       Encouragement was given to look at the Council’s financial controls such that any project with a budget of more than half a million pounds should be monitored for overspends greater than £25K. It was suggested that the project should have been taken to the Executive in January 2023 and Council should have been considering the additional funding as part of the budget for 2023/24.

·       It had been requested that a vote be allowed on the separate parts of the Budget and Capital Programme for 2024/25 but this had not been possible. As a result, the Residents’ Association would be voting against the whole of the package.

 

The Mayor invited other Members to speak on the Budget & Capital Programme for 2024/25. Councillor Bray, made the following observations:

·       As an ex-banker she had an expectation that the Council would have released the allocated funding in tranches, probably in thirds, with progress reports being provided throughout. It was doubted that the overspend had happened in the final phase of the project. Rather this would have happened throughout the lifetime of the project. Regular figures should have been supplied on how the budget was being spent. In banking, a traffic light approach would have been taken to report on the health of the project. As a result, more detailed figures would have been requested.

·      It had been suggested that members of the Executive lacked curiosity. This indicated a need to look at the governance of such projects. It was appreciated that there was a big increase in the cost of raw materials during the pandemic but the impact of this on the budget for the project should have been known about during its lifetime.

·       As it was not possible to support this element of the project or vote on the elements separately, it was not possible for the Budget and Capital Programme for 2024/25 to be supported as a whole.

 

Councillor Walsh, made the following observations reflecting on the comments that has already been made on the Marketfield Way project:

·       Disappointment was expressed at the Council’s position. It was encouraged that the focus be on ensuring the Council did not get into the same position again. Councillor Bray’s call to look at project governance and processes was supported.

 

Councillor Blacker, made the following observations also commenting on the Marketfield Way project:

·       Whilst the project should not have been run as it was, it was not possible to go back. Without granting the additional funding being requested, the Council would not have a development bringing in a significant income. It was acknowledged the project should have been managed better.

 

Councillor Lewanski, the Executive Member for Finance, Governance & Organisation having reserved the right to speak responded to the debate, making the following observations on the Budget & Capital Programme for 2024/25:

·       Pleasure was expressed on being able to present a balanced budget without calling on General Reserves. The Council was nowhere near a Section 114. The budget for 2024/25 was smaller than that for the current year. Whilst this was only a small reduction, it nevertheless demonstrated the commitment to reducing costs.

·       There was little choice but to increase Council Tax by 2.99% which was noted as still being below the Consumer Price Index (CPI) at 4%. The need for the increase was compounded by the reduced share of business rate income due to the Government’s formula.

·       Government Grant income had increased.

·       It was being proposed to offer a new Council Tax Support Scheme. One of the benefits of the scheme would be that 800 household would qualify for a full 100% reduction. A budget allocation had been made to manage the risks of housing, benefit subsidy losses and a strategy was being followed to avoid external borrowing costs. Significant efficiencies and income generation savings had been found to help balance the overall budget requirement.

·       Additional funding, received from the Local Government Settlement which was announced after the Budget and Capital Programme for 2024/25 was reviewed by the Executive, would be added to the Environmental Sustainability and Community Partnership Reserves.

·       Whilst as outlined in the report, the Council had healthy reserves, a budget gap continued to be forecast over the medium term. As a result, all budgets would therefore continue to be take through Financial Sustainability Programme to ensure that all services delivered value for money.

·       The Capital Investment Plan would improve and enhance the asset base capital growth providing £4.3million for Marketfield Way, the Council’s first electric refuse vehicles, investment in solar compacting bins as well as the move to HVO fuel vehicles.

·       In summary, the Budget and Capital Programme for 2024-25 was based on a full and robust assessment of what the Council did and how services were funded. It had been developed by Executive Members supported by the Management Team. It had been reviewed by Overview and Scrutiny. It was recommended as a firm foundation for the Council’s future financial plans and service delivery.

 

Councillor Biggs, the Leader of the Council, responded to the debate on the Budget & Capital Programme for 2024/25:

·       Officers were thanked for the time and effort taken to ensure the Council continued to provide some of the best services in the county and country.

·       In response to the comments made by Councillor Essex, it was explained that the Community Fund was in place to support volunteers and their work on health and wellbeing. 

·       As had been promised, issues would not be deferred. This would be continued and lessons would be learnt from what had happened in the past. A process had already been put in place to ensure that this was the case.

·       Disappointed was expressed if it was decided to vote against a very good budget which included investment in town centre regeneration to provide more than just buildings. The Rise provided an entertainment centre which had significantly grown the footfall in Redhill Town Centre. Investment was happening to make the Borough the best place possible including in Community Centres, more health and wellbeing services, waste services with more recycling and biodiversity.

·      The Budget and Capital Programme for 2024/25 had been questioned and scrutinised for eight months and more. It was the right budget which everyone was encouraged to support.

 

Councillor Chandler, proposed the amendment to the Budget & Capital Programme 2024/25 recommendations at set out in the addendum to the agenda making the following comments:

·      The amendment aimed to improve the budget in three areas: delivering the Environmental Sustainability strategy, completing the recycling rollout and delivering Affordable Housing as the Council was taking too much time in delivering these objectives.

·       It was therefore suggested that the budget be amended to provide more staff within the Sustainability Team, an additional officer to increase the Council’s capacity to engage and collaborate with private and social landlords in order to complete the recycling rollout by the Government’s deadline of March 2025 and a dedicated officer to develop a long-term plan to increase Affordable Housing stock.

·      Additionally, to address concern that the Government may discontinue the Household Support Fund Grant, the one-off grand funding announced in February 2024 and General Reserves would be used to maintain the fund at £500K for the 2024/25 financial year. 

 

Councillor Essex seconded the motion and reserved the right to speak.

  

The Mayor invited other Portfolio Holders to speak on the amendment to Budget & Capital Programme for 2024/25. Councillor Neame, the Executive Member for Housing & Support, made the following observations:

·       There was already a Senior Development Manager in the Place Delivery Team specialising in the delivery of Affordable Housing.

·       With regard to an Empty Properties Officer role, the Council was already identifying empty homes for conversion into housing for social rent. As of January 2024, 105 properties empty for over two years had been identified. Unfortunately, there had been little interest from owners to engage with the Council. Therefore, two different approaches were being employed; (1) A higher Council Tax was being applied to empty properties to encourage engagement with the Council; and (2). For the Council to consider directly purchasing.

 

Councillor Avery, the Executive Member for Neighbourhood Services, made the following observations on the Budget amendment:

·       Two new officers as part of the Recycling Team would not be self-funding.

·       Additionally, making savings through the costs associated with domestic waste was not achievable because this was managed by Surrey County Council.

·       Now that the Government’s new recycling strategy was available, how this should be achieved was being considered.

·       There were 5.5K properties to which the full recycling scheme needed to be rolled-out but all were already on the paper recycling scheme. The Council had taken a proactive approach, was already ahead of time and would continue to approach in the most efficient way possible.

 

The Mayor invited other Members to speak on the amendment to the Budget & Capital Programme for 2024/25. Councillor Harrison, in his capacity as the Leader of the Residents’ Association Group, made the following observations:

·       This was the third time elements of this proposal had been heard. There was sympathy for the observations made on Environmental Sustainability and the recycling rollout.

·       However, there was concerned for this as a whole package which included setting up another reserve fund for Household Support.  It was recommended that the Council should wait and see if this was needed in 2024/25 before another reserve fund was established..

·       On which basis, support could not be given to the amendment.

 

Councillor Smith, made the following observations on the Budget amendment:

·       There was a lack of support from the national Government for local Councils with others having to declare bankruptcy. The funding provided was therefore disappointing. It gave respite but was nowhere near enough given stubbornly high inflation and demands for services such as housing.

·       Commended the budget for increasing the Council Tax Support Scheme. However, it was questioned why the Council wanted to increase the fees for a Council Tax Summons and Liability Orders. In a cost-of-living crisis, it was questioned why the Council wanted to place more debt on those who were struggling.

·       It was noted that the budget was balanced before a small increase in Government funding. However, the proposal was to use the additional Government funding to increase reserves. It was recommended that this decision be reversed as this was ten times the income that would be generated from the increase in Summons fees.

·       It was noted that the budget made no mentioned CCTV in Town Centres despite the Executive having said it would give this further consideration. Establishing a Business Improvement District was recommended to bring in external funding in part to fund support for CCTV investment.

·       It was noted that the budget amendment went some way to delivering real change for local communities. However, it was thought unfortunate that this was funded by using reserves rather than building rents which were underperforming. Labour would explore employing specialist building management staff to look after and improve the Council’s buildings.

 

Councillor Walsh, made the following observations on the Budget amendment:

·       Support could not be given to the budget amendment because it asked residents to spend more of their money with not enough certainty about how this would provide additional revenue.

 

Councillor Essex, having reserved the right to speak, responded to the debate and made the following observations about the amendment to the Budget & Capital Programme for 2024/25:

·       The amendment was about making the budget better. An allocation of £20m was made to Affordable Housing in 2020. The budget amendment sought to provide a plan to deliver on the promise made. The same was true of climate change; reserves had been allocated but there was no plan for how this should be spent.

·      The recycling proposal being self-funded at a cost of £90K was achievable because this had been verified by officers. This would be achieved by increased recycling income and credit from Surry County Council. 

·       The Council was halfway through the recycling rollout with 5.5K households still to benefit fully from the scheme. The new target for delivery from the Government, was ten years later than the previous deadline for completion set by the Council. The speed of the rollout was constrained by recycling officer time. A small change in the budget would allow progress to be made.

·      The cost of living continued to be an issue but the Government had yet to  commit to continue funding the Household Support Grant. The Council was called on to make this commitment.

·      The budget amendment sought to accelerate the action on promises made but which had not been delivered. Money had sat in bank accounts for years. The amendment proposed to make officer resource available to ensure the development of proper plans.

 

Councillor Lewanski, the Executive Member for Finance, Governance & Organisation responded to the debate, made the following observations on the amendment to Budget & Capital Programme for 2024/25:

·       It was highlighted that, as much as there was respect for the budget amendments, there had been opportunity to discuss this at the Budget Scrutiny Panel and Overview & Scrutiny Committee meetings.

·      This had covered three areas with Affordable Housing and the recycling rollout already addressed by the relevant Executive Members as part of the debate.

·       With regard to Environmental Sustainability, the proposal of a new climate change officer did not hold merit. There was no evidence provided that additional staff would bring acceleration of activity. Additionally, funding for external advice already existed. Additionally, there was no recognition of the complexity and dependencies associated with upscaling Electric Vehicle charging points. 

·       Retrofitting activity had already commenced. The rollout was being phased to ensure understand the requirements of all buildings based on the Council having commissioned an energy audit.

·       The move to Net Zero would cost millions. If delivered in two years, this would leave the Council with no reserves. Business cases were needed. Whilst there was a mandate for a switch to electric vehicles, there remained a service risk. It was therefore currently the policy to seek solutions with the lowest possible carbon emissions whilst maintaining service provision. The Council was already leading on electric vehicle charging but the amendment did not recognise the complexity of delivering this change.

·       The Leader had already written to the relevant Government Minister to receive clarification on the Household Support Fund so it was not yet clear whether  a new reserve was required.

·       A number of elements in the amendment were uncosted and therefore did not meet the objective of the Council’s Financial Sustainability Programme.

 

Councillor Biggs, the Leader of the Council, responded to the debate on the amendment to Budget & Capital Programme for 2024/25:

·       The debate on the amendment had not been given enough time or scrutiny. This was not fair to residents and therefore could not be supported by the Administration.

·       Some elements of the amendment were already included in the budget. Such as an additional Environmental Sustainability Officer with an additional budget allocation of £100K.

·       The Council was committed to delivering the Waste and Recycling Strategy. This would be easier to achieve with Government support.

·       The Council was already delivering on Affordable Housing in the North and South of the Borough. However, it had stepped back from schemes that would not have added value to the community.

·       The relevant Government Minister and the Chancellor had received letters to press them to continue funding the Household Support Fund.

·       In response to the comments made by Councillor Smith, it was noted that the Council was not Woking or Birmingham which were respectively increasing their Council Tax by 9% and 21%. The comments made about the Council’s property team were challenged. Officers worked very hard to manage the Council’s estate. 

·       Members were urged not to support the budget amendment. Not because it did not have some good ideas but because it needed more understanding and scrutiny despite there having been lots of opportunities to add and comment on the budget.

·       It was offered, that if there had not been enough time to discuss this budget, then this could be started earlier for 2025/26.

 

The amended recommendations on the Budget & Capital Programme for 2024/25 were put to a recorded vote:

·      Those Councillors voting for the budget amendment were: Chandler, Chester, Essex, Khan, Proudfoot, Ritter, Thorne and Smith.

·       Those Councillors voting against the budget amendment were: Adamson, Ashford, Avery, Baker, Blacker, Biggs, Bray, Buttironi, Cooper, Dwight, Elbourne, Fairhurst, Green, Harp, Harrison, Hinton, Hudson, Kelly, King (Andrew), King (James), Kulka, Lewanski, Michalowski, Moses, Neame, Parnall, Sachdeva, Stevens, Tary and Walsh

·       Those Councillors who abstained on the budget amendment were: Humphreys and Sinden

 

The motion was not carried.

 

The original recommendations on the Budget & Capital Programme for 2024/25 as contained in Minute 61 were put to a recorded vote:

·       Those Councillors voting for the Budget & Capital Programme for 2024/25 were: Ashford, Avery, Baker, Biggs, Blacker, Buttironi, Cooper, Dwight, Elbourne, Fairhurst, Green, Hudson, Kelly, King (Andrew), King (James), Kulka, Lewanski, Michalowski, Moses, Neame, Parnall, Sachdeva, Stevens and Tary

·       Those Councillors voting against the Budget & Capital Programme for 2024/25 were: Adamson, Bray, Chandler, Chester, Essex, Harp, Harrison, Hinton, Khan, Proudfoot, Ritter, Smith and Thorne, 

·       Those Councillors who abstained on the Budget & Capital Programme for 2024/25 were: Humphreys, Sinden and Walsh.

 

The motion was carried.