Agenda item

The Deputy Leader and Executive Member for Finance, Governance and Organisation.

The Deputy Leader and Portfolio Holder for Finance, Governance and Organisation, Councillor Lewinski, introduced the item on observations of the Budget proposals 2024/25 from Overview and Scrutiny Committee on 7 December 2023. He summarised that the O&S Budget Scrutiny Panel found the Budget proposals to be sound and robust. Credit was given to the Chief Finance Officer and the Finance Team for their work on the proposals this year. There was some more information to come which would come with the Government local government finance settlement announcement that was due before Christmas.

Councillor Harrison spoke in his capacity as the Chair of the Overview and Scrutiny Committee. The following points were highlighted:

·        Changes to the local Council Tax scheme are to be paid for by premiums on vacant properties which was supported by the Committee.

·        The local government finance settlement was due before Christmas which will be considered with the final budget changes at the January meeting of Overview and Scrutiny Committee.

·        The proposed savings will not have a significant impact on service delivery.

·        There was discussion on inflation assumptions and the Council’s Commercial Strategy.

·        Members were advised that the staff pay offer for 2024/25 had been accepted.

·        The housing benefit funding shortfall was being met by a one-off withdrawal from reserves.

In conclusion, the report was judged as acceptable and the final position would be reviewed in January.

Visiting Members to Executive made the following comments:

·        The Government’s Resources and Waste Strategy meant that rollout of recycling needs to be completed to all properties by the end of next year. There was disappointment that there were no plans indicated in the draft budget proposals as how this will be achieved next year.

The Leader noted that the first item would be picked up in the Review of the Council’s Environmental Strategy. The Managing Director noted that the Government’s new Strategy on waste had only recently been published. Officers were consulting with the Portfolio Holder in order to plan to address the new requirements. Due to timing announcement, it was anticipated that a separate report would be brought forward to deliver the new legislation and confirm the budget implications.

·        A number of items in the Capital Programme were brought forward from previous years. There was a request to set out those items that have been delayed and how these will be taken forward. For example, the environmental sustainability retrofit of the Council’s buildings. Councillor Lewanski explained that the future spending forecast would be reviewed with budget holders, when preparing the final budget proposals.

A Visiting Member reinforced the point on the Capital Programme and the items that were previously budgeted but had not yet been delivered. Concern was expressed that further detail was required.

·        Update on the Harlequin theatre in Redhill and the situation with regard to insurance following discovery of RAAC concrete.

The Leader clarified that there is no date yet to carry out the intrusive survey. The Managing Director advised that discussions were taking place with more information to be provided as this became available. It was confirmed that the Council owns the freehold of the Harlequin.

RESOLVED that the Executive:

Note the following observations and Recommendations from the Budget Scrutiny Panel that in response to the Service and Financial Planning 2024/25 report and supporting documents to Executive on 16 November 2023, that:

(i)          The national and local policy context (Annex 1) and significant financial uncertainties at this stage in the budget-setting process were noted, along with the associated uncertainties and risks.

(ii)        The service proposals set out in this report which seek to respond to this context and deliver our corporate priorities, be noted.

(iii)      The draft service business plans for 2024/25 to 2026/27 be noted.

(iv)      The Panel tested the explanations in the Budget report for year on year changes in the revenue budget (savings, income and growth) in the context of the actual expenditure for the previous year and current year in respect to the services to be provided.

(v)        The Panel found the Budget proposals to be reasonable and in relation to the budget consultation and subject to the outstanding issues and risks commented on below, the Panel considered the following to be achievable, realistic, and based on sound financial practices:

a.Medium Term Financial Plan Forecasts and proposed actions to address the forecast Revenue Budget gap (Annex 2);

b.       Service Revenue Budget growth proposals totalling £0.943 million, savings of (£1.719) million and additional income of (£0.540) million (Annex 3);

c.       Continued funding support for Banstead Commons Conservators for a further three years (2024/25 to 2026/27);

d.       Central Revenue Budget savings and growth proposals totalling (£0.376) million, and £1.75m provision for the 2024/25 pay award (Annex 3);

e.       Agreement of a new 10 year Section 136 agreement with Horley Town Council;

f.         Revenue Issues, Risks and Opportunities totalling £0.964 million, to be funded from earmarked Reserves as necessary;

g.       Revenue Reserve Balances at 1 April 2023 of £35.474 million (Annex 6.1); and

h.       A forecast balanced Revenue budget for 2024/25, subject to final confirmation of the outstanding items.

(vi)      The Capital Programme Growth proposals totalling £3.175 million (Annex 4) was reviewed. (This is revised down from the original £3.986 million)

(vii)     The Fees & Charges Policy (Annex 5) was noted.

(viii)   The Reserves Policy (Annex 6.2) was noted.

(ix)      The Panel supported the following changes to the Local Council Tax Support Scheme to be adopted from 2024/25:

a.       Removal of the maximum award of 90% Council Tax liability for 1,800 households and increasing the award to 100%;

b.      Removal of the minimum requirement for a household to qualify for £5 per week before support is provided;

c.       Expansion of support awards to cover full Council Tax liability for residents in Bands F to H;

(x)  The Panel supported the following changes Council Tax premiums on empty properties to be adopted from 2024/25:

a. Removal of the empty homes discount of 28-days where a property becomes empty and unfurnished;

b. For empty and furnished second homes – charge 200% council tax after the first 12 months; and

c. For long-term empty properties – commence charging the 100% premium after 12 months.

(xi)      The Panel noted that the proposals at recommendation (x) would fund the proposals at recommendations at (ix)

(xii) The Panel noted that assumptions and individual budgets were to be reconsidered following the December Government financial settlement announcement; consequently, the Panel did not draw a final conclusion on the overall Budget proposals for 2024/25. The Panel looks to receive an update on these items in January. Besides Government funding, the principal areas of uncertainty and risk are: homeless support/ temporary accommodation, housing benefit subsidy, recyclate income/costs and the Government’s proposals for resources and waste; the Harlequin/RAAC, and final confirmation of other grants received.

(xiii) The changes made in the final Budget 2024/25 proposals to Executive on 1 February will also be an agenda item for discussion at Overview and Scrutiny Committee on 25 January 2024.

(xiv) The Panel noted that the proposed savings were not expected to have a significant impact on service scope or quality.

(xv) The Panel expressed concerns about general inflationary pressures in the UK economy – 10% in the previous year and currently 6%, well above the Bank of England 2% target, and suggested this may put further upward pressures on the cost of goods and services and the annual pay award.

(xvi) The Panel noted that for several years, the Council has been pursuing its Commercial Strategy to help address budget gaps in future years, as Government funding is further reduced. It noted that additional income from The Rise is included in the revenue budget, with potential for further increases when all units are fully let. Furthermore, Government guidance and experience elsewhere means that the Council is cautious about further expansion of commercial activity. The Panel noted that the Commercial Strategy was now more focussed on generating income through the Council’s areas of strength, such as service provision, rather than investment in commercial assets. It was noted that outside of The Rise, there are not yet specific proposals for additional revenue in development for 2025/26 and beyond.

(xvii) The Panel noted that the use of earmarked reserves, to fund housing benefit shortfalls, could only be a one-off action and not a permanent solution.

(xviii)The Panel noted that in the Financial Accounts, a £1.1million provision has been made for credit loss with regard to the investment in Pathway for Care. This would be funded from the Commercial Risks and Volatility Reserve.

The Panel thanked the Portfolio Holder and officers for the substantial work in preparing the Budget 2023/24 report and for the written responses to the 82 advance questions from Members.