Decision details

2020/21 to 2024/25 Draft Budget

Decision Maker: Overview and Scrutiny Committee

Decision status: For Determination

Is Key decision?: No

Is subject to call in?: No

Purpose:

To consider the draft budget proposals for the financial years 2020/21 to 2024/25.

Decisions:

Note - Councillors Helen Chaffey, Brian Cooper, Vicky Hughes, Anne Hutton, Janette Jenkinson and Susanne Long reserved their positions by virtue of the fact that they were Members of the Planning Committee which was due to consider a planning application relating to the Grange Lido. All remained in the Chamber during the discussion and voting on the item.

 

The updated 2020-2021 to 2024/25 draft budget was presented to the Committee by the Finance and Resources Portfolio Holder. He explained to Members that the delays in presenting this updated budget had been due to the recent general election, and informed them that figures in the draft budget were based on what had been published to date and may change slightly. Members were informed that the longer term position of the budget’s Medium Term Financial Plan (MTFP) reflected future uncertainties in local government funding and settlements and that the Government had been expected to publish a new three-year Comprehensive Spending Review during 2019; this would have formed the basis of a new four-year spending settlement for local authorities. Members were informed that the Council now envisaged the new spending settlement would only be in place for 1st April 2021. This, he said, may result in a rise in local government spending but this would not be spread equally over all authorities and it was expected that more resources would be directed to social care. As a result, this draft budget contained plans for substantial reductions of funding such as the abolishment of the Rural Services Delivery Grant which contributed over £400,000 to the Council and a new allocation mechanism for Non-Domestic Rates based on a new ‘needs assessment’. The Council was generating between £1.5 million - £2 million above the current needs assessment and the draft budget included an assumed loss of this income phased over a four year period.

 

The Finance and Resources Portfolio Holder informed Members that the draft budget included assumptions with respect to other incomes such as growth in fee income at 2% via a combination of increases in volume and fees increases as shown in Appendix B. It now assumed increases in Council Tax in all years of 2% in line with the recent technical consultation, which would be below the £5 maximum that was previously assumed. Members were informed that this level of Council Tax increase reduced the Council’s income by £50,000 on a cumulative basis and that this reduction would be kept under review. The Council’s inflationary costs such as salaries, review costs of the Council capital programme and the recently increased costs of local government borrowing would lead to a significant and growing deficit from 2021/22 onwards, with a projected cumulative deficit of £4 million over three years. The implementation of the Customer Connect Programme was expected to save the Council £1.5 million per annum.

 

With respect to next year’s budget, Members were reminded of July 2019 forecast of a MTFP deficit of £620,000. Significant and unavoidable pressures such as the rebasing of car parking income would remove a one off £160,000 increase implemented in 2019; the costs of a Commercial Project Team to future proof the Council’s work, systems and process in areas such as Section 106 agreements; assumed reduction in proceeds from the sale of recycling material of £110,000 and reduction of assumed vacancy rate in rotaed services at £95,000. These costs were said to be largely off-set by savings of £330,000 in pension payments as no further deficit reduction contribution are required, continuation of a further year of Rural Services Delivery Grant and the maintenance of the current Non-Domestic Rates distribution with no application of negative Revenue Support Grant. The Council was expected to benefit from the continuation of New Homes Bonus which is was earmarked for specific purposes.

 

The savings of £1.5 million from the Customer Connect Programme was said to have given the Council the opportunity to firstly commission reviews into how to best ‘sweat the Council’s assets’ in areas such as the Glebe area of Bowness and the North Lonsdale Road in Ulverston. Funding was also requested to be dedicated for additional debt advisor service and employment of a climate change co-ordinator who would cover areas such as environment, bio-diversity and carbon reduction. Secondly, the continued funding of Locally Important Projects by establishment of new Locally Important Project Reserve to fund helpful projects for local communities over the next four years from 2021/22 onwards. Members were told that these actions enabled the Council to deliver a budget with a small projected surplus for 2020/21, while strengthening delivery and protecting the Council’s financial position in the longer-term.

 

Members were informed of the Council’s agreed Capital Expenditure as set out in Section 4 of Appendix A. This identified a number of additional capital bids that had been included in the draft budget plan. Amongst them were the £550,000 requested for improvement to the Kendal Flood Relief Scheme led by Environmental Agency; £500,000 towards the actions from the Kendal Car Parking Study which would include acquisition of land (it was expected that this project would self-fund via additional income generation) and £480,000 towards structural repairs at the Westmorland Shopping Centre Car Park which would significantly extend its operational life and reduce long term liabilities to the Council.

 

Members were informed that this budget was now in a period of formal consultation and that feedback from this Committee and any revisions to the settlement would be presented to Cabinet on Wednesday, 5 February 2020, and to Council for approval on Tuesday, 25 February 2020.

 

Members requested that the Overview and Scrutiny Committee be kept updated on the ever changing situation of the settlement spends and the sweating of the Council’s assets. The Finance and Resources Portfolio Holder informed Members that they would be kept updated through the Overview and Scrutiny Committee and that Members would be briefed when there were major changes. Members requested clarity on the expected reduction in Council’s funding to which the Finance and Resources Portfolio Holder informed Members that a loss of £2million of Non-Domestic Rate was expected over a four year period. The Council was however confident that the shortfall would be met. This shortfall would have been larger without the savings of £550,000 from Phase One of Customer Connect, Phase Two which commenced in January 2020 and changes to the Council’s IT Services.

 

Members enquired about the prospect of the Parish Councils taking more responsibility as a result of reduced funding from Districts on grants and, for example, toilets maintenance. Members were informed by the Finance and Resources Portfolio Holder that there was a possibility that parishes could look at increasing their responsibility, however, it was a question of whether such action was reasonable. Members were told that the Council did not consider it prudent to look at tax increase at Town or Parish level as a source of funds. Officers would provide Members with details on what parish councils could do with regards to spending. Members also requested a briefing by the Finance and Resources Portfolio Holder and Officers on maximising returns from the Council’s assets. In response to Members’ questions, the Finance and Resources Portfolio Holder agreed to provide Members with a written response on how the Council was doing with regards to business rate pooling. He informed Members that the latest figures relating to the Council’s income from business rate pooling were between £600,000 – £800,000 as a result an increase in economic development which had led to a balance on the pooling reserve in the area of £2 million (although this fund could only be used for specific activities).

 

RESOLVED – That

 

1)         the proposals contained in the report to achieve a balanced budget in 2020/21 be noted.

Report author: Helen Smith

Publication date: 03/03/2020

Date of decision: 17/01/2020

Decided at meeting: 17/01/2020 - Overview and Scrutiny Committee

Accompanying Documents: