Agenda item

This report presents the revenue and capital budgets together with proposals for Council Tax and Adult Social Care Precept for 2021/22.

Councillor Richard Samuel introduce the Budget & Council Tax 2021/22 by reading out the following statement:

‘This 2020/2021 has been an extraordinary year for our country. COVID has wreaked destruction and damage to our economy and our very way of life. And as of yesterday, nearly 115,000 people have died in the UK, with 4 million people testing positive for Coronavirus. Job losses due to pandemic, as we know, have amounted to nearly 1 million jobs. And the retail and hospitality sector have been particularly badly hit.  In Bath and North East Somerset where we have traditionally had strong dependence on this the impact was quite serious. This isn't an emergency situation in every sense of the word, and one that has hit our Council was hard as it has hit our residents and local businesses. As 20/21 was a difficult year, I fully expect 21/22 to also be a very difficult year for the Council's finances and the succeeding years until 2025. I do expect some recovery for next year, but we also have to be prepared for setbacks along the long road to normality. It was only six months ago that we were forced to introduce an emergency budget in the form of a financial recovery plan that aim to save £20m during the year and stabilise our finances. And I'm pleased to say this decisive action has meant that the Council is on course to balance the books in the current financial year. This is very important because had the Council being forced to draw on its reserves this year, this would have left us very exposed in future years. I am bound at this point say something about the support we have received from the government. Promises at the start of the pandemic made by Robert Jenrick MP, the local government minister have turned out to be based on foundations and sound. He promised we would have all the resources we needed to tackle the pandemic. Well, so far, we have received unrestricted grants of £12m from the government and expect to be able to claim back £18m for income loss. However, this does not fully compensate our income shortfall, as the government scheme only provides 70% reimbursement and excludes all of the Council's commercial income losses. This means that a £14m shortfall exists that we have we have to make up by service cuts and in the main the slowing down of our capital programme. To sum this up, we have been short-changed.

So, against this background, we have been forced to plan for the next financial year. Much of the impact on the Council has been a substantial loss of income which is experienced from the closure of our world heritage assets such as the Roman Baths and Pump Rooms. Other major losses have occurred from reductions in parking and other related transport income. And finally, our commercial estate operating in the marketplace as it does has seen a huge pressure on rental income. Tenants who have received inadequate support from the government have turned to us for help, whether through rent restructuring, payment deferment, or defaults. And as businesses have ceased to trade, income has reduced and for the moment units remain difficult to let as private confidence is drained away. Business confidence measured by the CPI Business Confidence Index is now at -22. Well, this is better than the -87, recorded in quarter two last year. But it reflects not only the pandemic woes, but the double whammy of break of the Brexit chaos caused by the government's botched trade agreement. All of these factors mean that our planning assumptions to 21/22 to have had to be downgraded as a starting point in building this budget. I made an early decision that given the extreme economic turbulence I have described; we should smooth the impacts of reduced income until the local national economy recovered and income levels began to return to pre COVID levels. If we had not taken this decision, we will be looking at making £20m of cuts on top of those we made only six months ago. And I was clear at the time that this would have been difficult at any point let alone while we were still dealing with the pandemic. The Council will therefore be recommended to ‘borrow’ £13m from our reserves to be repaid by 2025 as a means of smoothing out cash flow.

This is an exceptional action for exceptional times. But it is necessary to avoid damaging those vital services or residents need. Because I expect 21/22 to be a turbulent year, I am making one off provision of £5m into a special COVID contingency reserve. I hope of course that we will not need to draw down any of this reserve and if that turns out to be the case it will be returned to our main reserves when it is prudent to do so. I now want to turn up the main thrust of this budget. It would have been tempting for someone to say these are tough times abandon your ideas for saving the planet and its ecology stop your transport plans forget building affordable housing for the moment. Well, the Cabinet considered this for no longer than it takes me to do my shoelaces. We are clear that the existential threat that climate change poses must be tackled. This includes continuing to bear down on carbon emissions from vehicles and taking other carbon reduction measures. Our budget also contains a range of measures to help our local economy recover, with emphasis on our high streets, enterprise parks and of course of continuing work on Bath Keys. Our own commercial estate will spearhead this renewal work together with valued partners such as our two outstanding universities. We will continue to collaborate and secure funding from the West of England Combined Authority, focusing particularly on transport improvements, investment funding for local acquisition, and support for our economic recovery plans. In addition to these initiatives, I've made clear that it is essential to do as much as possible to cushion any financial impacts on our services for children and vulnerable adults. Nevertheless, our budget can set £8.5m of savings that it is necessary to undertake to balance the books. Wherever possible. I have tried to ensure that these have the least possible impact on our frontline services. We aim to minimise redundancies and there are no imposed cuts. But there are changes which we are funding that will improve our working environment for staff reflecting the dramatic shift to home working as you've just heard. Our budget also makes provision for a modest pay increase that is favourable, particularly to lower paid employees. During the pandemic and in the future over the next year the Council has run the wellbeing hub providing free school meals distributed millions of pounds of business grants kept the refuse and recycling service literally on the road, as well as the whole range of services to the neediest residents. Our pandemic planning with the NHS at a local level has been top rate and the communication of messages on the progress of the pandemic has been faultless in my view. Our administration wants this to continue as long as it is needed. I want to end by setting out our plans for Council Tax levels next year, and how we intend to cushion the impact from lower income households. Nobody wants to pay more tax, but at the same time, most residents value the services they received from the Council. I believe that given the choice, most residents would support modest increase in their Council Tax. And that is why I'm proposing a 1.99% increase in council tax in 21/22. This increase is necessary to bridge the financial gap left by the income reductions I previously described and to avoid further damaging cuts. It also enables the continuing delivery of the programme we were elected to implement. In addition to the basic Council Tax rate, as I've described, but I'm also proposing a 3% increase in social care precept. This will be used to fund improvements in our Adult Social Care Services which were under such severe pressure during the last year. The total Council Tax and social care precept increases amount to £1.40 a week at the end of which the council tax element is 56p per week. Now, I realised that even this amount of increase will be a struggle for some people. That is why I've increased the funds available for Council Tax support and also funds for welfare support by £400,000 per year increase.

This is a robust budget for challenging very challenging times it seeks to restore stability in the Council's finances offer a truly dreadful year. And I cannot finish without paying tribute to Andy Rothery and his excellent finance team, as well as other directors and officers who have supported our work to bring this budget forward. They have worked tirelessly to bring these proposals before us today and help us rebuild our financial strength. So, I commend this budget to the Cabinet, and I move the recommendations set out in the report.’

Councillor Richard Samuel moved the recommendations.

Councillor Dine Romero seconded the motion by thanking Councillor Samuel, Cabinet Members and Council officer for setting this budget.  The Council have had a very challenging past year, with huge losses in revenue from heritage services, commercial loans and parking income. The government has compensated for some of this lost income, but not entirely. The Cabinet set a mid-year financial recovery plan which has helped in resetting Council’s finances. The pressures on all Council services, especially adult and children services, have remained high and revenue sources remain precarious.

With the prudent action recommended and the increase in council tax, the Cabinet would still be able to ensure that key priorities for this administration are being delivered.

The rest of the Cabinet Members agreed with the proposed Budget and Council Tax for 2021/2022 by highlighting pressures and issues within their Cabinet portfolios, as outlined in the report, and expressed their commitment to continue with the delivery of priorities set by this administration. 

RESOLVED (unanimously) that the Cabinet agreed to:

1.1 Recommend that the Council approves-

a)  The General Fund net revenue budget for 2021/22 of £130.07m and the individual service cash limits for 2021/22 as outlined in Annex 1.

b)  The savings plans outlined in Annex 2(i), growth and pressures 2(ii), in conjunction with the Equalities Impact Assessment Report in Annex 3.

c)  An increase in Council Tax of 1.99% in 2021/22 (an increase of £28.99 per Band D property or 56p per week).

d)  An increase of 3% to Council Tax for the Adult Social Care Precept is approved in recognition of the current demands and financial pressures on this service. This is equivalent to an increase of £43.70 on a Band D property (84p per week).

e)  The movement in reserves outlined in section 5.6 and the adequacy of Un-earmarked Reserves at £12.59m within a risk assessed range requirement of £11.6m - £12.8m.

f)  The Efficiency Strategy attached at Annex 4.

g)  The Capital Programme for 2021/22 of £69.506m including new and emerging capital bids outlined in Annex 5(i), planned sources of funding in 5.8.2, and notes the programme for 2021/22 to 2024/25 and that any wholly funded projects coming forward during the year will be added to the Capital Programme in line with the Budget Management Scheme.

h)  The delegation of implementation, subject to consultation where appropriate, of the capital programmes set out in Annex 5(ii) to Annex 5(iii) to the relevant Director in Consultation with the appropriate Portfolio Holder.

i)  The Community Infrastructure Levy (CIL) allocations and amendments outlined in Annex 5(iv).

j)  The Capital & Investment Strategy attached at Annex 6.

k)   The MRP Policy attached at Annex 7.

l)  The Capital Prudential Indicators outlined in 5.8.8.

m)  The Annual Pay Policy Statement at Annex 8.

n)  The Community Contribution Fund proposal outlined in Annex 10.

o)  The Council Tax Support Scheme for 2021/22 shown in the following link: https://beta.bathnes.gov.uk/sites/default/files/2021-01/Council%20Tax%20reduction%20scheme%20April%201%202021%20-%20March%2031%202022.pdf  and referred to in 5.3.4.

1.2  That the Council include in its Council Tax setting, the precepts set and approved by other bodies including the local precepts of Town Councils, Parish Councils, and Charter Trustees of the City of Bath, and those of the Fire and Police Authorities.

1.3    That Cabinet note the S151 Officer’s report on the robustness of the proposed budget and the adequacy of the Council’s reserves outlined in 5.7.

1.4  Authorise the Council’s S151 Officer, in consultation with the Portfolio Holder for Resources, to make any necessary changes to the draft budget proposal for submission to Council.