Agenda item

The Chief Finance Officer addressed the Panel and gave a presentation. A summary is set out below and a copy will be attached as an online appendix to these minutes.

Budget Assumptions 2022/23

The forecast includes the following cost pressures and assumptions:

·  Pay Inflation - Estimated 2.00% per annum

·  Council tax - Assumed at 1.99% & 1% Social Care precept for next 3 years

·  Pension Costs - Have been revised in line with the recent revaluation for the next two years followed by a 1% increase per annum from 2023 24

·  Demographic Growth & Increase in Service Volumes - Additional demand from new placement and market pressures in Adult Children Social Care

·  Inflation - CPI projections held at existing planning levels of 2% this will be refreshed for the detailed budget proposal based on ONS data Financial risk is being recognised with contingencies made in high risk areas

·  Budget Pressures / Rebasing – 2022/23 budget rebasing of income budgets taking account of Covid recovery, with improvement in future years

·  Capital Spending - an allowance has been made to fund a minimal number of new schemes given current financial constraints

·  Reserves - Planned use of £3m corporate £2.22m service reserves to manage the transitional pressures from reduced income, and £5m commitment against un earmarked general reserve for unbudgeted Covid pressures

He explained that the Council was still awaiting the outcome of the Spending Review from the Government.

He informed the Panel that a contingency budget (inflation and pressures) had been constructed with the following elements in mind.

·  Adults and Childrens Corporate Contingency £2m

·  Energy Inflation contingency £1.25m

·  N.I. Uplift £0.75m

·  Business Rates base pressure £0.5m

·  New Homes Bonus grant risk £0.92m

·  Total £5.42m

The Chair asked if enough measures were in place given the continuing pressure on funding within the Council.

The Chief Finance Officer replied that it was difficult to account for all eventualities, but that he felt the Council was as prepared as it could be.

Revised Budget profile

·  Increase in Government funding into base budget for 2022/23

·  2022/23 will reset the budget taking account of new funding requirements

·  Council funding and the budget requirement is more aligned in future years

Budget setting timetable:

·  Nov: Area Forum discussion on Winter Pressures

·  Dec: 14th December Budget Engagement event

·  Jan: 10th & 31st Corporate Scrutiny Panel

·  Feb: 10th Cabinet

·  Feb: 15th Full Council

The Chair requested that as much information as possible be shared with the Panel ahead of its meetings on Jan 10^th and 31^st respectively.

The Chief Finance Officer replied that it was the intention that all of the detailed budget annexes, in terms of adjustments to the budget, including savings, investment and the capital programme would be discussed on Jan 10^th.

Councillor Andrew Furse asked if the 2% assumption on pay inflation was sufficient.

The Chief Finance Officer replied that he felt that it was a reasonable figure over the five year term. He added that a contingency may need to be considered as negotiations regarding pay settlements were ongoing.

Councillor Sally Davis asked how many scenarios officers had drafted prior to the one set out in the presentation.

The Chief Finance Officer replied that there had been a range of scenarios within the Medium Term Financial Strategy and that this currently was seen as a blended live scenario. He added that Scenario 1 had Council Tax at 1.99%, Scenario 2 had a Social Care Precept of 2% and Scenario 3 had a Social Care Precept of 2% plus the continuation of the Business Rate Retention pilot.

Councillor Hal MacFie asked what elements were being cut back in terms of Capital Expenditure.

The Chief Finance Officer replied that there were no plans to cut back the existing Capital Programme items and that the only change would be to profiling on delivery to calculate our borrowing requirements. He added that there will be an updated delivery timetable.

Councillor Winston Duguid if the Council mainly received capital through a series of grants / allocations.

The Chief Finance Officer replied that large parts of the Capital Programme are grant funded on major infrastructure schemes, however there are a number of elements that are corporately funded. He added that if a loan were required for a scheme it would be repaid plus interest through revenue. He said that these were built into their core budget assumptions.

Councillor Duguid asked if there was now more of a trend for the profile of the capital to be coming through WECA rather than central government.

The Chief Finance Officer replied that it was probably more through WECA on the larger schemes.

Councillor Duguid asked how much of the Council’s reserves would be needed to be used this year and in the coming years. He said that it was his recollection that when the current administration began they were at a level of £40m (£30m specific / £10m general).

The Chief Finance Officer replied that the figure was around £50m (£37m specific / £13m general) and remained broadly the same. He said that reserves were utilised to manage the 21/22 budget, however through the Covid Recovery Plans the Council was able to mitigate its financial exposure risk and did not have to draw on the financial planning reserves that were earmarked.

He added that due to income exposure £7m had been put into the budget for 21/22 and £3m was planned for 22/23 and that this would be repaid in future editions of the Financial Plan.

Councillor Duguid asked if the savings proposals of £12.3m would be as a result of cuts or postponements.

The Chief Finance Officer replied that it should not always be seen as cuts as there are different methods of providing service delivery, such as care placements and care locations.

Councillor Duguid asked if the Council was allowed to hedge on energy.

The Chief Finance Officer replied that it was not.

Councillor Duguid asked if borrowing was expected to be static.

The Chief Finance Officer replied that this would be refreshed on the borrowing requirements of the Capital Programme, but it was static in terms of cash flow projections.

The Panel RESOLVED to note the update to the Medium Term Financial Strategy budget assumptions.