Agenda and draft minutes

RESOLVED that Councillor Hannaford be appointed Chair of the meeting.

To approve and sign the minutes of the Combined Strategic Scrutiny and Customer Focus Scrutiny Committee held on 28^th July 2022.

The minutes of the meeting of the Combined Strategic Scrutiny and Customer Focus Scrutiny Committees held on 28 July 2022 were taken as read, approved and signed by the Chair as correct.

The Democratic Services Officer (SS) reported that the Director City Development was collating further data on the proposals for the Exeter Development Fund reported to this Combined Scrutiny Committee last year. A date for a further meeting of the Task and Finish Working Group could then be set for it to report back to this Combined Committee.

Councillors are reminded of the need to declare any disclosable pecuniary interests that relate to business on the agenda and which have not already been included in the register of interests, before any discussion takes place on the item. Unless the interest is sensitive, you must also disclose the nature of the interest. In accordance with the Council's Code of Conduct, you must then leave the room and must not participate in any further discussion of the item.  Councillors requiring clarification should seek the advice of the Monitoring Officer prior to the day of the meeting.

No declarations of discloseable pecuniary interest by Members were made.

The Chair invited the Leader to address the Combined Scrutiny meeting.

The Leader referred to the detailed consideration given to the budget in light of the ongoing resource pressures facing the Council. He welcomed input from Scrutiny Members on the budget process, Members having already received a briefing from the Director Finance on 18 January 2023. The budget making process was predicated on a degree of flexibility and that there could be opportunities for additional projects during the year subject to available funding. Three month budget monitoring by the Executive was integral to the process.

He referred to the recommendation from Executive on 7 February 2023 for Council to utilise CIL funding, for the refurbishment of St. Thomas Splashpad.

To consider the report of the Director Finance to be presented to the Executive on 7 February 2023.

The Director Finance presented the report considered at Executive on 7 February 2023 highlighting individual elements within the sections below, with his responses to Members’ queries set out in italics.

The Director Finance thanked Members and officers for proposing a balanced budget given the number, and difficult timing of, a series of financial pressures.

Local Government Finance Settlement 2023/24

·         A better than expected final settlement had been announced by the Government. This was confirmed on 6 February 2023 with no overall change from the provisional settlement. The Council’s core spending power had therefore increased by 4.5 % compared with a Local Government average of 9.1%. Additional funding could therefore be incorporated into the Asset Management Programme.

Business Rates

·         The Government had confirmed that the implementation of the Business Rates retention reform and the review of the formula would not take place in this Parliament and was not expected to be implemented until 2026/27 at the earliest.

·         the revenue support grant was only a small element of funding with Exeter benefitting more than some other Councils from the Business Rate Retention Scheme. The Retention Scheme was split 50% Government, 40% Districts, 9% Counties and 1% Fire Authorities.

Council Tax

·         The referendum threshold had been increased this year to the higher of a less than 3% or £5 increase for District Councils. As a result, Exeter’s budget strategy for next year assumed that Council Tax would increase by 2.99%, which, along with the estimated surplus on the collection fund of £86,793 and an increase in the taxbase would raise an extra £369,622;

·         a number of elements were taken into account when collecting the Council Tax including those Purpose Built Student Accommodation (PBSA) properties which were not exempt, the premium on second homes, single occupancies and Council Tax support for those on low incomes. There was a likelihood of a 97% collection rate but it was evident that there was a downturn in the current year’s collection rate;

·         there were 505 second homes/empty properties in the city which it was estimated would generate some £1.5 million when the Government scheme for permitting Council’s to charge would come into effect in 2024/25; and

·         a technical question was asked in respect of back dating Council Tax in respect of these properties and the Section 151 Officer committed to providing a written response.

The Chair moved an additional recommendation to the three recommendations set out in the report to the Executive on 7 February 2023 to commend the Executive’s recommendation to Council to implement the 2024/25 Council Tax charge on second homes following the Government’s announcement enabling Council’s to introduce this element in its Council Tax setting. A 12 month notice period was required before this could be introduced.

The motion was seconded, voted upon  and carried unanimously.

Key Assumptions

·         an overall allowance of £4.415 million had been set aside for inflation. This included a catch up to reflect the higher pay award in 2022/23 and the significant increase in energy prices for next year. Other  ...  view the full minutes text for item 6.

To consider the report of the Director Finance to be presented to the Executive on 7 February 2023.

The Director Finance stated that the report explained the details of the long-term policy objectives and resulting capital strategy requirements, governance procedures and risks for the capital programme, the strategy being a statutory requirement.

It was underpinned by the condition survey results, approved in late 2020 which targeted Health and Safety improvements to the Council’s assets.

The Combined Strategic Scrutiny and Customer Focus Scrutiny Committees noted the report.

To consider the report of the Director Finance to be presented to the Executive on 7 February 2023.

The Director Finance explained the proposed 2023/24 prudential indicators for capital finance for adoption by the Council and to set the annual statement of Minimum Revenue Provision (MRP). He set out the following key indicators that the Council had to consider:-

·         the Capital Financing Requirement - demonstrates the amount that the Council has an underlying need to borrow, regardless of whether that amount has actually been borrowed;

·         the Operational Boundary - this sets the amount of borrowing that the Council intends to keep within over the period covered by the indicators; and

·         the Authorised Limit - the maximum that the Section 151 Officer is allowed to borrow to cover the Operational Boundary and day to day cash flow needs. The Council is not allowed to exceed this amount of borrowing without first authorising an increase to the limit.

Responding to a Member, the Director Finance advised that there were very limited opportunities to capitalise revenue spend. One such could be a Transformation Programme and an extreme example was the Government issuing a directive to support a Council who had issued a Section 114 notice.

The Combined Strategic Scrutiny and Customer Focus Scrutiny Committees noted the report.

To consider the report of the Director Finance to be presented to the Executive on 7 February 2023.

The Director Finance presented the report seeking the adoption of the Treasury Management Strategy Report and the incorporated Annual Investment Strategy 2023/24, as required under section 15(1) (a) of the Local Government Act 2003.

There had been no significant change in the Strategy and he highlighted the liability benchmark graphs.

Responding to Members, he stated that advisors had been asked to assess the green credentials of bodies the Council invested in. He would circulate the advisor’s report but advised caution on the ability to accurately determine the degree of environmental and social responsibility of bodies with whom the Council invested and it was not possible to determine the carbon footprint impact. The Council was legally required to prioritise security, liquidity and then yield in that order. Money Markets was a favoured investment option as they met the first two criteria.

Although there had been concerns regarding the financial position of some local authorities with whom the Council placed deposits, ultimately there was very little risk associated with local authority investments. Thurrock and Croydon Councils were examples of struggling Council’s but services could not be suspended and, ultimately, the Public Works Loans Board acted as the lender of last resort and they had not defaulted. Even the Icelandic Banking crises, as an example, had been resolved with monies subsequently returned to this Council with some of the expected interest.

The Combined Strategic Scrutiny and Customer Focus Scrutiny Committees noted the report.

The Chair thanked the Director Finance for his presentation.