Agenda item

To note the report of the Director Finance presented to the Executive on 12 January 2021. (report attached)  

The Director Finance introduced the Budget Strategy which included the strategic overview of the budgetary position for the 2021/22 financial years and beyond.  The report included an indication of the likely level of available resources, current demand for resources and proposals to ensure that a balanced budget was achieved. The report had previously been considered by the Executive on 12 January 2021, but this provided the opportunity to ensure Members were fully briefed before consideration of the budget at Council on 23 February 2021. The Director Finance reminded Members, that the Council was required to agree a balanced budget, and council tax prior to the start of the financial year. He added that the detail of the final settlement from Government was not expected until February and after the Executive agenda was published.

Having already made reference to the expected delay in the arrival of the final financial settlement, he outlined the key points -

·      the Government, through its one year Settlement, had announced a Lower Tier Services Grant given to all District Council’s and Unitary authorities running lower tier services, Exeter’s allocation to be £228,000. These grants would ensure no Council’s had a negative core spending power and, as a result, the Council’s core spending power would remain the same as the current financial year;

·      a higher contribution had been received in respect of the New Homes Bonus from a third payment received for houses built by the Council in 2020;

·      the Referendum Principles for the Council Tax set by the Government would allow Councils to increase the tax by £5 or less than 2% whichever was the higher. A £5 increase equated to 10p a week. This increase along with the surplus in the collection fund would raise an extra £174,000;

·      the Medium Term Financial Plan had included a drop in Business Rates Income as a result of the Covid-19 Pandemic;

·      a new software update would be installed shortly for the National Non Domestic Rates (NNDR) figure to be provided to Government; and

·      the Government were still committed to resetting the Business Rates and removing the New Homes Bonus. These two actions would have a significant negative financial impact on the Council with £6.1 million savings required for the Medium Term Financial Plan (MTF) up to 2024/25 with £3.3million savings in 2022/23. It was for Members to consider what can be afforded rather than what we want to do and so work on identifying savings was needed now.

The Director Finance responded as follows to Members’ questions and comments:-

·      there would not be a disproportionate effect to those on lower council tax bands by charging £5 rather than a 2% increase in the council tax levy.

·      the Section 31 grant of £16.45m was the estimate of the money that the Government will give to offset the impact of no Business Rates receipts from the retail, leisure and hospitality businesses in the city. This was a significant sum identified in the assessment which will be set aside to pay off the deficit next year.

·      a sum of £50,000 was also set aside to undertake some specific targeted work relating to the Net Zero project. Currently there were no specific funds for the overarching New Zero project. The Corporate Energy team continue to carry out targeted projects relating to the Council and work was continuing through the Housing Revenue Account (HRA) in respect of the Retrofit Pilot.

·      at the request of a Member and to put some context to the challenging financial situation, he would add additional narrative to the Budget report to Council relating to the funding lost by the Council since 2010. 

The Chair invited Councillor Diana Moore to expand on her suggestion for this Scrutiny Committee to consider the work of the wider Commercialisation project, performance against forecast, as well as areas for future development, including those relating to climate change, and invited her to provide more detail to be put forward for consideration by the Scrutiny Programme Board.

Members noted the report and thanked the Director Finance and his team for all of their endeavours.