Agenda item

General Fund/HRA Estimates and Capital Programme 2024/25

To consider the report of the Director Finance to be presented to the Executive on 6 February 2024.


The Director Finance presented the report considered at Executive on 6 February 2024. His responses – as well as the Leader’s where applicable – 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 - financial pressures. He also advised that the budget-setting process would change next year and that a new meeting of this Committee would take place in June 2024 where he would set out:-

  • MTFP requirements;
  • timetable; and
  • process.


This had been agreed at the previous Scrutiny Programme Board meeting.


Local Government Finance Settlement 2023/24


The Director Finance clarified that:-


  •  it was not his role to determine how any additional money received by Exeter City Council (ECC) would be spent;
  • it was true that the rise in costs incurred was higher than the rise in income generated, which made the budget-setting process more difficult;
  • the condition survey underpinned the Capital Programmed;
  • ECC could not presently borrow at an interest rate lower than 5%;
  • not all operational properties generated an income;
  • in terms of investment required, the situation with car parks was not dissimilar to the one with the Material Recycling Facility (MRF);
  • car park income appeared close to its peak, which was lower than the budget set;
  • ECC had a choice of investing to maintain the car park or risk losing income;
  • it was extremely difficult for ECC to find new income streams; and
  • the option of losing the multistorey car park required the assumption that other car parks could absorb the overflow.


The Leader responded to Members’ questions as follows:-


·         Not all services were being treated as cost-neutral at the moment; and

·         He was leaning on advice from officers regarding the commercial strategy.


New Homes Bonus


The Director Finance advised that:-


·         there was little left (£59,000) of the £3,028,000 in the “Unused / Projects” column at paragraph 8.7.2; the money had been used entirely;

·         all of the “Unused / Projects” money would be used by the end of the year; and

·         he would enquire with the Director of City Development if there had been any update on the Community Infrastructure (CIL) review announced by the Prime Minister.


Medium-Term Financial Plan


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


·         On the issue of the Corporate Plan, the Finance Team’s role was to deliver options for funding to the leadership;

·         Building homes was an HRA matter;

·         There was a number of ways budgeting could be done so long as the Council’s statutory obligations were met; and

·         Some of the proposals of One Exeter could offer solutions to the approach to financial planning.


The Leader responded to Members’ questions as follows:-


  • The Corporate Strategy was being looked at again; and
  • In terms of Risk, the Equality Act 2010 and Carbon Footprint implications were always considered.


Business Rates


The Director Finance explained that:-


  • business rates had become an increasingly complex area;
  • the current scheme enabled ECC to be part of a pool with other local authorities across Devon;
  • the Devon business rates pool was one of the most successful in the country;
  • the Government wanted to link a reset to reforming the funding formula;
  • every loss of business rates through government policy would be fully funded by the Government;


Spending Pressures

  • there had been a reduction of £1.4m in income;
  • there had been a loss of housing benefit admin grant as a result of the transition to  universal credit, increased pensions contributions, external audit fees and an increase in software licences, among others;
  • debt recovery had increased;
  • a new telephony system would be needed next year;
  • the reduction in car park income had been caused largely by a change in commuter patterns;
  • housing benefit overpayments had reduced significantly;
  • while there was a team in place in charge of marketing ECC’s trade waste services, it was hard for the Council to compete with national companies; and
  • trade waste still made more money than it cost to run.



Council Tax Budget Requirements


The Director Finance clarified that:-


  • Exeter probably had the lowest council tax compared to cities of the same size, although no comparison would be like-for-like;
  • Exeter received £51 per head of population, which was the lowest in the country of similar Cities and prominent towns;
  • the Government had introduced a referendum limit for council tax; and
  • it was possible to hold a local referendum about paying more council tax, but this would be a gamble and carried a risk associated with the cost of running the referendum and rebilling.


Housing Revenue Account


The Director Finance explained that:-


·         despite the impact of the HRA financial challenges, tenants would continue to get repairs;

·         additional staff had been required to cover new regulatory responsibilities for the Council as a landlord;

·         maintenance was a challenging area;

·         £16m would be made available for improvements to ECC’s housing stock;

·         the retrofitting of properties did have an impact on the budget;

·         budget was going up for housing rents.


General Fund Capital


The Director Finance clarified that:-


·         Strata was wholly owned by three local authorities (Exeter, Teignbridge and East Devon);

·         Strata was a limited company which didn’t pay dividends;

·         IT hardware used by ECC was owned by the Council, while software was owned by Strata;

·         Strata was not a company in the normal sense;

·         it was cheaper for ECC to use Strata than to run its own IT.


Responding to a Member, the Leader explained that he did not want to contract out for IT solutions and felt that the Strata system was working.


Robustness of Reserves and Estimates


The Director Finance explained that:-


·         commercial property income and car park income were regarded as “risky income;

·         consequently, ECC was deemed to be a high-risk local authority as it relied on such income to deliver its statutory functions;

·         the impact that the cuts from Devon County Council had on housing needs could be significantly be offset next year but would have a major effect in future years; and

·         the cuts from Devon County Council caused unavoidable pressures (around £200,000; potentially £700,000 next year).


The Chair and Committee Members thanked the Director Finance for his report and answers. The report was noted.


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