Agenda item

“It is recommended that the Authority be recommended to:

1(a) Note and have due regard to the report and Statement of the Chief Finance Officer (see section 8 of Annex A).

1(b) Approve a Council Tax precept of £67.16 for a band D equivalent property (a 1.99% increase from 2020/21 - equal to 2.5p per week) and the revenue budget as set out in Appendix 1.

1(c) Approve the capital programme as set out in Appendix 2.

2 Not hold a referendum to increase Council Tax above the 2% threshold for 2021/22

3 Note that a referendum may need to be considered for 2022/23     depending on the outcome of the Comprehensive Spending Review.”

The report considered by the Executive Committee is attached at Item 7(b)

The Vice Chairman as Lead Member introduced the report by advising Members thatthis paper presented the revenue budget and capital programme, which followed on from the Financial Strategy approved by Members last December. As Members would appreciate, producing a budget this year had been especially challenging due to the unprecedented impact of Covid-19 on the economy, and in turn, public finances. Even at this stage, there was still uncertainty regarding the amount of Government support the Authority would receive during the coming year.  This would depend on, amongst other things, the outturn position on the Council Tax and business rates collection funds, which won’t be apparent for a number of months. 

As colleagues would appreciate, these figures would contain significant provisions for doubtful debts and potential appeals, and the Finance team would keep a close track of this income during the coming year. With no flexibility to increase Council Tax above 2% without triggering a referendum, the Authority was budgeting to use £1.1m of reserves to balance the budget for 2021-22. In light of updated figures received since the papers were published, revised appendices would be presented today.

The Deputy Director of Finance and Assets advised Members that the Authority had seen a reduction in its Council Tax base by 0.65%. For comparison, in previous years, the Council Tax base had increased in the region of 1.5% to 2%. To counter some of this reduction, the Government had announced an additional £670m unringfenced grant that would be distributed to authorities in recognition of the increased costs of providing local Council Tax support following the Covid-19 pandemic. Indicative figures published on 18 December 2020 show the Authority would receive in the region of £336k which had been reflected in the projections under the heading Council Tax Support Grant.

The Deputy Director of Finance and Assets advised Members that without sufficient time to undertake a full comprehensive spending review (CSR) due to the Covid-19 Pandemic, the Government had effectively rolled forward amounts within the settlement funding assessment for 2020/21 and increased these by the rate of inflation as at September 2020. The exception was the pension grant funding of £1.2m which was a flat cash settlement and expected to be included in future years’ settlement funding assessment and subject to review as part of the anticipated three-year comprehensive spending review. It was anticipated that next year the Government would revert to a three-year comprehensive spending review whereby all funding would be subject to review.

The Deputy Director of Finance and Assets advised Members that in terms of the Authority’s budget setting process, this year officers reverted back to the incremental budgeting setting approach when developing the budget proposal for 2021/22. With the projected reductions in Council Tax base and business rates funding, the budget setting process was scrutinised by Officers and Members to ensure only proposals which added value for money were approved. As part of the one-year CSR, the Government announced that public sector pay increases would be paused, excluding NHS, and those earning less that £24k. Therefore, no pay award had been built into the 2021/22 budget for anyone earning more than £24k.

The Deputy Director of Finance and Assets took Members through the revised Appendix 1 and 2.

A Member asked when setting the 2022/23 budget was it sustainable to use reserves long-term and was it viable for the Authority to keep using reserves without further government support in the long term.

The Chairman advised that as Members were aware, there was a lot of work being done by officers and Lead Members to try and increase the amount the Authority could receive from Council Tax. Also, officers had anticipated there would be a three-year comprehensive spending review (CSR), unfortunately, due to the Covid-19 pandemic, this was only one year. The Chairman hoped for a three-year CSR next year, and also that the Authority would be given permission to increase its Council Tax by more than 2%. Without knowing what would happen next year, it was difficult to say if reserves would need to be used.

The Chief Fire Officer advised Members that those who had been on the Authority for a number of years would know the Authority had been campaigning to increase Council Tax by £5 per year. If in the longer term it looked as though the Authority was not sustainable, then Members may have to make a decision to hold a referendum. The Authority was not recommending a referendum this year, but Members would need to think about having a referendum to increase the Council Tax to increase the precept by more than 1.99%. The cost of a referendum would cost the Authority in the region of £600k.

Members discussed the possibility of holding a referendum, or not holding a referendum, and also ringfencing £600k, out of reserves, to pay for a referendum on the precept in future years.

RESOLVED –

1(a)That the report and Statement of the Chief Finance Officer (see section 8 of Annex A) be noted.

1(b)A Council Tax precept of £67.16 for a band D equivalent property (a 1.99% increase from 2020/21 – equal to 2.5p per week) and the revenue budget as set out in Appendix 1, revised 17 February 2021, be approved.

1(c)That the capital programme as set out in Appendix 2, revised 17 February 2021, be approved.

2.         To not hold a referendum to increase Council Tax above the 2% threshold for 2021/22.

3.         To note that a referendum may need to be considered for 2022/23 depending on the outcome of the Comprehensive Spending Review.

It being proposed and seconded:

4.         That £600k be transferred from the existing earmarked Future Funding Reserve to a new earmarked reserve, the purpose of which is to hold funding for a potential referendum in a future year.

Details of the recorded vote for resolutions 1(a) to 1(c) are set out below: