Agenda item

Draft Ten Year Capital Programme, Revenue Budget 2022-23 and Medium-Term Financial Plan 2022-25


1.         The Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services, Mr P J Oakford, introduced the report and set out the uncertainty against which the County Council was required to set a balanced revenue budget for the forthcoming year, using the approved net budget for 2021-22 and updating it to show known and forecast changes. He set out the enhanced presentation of the capital programme to show a 10-year horizon covering 2022-32 and changes to the way feasibility costs were accounted for, to ensure a more realistic capital programme with significantly less slippage. He explained that the Council was facing exceptional spending demands for the forthcoming year from a combination of the longer-term impacts of the Covid-19 pandemic as well as the economic impact from rising inflation. Savings plans set out the amounts planned to be achieved over the forthcoming year and 3-year Medium-Term Financial Plan as a combination of full-year effect of current-year savings, roll-out of existing policy and new policy savings.  The proposed increase in Council Tax was in line with the Government’s referendum principles and the amounts included in Core Spending Power assumptions in the local government finance settlement. All the provisional grant allocations in the provisional settlement had also been included.  Whilst the overall funding from a combination of grants and local taxation was increasing, it was not sufficient to fully fund all the spending growth pressures, either for 2022-23 or prudent assumptions for later years, so the Council would have to continue to find savings in order to balance revenue spending each year for the foreseeable future.


2.            Ms Cooke was asked how close the Council was to needing to issue a Section 114 notice. Ms Cooke advised the committee that a Section 114 notice was required to be issued by any authority which did not have enough funds to meet its commitments. This requirement had gained increased significance in recent months and was prominent in discussions for several local authorities around the country, which were taking steps to avoid being in that position. Mr Oakford added that the Council had been making hard decisions, for example, about the use of its reserves, to address the challenge and avoid being in a position to have to issue a Section 114 notice. Ms Cooke advised that if the required £38m of savings could not be made, reserves would need to be used, leading to the need for harsher cuts in future years. She added that she was confident that the Council would be clear of needing to issue a Section 114 notice for the next three years.


3.         Mr Shipton advised that a key indicator or early warning of such a situation was the ratio of the Council’s reserves to its debt. In response to a question about the league table measured using this ratio, he advised that the Council was currently ranked 17th out of 24 councils (where the council rated 24th had the poorest ratio).  It was feasible to identify where the Council might have been ranked if different decisions had been madeand Mr Shipton undertook to look into providing this additional information for Members.


4.         Asked by how much Government funding to the Council had been reduced in the last 10 years, Mr Shipton advised that Government funding had been reduced by £222m and the Council had had to close a funding gap of £750m over the last 10 years. In this period, it had raised extra Council Tax revenue of £280m but needed to cover the remaining gap.  He advised that this challenge was shared by many local authorities. Mr Oakford added that local authorities with political leaderships from all parties all wanted more Government funding but needed to be realistic as the impact of the pandemic had reduced the level of funding available. Ms Cooke advised that the Council did not currently need to cover its accumulated deficit but that, if the current Government arrangement were not extended beyond its planned end date of March 2023, the council would then have to cover this.


5.         The Chair thanked Ms Cooke, Mr Shipton and the Finance team for their work in preparing and presenting the budget report and the separate briefing sessions for Members.   


6.            It was RESOLVED that the draft capital and revenue budgets, including responses to consultation, be noted, with thanks, and the draft be presented to Cabinet on 27 January 2022 and full County Council on 10 February 2022.

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