Agenda item

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


Committee consideration based on the draft budget issued 5 January 2022.


1.    Mr Oakford introduced the Draft Ten Year Capital Programme, Revenue Budget and Medium-Term Financial Plan. In summarising consideration to that point, he noted that as well as briefing Members himself, Cabinet Members had given explanations of the draft budget in relation to their respective portfolios at each Cabinet Committee. He confirmed that Finance had worked closely with Cabinet Members and Corporate Directors throughout the drafting process. He outlined the proposed council tax increase, which amounted to an increase of 2.99%, and confirmed that its core purpose was to cover demand led cost pressures. He recognised that there could be a requirement to make further cost savings if future Local Government Finance Settlements did not increase to reflect changes in demand. He emphasised that any future cost savings would involve individual public consultations and executive key decisions. Budget risks were addressed and the importance of continued in-year budget monitoring recognised. Members were informed that a £20m in-year revenue budget overspend was anticipated for the 2021/22 financial year, which would be accounted for through a drawdown of reserves. He mentioned that Government were analysing the funding methodology for the next two financial years.


2.    Mr Gough contextualised the draft budget in relation to key developments over the previous financial year, which included Government Covid-19 grant funding and significant changes to service demand and case complexity. The aim of the Medium-Term Financial Plan, to maintain a stable finance position and operations, was highlighted.


3.    Members asked a range of questions in relation to the Draft Ten Year Capital Programme, Revenue Budget 2022-23 and Medium-Term Financial Plan 2022-25. Key issues raised by the Committee and responded to by Cabinet included the following:


a.    A Member asked for assurance from the Corporate Director of Finance, as the Section 151 Officer, that KCC was in a financially sustainable position, especially when the drawdown of reserves was considered. Ms Cooke reassured the Committee that she was satisfied that the proposals and use of reserves over the next two years were financially sustainable. She reminded Members that her Section 25 Assurance Statement, on the robustness of the budget proposals and Medium-Term Financial Plan, would be presented to County Council at its budget meeting on 10 February 2022. She acknowledged that there were tangible risks in years 2 and 3 of the Medium-Term Financial Plan. Regarding the maintenance of reserves, she cited the intention to maintain a revenue budget to reserve ratio of 5%. Mr Gough noted that the general reserve had increased in size over recent years.


b.    Mr Oakford was asked to explain his strategy regarding the future use of reserves and was encouraged to avoid funding discretionary spending from reserves. He stressed that reserves would be used as a last resort and addressed the use of reserves in the 2021/22 finance year which was termed as a loan against future savings. He further emphasised the need to pursue a 5% reserve policy. He committed to avoid further discretionary spending, unless absolutely necessary.


c.    In relation to nationwide energy price increases, a Member asked for details of KCC’s energy expenditure and measures untaken to decrease usage. Mr Oakford confirmed that KCC’s energy was supplied by Laser Energy and through forward buying. He noted that energy savings were part of the Strategic Reset Programme (SRP) and reminded the Committee that a Member Briefing would be held on 21 January to explain the Programme further. He recognised that reducing the authority’s estate would further reduce energy consumption and costs. Miss Carey spoke on KCC’s investment in renewable energy, she reminded Members that £20.6m had been received from the Department for Business, Energy and Industrial Strategy’s (BEIS) Public Sector Decarbonisation Scheme (PSDS), with a series of projects underway and planned, which included new solar farms. She explained the future environmental and financial benefits to Kent. 


d.    Following a question from a Member on the management of KCC’s debt, Mr Oakford confirmed that 15% would be paid off in the next 10 years. He asserted that any further increase to the level of debt was to be avoided. He informed Members that a significant proportion, approximately £300m, of KCC’s debt was sourced from internal borrowing, which was treated similarly to external debt, with different interest rates. Mr Oakford shared his satisfaction at the quality of the authority’s overall treasury management.


e.    A Member asked Mr Oakford whether he was confident that inflationary cost pressures had been adequately accounted for and mitigated against. Mr Oakford recognised the impact of inflation on service and commissioning costs and asserted that he did not expect inflation to be a long-term challenge. In relation to facilities management, he confirmed that cost increases had been factored into the contract tender. Mr Shipton advised that contracts with inflation indices had been included in the draft budget, with average commissioning cost increases of 3% forecast.


f.     Mr Oakford was asked to explain KCC’s use of external consultants. He confirmed that consultants were used by the authority in three capacities: for strategy; as interim staff; and as fixed term specialists. He committed to review their use in order to minimise cost where possible.


g.    A Member sought assurances that the review of Open Access services would appropriately engage stakeholders and be undertaken by qualified professionals in the field. Mrs Chandler reassured Members that the review would involve extensive consultation between the appropriate professionals, staff and young people.


h.    An explanation of the sources of future savings was sought by a Member. Mr Oakford highlighted the areas for future savings, as detailed in the draft budget report. Following Member concerns, Mr Oakford reassured the Committee that an open public consultation had taken place in advance of the draft budget’s publication and reiterated that individual public consultations would be carried out ahead of future savings.


i.      A Member asked what impact was expected as a result of the planned cessation of the homeless support contract from September 2022. Mr Oakford confirmed that the cessation was due to the expiration of the contract and informed Members that support for homeless residents was the responsibility of district councils. He confirmed that funds would be available to support the transition period. Mr Gough noted that the contract was funded by a one-off Government grant.


j.      A Member asked for an explanation of the proposed Kent Travel Saver pass price increase, accounted for in the draft budget. Mr Oakford confirmed that the saving represented a reduction in subsidy, that the subsidy was a discretionary spend, and reminded Members that the price increase would be a separate key decision taken by the Cabinet Member for Highways and Transport. He added that KCC were the only authority outside of London to offer a subsidised children’s travel saver pass. He recognised the impact of the change and stressed the need to ensure that statutory services were delivered to the best of the authority’s ability. Further reassurance was given that Cabinet Members would continue to work closely with officers to ensure that savings had as little impact on residents as possible.


k.    Following a question from a Member, Mr Oakford confirmed that the Contract Management Review Board would be re-established, with Deputy Cabinet Member for Finance, Mr Cooper as its Chair.


4.    Members stressed the need for an extensive publicity campaign to clearly explain the reasons for the proposed council tax increase and budget savings.


5.    The Chairman reminded Members that Cabinet received regular updates on in-year revenue spending, which were publicly available, and encouraged Members to monitor developments. He recognised the pressure on Cabinet Members to maintain quality services within their portfolios, whilst ensuring good value for money.


6.    The draft capital and revenue budgets were not noted by Dr Sullivan.

RESOLVED to note the draft capital and revenue budgets including responses to consultation.


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