Agenda item

Please refer to the draft budget report published and shared on 3 January 2023.

Committee consideration based on the draft budget issued on 3 January 2023.

1.    Mr Oakford introduced the administration’s budget proposals. He informed the Committee that the Council faced its most challenging financial position in recent history and that whilst the local government finance settlement from government had been better than anticipated, £39.1m in further savings were required to offset the impact of increased statutory service demand. Reassurance was given that residents; voluntary, community and social enterprises; and key stakeholders were consulted on savings proposals. Concerning the relationship between the revenue budget and reserves, he confirmed that it was planned for reserves to be used to reduce level of savings required for the coming year only. He explained that it was the first time the general reserve had been drawn on to balance the budget in over twenty years. It was confirmed that a £12m risk reserve was contained within the budget proposal. He stressed that the proposed savings had to be achieved to ensure the Council’s financial stability. The proposal to increase Council Tax by 4.99% was highlighted, with it noted that whilst the administration was reluctant to propose the maximum possible increase, it was necessary to meet budget demands and reflected the majority of upper tier authorities nationally, who were also pursuing the maximum increase. Concerning the Future Assets Programme, he informed Members that KCC was not alone in its review and reduction of its estate to maintain financial resilience. He concluded by stating that it was the intention to make savings in areas which had the least impact on residents, with proposed savings having been reviewed and discussed with Cabinet Members, Corporate Directors and Finance.

2.    Mr Gough reminded the Committee of his letter, with the Leader of Hampshire County Council, to Government which urged for urgent action to address the looming financial crisis facing upper tier authorities, noting that whilst it contributed to a better settlement, future financial risks which effected all authorities remained. He stressed that increased demand and costs to adult social care, SEN and home to school transport, as well as large infrastructure demands, remained the Council’s core financial pressures.

3.    Regarding the proposed revenue budget for Integrated Children’s Services Mrs Chandler explained that the budget uplift reflected the need to accommodate increased service demand and case complexity. She assured Members that resourcing statutory services was the Council’s priority and had influenced where savings were proposed. It was confirmed that savings were connected to reviews, with further details to be fully identified.

4.    Concerning the Public Health Grant, Mrs Bell confirmed that the draft budget included a prediction, as KCC’s allocation was yet to be agreed by government.

5.    Mr Murphy summarised the key proposed savings within Economic Development which included reduced contributions to key contracted partners as well as additional income of £200,000 per annum for the next 3 years through the No Use Empty scheme.

6.    Mr Brazier provided an overview of the capital programme within Highways and Transport, with it noted that Highways Asset Management comprised the majority. Proposed revenue budget savings within his portfolio were highlighted, with attention drawn to reduced costs of concessionary bus pass schemes including the KCC Travel Saver and English National Concessionary Travel Scheme (ENCTS) which were caused, in part, by lower demand. He reminded Members that many services within his portfolio were commissioned and continued to be affected by inflation.

7.    Mr Hill addressed the proposed budgetary changes to Community and Regulatory Services. He reminded Members of the pressure on trading standards and explained that the Libraries, Registration and Archives service continued to experience reduced income. He highlighted the proposed increase to expenditure for the Kent and Medway Coroner Service, with the appointment of an additional assistant coroner. Regarding revenue savings, he noted that significant savings to the Community Warden service and arts contributions were proposed. With respect to the capital budget, he explained that the digital autopsies programme would create future revenue savings.

8.    Members asked a range of questions in relation to the Draft Ten Year Capital Programme, Revenue Budget 2023-24 and Medium Term Financial Plan 2023-26. Key issues raised by the Committee and responded to by Cabinet included the following:

a.    Concerns were raised that the impact of proposed savings had not been detailed in the draft budget report. A Member added that an impact assessment would provide an indication of saving deliverability.

b.    The total additional borrowing planned in relation to the capital programme and what impact it would have on the revenue budget for the coming year was requested. Mrs Cooke agreed to provide Members with a written response following the meeting.

c.    Members asked that cabinet committees be provided with equality impact assessments related to savings made within their respective areas. Mr Oakford reassured the Committee that savings would be consulted on where necessary. Mr Gough added that the impact could be examined by Scrutiny and cabinet committees when considering executive key decisions related to the implementation of agreed savings, which would include equality impact assessments.

d.    In response to a question from a Member, Mr Oakford confirmed that the budget, once approved, would continue to be formally monitored on a quarterly basis by Cabinet and Scrutiny, in addition to monthly monitoring by Cabinet Members, Corporate Directors and Finance. He gave further assurance that where in-year adjustments were made by officers to realise savings, Members would be made aware through the formal budget monitoring process.

e.    Following a question from a Member regarding whether the budget setting process had adhered to Section 11.4 (e) of the Constitution, Mr Watts, as Monitoring Officer, gave assurance that opposition groups had been afforded sufficient impartial advice, where required and requested, and that sufficient time and opportunity had been given to Members, to scrutinise the proposal.

f.     In relation to Cabinet’s draft budget setting process, Mr Gough warned Members not to overestimate the Council’s room for budgetary manoeuvre, with the Council’s statutory duties noted as a key factor.

g.    Mr Oakford confirmed, following a question from a Member, that proposed savings had factored in anticipated implementation timelines, with saving in the first and following years adjusted.

h.    In response to a question from a Member, Mr Gough confirmed that KCC’s Bus Service Improvement Plan (BSIP) funding allocation had yet to be agreed by the Department for Transport. He stated that the BSIP formed part of a wider discussion around KCC’s long term role in public transport.

i.      A Member asked how future savings could be made to mainstream home to school transport. Mr Love emphasised the need to deliver services in line with the agreed policy, mitigating excess provision and agreed to discuss the matter further with Members.

9.    Mr Betts gave a presentation on the Safety Valve Programme. The contents of the presentation included: its purpose, as the Department for Education’s (DfE) programme to reduce historic debts for local authorities with the high Dedicated Schools Grant (DSG) deficits; that an agreement was still subject to negotiation, Ministerial agreement and confidentiality; issues which had increased the deficit; proposed ‘hard reset’ solution; measures already in place; the preliminary timeline for future Member consideration; and that publication of the agreement was expected for March 2023.

10.Following questions from Members, Mr Betts confirmed that it was expected that the Council would need to get in-year spend to match the in-year grant by the 2027-28 financial year and that DfE funding, in addition to an advanced payment, would be connected to KCC meeting agreed targets.

11.Mrs Cooke clarified that the Safety Value did not impact the 2023-24 draft revenue budget and that any immediate financial risk to the Council in the area was mitigated by a statutory override. It was explained that the Safety Value would have a medium-term financial impact, beginning the 2024-25 financial year.

12.Mr Watts informed the Committee that the final agreement with DfE would be subject to the executive decision-making process and consideration by Scrutiny. The Chairman reassured Members that they would be given the opportunity to scrutinise the agreement.

13.No proposed changes to the draft capital and revenue budgets were made.

14.Mr Oakford thanked the Committee for its comments and consideration of the draft Ten Year Capital Programme, Revenue Budget 2023-24 and Medium-Term Financial Plan 2023-26.

15.The Chairman thanked the Leader, Cabinet Members, Deputy Cabinet Members and Corporate Directors for their attendance and engagement in the scrutiny process.

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

POST MEETING NOTE: The Committee were provided with a written answer to question b. on 1 February 2023.