Agenda item

1.         Mr Oakford introduced the report and advised that, although the County Council had received more funding from Central Government than it had expected, it still had a funding shortfall in the current year.  He reminded the committee that the Council had a legal duty to agree a balanced budget and would need to identify savings of approximately £40m and draw down from reserves, replenishing them in years two and three to maintain general reserves at 5%.  The main areas of increasing demand were in Adult Social Care and Health (ASCH) and Children, Young People and Education (CYPE). The current draft budget had assumed that the Council would take the maximum possible precept from Council Tax, and he reminded the committee that 75% of the Council’s income came from Council Tax.

2.         Mr Oakford, Ms Cooke and Mrs Spore responded to comments and questions from the committee, including the following:-

a)    local projects run using the New Business Fund, to cover directions given by Central Government, would still continue, and assurance was sought that funding would continue, to allow such projects to be completed;

b)    more detail was sought on disposal costs, stated as £650,000 p.a.  Mrs Spore advised that the issue was complex; disposal costs could include staff costs and the costs of applying for planning permission, depending on the disposal route taken.  The Council could charge only a limited amount of these costs to capital receipts.  The questioner asked that full detail on disposal costs, as well as full procurement costs, be included in all future reports to the committee;

c)    more detail was sought on the Capital Projects Asset Review. Mrs Spore advised that the asset utilisation line in the budget book covered investment to maintain the County Council’s estate.  This would go up in 2023/4 but would then reduce. This was the tail-end of funds made available to cover changes to the office estate, for example, leases ending, and was reviewed case by case;

d)    more detail was sought on the Strategic Reset Programme. Mrs Spore advised that the programme covered strategic ambitions, including technology and various other facets of activity and gave as an example the current consultation on Kent Community Assets;

e)    asked for how long the Council had been receiving insecure funding, Mr Oakford advised that the Council had always received this.  Previously, it had diverted it into the base budget but this was not sustainable so the Council would seek instead to put it into reserves. Kent’s current level of reserves, £55m, placed it near the bottom of the league table of local authorities.  The Council would balance its budget this year and then rebuild its reserves;

f)        disappointment was expressed that the Council did not seem to invest more in preventative work, and a comment made that this was short-sighted;

g)    a view was expressed that the Council should seek to avoid closing its buildings but use them instead to group public services together, as this was what residents had said they wanted. More detail was sought on potential capital projects. Once the response to the Kent Community Assets consultation was known, the Council would need to look at long-term investment and solutions;

h)    a view was expressed that reserves were supposed to be for a rainy day. Mr Oakford advised that the Council would draw down reserves a lot in the future and they could soon become dangerously low;

i)        5% in reserves would represent about £50m, and a question was asked about what level of reserve would keep the County Council viable. The deficit caused by an overspend must be taken from reserves, but this was not sustainable - £60m debt would cancel out £50m of reserves. It was surely expected that a Section114 notice would shortly become necessary. The Council had failed to maintain sufficient reserves and needed to add to them now rather than later. The situation did not seem to have been properly monitored. Ms Cooke drew attention to the Council’s Reserves policy, included as Appendix G of the budget book, and advised that 5% general reserve was a policy position which many local authorities used. Insecure funding was not used for non-recurring or time-limited activity, and reserves were earmarked to meet predicted risks.  Management action would seek to bring down the overspend to as close to £25m as possible.  Key areas of overspend, and ongoing pressures, were in ASCH and CYPE, in common with many other local authorities. Local authorities could not become bankrupt; a S114 notice meant that they would receive Government intervention to ensure that statutory service obligations were met. By the time of the budget County Council meeting, quarter 3 monitoring information would be available and officers would be able to give an update on reserves. The ability to achieve a balanced budget would depend on the ability to identify savings. The committee was reassured that monitoring was very tight, and its frequency would be increased. Mr Oakford added that all areas of the budget were impacted by ASCH pressures and that this situation would continue into the near future;

j)        a comment was made that no clear steps or detail was included to say how any savings would be delivered;

k)    Members needed to be clear about who was accountable for the policy which had led to the overspend;

l)        options for the future of the Chief Executive’s Department Strategic Estate Programme stated an allocation of £6m, followed by £12m, but the spreadsheet did not give detail of what this would be spent on. Mrs Spore advised that full details of options for the future of Strategic Headquarters buildings would come to the next meeting of the committee;

m)  Members could not ‘propose changes’, as asked by the recommendation in the report, if they did not have a full picture. Mr Cockburn advised that it was key that all Members had all information in order to be able to make budget proposals; and

n)    asked if the reserves were sufficient to cover fluctuational spending, Ms Cooke advised that they were and that the situation was, and would continue to be, monitored regularly. 

3.            It was RESOLVED that Members’ comments on the draft capital and revenue budgets relevant to this committee, including responses to consultation, be noted and reported to the Cabinet on 26 January 2023, before the draft was presented for approval at County Council on 9 February 2023.