Agenda item

The Cabinet Member for Finance & Commissioning, Councillor Strachan, introduced this item and said, as everyone was aware, the finances in government had been moving very quickly recently so apologised that elements in the report had already been superseded.

The Assistant Director - Finance & Commissioning, Mr Thomas, gave a position statement presentation covering a selection of things that had changed very recently:-

•       Spending Review 2021 and Core Spending Power

•       The Medium Term Fiscal Plan – government announced very recently and changed yesterday

•       The Medium Term Fiscal Plan and Local Government Funding

•       The Energy Bill Relief Scheme for Businesses and other Non-Domestic Customers

•       Usable Reserve Trends

•      Business Rate Pooling for 2023/24

He asked members to note:-

·         Core Spending Power - Percentage increases – last year this looked like a good settlement from the Spending Review for grant funding with an increase of 7.9% for 2022/23 – however for 2023/24 and 2024/25 there is no allowance for inflationary increases which is a bigger issue in the current economic environment.

·         There is an assumption in government core spending figures that councils will raise their council tax by maximum allowable level and there is Tax base growth and the assumption is that more money will be raised locally.

·         Council tax funding is increasing and therefore a bigger proportion is being funded locally through council tax payments.

·         Funding that comes from business rates and revenues support grants reducing.

·         New homes bonus has dropped significantly in last 3 years because there has been one-off payments, at the moment there is money in the funding settlement for it but will it survive?

·         Medium term fiscal plan – This was updated yesterday so it will be published later this month now.  It will set out further details of fiscal rules/how debt will be reduced.

·         Government wants to stick to spending settlements for this spending review settlement period which implies it is unlikely there will be any additional funding for local governments within that period.

·         Budget will be published in the spring with a further OBR forecast.

·         Local Government Funding - Chancellor suggested spending review levels are being adhered to so it is likely to mean public spending cuts as inflation is significantly higher than projected.  Local government not immune from those cuts.

·         Although an extra £2.7 billion has been given to councils, this was based on inflation projections last year and a large portion of that is from council tax income but not the extra money; it is permission from the government to raise council tax payments locally to fund the services.

·         In our projections we have increased the cost of utility/energy costs as the government have introduced an Energy Bill Relief Scheme but only for a 6 month period to partly mitigate this impact.  It does not specify local authorities are eligible but it is assumed we will fall in to its scope.  However, it is not quite as generous as the headlines say, as there is not actually a cap – there is a cap to a point but then it is left to individuals to fund the difference.  Finance are trying to work through the numbers and identify what level of support this gives the council as there is still an element of exposure to those costs.

·         Usable Reserve trends – level of reserves increased and District Councils have had the biggest increase because they have been exposed to the most risks with the changes through local government funding on business rates and new homes bonus schemes.

·         Business Rates Pooling – we have opted to remain in Staffordshire & Stoke on Trent business rates pool.  If it is successful we as a District Council will retain approximately £400,000 which would otherwise have gone to the government.  Staffordshire County Council will receive extra funding, likewise the Police and Fire Service.  An outcome of whether this pool stays in place is expected in December.

A number of questions were raised by Members and answered focusing on key risk areas, budgetary pressures, inflation pressures and why another £2m had been allocated to the Birmingham Road site.

Cllr Strachan presented an overview of the MTFS Report and said this is the truly consultative phase in the budget process and comments may form part of the emerging budget plan.  He appealed for comments and observations which could be assessed as part of the budget process and possibly built in.  He recognised that there was a special Budget O&S Committee meeting scheduled for December. 

Councillor Strachan said a number of assumptions were in the report and no longer applied as Mr Thomas had mentioned in his presentation.  He told members that the funding gap of slightly over £1m was built in for the first year and confirmed this would be funded from general reserves.  He reassured the committee that it was not all bad news as there was money coming from the UK shared prosperity fund – proposed investment plan presentation later in the agenda and Mr Percival had advised him that a further £400,000 was also available from the Rural England prosperity fund which we needed to prepare an investment plan for – deadline 30 November so optimistically there were funds due to come to us as an authority.

Councillor Strachan advised that Council tax was a key area for consultation and asked members for comments on how better Lichfield could deploy the Local Council Tax Support Schemes to support the residents in our area, (there has been 1,500 consultation responses and positive support from Staffordshire County Council already)

And comment on the rates of council tax.  He advised that no decision had yet been made on this and advised that he had concerns about any projection to rise council tax year by year and said it needed a careful balancing exercise.

The following questions were asked:-

·         In relation to negative RSG – are we at risk of this with any of the changes?

·         Re: What we can set aside on the windfalls revenue side – we have a significant employment gap between people with disabilities most deserving of support and able bodied people in district – approx. 20% - can we help?

·         Inflationary pressures – gas and electricity – February is a strange time to end a support scheme, can we ask central government what is going to happen after February before January? We will need to make a decision in January at Council so any decision on the future will be difficult without knowing their future plans.

·         Potential for future council tax rises – what would a freeze this year look like if we went to 1.5% the following years? Or a potential freeze this year and 2% for the following three years?

·         Could Central Government move the cap on council tax increase?

·         Capital Investment – additional £3.8m will not fund Leisure Centre so if dependant on other monies should it be spent elsewhere?

·         Similarly re: Birmingham Road investment – we know there is a significant need for investments elsewhere, is this a good allocation of the monies?

·         Re: New Depot – Is this not churlish when we have pressing needs now in city centre? Should be addressed if and when the national waste strategy is implemented.

The following observations were given:-

·         Birds Street regeneration – city centre works needed more.

·         Climate Change – Solar PV/insulating is very important to meet response to the climate emergency.  This impact on revenue position could potentially be well received to take on.

·         Greenway – liked idea – adequate linkage from greenway to public active travel routes and tourism hotspots i.e. Lichfield Cathedral to Chasewater.

·         CCTV – Any discussions on CCTV should seek an investment from the Police & Crime Commissioner.

·         Appendix D quotes £100,000 from the new Property Company – sceptical that this will be achieved.

·         The identified potential investments are important and hope that Burntwood Town Centre does go ahead as waited such a long time for it and been promised on a number of occasions previously.

·         If government are suggesting that councils will raise their council tax by maximum allowable levels and they will have to raise more money locally it does give the feeling that they are not looking at any other way of offering support.

RESOLVED:- That the views of the committee be considered by Cabinet and members give some thought to the budget in readiness for November and December’s O&S meetings.