Agenda item

Medium Term Financial Strategy

Minutes:

The Cabinet Member for Finance & Commissioning, Councillor Strachan, introduced the Medium Term Financial Strategy Report and said this was the second time this item had come to the O&S meeting and members will see some of the comments from the previous meeting had been incorporated and the remainder of comments were still under consideration before it is made final and taken to Council on 28 February 2023.

 

The Assistant Director - Finance & Commissioning, Mr Thomas, gave a presentation covering the Autumn Statement announcement today even though the detail would not be available until the settlement is released which is not due until 19 December:-

 

Local Authority Elements:-

 

·       Spending Review numbers not changing from numbers for 2021.

·       Adult social care funding. (new money available)

·       Delaying adult social care charging reforms. (saves a lot of money)

 

  • B and D council tax thresholds.  The maximum core threshold will increase from 1.99% to 2.99%, and the ASC precept will be 2% in 2023-24.  Thresholds will increase for both district councils and for authorities with social care responsibilities.

 

  • Business rates multiplier.  The multiplier will be frozen in 2023-24.  Local authorities “will be fully compensated for the loss of income as a result of these business rates measures”.  No confirmation yet whether cap compensation will be payable based on RPI or CPI.

 

  • Business rates reliefs.  Extension of Retail, Hospitality and Leisure (RHL) reliefs into 2023-24, plus a Supporting Small Business Scheme (SSBS). 

 

  • Revaluation 2023.  Revaluation will go ahead but there will be a more generous transitional scheme, with additional Government support.

 

  • New Homes Bonus – No mention of this in the Autumn Statement but likely to be in the settlement details in December.

 

Further information was also given on the potential financial impact of a higher Council Tax threshold - 3% threshold in all years was illustrated on the presentation.

 

Councillor Strachan then gave his update:-

 

·       Financing of the Leisure Centre - Reiterated that Option 1 was always and remains a successful application to the Levelling up Fund.  He sees it as a replacement of a very well used but aging facility that without a replacement would be lost so avoiding levelling down not just levelling up.  However, members were asked to note that if the application was unsuccessful, the original plan was to look at funding via external borrowing but this now looked less probable and it was discussed why in the current economic climate it is becoming a challenging option in the report.  Alternative options are under consideration.

·       Fees and charges – Balancing act of user affordability versus offset to increasing costs as there were a number of things that were significantly restricted and we have to do on a costs recovery basis.  At previous meeting, the committee agreed to a 2.5% increase (2023/24).  It was agreed we have to recognise where residents are struggling to afford things we are operating but look at where we are committed too.

·       Local Government Finance Risks – Very difficult climate at the moment and the Audit & Member Standards Committee have been monitoring strategic risks where the financial related risk is currently outside our risk appetite.  Anthony Thomas has advised as Section 151 Officer that he is required to report to Council on the adequacy of the level of reserves and that we need to review our minimum level of reserves in the current economic climate and this may result in an increase and Councillor Strachan agreed.  Therefore, the level of available reserves to support the budget and other projects may vary but it is a very prudent and necessary step.

·       Council Tax – the Autumn Statement has given the provision to allow 3% (or potentially £5 whichever is the higher) but still a balancing act to be done and no decision has yet been made.

·       Budget Consultation – Still open until 31 December 2022 and this year a budget simulator has been launched to attract more returns.  The simulator includes moving sliders/seeing the challenges we face and what affects would be made and whether you get a balanced budget at the end.  Members were encouraged to take part and encourage everyone to do so to maximise response rates.

 

The Chair reminded members there was an additional Budget O&S Meeting scheduled for 15 December and suggested they think about other areas that may not have been thought of and use the simulator beforehand.

 

Questions were asked:-

 

1.     Would Councillor Strachan be in a position to bring the budget forecast to O&S meeting on 15 December?  The answer was yes, but may not have the settlement information.

 

2.     There were concerns there was a Projected External Auditors 150% fee increase and that seemed very high and would only mean further increases year on year. Agreed it was nearly £90,000 per annum more which the Audit & Member Standards Committee would be looking in to but unfortunately the Council were in a wider procurement exercise so could not do much.  It was reported that it did reflect the audit environment currently with a lack of qualified staff.   It was noted, that there could be a possibility the Council may get some government funding in the settlement to mitigate this rise.

 

3.     The level of reserves were discussed and it was asked what were they used for?  It was felt that they should be to help the Council represent the people as well as running a good council.  To be discussed at budget meeting on 15 December. It was noted that there was a difference between Earmarked and General Reserves and also that c£5m of earmarked reserves had recently been repurposed to support the cinema project.

 

 

4.     It was asked if there could be a freeze on Council Tax for two years due to the exceptionally bad time predicted on peoples’ incomes.  It was reported that it was appreciated that the Council had to be prudent but also needed to be looking after people.

 

5.     It was noted that discretionary funds to support people experiencing financial hardship are available at Lichfield District Council.

 

RESOLVED:-

 

(1)  The Committee noted the specific updateson:

§  The Medium Term FiscalPlan.

§  Local Government and Wider FinanceIssues.

§  Business Rates Revaluation.

§  The financing of a replacement Leisure Centre and the potential impact on the Medium Term Financial Strategy (pending the Local Government FinanceSettlement).

 

(2)  The Committee provided views to Cabinet in relationto:

§  The approach to fees and charges increases for2023/24.

§  The management of financial risk in the Medium Term FinancialStrategy.

§  The potential level of the District’s Council Tax increase for2023/24.

 

Supporting documents: