Agenda item

Councillor Strachan, Cabinet Member for Finance & Commissioning advised the committee that following the health matters notes previously discussed on health benefits and planning for healthy communities carried out at shire district level, this element had been alluded to in our consultation response to the provisional government finance settlement as it supplements the direct provision made by Staffordshire County Council.  It had been highlighted what good work we at shire district level do and that the Council could do more if there was a little bit more provision, funding, and a little more space to work in that sector.

He introduced the Medium Term Financial Strategy report and appendices for the final time to overview and scrutiny before Cabinet and Full Council (substantive document) and Audit & Member Standards (treasury management) next. 

The Assistant Director - Finance & Commissioning, Mr Thomas, gave a presentation on the provisional local government settlement key points as there was quite a change in approach on a positive side.  He said the Government now recognised the pressures local government were facing and wanted to provide stability and increase funding to provide services in communities and had therefore introduced a new Funding Guarantee which ensured every local authority would see a minimum 3% increase in their core spending power in 2023/24 before taking any decisions to increase council tax rates.

The government priorities, the change in core spending power, the change in settlement funding assessment and band d increases were illustrated and it was agreed to forward the presentation to all members for further examination.

In summary Mr Thomas advised:-

•       Better-than-expected settlement (big increases in funding announced in the Autumn Statement 2022);

•       Increases focused on social care (both grant increases and Adult Social Care precept);

•       Some attempt to balance grant allocations for non-social care authorities (3% Funding Guarantee, £5 fire authority increase);

•       Distribution is still very short term (no numbers for 2024-25, cliff-edge in 2025-26).

Councillor Strachan agreed that having to plan a 4 year MTFS with only very short-term certainty for 2023/24 and the principles only known for 2024/25 was not helpful for financial planning purposes.  The remaining 2 years of MTFS after the guideline figures will remain uncertain until central government can come up with a multi-year settlement which we have constantly been asking for.  However, the provisional settlement had some considerable benefits for Lichfield District Council, particularly re: the windfalls/retained business rate income as there was £2.1m unforeseen income for 2023&24 and projected £1.8m the following year.  It was noted that it was proposed to use this for the wider strategic projects and place in the strategic priority reserve pending approval for its allocations.

Councillor Strachan advised members that Lichfield District Council will freeze its element of Council Tax in the forthcoming financial year recognising the unprecedented financial difficulty for our residents and due to our own better than expected situation.  This was welcomed by members that cabinet have listened and was the caring thing to do.

It was noted under the capital programme that we had been unsuccessful with the second Levelling up funding bid, which was disappointing but not entirely unexpected as even £5m from central government would have assisted.  Councillor Strachan advised there were still sources of funding that can be accessed, and Lichfield District could fund it from our own resources. The Leader of the Council had also announced today that this council will still deliver the replacement leisure centre so many residents wanted at an 8-figure sum.

It was noted that Mr Thomas had reviewed what minimum reserves were required and these had been increased from £1.6m to £1.9m which had been driven by the current economic climate and the specific risks, but this would be regularly reviewed and amended if necessary.

Members made the following comments/observations:-

·       Why was our settlement less than the average shire district?

The Cabinet member could not confirm this as a central government decision.

·       The Budget Consultation was responded to by over 1130 people – a reduction in council tax was suggested, why was this not an option?

The Cabinet member said the consultation had come so close to the MTFS that some things may be implemented this year and some may be in future years.  A reduction in council tax had never been stated as there was still a funding gap for this council and so to freeze council tax this year and consider subsequent years is the correct thing to do.

·       What was the cost of developing and presenting the LUF bid to government?

The Cabinet member confirmed that the bid was resourced by internal officers and using feedback from the first round bid so no additional capital costs only officer time; figures for revenue costs not known.  The outcome is extremely disappointing and we were given to understand that our bid was a strong one but there was a large number of bids and only a certain amount of money.  It was felt the comments recorded externally were not factually correct.  A formal response outlining the rejection reasons will be forthcoming.

·       The demographics of the budget consultation respondents should be requested as this response rate is not representative of the Lichfield district. It is still less than 1% of the population so is this still valuable – qualitive consultation needed to give us themes rather than a quantative approach.  More engagement is a good start moving forward.  Perhaps the first four digits of post codes would help?

The Cabinet member agreed and defended the value of the consultation as it had increased so much since last time and agreed with a qualitive approach and agreed to speak to the Cabinet Member for Community Engagement and improve this for next year.

·       Inconsistency between two years approaches – last year and this year to council tax rates – why?

The Cabinet member said a detailed review of monies had been carried out to create the strategic reserves and gave us more confidence together with the windfall settlement which are the key drivers for the change in approaches.

·       Funding gap – can we start to nurture a culture of innovation/entrepreneurship and change to a more commercial mind but thinking of public sector ethos?

The Cabinet Member said the recent recruitment of new commercially minded officers under the Chief Executive had given him and cabinet more confidence in the executive arm of the council now to aid this culture.

·       Moving forward, can we do a heavy lobby campaign for multi-year financing, can we write to MP Michael Fabricant and ask him to speak to Harriet Baldwin (Chair of local governments finance committee) or the Minister who is looking for ideas for reform of local governments?

The Cabinet Member confirmed that the district council network and LGA are already lobbying but he agreed to seek further contact as stated.

·       As interest rates only going one way, how does the change to fund a new leisure centre affect the projected funding gap and can any comments be made on current figures or is future clarity needed.

The Cabinet member confirmed that the detailed planning of what the cost will be are not yet available but Mr Thomas had details which would be forwarded for scrutiny as soon as possible.  Internal borrowing is an option as will be at a lower cost and can be repaid if future windfalls received.

·       Cost of Living contingency budget is good but are the figures appropriate?

The Cabinet Member said yes, he felt so given the modelling and the pressures from the local council tax support scheme – money to be taken from the unexpected windfall monies.

·       What is the lifespan of a new Leisure Centre likely to be?

The Cabinet member could not answer but the Leader said it would be at least 25 years and the loan would not exceed the lifetime of the building. 

(Cllr Norman said the LGA suggested the average lifespan was 38 years).

It was agreed that a multi-year settlement would give us more certainty and that the budget principles were sound and overall, we are well run, and thanks were given to the Cabinet Member and Anthony Thomas and his team for all their hard work.

RESOLVED:

The Committee scrutinised the MTFS and provided feedback to Cabinet in relation to:

·       The 2023/24 Revenue Budget of £13,815,000, the Council Tax Requirement of £7,614,000 and a District Council proposed BandD equivalentlevel ofCouncil Taxfor 2023/24of £187.85(no increaseon 2022/23).

·       The MTFS 2022-27 Revenue Budgets set out in APPENDIXA.

·       The MTFS 2022-27 Capital Strategy including the 25 year capital investment model and the Capital Programme shown in APPENDICES B & C.

·       The recommended increase in the Minimum Level of General Reserves from    £1,600,000 to £1,900,000 based on the current economic climate.

·       The recommended inclusion of a cost of living contingency budget of £50,000 in 2023/24 and also provisionally for2024/25.

·       The recommended inclusion of an in-year growth/contingency budget of £100,000 in 2023/24 and also provisionally for2024/25.

·       The recommendedtransfer of‘windfall’ incomefrom theProvisional FinanceSettlement estimatedat £2,433,000 for 2023/24 and projected at £1,889,000 for 2024/25 to the strategic priorities reserve.

·       The 25 year revenue financial planning model shown at APPENDIX E.

·       The results of the Budget Consultation summarised at APPENDIX F.

            The Committeenoted:

·       The requirements and duties that the Local Government Act 2003 places on the Authority on how it sets and monitors its Budgets, including the CFO’s report on the robustness of the Budget and adequacy of Reserves shown in APPENDIX A.

·       Members agreed to set up a MTFS Task Group from the new Council who could work alongside the Cabinet Member and Finance so members can have more of an understanding of the development of the MTFS and the Leader asked if the scope could be widened to include the continuing improvement of engagement with members of the public.  This was fully supported with a suggestion of bimonthly meetings and quarterly reports being provided to the Overview & Scrutiny Committee.