Agenda item

Item includes ‘Financial Planning’

The report was presented by Cllr Rob Strachan (Cabinet Member for Finance and Commissioning) to the committee, reminding them that the final decision on this would be taken by Full Council. He believed that the majority of proposals discussed with political groups were either reflected within the report or could be accommodated because broad thematic budget allocations had been included around cost of living, in year growth/contingency and Enabling Regeneration Investment.

It was noted that the announcement from central government of additional funding on 24 January 2024, occurred after publication of the Medium-Term Financial Strategy Report included in the Overview and Scrutiny Committee agenda. The Council has received an additional c£100k of funding in 2024/25 from the increase in the funding guarantee. Anthony Thomas (Assistant Director Finance & Commissioning) has at this stage recommended in the Cabinet version of the Medium-Term Financial Strategy Report an increase to the in-year growth/contingency budget by a further £100k. In response to member suggestions, the cabinet member agreed that he was willing to consider allocating the money to the community and voluntary sector if deemed appropriate.

The cabinet member explained that as neither of the settlements lasted more than one year, this naturally added uncertainty to the authority’s ability to conduct financial planning. He believed the council tax proposals before committee are reasonable and proportionate. He confirmed that only items that are ready and costed go into the capital programme, whilst returns for projects are held at relatively pessimistic levels to ensure that there is no budgetary shortfall due to the use of over-optimistic figures.

·       Members asked about a 5% increase in fuel prices assumed and whether this would still be correct given recent conflict in the Red Sea and Gulf of Aden.

Anthony Thomas confirmed he had included provision for additional inflationary increases within the report.

·       Members asked for assurances on budget savings requested of the council.

The Cabinet member stated that the savings on budgets over the last 18 months was £1.7 million, with further savings aimed for, and reviewed every 6 weeks. It was true that councils across the country are once again having to try and deliver more with less and Lichfield was fortunate that it had successfully managed to achieve this so far.

·       Members asked whether council tax support would be locked in for the next two years.

The Cabinet member confirmed this and confirmed an awareness campaign to get those that are struggling to come forward for support.

Members highlighted that local government had been asked to make further efficiencies for many years now and that further cuts could ultimately cost more money in the long term by placing further strain on services and leading to inefficiencies.

Members suggested looking at the alternative option of a council tax increase at 2.99% rather than a rise of £5.

·       Members asked when the business plan for the cinema would be provided to O&S.

Anthony Thomas confirmed that a commitment to involve O&S had been part of the proposals approved by Full Council and the committee could take that as assurance that they would be consulted going forward. It was noted that Council had approved that it would not be prudent to include any potential return from the cinema in the budget at this time until the Business Plan and its assumptions were received and reviewed.

·       Members asked for clarification on CIL grant expiry.

It was explained CIL funding has been allocated in previous cycles to projects that have not subsequently been spent. The council is now looking to recoup the money from the group that received it so it can be reallocated. Anthony Thomas agreed to provide the Committee with the reasons for the projects where the CIL grant agreement had expired.

·       Members asked about the projections on general reserves and highlighted that they currently fall away very quickly at the end of the forecast.

Anthony Thomas noted those assumptions are based on finance reform being implemented in 2026/27 based on policy papers from the current government several years ago with the impact assessed by using models provided by two Local Government Finance experts. The upcoming general election adds additional uncertainty to these factors. In the event these projections prove to be accurate, the current level of available General Reserves would enable the council to make decisions in a sustainable way rather than on a’ knee jerk’ basis given there is still a great deal of uncertainty around these projections.

The cabinet member confirmed that there are no plans to cut the community and voluntary sector budget.

·       Members asked for clarification on the value of historic investment properties.

It was confirmed these are retail properties in some cases acquired a long time ago. The rental value - which has dropped significantly over recent years - is used to calculate the value of the asset moving forward. In some cases, asset redevelopment is taking place or there are also strategic reasons for their continued ownership.

·       Members asked if there was an opportunity to any feedback to the responses in Appendix F.

Officers believed that the comments were submitted anonymously, limiting the options for feedback. However, Anthony Thomas agreed to contact Tracy Cross to determine ways to provide feedback to those who had taken the time to complete the budget consultation.

Members suggested reviewing the way in which the survey at Appendix F was conducted to provide better quality data, rather than an option text option currently presented to respondents.

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

2.1 The Draft 2024/25 Revenue Budget of £15,230,000, Council Tax Requirement of £7,929,000 and a District Council proposed Band D Council Tax for 2024/25 of £192.85 (an increase of £5 or 2.66% on 2023/24).

2.2 The Draft MTFS 2023-28 Revenue Budgets.

2.3 The MTFS 2023-28 Capital Strategy including the 25 year capital investment model and the Draft Capital Programme.

2.4 The recommended increase in the Minimum Level of General Reserves from £1,900,000 to £2,000,000.

2.5 The recommended approach to funding Business-as-Usual Capital Investment in 2027/28.

2.6 The updated approach to the pay award in 2024/25, planning fees, car parking fees, contract/other inflation, regeneration initiatives and Treasury Management investment income.

2.7 The recommended provisional inclusion of a cost of living contingency budget of £50,000 in 2025/26.

2.8 The recommended increase of £298,000 in 2024/25 and the provisional inclusion of an in-year growth/contingency budget of £250,000 in 2025/26.

2.9 The 25 year revenue financial planning model.

2.10 The results of the Budget Consultation.

The Committee also reviewed:

2.11 The inclusion of the funding approved by Council for the Cinema for Lichfield District.

2.12 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.