Agenda item

To receive the draft budget for 2021/22.  This item will be presented by The Head of Finance and Property.

Recommendation

That the Committee consider the draft budget, fees and chargesand capital programme and review the revised Medium Term Financial Plan projections and pass comments and observations to the Executive.

This agenda item was introduced by the Portfolio Holder for Finance, Assets and Commercial Services Mark Merryweather.  He showed a slide presentation.  He noted that the discussion was just related to the general fund budget not the social housing budget which was dealt with through the Housing Revenue Account.

Key points were as followed:

·         The budget had already been under pressure before the Covid-19 pandemic.  The Council had been needing to find £1.5 million each year to make up for cuts to its income.

·         The Covid-19 situation had left a lot of uncertainty about the future.

·         In August 2020 the Council estimated the gross financial impact of the Covid-19 situation to be £6.6 million.  Government support had been less than ¼ of that amount so the Council had identified reserves which would be used.

·         The Government provided £1,507,000 support for the Covid Contingency Budget 2020/21.

·         There would be £2.3 million further Government Covid support towards lost income.

·         £2.8 million losses were expected for 2021/22

·         The Council had agreed a reserve drawdown of £2,874,000 in 2020/21.

·         The Council’s property investment strategy had been severely impinged by Government changes.

There was a question regarding Annexe 1 line 6 of the budget papers regarding inflation and contractual increases.  There was a big jump between years.  The strategic director explained that there was an assumption that inflation would increase to 2% in 2022/23.  It was further explained that there was an assumption that some staff would move up the payscale so there would be incremental increases to their salaries.  There were also going to be contractual increases to the Biffa contract as more houses were being built so there would be more waste collection.  The strategic director Graeme Clark agreed to circulate more information on inflation and contractual charges.

The Chairman requested more detailed budget papers in future.  It was also suggested that it would be helpful to see causal analysis showing the effect of Covid-19 on the budget.  The Strategic Director agreed to include a table in the report.

There was a query about the £2.7 million impact of closing the leisure centre set against the £400,000 claimed from the Government.  The strategic director explained that it was not possible to claim the full impact as the Council didn’t run them directly.

£2.2 million had been requested from the Government to cover loss of income.  At the time of the request, the loss of income from car parks could not be measured precisely.  The Council had received £1.2 million and had just submitted a bid for more.  It was now estimated that the loss of income due to lost revenue from car parks would be £2.4 million. The Council had got its first instalment of requested money from the Government.  Three claims had to be made throughout the year.  The first payment received was for about £1.2 million.  The Council were about to submit another claim.  It wouldn’t be possible to submit the full claim until the year end.  The Council were likely to receive over £2.2 million which was partly due to loss of income from car parks.  The loss of income grant would be carried over to the following year however only a fraction of what was lost is eligible to be claimed for.

The Capital Projects Spending Review would look at whether the Council’s spending priorities were still correct in the time of Covid-19.

There was a question around costs set aside for the replacement of Cranleigh Leisure centre.  The Accounts Manager was going to follow that up in relation to annexe 5.

There were questions around the loss of income from business rates.  It was stated that there would be a fair funding review of business rates by the Government in 2021.

There was a question about whether the Council would be penalised by the Government if it did not increase council tax by the full amount allowed.  The strategic director said the Council would not be punished if it set lower than the maximum increase allowed, but if that was done, the Council would feel a financial impact in future years and the budget gap would be bigger.

There was a comment about the amount which the Council were spending on consultants and there was a request for the work programme to look at the amount spent on consultants.  It was agreed that this would be looked at in the March 2021 committee meeting to see if the Committee wish to pursue this exercise.

The committee also requested separate pages of information about property.  The Strategic director said that this would be part of the review of the Property Strategy in March / April.

There was a comment that the work of the Budget Strategy Working Group needed to continue.

There was a further comment that there should be a decrease in funding for museums and Farnham Town Council should be asked to contribute to Farnham Museum.  The Strategic Director would look at the funding arrangements for Godalming Museum and report back to the Committee’s Vice Chairman.

RESOLVED

·         To pass these comments and observations to the Executive.

·         The Chair would work with the Strategic Director Graeme Clark and the Head of Finance and Property Peter Vickers to consider ways to present the budget in a more comprehensive way in future including showing the original budget.