Agenda item

Recommendation

That the Policy O&S Committee consider the draft General Fund Budget and Medium Term Financial Plan (MTFP) 2022/23 and pass comments and observations to the Executive.

The Head of Finance and Property will lead this agenda item.

The item was introduced by the Financial Services Manager.  She stated that the Committee had in front of them the general fund budget 22/23 and the medium-term financial plan for the general fund.  She took them through the key items in the report.  She stated that the report set out the medium-term financial plan for the next four years building in key assumptions that they had made around the reversal of the Covid-19 impact, inflation on contracts and pay and she stated that the other key item was the fair funding review that they were expecting in the next financial year.  She stated that it also built in some known changes that they would be having over the next year and beyond to government funding for 22/23.  She stated that the first annex, took them through four years assumptions and detailed the forecast budget shortfall over the next four years which was a total of £5.2 million.  She stated it also detailed the measures proposed to help meet some of the budget shortfall and included some targets for services which had been scrutinized and which would be closely monitored throughout the period of the MTFP.

She stated that Annex 2 set out the specific 22/23 budget year with details of the movements on this budget in Annex 3. Then Annex 4 covered the fees and charges.  The capital programme and proposed funding were Annex 5 which was the key item around the revenue contribution to that capital programme which impacted the general fund revenue summary and then the report detailed a lot of the changes through the annexes but also the risks to the budget foreseen at that stage.

There was a question on inflation.  It was stated that the officers had given the Committee some additional papers which gave some indication of inflation and looking at those and comparing them to Annex 3 some of the Committee were confused as to what the analysis was.  The analysis on page 43 gave an inflation level of £905,000 and indicated inflation increments and elsewhere they had figures for the National Insurance impact with contracts of £380,000 and utilities and staffing at £529,000.  Councillors wanted to know what the contributory factors to inflation were and to have greater degree of detail on the contracts and the individual areas such as the leisure centre and the refuse contract.

The Committee also wanted to see more breakdown regarding car parks revenues as they were not able to follow them year by year.  Councillors were interested in the fact that the full year increase for next year for car parks was £730,000 and noted that it was about a 14% increase over the pre-Covid levels which was quite a steep increase.  The Committee did not think that was particularly clearly drawn out when they were taking those decisions or ratifying them earlier in the year.

There was a question on the figure for car parks recovery because there was a £730,000 increase due to the car parking fees increases and there was a £265,000 recovery from Covid-19 which looked to be quite low in comparison to the following year of £820,000.  Councillors felt that the £265,000 should be a higher figure now releasing more funds elsewhere.  They could also see £250,000 going in for maintenance

The Committee asked the Head of Finance and Property to clarify the current position with car parking income.  They thought that in a full year income was about £5.1 million and it fell to something a little over half that in the first of the Covid years.  They wanted to know the estimate for the current financial year and the extent of the government grant aid in the both the past year and the current year.

The Head of Finance and Property said that for the car parks the Covid recovery budget for the next financial year was based on an increasing usage of 70% capacity for the first six months and 75% for the second six months of the year.  Omicron variant over the last couple of months had affected figures.  Officers felt that the forecast for Covid recovery for car parks was careful but realistic for the next financial year.  It was being impacted by working from home and they expected that working from home would slowly reduce over the next two three years.  They felt that people were also returning to shops and the high street.  The Head of Finance and Property stated that in the current year the actual income levels were within 10 or 15% of where they were pre-Covid.  The Committee felt that as the service had put up the prices that would influence the Council’s income, and they should therefore be somewhat nearer pre-Covid figures.  The Head of Finance and Property said that they wouldn’t get back to a full hundred percent in 22/23 it would more likely be in 23/24.

The Committee understood that the bulk of the national insurance increase for the next year was covered by the government grant.  The Committee wanted to know what the level of government grant had been in the financial year 19/20 and where they were for 21/22 versus what was expected.

Some of the Committee thought that for the big income items it would be very useful to have the actual absolute figures in future for clarity. 

The Head of Finance and Property stated that the government had deferred again their assessment of the whole business rate funding and retention and fair funding review.  The figures had been confirmed at the same level and the Council’s core funding would not change year on year.

The Head of Finance and Property stated that the services grant broadly covered the additional NI impact but it did fall short.

He explained that the new homes bonus was not part of Waverley core funding.  It was an amount that Waverley and other Councils received if the net growth in new homes in the borough year on year exceeded a certain threshold.  The Government had committed to review this in 22/23, however this had been deferred by a year.  Finance officers were expecting this to reduce significantly but the increase from £977,000 to £1,613,000 was for the purpose of the Council’s MTPF, a one-off increase.  The delay enabled Finance to introduce some one-off additional items into the 22/23 budget but doesn't give any certainty beyond that.

The Head of Finance and Property stated that the new homes bonus was a guaranteed amount as it was pre-calculated and pre-set for the year, so the Council’s government funding would come in the current year as per the budget. 

The Head of Finance and Property stated that they had worked very closely with Places Leisure to push them to give Waverley the benefit of the recovery that they were experiencing in the usage of the leisure centres.  He stated that if the projections held up until the end of March they would not need to draw on the one million pounds of contingency backed by reserves that they put into the budget for the current year.

The Chairman and Vice Chairman were supplied with information regarding the inflation assumptions.  Some of the Committee thought this didn’t tally with the Annex three figures for inflation.  Finance stated it reconciled to Annex One where there was a line there that showed inflation at £959,000.  The Head of Finance said there were a number of contracts attracting inflation so it would be useful if the Committee could be more specific on which contracts they were interested in seeing inflation on.  He said he would circulate further information. 

On page 41 of the papers two Covid-19 government grants were shown for £457,000 and £460,000.  The Committee wanted to know how they compared to what Waverley expected.  The Financial Services Manager said the first grant on page 41 which was the government grant towards costs was a fixed amount so they had received exactly as budgeted.  The government grant towards income was a fees and charges compensation grant so the government extended that scheme into the first three months of the 21/22 financial year and Waverley hadn’t received the final payout for that so did not know exactly what would be paid but the claim submitted was slightly more than £460,000.  It was expected imminently.  

Some Councillors who were not part of the Committee but who had been invited to attend due to the Committee discussing the budget put questions:

·         Whether there were any costs associated with the ward boundary changes

·         As Waverley moved towards going paperless, what was the budget for additional technical support for councillors /a review of digital platform as fit for purpose

·         What was the budget for cyber security

Officers advised that the boundary review had a one-off cost of £20,000 that officers had estimated would be the amount that would be required for the Council’s system providers to alter the boundaries.  For a Council system with parameters based around the current boundaries, such as the revenues and benefits; and election service software, there would be a cost associated with any changes. 

Regarding cyber security, it was stated that Waverley employ an officer who is a cyber lead.  Officers had recently secured funding from the Government for the fight against cybercrime and the government had been promoting anti cyber-crime work by local authorities.  The IT Manager regularly applied for and secured funding.

There was a bid of £30,000 for the costs of moving to a fully paperless approach.  Some of the Committee did not support a fully paperless approach and said that  every member of the committee was using their paper copies, and some felt they could not have properly prepared for the meeting without them.

The Vice Chairman who was not able to be present had submitted questions in advance of the meeting.  She noted the high take-up of the £500,000 council tax hardship Covid impact grant which was very much higher than previous years and she noted there was a £50,000 addition to the hardship fund for the coming year but questioned whether it was sufficient.  She also wanted to know what would happen to the unused £155,000 of the original Covid impact grant.  The Head of Finance and Property stated that the hardship monies that Waverley received from the Government was just over half a million pounds.  It was part of the Covid scheme and there was not a take-up of it in respect of people asking for hardship, it was an automatic award of £150 to everybody on the council tax support scheme.  The balance of that money had been kept back from the section 13a hardship which was the £5,000 pounds in the budget.  Over about the last seven years Waverley had about £30,000 however there had not been the demand so £5,000 had been retained in the budget.  With the pandemic the view was taken that there could be more demand for this money going forward and therefore the money was kept back on the balance sheet to fund any hardship applications.  The revenues; benefits and housing benefit teams actively looked for cases that would potentially meet the criteria.  The additional £50,000 proposed in recognition of the rising household bill costs that were being experienced by many residents. 

Regarding the recommendation for fees and charges, the Committee wanted clarity on what appeared to be discrepancies or anomalies between two sets of planning charges on pages 55 and 56 of the pack.  Finance officers said they would check these figures.

Another Councillor not on the Committee but invited to join due to the discussion of the budget asked how sensitive the MTFP projections were to inflation rate assumptions.  The finance officers stated that in the next year which was the key year for the council to set next year's budget they felt that inflation provision was sufficient.

Finance Officers also stated that there was a large pay award that was not resolved yet.  There were also CPI-based inflation uplifts that were pegged against Waverley’s big contracts.  The contractual side of the general fund which attracted inflation was about £14 or £15 million.  It was noted however that different contracts were attracting different rates

Councillors also noted that at 31 March 2021 there was an increase in the general fund usable reserves from £14 million to £27 million.  It was stated that at least £12 million of that related to Government grants which were of a temporary nature.  Councillors wanted to know how quickly those would leave the general fund usable reserves.  Finance clarified that it was support from the government towards council tax due to Covid.  However, the accounting treatment that Waverley was required to apply meant that this had to be treated as a usable reserve, which it was not in the strictest terms, and that was why Annex Six was entitled General Fund Reserves within the scope of the Medium-Term Financial Plan.

The Vice Chairman also asked whether the Council’s arrangement with the London Borough of Sutton to act as the Council’s insurance broker and reinsurer for a certain part of its risk, was under annual review or was the Council tied into this arrangement for some number of years.  The Committee was advised that they were contracted to them for five years, but it was under constant review and the Council’s Insurance Officer acted as the interface with Sutton.  It was noted that Waverley had not received many claims since it transferred to Sutton.  The arrangement was felt to provide value for money as it was significantly less money than was paid to Zurich.  Officers were not anticipating a big increase in the cost of insurance.

It was noted that car parking remained Waverley’s biggest single income item.  Some of the Committee felt that Waverley should be making the car parking experience as convenient as possible for users with measures such as ANPR as the Council had not increased charges for a few years, then implemented a sharp increase.  Officers felt that the issue wasn’t to make car parks as convenient as possible but to make them as safe as possible because of the condition that they'd fallen into.   Waverley had not been able to afford to maintain car parks properly which had resulted in some serious health and safety issues with trip hazards and potholes. It was proposed to put aside £250,000 to bring them up to a safe standard.  It was noted the Council was restricted in its use of ANPR.  Unlike colleagues in the private sector who were able to use ANPR to track drivers, the Council could only use ANPR to track vehicles and therefore if ANPR was used in any of its car parks, the Council would have to install barriers. 

It was stated that Waverley’s main climate change issues were leisure centres and housing.  Waverley had had a great deal of success with grants in the order of £900,000.  Councillors asked when they would see the nine hundred thousand coming through the accounts.  Officers said it was not all in one year but spread over many years.  It was non-HRA and for the General Fund.  It didn’t form part of the budget for approval.  Officers thought it would be helpful if they presented a memorandum to the budget about what was going on in terms of grants particularly around climate change and they could do that through their quarterly reporting to O&S.   It was noted that the Executive had discussed having a table of any grant income received from other sources to clarify what the income was and how it was distributed.

RESOLVED

The Committee ENDORSED recommendations #1-7 to the Executive in para 3.1. The Committee further RECOMMENDED that the Executive explore investments in the Council’s car parks to increase the income they generate.

The Committee RESOLVED to add scrutiny of the value-for-money of the Council’s insurance reserve and agreement with the London Borough of Sutton on this matter to the work programme.

The Committee REQUESTED that the planning fees and green waste charges set out in the committee papers be checked to ensure they were correct.