85.1 The Leader of the Council briefly introduced the General Fund Budget 2023/24 and Medium Term Financial Plan (MTFP) 2023/24 – 2025/26, and thanked the Section 151 Officer, Financial Services Manager and Senior Accountant for the work put into developing the budget and the MTFP, which provided a high level of confidence and assurance that the numbers presented were accurate and valid.
85.2 The Leader went on to thank Cllr Mark Merryweather, Portfolio Holder for Finance, Commercial and Assets, for the patience he had shown with Members in explaining budgetary matters over the past four years. The Leader commended the budget to Council, which was duly seconded by Cllr Kika Mirylees, and invited Cllr Merryweather to present the detailed budget proposals.
85.3 Cllr Merryweather referred the Mayor and Members to their agenda papers (pages 35-106) and presented the detailed proposals for the General Fund Budget 2023/24:
“Our General Fund provides the funding for most of our activities except most notably our Social Council Housing which is covered as a separate item later in the agenda this evening.
Even pre-Covid, cost based inflation was running ahead of our ability to replace the income we were losing from central government. Since then and on top of Covid we now also face the more structural and perhaps more sustained consequences of eye-watering cost inflation that will compound that structural gap.
We expect cost inflation will add a further £3m to our cost base next year alone: a total impact to date of over £4.5m annually since before Covid. Inflation is a rate increase, and we also have net activity cost increases for unavoidable and other necessary growth items, including:
· a provisional allocation of £330k for the beefing up of staffing for our development management team, to restructure it following the sustained increase in applications post-Covid, although this is still subject to the confirmation of a business case, and
· £150k toward the provisional budget for the Local Plan Update, the balance of which will be spread over the following years if necessary, but which should at least be a one-off cost if it crystallises.
In terms of the cost focussed measures and other cost mitigations we expect:
· New Service savings and the ongoing Head of Service Costs review programme to continue to deliver a number of recurring benefits - including for example from our new insurance arrangements – which all add up;
· As we consider necessary future cost increases, we will try where possible to contain them at least to one-offs too;
· While we are cautious about savings from the Business Transformation strategy in 2023/24 - as both the new corporate structure settles in and as office costs inflate with everything else - further savings from further reviews of both customer services and staff travel are expected from 2024/25, and
· Our collaboration with Guildford is on target to achieve net savings of at least the £700k - annually – as originally projected.
Turning next to the pressures on our income from fees, charges and sources other than tax and government grants:
· While it’s getting harder to distinguish between Covid and the Cost-of-Living Inflation crises as an underlying cause, our income from sources that were affected by Covid are recovering but are still below where they were pre-pandemic;
· Activity-wise, we estimate that we’re still c£1m down on our pre-Covid car parking income, but expect half of that activity to return next year with the balance by 2025/26, while this has also been partly offset by the rate changes made late in 2021, and
· While our leisure centre fee income is recovering we’re now entering instead a period of transition to a new management contract which creates a different uncertainty. As a precaution, we’re proposing to provide for the possibility that a new contractor may need some temporary revenue support at least to start off with, although we’d expect to recover that through our subsequent management fee from them.
In terms of mitigations and measures we’re taking on this income:
· Although interest rates will never keep up with inflation, even the low risk rates that we receive will give us a welcome boost to the tune of £1m next year compared to this year, although that benefit will decline as inflation falls and interest rates follow;
· The Commercial Strategy continues to identify new income sources while restructuring our pricing for our existing services. In the meantime, our annual review of fees and charges – which excludes charges for car parks - does propose general increases in line with inflation - where we have that discretion – albeit with some exceptions including for example for Careline;
· Our asset management strategy has evolved from our property investment strategy for a number of reasons, not least for changes to the PWLB lending criteria. We expect our general fund income from our existing assets to increase, for example as we resolve the extended void at Wey Court East, and
· Also as the report states we are recognizing that the usage of the garages currently booked through our HRA has also evolved, and that they are no longer primarily dedicated to a housing objective and should be accounted for through the General Fund.
In addition to all of those overall net pressures on our revenue budget, we face similar pressures on our one-off project spends where inflation is escalating contractor bids against our very finite capacity to fund them both for new projects and for the maintenance of our existing estate. We are able to propose this year to make a one-off £170k increase in the revenue contribution to the general property maintenance fund, but the backlog of planned works remains concerning.
So, while the proposed 2023/24 budget is balanced, the medium term financial plan beyond that continues to show a projected unresolved budget gap and that brings me to the funding we receive directly from, or at the direction of, central government other than Council Tax.
· In 2023/24 we’ll suffer a decline in recurring income for New Homes Bonus and thereafter we’re still threatened with not only the loss of our share of Retained Business Rates but with the so-called “negative revenue support grant” where we’d end up a net paying into central government, and
· While we will receive a new Funding Guarantee Grant of £1m in 2023/24, this will be a one-off which barely covers not much more than the loss in NHB for just the one year, and is despite the nature of inflation being that costs tend to stay up once they’ve gone up. That £1m also compares to the £32million that central government takes every year from the £38million of business rates we’re obliged to collect from Waverley’s businesses (and of which we currently keep only £1.9million).
So it is that we’re proposing to raise our share of Council Tax by 2.99% in 2022/23, which for a Band D home equates to £5.85 for the year. That compares to £5 last year, which would have equated to a 2.6% rise.
We are still maintaining the CT support scheme which will, at least for 2023/24, be supplemented by a prescribed central government Council Tax Support Fund.”
85.4 Cllr Merryweather concluded by adding his thanks to the Finance Team to those of the Leader.
85.5 Cllr John Robini and Cllr Jacquie Keen left the Council Chamber, having made a declaration of a Disclosable Pecuniary Interest.
85.6 Due to technical reasons, the latter part of Cllr Merryweather’s presentation did not appear on the webcast of the meeting. The Mayor called a 10 minute adjournment to re-set the webcast before asking Cllr Mulliner to resume his response to the Budget presentation.
85.7 Cllr Stephen Mulliner, Leader of the Principal Opposition Group, presented the Opposition’s response to the Budget presentation:
“While I thank the Portfolio Holder and the officers for producing this Budget, the Conservative Group feels unable to support it. The principal reason is that we wish to express our sober criticism of the way in which this Administration has discharged some of its responsibilities over the past four years, even after making generous allowance for their initial inexperience and the impact of the pandemic.
Three themes of this Administration deserve comment. These are Waste, Delay and Delusions of Grandeur. When Conservative administrations come to power, they regard running the Council as their overriding objective with electoral success in four years’ time as a secondary concern which will hopefully follow success in the main objective.
Lib-Dem administrations seem to take the opposite view with future electoral success being all they care about. Actually running the Council is left strictly to officers unless something goes spectacularly wrong. What this approach omits is the crucial role of portfolio holders in gaining a detailed knowledge about how each department is performing, setting agenda priorities and then closely monitoring the rate of progress. Without such active leadership and urgency, the inevitable consequence is that matters will proceed slowly because officers will always prefer the risk-averse approach.
The penchant for grandiose schemes has been demonstrated by the collaboration with Guildford, the plan to become a major residential developer at Dunsfold and the economically incoherent plan to convert Godalming’s Crown Court car park into a housing estate. Each have involved the wasteful expenditure of large sums of Council taxpayers money, with complaints answered by saying “Don’t worry – it’s coming from a reserve!”. The Council’s Usable Reserves of £13 million are our deposit account and are a key component of our financial resilience. However, the Administration seems to regard them as a bottomless piggy-bank that can be raided without consequence. Incidentally, it is now almost a year since I requested sight of the original concept paper justifying the Crown Court project together with the high-level financial analysis of income and cost that suggested that it might work. It has never been forthcoming despite repeated requests and the only reasonable explanation is that it never existed in the first place.
We believe that the collaboration project between Guildford and Waverley must rank as one of the hastiest and least scrutinised strategic decisions in recent local authority history. Only 20 days elapsed between an all-member briefing on 16 June 2021 and the Council meeting on 6 July 2021 at which the substantive decision to proceed was taken. This represents a damning indictment of the Administration’s attitude to risk and to scrutiny. The risks to staff retention and recruitment were ignored and the existence of major differences in IT systems were glossed over. The projections of saving £700,000 per annum were based on a high-level consultant’s report that Waverley’s own officers regarded as superficial and unreliable.
What has the collaboration achieved to date? Nominal annual savings of just under £450,000 are claimed for Waverley as a result of the new shared Senior Management Team and its support staff. But these are matched by the current extra spending on agency staff to fill gaps created by permanent staff leaving Waverley which have not been filled by new permanent employees. Guildford and Waverley have made it clear that they see themselves as being in financial distress and are seeking a remedy by reducing costs. To any local authority employee that means only one thing – staff reductions. Is it any wonder that cost-cutting councils are not attractive destinations for ambitious officers seeking to develop their careers? Lest anyone be in any doubt, £100,000 spent on an agency worker will represent the £80,000 total cost of the equivalent full time officer and a £20,000 premium payable to the agency and the agency officer. The figure of £2.2million recently stated for agency costs in 22/23 implies a wasted cost of £440,000, which is enough to eliminate almost all the claimed collaboration savings. The Planning Department has been particularly affected by the departure of experienced planning officers. When the additional £333,000 proposed to be allocated to repair the Planning Department is also taken into account, we believe that the collaboration is actually costing Waverley money.
But this financial analysis ignores the organisational cost of the collaboration. Before there were 18 Heads of Service between the two councils. Now there are 12. In nearly 16 years as a Waverley member, I cannot ever recall a Head of Service complaining to me that he or she was bored and needed a bigger job. And yet the outcome of the collaboration is to place much greater load and responsibility on Heads of Service who are now required to operate across two teams serving two Councils. Indeed, if all Senior Management Team costs were shared 50:50, Waverley’s savings would be only just over £300,000. In order to increase those savings to nearly £400,000, it has been necessary to allocate more of the costs to Guildford which meets 67% of the costs of three Heads of Service and 60% of the cost of one Strategic Director and one other Head of Service in order to recognise the “risk and scale “ of the challenge that Guildford presents. He who pays the piper calls the tune and the risk is that Waverley will not receive an equal amount of attention and leadership in the affected service areas.
If the electorate returns the Conservatives to power in May, one of our immediate priorities will be to review the state of the collaboration and we will not hesitate to give notice of termination if we believe that it is in interests of Waverley’s residents to do so.
Delay has been one of the other obvious features of life under this Administration. The Great Waverley Planning Disaster has its roots in the Administration’s failure to grasp the challenges facing planning and was exacerbated by the year-long delay in submitting Local Plan Part 2 for examination in an attempt to prevent development of the Red Court site in Haslemere. It is ironic that the applicant succeeded on appeal but today, in February 2023, we still have no firm date for when LPP2 can be adopted. The most recent embarrassment is, of course, the fact that Waverley has been threatened with being placed in special measures for poor planning performance.
Delay has also been endemic in relation to Housing, caused in part by the loss of some experienced housing officers which, we believe, can also be attributed to the collaboration project. Given the Administration’s claimed concern to reach net zero by 2030, it is extraordinary that the social housing stock condition survey was not treated as the most urgent priority after the declaration of the climate emergency in 2019. Waverley owns 4,800 council houses and any serious plan to decarbonise them depends on having a clear understanding of the realism of such an ambition given the fabric of decades-old buildings, some of which date back to the 1920s. Yet, the exercise has still not even started. It is particularly regrettable that a most able asset management officer was not retained who could have been instrumental in starting this vital survey last year. It is to be noted that realism has recently triumphed with the decision to replace 3,700 old gas boilers in Waverley’s housing stock over the next six years with 3,700 new gas boilers whose useful lives will extend into the 2040s. It should now be clear to all that the target of net zero by 2030 is a complete pipedream.
What do we offer instead? In place of waste, delay and delusions of grandeur, a Conservative administration will display financial rigour, urgency and realism.
Our portfolio holders will be required to develop a deep and detailed knowledge of what is going on in their departments and will be alert to any signs of strain or underperformance. Our watchwords will be efficiency, effectiveness and genuine transparency so that residents will always know why we have taken certain actions and not taken others.
Mr. Mayor, I will repeat that the Conservative Group, with the experience of 12 years in power from 2007 to 2019, was not unsympathetic to the scale of the challenge faced by a new and inexperienced administration, especially when so few had previous experience as councillors. But to take responsibility is to decide to accept the challenge to perform and, having observed this Administration in action for almost four years, we firmly believe that Waverley deserves better.”
85.8 The Mayor opened the debate on the General Fund Budget, and the following Members spoke: Cllrs George Wilson, Peter Martin, Steve Cosser, Jerry Hyman, Joan Heagin, Kika Mirylees, Michael Goodridge, David Beaman, Nick Palmer and Liz Townsend.
85.9 The Leader and Cllr Merryweather responded to some of the points raised in the debate including noting that the Leader of the Principal Opposition Group had not offered any proposals to balance the budget without the proposed 2.99% increase in Council Tax; and while Surrey County Council was only raising Council Tax by 1%, this still amounted to £50 per household, compared to £5.85 by Waverley.
85.10 In accordance with Procedure Rule 17.4, the Mayor called for a recorded vote on the recommendations which were taken en bloc.
85.11 The vote was carried, with 29 votes in favour, 14 votes against and zero abstentions.
RESOLVED that:
i) a 2.99% increase in Waverley’s Band D Council Tax Charge for 2023/24 with resultant increases to the other council tax bands be agreed;
ii) the Council’s existing Council Tax Support Scheme be continued at the current levels;
iii) a general inflationary increase to Fees and Charges for 2023/24 be agreed, except for car parking charges and some exceptions as proposed in Annexe 4;
iv) the appropriation of garages from the HRA to General fund be noted, and an increase of 4% to the weekly charge for all garages from 1 April 2023 be approved;
v) the General Fund Budget for 2023/24 as summarised in Annexe 2, incorporating the baseline net service cost variations included at Annexe 1 and Annexe 3, be approved;
vi) the General Fund Capital Programme as detailed in Annexe 5 be approved; and,
vii) the reserve movements as set out in Annexe 6 be approved.
For (29)
Councillors David Beaman, Dave Busby, Martin D’Arcy, Jerome Davidson, Sally Dickson, Paul Follows, Maxine Gale, Joan Heagin, George Hesse, Jerry Hyman, Andy MacLeod, Penny Marriott, Peter Marriott, Michaela Martin, Mark Merryweather, Kika Mirylees, David Munro, John Neale, Peter Nicholson, Nick Palmer, Ruth Reed, Paul Rivers, Penny Rivers, Julian Spence, Liz Townsend, Philip Townsend, John Ward, Steve Williams, George Wilson
Against (14)
Councillors Steve Cosser, Kevin Deanus, Simon Dear, Patricia Ellis, David Else, Jenny Else, Michael Goodridge, Val Henry, Anna James, Robert Knowles, Peter Martin, Stephen Mulliner, Trevor Sadler, Richard Seaborne
Abstentions (0)
Cllr John Robini and Cllr Jacquie Keen returned to the Council Chamber.
The Executive RESOLVED to make the following recommendations to Council, to:
i) agree a 2.99% increase in Waverley’s Band D Council Tax Charge for 2023/24 with resultant increases to the other council tax bands;
ii) agree to continue the Council’s existing Council Tax Support Scheme at the current levels;
iii) agree to a general inflationary increase to Fees and Charges for 2023/24 except for car parking charges and some exceptions as proposed in Annexe 4;
iv) note the appropriation of garages from the HRA to General fund and approve an increase of 4% to the weekly charge for all garages from 1 April 2023;
v) approve the General Fund Budget for 2023/24 as summarised in Annexe 2, incorporating the baseline net service cost variations included at Annexe 1 and Annexe 3;
vi) approve the General Fund Capital Programme as detailed in Annexe 5; and,
vii) approve the reserve movements as set out in Annexe 6.
Reason: The General Fund Budget is a major decision for the Council and setting a balanced budget is a statutory requirement. Scrutiny of these MTFP and Budget proposals demonstrate transparency and good governance. The Covid-19 negative impact on the finances has mostly been overcome through the swift response and actions taken by the council. This challenge was immediately followed by the impact of the global economic crisis driving up UK inflation and interest rates and the resulting current cost of living crisis. The council has been well positioned to respond to these challenges and whilst the latest MTFP for the subsequent years ending 2026/27 continues to project future financial pressures, and opportunities, the council is able to take action to ensure sufficient funding is in place to deliver and maintain services.
[This matter is recommended to Council for decision.]