Decision Maker: Cabinet
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
To note the financial remit for 2023-24 and medium term
That it be noted:
1. That the council agreed a balanced budget for 2022-23 on 23 February 2022, the main features of which were:
a. A budget requirement of £293m
b. Central Government Settlement Funding Assessment (SFA) of £153.6m
c. Council Tax of £128.9m
d. Business Rates Growth of £17m.
2. That the government published a 3 year spending review in October 2021 but left significant uncertainties which made it impossible to set a 3 year budget, including:
a. Shortfalls in inflation projections
b. Uncertainty on the future of the New Homes Bonus
c. Funding for adult social care reform but no way to reasonably estimate costs
d. No clear indication of when major funding reforms will occur (Fair Funding Review and Business Rates Reset).
3. That additional financial uncertainty as a result of a number of factors:
· A broadly positive three-year spending review, but with most of the good news front-loaded in 2022-23
· Limited information on the major changes to adult social care which are expected to carry a significant price-tag in 2023-24 and 2024-25
· The Business Rate Revaluation taking effect on 1 April 2023 and the potential impact on locally retained revenues
· Rising inflation driving an emerging cost of living crisis
· Rising interest rates increasing the cost of credit for residents and the cost to the council of financing its ambitious capital programme
· Economic and financial impacts to the council of exiting the European Union
· The current absence of any certainty of funding streams to support climate emergency plans.
4. That there are a range of possible outcomes presented in the report, with greater detail in 2023-24 than in 2024-25 and these are based on scenarios built using the best data available at the time. For 2023-24, the possible budget gap ranges from £3.1m to £50.5m, with a most likely scenario of around £24.2m.
5. That the central budget forecast is based on the assumptions set out at paragraph 25 of the report,with the key assumptions being:
· Government funding rises by 3% with the exception of:
o New Homes Bonus – expected reduction of circa £2m resulting from ending of current scheme
o Market Sustainability and Fair Cost of Care Fund – expected to increase with matching commitments
o 2022-23 Services grant – originally described as ‘one-off’ - forecast as flat until more information known.
· The Fair Funding Review and Business Rate Retention Reset will be delayed again until 2024-25
· Additional costs arising from pay and prices (3% and 6% respectively)
· Additional debt financing costs arising from additional capital projects (£3m)
· Council tax will increase by the maximum amount allowed (1.99%)
· An adult social care precept of 1%.
6. That the accumulated deficit on the dedicated schools grant was£21.7m at 31 March 2022 with the prospect of achieving any meaningful reduction without additional funding from the Department for Education being remote.
7. The strategic director of finance and governance, with the support of other strategic directors will seek to prepare indicative savings options and commitments, initially for 2023-24. For the following 2 years, 2024-25 and 2025-26, a long-term strategy is going to be developed which will support the new council delivery plan.
8. That further reports will be received in the autumn including modelling and proposals for future years as further information regarding funding is made available.
Report author: Duncan Whitfield
Publication date: 19/07/2022
Date of decision: 18/07/2022
Decided at meeting: 18/07/2022 - Cabinet
Effective from: 27/07/2022