Agenda item

Report attached.

Councillor Joyce Plummer, Portfolio Holder for Resources, provided a report setting out proposals for the 2022/23 General Fund Revenue Budget.  It also provided an overview of key issues arising from the Medium Term Financial Strategy.  The decision to set the Budget would be a core decision of the Council.  The role of the Cabinet was to recommend a proposed Budget to the Council.

Councillor Haworth indicated that the Conservative Group had hoped to provide an alternative Budget for 2022/23, but were cognisant of the fact that finance officers were extremely busy and would be unable to support Members to develop a detailed alternative Budget.  Accordingly, the Group would not prepare that type of draft Budget.   However, Group might wish to propose some amendments to the existing Budget recommendations at the Resources Overview and Scrutiny Budget meeting.  She expressed a hope that the lack of a formal alternative Budget would not be raised as a political point at the Council meeting.  The Leader noted that the way that Budgets were developed had altered as local authorities had shifted from the traditional the Committee Model of governance arrangements.

Councillor Plummer highlighted some key issues from the report as follows:-

• The Council had managed its Budget well in 2021/22, so could set balanced budget in 2022/23 without draining reserves or making cuts to services or staffing;
• Grants would make up around £2M of the total £12M spend;
• COVID-19 was waning but the virus had not yet gone away and there could be further combative action and extra resources required in the future;
• Around £1.2M cost pressures had been added to the proposed Budget;
• Overall there would be small increase of around 2% in Council Tax, around 7p per week for most households and below inflation;
• The Budget would support key projects including town centre events, environmental health team activity and enforcement, ICT infrastructure, permanent posts, correcting budgets which had become detached from actual costs, maintenance of public defibrillators as recommended by Overview and Scrutiny; and
• The final details of precepts from Lancashire County Council, the Police and Crime Commissioner, Lancashire Combined Fire Authority and Altham Parish Council should be available in time for Council on 24^th February 2022.

The Leader of the Council added that the major costs in the Budget were around staffing - about £10M.  A list of the growth pressures was included at Appendix 3 to the report, along with the corporate savings target of £120k and resources released by the abolition of the Cabinet Action Fund of £20k.

Approval of the report was not a key decision.

Reason for decision

This report set out the Council’s Revenue Budget for 2022/23.  This would require net expenditure of £12,334,000.

Under these proposals, Council Tax for Hyndburn residents would rise for Hyndburn Council provided services by £5.11 (1.99%) for a Band D property.  The amounts due for each band were shown at Appendix 4 of the report.  The increase was equivalent to less than 10p per week for a Band D property.  However, for most residents the increase will be less than 7p per week as the majority of households in Hyndburn were Band A properties that paid two-thirds the value of a Band D property in Council Tax.

This was the only the sixth rise in Council Tax for Hyndburn services since 2009/10 and the average annual increase over this period had been 1%.  This was significantly below the rate of inflation over this period.  If the Council had increased Council Tax simply by inflation (CPI) over the last 13 years rather than the actual increases made, Council Tax for Hyndburn’s services would have been almost 14% more expensive at £292.76 for each average Band D property within Hyndburn which was £32.12 more than proposed for 2022/23 at £260.64.

The increase in Council Tax by Hyndburn Council was a result of cost pressures from wages, other expenditure inflation, the loss of income and the impact of COVID-19 which had altered at a faster rate than the increases generated from Government Grant or Business Rates.

Lancashire County Council, the Police and Crime Commissioner (PCC) and the Lancashire Combined Fire Authority had not yet formally taken their decisions on Council Tax Levels for 2022/23.  It was expected that the County Council would raise its Council Tax for each household by a general increase of 1.99% and a 2.0% increase to assist with meeting the cost of Adult Social Care which equated to a 3.99% increase overall.  It was expected that the PCC would increase a Band D Property by £10.00 and that the Lancashire Combined Fire Authority would recommend a £5.00 increase.

Altham Parish Council had set a separate precept for its activities for the fourteenth time in 2022/23.  This year the Parish Council intended to increase its precept.  The Band D charge for Altham Parish Council would therefore increase from £40.27 to £41.07 for the year and the Parish Council would precept the Collection Fund for £12,731.  Details of the proposed position on other Bandings for properties in Altham were shown in Appendix 6 of the report.

In setting the Budget for 2022/23 the Council faced continued volatility around some of the most significant items within its Budget.  Major reforms of local government finance had transferred the risk of business rate revenues and Council Tax benefits to the Council.  The certainty on which the Council could budget and manage its finances had therefore decreased since 2013 and it would be important going forward to plot any deviations away from the expected figures and take appropriate action if these should start to emerge.  The ongoing impact from COVID-19 was also difficult to predict at this time.  This might result in the need to reduce spending during the year, if revenue monitoring started to indicate the amounts of funds received would fall short of the target or if the authority faced an upsurge in spending.

The Cabinet intended to continue the good financial stewardship of the Council’s affairs by continuing the successful policies introduced over the last 18 years to manage costs effectively and promote appropriate service investment.  This Budget would therefore deliver,

• A continuation of the Council’s established approach of limiting enhancements on early retirement, continuing its rigorous approach to absence management and committing to minimising borrowing costs.  These actions had already stemmed the build-up of unproductive costs within the organisation.  In each of these cases the authority had put a stop to the costly and financially damaging policies of the past and created a healthier and more financially stable culture within the Council.

• The Capital Programme for 2022/23 would be the largest the Council had ever authorised at over £38m.  The Programme would include a £24m investment in Accrington Town Centre with £20m coming from the Government’s Levelling Up Fund and a £12m investment into our Leisure Estate to modernise it and significantly boost the number of people making use of the facilities to keep fit and healthy.  There would also be £250,000 of investment into Accrington Stanley Community Trust to help them expand their facilities and £240,000 to replace the artificial pitch at Hyndburn Sport Centre.  In addition, the Council would be committing a further £1m to Disabled Facility Grants this year and around a further £500,000 would be spent on a variety of projects to improve the Council’s service delivery and value for money.  Within the overall capital programme it was the Council’s intention to maintain its commitment to avoid borrowing whenever possible and therefore it would be looking to only borrow to finance the investment in the Leisure Estate which could not be finance by external grants and existing capital and revenue resources.

• Despite costs of over £85,000 to provide car parking in Hyndburn for residents and visitors and particularly for shoppers, the Council would continue to provide this facility free of charge and not introduce charges for parking in Hyndburn.  The Council believed this action would help bolster the town centres through these difficult economic times and provide an incentive for people to shop locally rather than drive and pay to shop elsewhere across the North-West.

• Further reductions in the Council’s accommodation costs, building on the success over the last 13 years including further rationalising its accommodation and looking at more ways of using its accommodation more effectively.  The authority would also continue its actions to reduce its carbon emissions and energy costs and continue contributing to the improvements of its environmental footprint by positive action.

The Council intended to continue to deliver all of the above and remain committed to a radical agenda of improvement while managing within its available resources.  This would be more difficult in the years to come, given the authority’s reduced resources from the Government.  However, there remained a firm commitment and absolute determination amongst Members and Officers of the Council to control the finances of the Council, drive forward on the efficiency agenda and continue to improve service delivery.  The authority wished to continue to push forward on the drive for delivering value for money as a key priority for the Council.

The rewards of strong financial control remained clearly evident.  The Council had built itself back from experiencing major difficulties in controlling expenditure and a position of negative reserves in 2003/04 to a situation by March 2021, in which Balances were over £2.3m.  The authority had been able to operate within its existing financial resources over the last two years during the pandemic, through good financial management and would continue to deliver strong financial performance in the years to come.

Within the Budget for 2022/23 there were a number of areas which were subject to the Council’s best estimation.  There were therefore a number of risks around the Budget, should these estimated costs or revenue amounts vary during the year.  The authority had assumed that extra costs from COVID-19 were containable within the funds previously provided by Government or that additional funds would be made available if required.

After the introduction of the Government reforms to Business Rates Funding of Local Government, the Council now carried a significant risk around the level of monies available, fluctuating substantially from this source.  In addition, as the calculation of how much funds would be available was dependent on a number of factors (including debt collection rates, the size of appeals against business rates assessment and the success of these appeals, new rules around levies, safety nets and pooling, the introduction of new rules on rates relief on retail premises and small businesses, as well as predicted levels of growth or decline in business activities and the estimation of a number of figures which would only truly emerge after the end of the financial year), the imprecision in these estimates was regarded as high and could be subject to variations of hundreds of thousands of pounds.  The volatility around these forecasts had increased due to the impact of COVID-19 that the pandemic would have on the Business Community.  Volatility was therefore expected to remain for a number of years until the new system became bedded down and the financial impact of COVID-19 began to subside. 

The report included detailed information on the following matters:-

• Medium Term Financial Strategy;
• Continuation Budget;
• Growth pressures;
• Available resources (Core Government Revenue Support Grant (RSG), Business Rates, Council Tax; New Homes Bonus; and other Government funding);
• Budget proposals 2021/22 (general financial pressures; and Budget savings proposals);
• Reserves;
• Risks and risk management; and
• Consultation.

In summary, the overall Revenue Budget 2022/23 was set out at Appendix 2 to the report.  The Budget for 2022/23 would be £12,334,000 and would be supported by a Council Tax levy of £260.64 for a Band D property—translating into a revenue source of £5,486,000 to meet services to the local community.  The Budget had been determined in light of continuing upward pressure on costs, the additional costs associated with COVID-19, previous financial difficulties that continued to overhang the Council, the available funding from Government and the Council’s strong desire to provide high levels of service to the Community in line with its priorities.

The recommendations in the report provided an appropriate platform on which the Cabinet could recommend a Budget to the Council which would meet the objectives and key priorities of the people of Hyndburn.

Alternative Options Considered and Reasons for Rejection

There had been a wide number of individual proposals put forward to produce a Balanced Budget.  Options had been rejected on a variety of grounds including policy objectives, practicalities and the potential for additional costs to be incurred.  Further options might be presented at the Council meeting.

Resolved                                 (1)   That Cabinet proposes to Council an increase in Council Tax for 2022/23 of £5.11 per year for a Band D property.  This is equivalent to less than 10 pence per week.  As most households in Hyndburn are Band A rather than Band D properties, the vast majority of households will only see a rise of less than 7p per week.  This is only the sixth increase in Council Tax by Hyndburn Council in 13 years.

(2)    The Budget for 2022/23 will therefore be £12,334,000 as detailed in Appendices 1 and 2.

(3)    That Cabinet recommend approval of the growth items and savings approach outlined for 2022/23 as set out in Appendix 3 to ensure the Council has a balanced budget.

(4)    That Cabinet note the significant improvement made in relation to budget monitoring and cost reduction within the Authority over the past 18 years and confirms its commitment to continuing this approach in the year ahead.

(5)    That Cabinet recommends during the financial year 2022/23, the Deputy Chief Executive be delegated responsibility to amend the Budget (following consultation with the Leader of the Council) for technical reasons, such as the restructuring of cost centres, the re-apportionment and re-allocation of overheads etc., provided such amendments have an overall neutral impact on the Budget.

(6)    That Cabinet recommends during the financial year 2022/23, the Deputy Chief Executive be delegated responsibility to amend the Budget (following consultation with the Leader of the Council) should the estimate of Business Rates not be sufficiently accurate, by drawing on reserves if needed or paying over additional contributions to reserves.

(7)    That to aid future financial management planning, any surpluses generated during 2022/23 are set aside to help the Council reduce its cost base over the next three years, to support its long term capital programme or to strengthen its overall reserve position.

(8)    That Cabinet recommends that the Lower Tier Service Grant and the 2022/23 Services Grant are used to help balance the Council’s Budget.

(9)    That Cabinet recommends that the New Homes Bonus and any additional funds from Government that are not ring-fenced funding as well as any other surplus funds can be used if required to support capital expenditure as determined by the Deputy Chief Executive in the overall financing of capital expenditure or be transferred to Reserves.