To receive a report from the Section 151 Officer.

The Section 151 Officer presented Members with the Annual Budget Report, Medium Term Financial Strategy, Financial Strategies & Council Tax 2023/24, pages 1 to 78 of the Supplementary Agenda refer.

Councillor Richard Fry, Portfolio Holder for Finance provided Members with a preamble to the report.

The report set out the draft budget at Appendix A, including the areas of pressure that would be considered as part of this year’s budget setting process, the details of the Council’s Provisional Funding Settlement and the proposed level of Council Tax for 2023/24. 

The Treasury Management Policy and Draft Strategy Statement for the 2023/24 financial year was also included at Appendix B to the report.

The Section 151 Officer apologised for the lateness of the report and advised Members that she was happy to offer a further briefing when the budget setting process was complete.

Following which the Section 151 Officer delivered a presentation to Members, a copy of which is attached at Appendix A to the Minutes

Members were invited to put their comments and questions forward.

·       With regards to the IDB issues, a Member queried whether a Section 31 grant award was a one-off payment.  The Section 151 Officer responded it could be and that financial support would be helpful, however although not straightforward, the Council wanted a permanent resolution to this situation.

·       In response to a query relating to the increase in employees’ salaries and pension contributions, the Section 151 Officer advised that 5% had been built in for 2022/23 and also for 2023/24 compares to previous years where increases had been more modest.  The Council had also been successful in being awarded grant funding to cover the cost of temporary posts, for example the Green Homes Grant Team and Homelessness Team.

In response to a query as to why the Council was making a £2m contribution to Reserves whilst in difficult financial times, page 31 of the Agenda refers, the Assistant Director, Finance explained in detail of the elements that made this money up  The Section 151 Officer added that the challenge with the figures was that a lot of the payments were one-offs, so if they were left in it would just move the problem forward for the following year.

·       A Member referred to the commentary and the targets set versus the numbers achieved for Kingfisher Caravan Park (KCP) and suggested that it would be useful if the Q2 Outturn report came to Committee.  With regards to the disappointing figures, it was highlighted that caravan sites owned by the private sector were performing well so was very concerned with the management of the KCP site.  It was further highlighted that failure to meet targets reduced the budget and a query was raised on what the revised target was going to be.  The Section 151 Officer advised Members that she would ask the budget holder to provide a response to all Members of the Committee.

·       A Member commented that there was not a table for Reserves contained within the pack and highlighted that it was key to see this to see how it could or could not be used in the budget process. 

Further to this, it was considered that the Council should consider invest to save schemes to deliver fuel savings, for example by investment on car parks that did not have solar panels installed.  In response, the Section 151 Officer advised Members that the Council was looking at de-carbonisation and the energy situation where the Council could bring its own initiatives forward to support power needs.  With regards to the reserve schedules, these would be presented when completed and was happy to discuss these on request.

·       A Member referred to the list of projects for savings relating to commercialisation of services, page 37 of the Supplementary Agenda refers and asked whether this referred to outsourcing.  The Section 151 Officer informed Members that this covered a myriad of issues including looking at how you could run a particular service commercially.  This could work really well, for example the enviro-crime contract had been involved with an enforcement agency to assist and improve the performance, therefore looking at in the context of each individual services.  All Assistant Directors were currently reviewing services and looking for opportunities that might exist. 

·       In response to a query on what the way forward would be for the IDBs if discussions with government was unsuccessful. The Section 151 officer commented that we must get a solution to this structural issue.

·        A Member added that climate change would be a big challenge for the future and highlighted that the Council needed to be cautious for future planning as a couple of floods would have a massive impact on the bud gets.  The flooding in Wainfleet was provided as an example, whereby the additional cost of electricity to the IDB was £0.75m.

·       A Member referred to tackling climate change through the Green Homes Grant Scheme and queried what checks and balances had been put in place to ensure that residents were protected against unscrupulous people who may wish to take advantage of residents.  The Section 151 Officer advised Members that she would seek a response from the service involved and feedback to Members.

The Chairman welcomed Sean Howsam, Interim Treasury and Investment Manager to the Meeting.

Members were delivered a presentation on the Treasury Management Strategy 2023/24, a copy of which is attached at Appendix B to the Minutes.

Members were invited to put their comments and questions forward.

·       In response to a query raised on an earlier comment that the Capital Programme was being reviewed, the Section 151 Officer confirmed that Members would receive an update on prudential indicators to ensure an up-to-date position.

·       A Member asked what the Council’s total loan was to Invest East Lindsey, what had been paid to date and whether this was on forecast and if not, details on the variances.  The Interim Treasury and Investment Manager advised Members that he would provide this information after the meeting.

·       Reference was made to Environmental, Social and Governance (ESG) factors and it was highlighted that this should be included as soon as possible.  It was further queried whether the Council retained a list for organisations with decent ESG scores and credit ratings, and if not when this would happen.

The Interim Treasury and Investment Manager responded that it was important to ensure that banks and building societies met the investment criteria and that investments were spread as much across areas of different sovereigns. Members were assured that regular training was undertaken by officers throughout the year to ensure they were fully up to date on processes, for example where the global economy was at and any changes in legislation.

With regards to ESG factors, work was underway with the external treasury advisors.  It was highlighted that this was in its infancy, therefore would seek a response to the current status with this.  With regards to a query why a country might not be used at any time, the Section 151 Officer advised Members that consideration would be given to the wider factors involved and potential areas of conflict that would affect where the Council placed its investments.

A Member wished to pass his thanks on to the Interim Treasury and Investment Manager for outlining a very prudent and cautious approach to the Council’s treasury management.

Following which it was,

RESOLVED:

That the Budget Report (Appendix A), Treasury Management Policy (Appendix B1) and the Treasury Management Strategy Statement, Minimum Revenue Provision Policy and Annual Investment Strategy 2023/24 (Appendix B2) together with comments and suggestions be forwarded for consideration by Executive Board on 15 February 2023 and Council on 1 March 2023.

N.B.  Councillor Richard Fry, Portfolio Holder for Finance and Sean Howsam, Interim Treasury and Investment Manager left the Meeting at 12.14pm.

N.B.  The Meeting adjourned for a short break at 12.14pm and reconvened at 12.22pm.