To consider the General Fund Budget for 2023/24 including the use of reserves, Medium Term Financial Strategy, Capital Programme and Strategy, Treasury Management Strategy, MRP Policy and Annual Investment Strategy, Fees and Charges for 2023/24 and the Annual Delivery Plan.

That the following recommendations be approved for onward referral to Full Council on 1st March 2023:

 

1.       The Revenue Estimates for the General Fund for 2023/24 (Appendices 1, 1a and 1b) be approved;

 

2.       That the Council Tax for a Band A property in 2023/24 be set at £107.76 (£3.30 per annum increase on 2022/23 levels) and band D £161.64 for 2023/24 (a £4.95 per annum increase on 2022/23 levels);

 

3.       The additions to and use of reserves (as detailed at Appendix 1) be approved;

 

4.       The Medium Term Financial Strategy (at Appendix 1) be approved;

 

5.       The Capital Programme and Capital Strategy (Appendices 1 and 2) be approved;

 

6.       The Treasury Management Policy 2023/24 (Appendix 3a) and Treasury Management Strategy, including the Minimum Revenue Provision Policy and Annual Investment Strategy 2023/24 (Appendix 3b) be approved;

 

7.       The Annual Delivery Plan for 2023/24 (Appendix 4) be approved;

 

8.       That Executive Board notes the results of the Budget Consultation process at Appendix 5 (to follow);

 

9.       That Full Council delegates approval to the Deputy Chief Executive Corporate Development (S151), to account as required for any s31 grant and reserve transactions required in respect of the Collection Fund;

 

10.   That delegated authority be given to the Deputy Chief Executive Corporate Development (S151), in consultation with the Portfolio Holder for Finance, to make any necessary amendments to the budget prior to Council due to late notifications.

 

A report was presented to enable consideration of the General Fund Budget for 2023/24, including the use of reserves, Medium Term Financial Strategy, Capital Programme and Strategy, Treasury Management Policy/Strategy, MRP Policy and Annual Investment Strategy and the Annual Delivery Plan.

 

Firstly, the Portfolio Holder for Finance wished to extend his thanks to Christine Marshall, Deputy Chief Executive (Corporate Development) and s151 Officer and her team for their work in preparing the budget.  During his introduction the Portfolio Holder referred to this year’s budget being set within a background of unprecedented inflationary pressures and significant changes in residents, customers and business needs.  It was highlighted that despite this the Council was well placed and able to take a considered approach to mitigating theses exceptional challenges.  Furthermore, the Council had been and continued to be successful in drawing in significant capital and revenue investment for the area. 

 

It was noted that the budget had been through a consultation procedure and the summary had been circulated (Appendix 5).  The draft budget proposals had been considered by Overview Committee and Audit and Governance Committee respectively, Overview Committee Minute 71 and Audit and Governance Committee Minute 46 refer.

 

The Treasury Management Strategy was also presented to Audit and Governance Committee on 1^st February, Audit and Governance Committee Minute No. 46 refers and had been updated to reflect the final budget accompanying the report presented.

 

Key budget pressures were listed at paragraph 3 of the report and were noted as:

·                 A pay award for 2022/23 was agreed in November 2022 averaging 5% across the pay spine.  For 2023/24 a 5% award had been assumed, this allowance would be held corporately and adjusted to any savings target should it be settled at a lower level.  This was one of the most significant impacts in the budget.

•         Pension contributions would be 23.8% in 2023/24 with an additional lump sum amount payable towards the deficit on the pension scheme. This rate was applied only to those staff in the local government pension scheme. The pension contribution rate was assumed to stay at 23.8% throughout the life of the MTFS.

·                 The return on cash investment reflected recent increases to Bank of England base rates which had increased significantly from the recent historic low levels.

·                 Electricity and gas costs had been inflated for 2023/24, as a result of increased wholesale prices.

·                 Vehicle fuel costs have also experienced inflationary pressures.

·                 Increased Internal Drainage Board levy of particular concern (as detailed at paragraph 6.1 of the report presented). 

·                 Increased contract and service costs were similarly a feature of the budget, albeit officers and members are working closely to seek to manage these implications and impacts, these included:

·       External audit fees;

·       External contract pay and inflation pressures.

 

In respect of Council Tax and Business Rates paragraph 4.1 of the report detailed the previous Medium Term Financial Strategy (MTFS) committed to a Council Tax increase in line with the maximum allowed under the recent Local Government Settlement.  For ELDC in 2023/24 this was a £4.95 (3.16%) per annum increase (for band D properties).  This would generate additional income of £321k and the increase was reflected through the life of the MTFS.

 

Business rates budgeting for 2023/24 was particularly complex this year due to a number of changes, including the inflation measure used to increase the local government funding amount within the Settlement Funding Amount using the CPI September indicator 10.1% instead of the RPI September Indicator (12.6%).

 

The National Non-Domestic Rates Form (NNDR1) production was now particularly important in terms of changes to the business rate yield which heavily influenced not just our own budgets, but also the Pool of councils within Lincolnshire and significantly the County Council.  This was an area of focus as the Council sought to understand the changes within the yield, particularly as a result of Covid and changes as a result of the Business Rate Revaluation 2023.

 

In order to manage and review this important income stream and the changes within it, regular review meetings were taking place internally. There had also been some significant changes which need further and detailed consideration in terms of growth, appeals and new hereditaments.

 

Information on the support delivered by the Local Government Settlement, delivered on 6^th February 2023 was detailed at paragraph 5 of the report.  The main points from the settlement were detailed at paragraph 5.2 of the report.

 

In terms of balancing the budget the following areas had been considered as part of the budget setting process:

 

Short Term – Potential use of reserves to support one off pressure and for invest to save initiatives; New Homes Bones to be set aside to support service efficiencies whilst medium term activity is actioned; continued work to engage on the IDB finance challenge and review of all new pressures and service budgets to consider efficiency opportunities and alternative options.

 

Medium Term – Work with PSPS on transformation plans; driving transformational change using the S&ELP sub-regional partnership as a driver; review of all assets to maximise income and efficiencies; delivering and supporting economic growth and reviews of fees and charges in light of inflationary increases in costs, where appropriate.  It was  noted that detailed efficiency and transformation plans were being put together tor Members.

 

The Councils Capital Strategy was detailed at Appendix 2 and focused on the core principles of capital investment.

 

The five year General Fund Capital Programme included provision for investment and growth linked to the Councils Strategic objectives. Final decisions on individual projects would be subject to approval and detailed business cases.  The main areas of continued investment were:

 

•         Disabled Facilities Grants;

•         IT Systems;

•         Asset Improvements;

•         Grant Funding bids.

 

Due to the nature of some capital projects, it was common for large scale project timing to change over the medium term. The budget provided the best estimates of deliverability available at the time of production and the programme would be flexed over time as reported in quarterly reports to Executive Board and Council.

 

General Fund Specific Reserves were budgeted to reduce by £12.484m in 2023/24, this was predominantly to fund the Capital Programme which had seen slippage on some of the larger schemes.  This figure would be adjusted once the outturn for 2022/23 was known.

 

There had been a number of significant changes particularly within the Collection Fund relating to the appeals provision, the recent new business rate changes and the Councils renewable element.  Detailed analysis of these changes was still underway in terms of future years impacts.  As a result of these changes additional funding is was being set aside to reserves and in 2023/24 it was proposed that the following sums be made available for use in the following areas:

 

•         Decarbonisation of Assets - £1.5m

•         Cost of Living Support for Residents - £1m

 

These would be funded from the New Initiatives/Contingency Reserve.

 

Thanks were extended to Councillor Fry for an extensive report.  During discussion Members noted the conversations being held on the IDB Levy at Government level.

 

RESOLVED

 

That the following recommendations be approved for onward referral to Full Council on 1st March 2023:

 

1.       The Revenue Estimates for the General Fund for 2023/24 (Appendices 1, 1a and 1b) be approved;

 

2.       That the Council Tax for a Band A property in 2023/24 be set at £107.76 (£3.30 per annum increase on 2022/23 levels) and band D £161.64 for 2023/24 (a £4.95 per annum increase on 2022/23 levels);

 

3.       The additions to and use of reserves (as detailed at Appendix 1) be approved;

 

4.       The Medium Term Financial Strategy (at Appendix 1) be approved;

 

5.       The Capital Programme and Capital Strategy (Appendices 1 and 2) be approved;

 

6.       The Treasury Management Policy 2023/24 (Appendix 3a) and Treasury Management Strategy, including the Minimum Revenue Provision Policy and Annual Investment Strategy 2023/24 (Appendix 3b) be approved;

 

7.       The Annual Delivery Plan for 2023/24 (Appendix 4) be approved;

 

8.       That Executive Board notes the results of the Budget Consultation process at Appendix 5 (to follow);

 

9.       That Full Council delegates approval to the Deputy Chief Executive Corporate Development (S151), to account as required for any s31 grant and reserve transactions required in respect of the Collection Fund;

 

10.   That delegated authority be given to the Deputy Chief Executive Corporate Development (S151), in consultation with the Portfolio Holder for Finance, to make any necessary amendments to the budget prior to Council due to late notifications.

 

Reasons:

To comply with the budgetary and policy framework.

 

Other options:

None were considered.