To receive a report from the Section 151 Officer.

Councillor Richard Fry, Portfolio Holder for Finance presented Members with the Draft Budget Report 2024/25 - 2028/29.

 

Members were invited to review the papers and provide comment and feedback to Executive Board for consideration at its Meeting to be held on 14 February 2024. The report and associated documents were attached to the Agenda, pages 23 to 64 refer.

 

The Portfolio Holder for Finance advised that this was his last budget presentation as he was stepping down from the role of Portfolio Holder.  Recognition was placed on the dedication and expertise of the Finance team; the service area teams and Portfolio Holders in the context of the budget challenge process and he was pleased to report that the 2024/25 budget was balanced and retained the Council’s current baseline service levels.

 

The Portfolio Holder for Finance further advised that final checks on the budget were being undertaken and that the Capital Programme remained in draft as final adjustments were made.  Significant improvement had taken place on last year’s timelines with more opportunities for Portfolio Holders to be involved.

 

A copy of the budget presentation delivered by the Portfolio Holder for Finance is attached at Appendix A to the Minutes.

 

Key information was highlighted as follows:

 

·         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 2024/25 this was a £4.95 (3.06%) per annum increase (for band D properties). This was to generate additional income of £370k and the increase was to be reflected throughout the life of the MTFS.

 

·         The proposed budget showed that efficiencies would be required to support the medium-term financial strategy (MTFS).

 

·         Efficiency Target of £424k allowing for £1.4m IDB support and significant contributions to reserves were budgeted for.

 

·         Minimum Revenue Provision (MRP) approach was being utilised for future replacements of assets rather than use of reserves.

 

·         Revenue budget was in draft and loaded into the finance system.

 

·         The capital programme was proposed with a total financing requirement of £54.4m and a final version of the programme was being presented to Council on 28^th February 2024 for approval.

 

·         Following the premature repayment of borrowing in 23/24, the budget included the pro rata discount credit of £834k.

 

·         Areas for priority investment and consultation included market towns and rural areas, driving and supporting economic growth, the delivery of affordable housing, supporting the vulnerable, healthy living, decarbonisation and continued investment in green initiatives and invest to save. 

 

·         A new Corporate Priorities reserve had been established to facilitate the delivery of these areas of focus.

 

Members were invited to put their comments and questions forward.

 

·         A Member queried how many Councils in areas with IDB’s paid levies rather than precepting and whether these Councils had been working together to address the issues.  It was further queried why external information had suggested the increase on IDB’s was 0.75% compared to the 2-10% increase reported.

 

In response, the Section 151 Officer advised that all Council areas with IDBs were working together and was pleased to see that 29 authorities had signed up to the Special Interest Group (SIG) with the number set to increase.  It was confirmed that IDB levy fees were embedded within the Council Tax limit and that Councils were obliged to pay them.  The choice for authorities whose increases exceeded their Council Tax uplift was either to raise Council Tax or cut services to fund the fees.

 

The Section 151 Officer further advised that the 0.75% figure increase referred to did not include the transfer of land and that there were two components in the charges, this included the rate and the charge as agricultural land became developed.  It was advised that every year IDBs looked at agricultural land which had been developed and that the rates were increased accordingly.  Indications from IDBs and colleagues were that levies were to be increased because of continued cost pressures and recent wet weather. 

 

·         In relation to pension contributions at 23.8%, a Member queried how many members of staff remained with the Local Government Pension Scheme and what the value of the lump sum payable towards the deficit stood at, page 25 of the Agenda refers.

 

In response, the Section 151 Officer advised that the value of the amount payable was estimated to be £713,000.  The budget included two components; the people previously employed by the Council and the contribution factor for current employees.  The scheme was evaluated every three years, and this had recently been undertaken.   

 

·         A Member further queried if staff could be moved to a more cost-effective pension scheme.  The Section 151 Officer advised that she was not familiar with authorities who had moved away from the Local Government Pension Scheme and believed that Councils were obliged to remain part of the scheme.  It was confirmed that the current scheme was a Career Average Revalued Earnings (CARE) scheme which meant that it was a career average of salary calculation.

 

·         In follow-up to the earlier question on IDBs, a Member considered that it would be beneficial to explain the difference between the 0.75% and 2% to the Chairman of the IDBs to clarify the position and ensure all facts were correct.  It was further stated that the transfer of land into new housing in relation to Lindsey Marsh Drainage Board needed greater clarification and that there should be more co-operation across the three drainage boards to save money.  It was queried if ELDC was the Council leading the SIG on drainage board levies.

 

In response, the Section 151 Officer confirmed that the SELCP was leading the process and highlighted that it was one of the top five most affected Councils in the country and stressed that the Council was significantly affected by the £5.1m bill for IDBs that was embedded in the Council’s revenue account as there was no funding support available.  Affected authorities were in a difficult position and were continuing to collaborate efforts to make representations to the House of Commons and with MPs.  The campaign was gaining momentum and it was within the Council’s interest to gain support to ensure the issue was resolved.

 

·         A Member expressed their support to all members of the Council’s team who were leading the initiative on IDB levies.

 

·         In relation to IDBs, a Member queried if costs were able to be recovered through S106 agreements which aimed to mitigate the impact of new developments.  The Section 151 Officer advised that she was not aware of any links between S106s and IDBs and stated that other requirements were in place for new developments, such as Sustainable Drainage Systems.

 

·         A Member praised the Council’s well managed budget and raised a query on risk and the New Homes Bonus.  It was queried why the new homes bonus was allocated to the Capital Fund and had not been ringfenced for building houses, noting there was a mismatch between the Council’s priorities, page 54 of the Agenda refers.  In response, the Section 151 Officer advised that regarding the New Homes Bonus, the reserves had been sufficient and the money was not ringfenced and was available for use.  It was further advised that there was nothing which prevented the funds from being ringfenced in future.

 

·         A Member further highlighted that the Council needed to be cautious of new projects which had not been included in the risk table, page 61 and 62 of the Agenda refers.  In relation to the revenue costs risk, the Section 151 Officer advised this was a foreseen risk that had been factored into the budget.  An example of this was provided to reassure Members that the revenue impact had been assessed to ensure risk was effectively managed.  Following Members comments, the Section 151 Officer advised that new projects that presented risk were being factored into the final version of the budget.

 

·         A Member requested clarification for the incoming increase in Waste Services income and on the position of bad debt on National Non-Domestic Rates (NNDR), pages 41 and 45 of the Agenda refer. 

 

In relation to Waste Services, the Head of Finance – Client advised that Waste Services 23/24 had increased from £1.4m to £1.7m and this was attributed to additional customers buying into the Garden Waste Scheme.  It was confirmed that the expected increase had been factored in to the 24/25 budget.

 

In relation to NNDR and bad debt, the Section 151 Officer explained to Members that many small businesses did not pay rates and that a backward trend had been observed from post COVID insolvencies and decline in business.  It was advised that this deficit related to when debts had been written off during the transition period between a former occupant and a new occupant of a business.  Members were was assured that this was not a recurring deficit or a significant trend.

 

·         A Member further queried that there was an inconsistency in the figures, page 42 and 48 of the Agenda refers.  In response, the Section 151 Officer advised that any inconsistencies would be examined before finalising the budget. 

 

·         A Member queried why the Sutton on Sea Colonnade project was not included in Table 14, page 56 of the Agenda refers.  The Section 151 Officer advised that the information in the report related to 23/24 not 24/25, and that slippage of spending on the Colonnade project into 24/25 was awaiting to be determined before it was included as part of the Q3 Report.

 

·         A Member commended the difficult and challenging work which was undertaken when preparing the budget and stated that it was good to see the inclusion of a Risk Register.  It was queried if service delivery issues in core services or reductions were expected as a result of the coming budget.  Referring to the short and medium-term alternatives for balancing the budget, it was further queried how this was being co-ordinated and prioritised, page 28 of the Agenda refers.

 

In response, the Section 151 Officer advised Members that there were no proposals for any reductions.  Opportunities across the Partnership had been examined to make the budget more efficient and more areas were being aligned such as joint working and grouping of resources, including IT.  Opportunities for the three sovereign Councils were being examined and managed in a methodical way as part of the longer-term strategy.

 

·         A Member stated that £198,000 allocated for the IT budget in capital was remarkably small and queried what plans were in place to maximise IT, and whether there was a Digital Transformation Strategy in place, page 56 of the Agenda refers.  In response, the Section 151 Officer advised that the IT budget whilst it appeared modest was significantly large in revenue terms.  It was advised that through looking at areas of focus and other opportunities, for example moving to cloud based services, the Council had obtained improved services without a large cost increase.  The Section 151 Officer further advised that IT continued to be an area of focus.

 

·         In relation to Key Budget Pressures for PSPS, a Member queried if ELDC was getting value for money and requested if a breakdown of figures for the PSPS contract increase was available rather than being listed under other costs, page 28 of the Agenda refers.  In response, the Section 151 Officer advised that a breakdown of the figures was available and that the main pressure which had increased costs was staff pay.  Reassurance was provided that the issue was recently reviewed and scrutinised.

 

·         In relation to the three carbon related reserves listed on Table 12 – Reserve Balances, a Member queried which one of the three categories was used for the Hub Solar project noted on the Forward Plan, page 53 of the Agenda refers.  It was further queried why specific projects had not been listed in the Corporate Priorities Reserve of £5.8m and when details on those projects was going to be provided, page 60 of the Agenda refers.

 

In response, the Section 151 Officer advised that reserves for Carbon Reduction, Decarbonisation and Climate Change was preferable to be combined.  It was confirmed that funding for solar was sourced from the Decarbonisation Reserve which was £1.4m.   It was further explained that there were investments in services within the budget, for example sand replenishment on beaches was put forward by the relevant service and had been incorporated into the budget.  There was a lot of work underway, and it was advised that a preference for themes was to be established and communicated to the relevant teams before moving forward. 

 

In relation to the public consultation being undertaken, a Member queried if there was any specific concerns raised.  The Section 151 Officer advised that nothing of note had come forward.

 

The Section 151 Officer confirmed to Committee that she had captured the comments to be fed back to Executive Board as set out in the recommendation.

 

No further questions or comments were received.

 

Following which it was,

 

RESOLVED:

 

That the Draft Budget Report 2024/25 - 2028/29 be noted and relevant Member comments be fed back to Executive Board.