Agenda item

The Leader of the Council and Portfolio Holder for Finance and Transformation presented a report, a copy of which had been circulated to each member and a copy of which appears as Appendix 'A' to these minutes in the Minute Book. In the ensuing discussion the Portfolio Holder and the Director of Finance responded to a number of points raised by members of the committee including:

·     Whether the budget was prudent as regards the issued ‘Section 25’ report. There was a series of risks and assumptions as part of the 22/23 budget which had been tested and would be carefully monitored. It was noted that the 2021/22 budget appeared prudent given the third quarter forecast. The Leader commented that they had brought in a balanced published whilst delivering on their priorities.

·     That it was concerning that weekly meetings to assess spending were required, indicating spending set within a high-risk scenario. It was noted that there had been costs associated with and these were kept under control with the regular monitoring.

·     That the risk associated with the current cost of living crisis had not been factored in when setting the budget. A good start had been made to look at the impact of cost of living but if it was ongoing, it would add further pressure to the MTFP.

·     It was good news that provisions were set aside last year and there had been a positive financial outcome. Mitigation measures in place were pushing the pressure further down the line. Mitigations had mostly been one-off measures but there were also some ongoing issues.

·     There was concern regarding the increase to the Council’s debt threshold which was increasing significantly. Future generations would be responsible for the debt. The borrowing was to fund capital investments and housing, and these needed to be backed up with a sound business case. Borrowing to fund revenue pressures was not allowed. The Leader commented that as a group of councils previously there was under borrowing and the current administration wanted to invest and build in regeneration.

·     There was a projected funding gap, for which the Council plan was to generate significant revenue receipts. New commercial models had been mentioned but it was not explained what these receipts would be. Transformation had been delayed by Covid, once the end of transformation was reached there would be a balanced position even with the cost-of-living pressures. Discussions were currently underway on this, and it was expected that there would be more detail available on this within the next quarter paper.

·     That residents didn’t view the Council as a money generating enterprise or a commercially focused organisation. The Leader advised that there were ambitious to deliver £50 million of investments ongoing every year and there was record levels of investment into new and improved services.

·     That half of council tax-payers didn’t pay by direct debit and therefore would not automatically receive the rebate. The Council Tax Team were working very hard to get the money out to people and noted the need to encourage people to pay by direct debit. 

·     There was concern raised regarding the potential loss and funding set aside for the BDC and the impact of debt on future places debt. It was noted that no money had been lost regarding BDC but both joint owners had set aside £5million as prudential measure.

·     Whether the activities of the BDC were compatible with the requirements for borrowing. Borrowing was available for housing and regeneration schemes. The government were trying to focus Councils on schemes which would deliver regeneration and it was important to set this within that context.

·     Whether the increase in borrowing to £1.34billion at end of the MTFP period was mainly associated with supporting the need for regeneration. How much dependence is there in third party finance to support this. Some schemes dependent on this – appears to be an inability to do this at the moment with winter gardens scheme. The Chief Finance Officer advised that extending borrowing thresholds would be based on robust business cases and each case would be assessed, these would be predominately focused on new housing schemes.

·     It was confirmed by the Chief Financial Officer that the increase to the borrowing threshold was not a direct recommendation of this report but a separate report would be made to the Audit and Governance Committee regarding an increase to the borrowing threshold.

·     Whether any examples could be provided of other councils who had increased debt thresholds previously, both where this had gone well or where it had not. Benchmarking data with other authorities was provided as part of the report.

·     Whether there were any mitigation measures being put in place to address risks associated with the increased debt thresholds.

·     That last year the Council had failed to reach transformation savings targets. There were concerns that this was in part due to staff vacancies. The Leader advised that the original level of savings was not required in that year and was cut from £15million to £7.5million in order to ensure that transformation was delivered properly.

·     Concern was raised that there were different levels of Council Tax for second homes across the conurbation. Any increase on the rate for second homes would not be introduced until 2024/25. There was a need to create homes for local people and this would be considered carefully as it came forward. Desperate to create homes for local people.

·     A query was raised about the statutory section 25 report from the Chief Financial Officer which was considered by full Council and in which an alternative budget configuration was suggested. It was confirmed that this was not a recommendation but advise which the Council was required to consider which was not accepted when Council voted on the budget. There was concern that there was not sufficient opportunity for Councillors to fully consider this. A Councillor requested that the Committee look further into the advice put forward by the Chief Financial Officer at the Council meeting.

·     Whether a risk register or similar could be provided to help evidence what the risks were through prudential borrowing. It was confirmed that the council would need to consider mitigation strategies on each one of the projects individually.

Following the questions and discussion points considered a proposed recommendation was put forward and duly seconded, “That the current debt level should be frozen and not increased”.  The Councillors commented that the current debt level had been increased already from £850m to £1.3bn and it was suggested that further increases would be too much and too risky.

The Leader of the Council advised that the increase was a cap rather than a target and would depend upon the assessment of individual projects. 

The recommendation was put to the vote which was lost by 4 in favour to 5 against.

A further motion was proposed and duly seconded as follows, “This committee has concerns on the level of borrowing and concerns on the sustainability of the plans and concerns using all these complex transaction for the budget.

The motion was put to the vote, which was lost by 4 in favour to 5 against. Cllr L Dedman wished to be recorded as voting for the motion.

One Councillor did not vote as they were not present in the meeting for the duration of the item.