Agenda item

To enable Cabinet to consider the updated financial forecast and proposed position for 2022/23 for consultation with the Resources and Services Overview and Scrutiny Committee.

RESOLVED that Cabinet –

(a)   approves the updated Financial Forecast and proposed position for 2022/23 as set out in the Corporate Finance & Governance Portfolio Holder’s report and the appendices thereto; and

(b)   requests the Resources and Services Overview and Scrutiny Committee’s comments on this latest financial forecast and proposed position for 2022/23.

Cabinet gave consideration to a report of the Corporate Finance & Governance Portfolio Holder (A.4) which sought its approval for the updated financial forecast and proposed budget position for 2022/23 to be submitted for consultation with the Resources and Services Overview and Scrutiny Committee, which was required under the Budget and Policy Framework Procedure Rules within the Council’s Constitution.

Members were aware that a ‘live’ 10-year financial forecast was maintained and reported to them throughout the year.  The most up-to-date position in December each year was translated into the detailed budget for the following year for consultation with the Resources and Services Overview and Scrutiny Committee.

As part of maintaining a ‘live’ forecast, this current report ‘built’ on the last position that had been presented to Cabinet on 12 November 2021.

It was reported that, despite the challenging financial and economic environment, confidence in the long term approach to the forecast remained, which was supported by the forecast risk fund. The Council had maintained a prudent and sustainable approach to its long term plan and had continued to ‘live within its means’, which had to date enabled it to respond to exceptional issues such as the COVID 19 pandemic without the need to make short term / adverse decisions that could have affected the provision of front-line services.

Cabinet was made aware that there were a number of emerging cost pressures that were currently reflected in the forecast, and that this report also highlighted a number of items that were planned to be mitigated via one-off funding or via the use of existing reserves / budgets to underwrite their overall risk to the forecast.

Members were informed that cost pressures to date largely reflected unavoidable items. Given the pressures on the ‘base’ budget, it was proposed to consider ‘optional’ cost pressures via a separate process that would include the development of a Corporate Investment Plan that would seek to prioritise further investment from available funding such as the reprioritisation of existing budgets or from additional funding that might become available from the Government.

Cabinet was advised that on-going savings of just over £0.200m had been identified as part of the early phase of developing a zero based approach to budget setting. This was behind the target of £0.450m, which highlighted the importance of quickly developing this framework during 2022 in order to identify the required level of savings over the remaining life of the forecast.

Members were further advised that, at this stage of the budget process, there was a net deficit of £1.488mforecast in 2022/23, an improvement of £0.154m compared with the £1.642m deficit reported to Cabinet on 12 November 2021. Therefore, the forecast remained within the financial boundaries set out in the long-term plan.

It was envisaged that, although subject to potential changes over the remaining budget-setting period, the current forecasted deficit of £1.488m would be met by drawing money down from the Forecast Risk Fund.

It was reported that a review of reserves had also been undertaken, which had highlighted the need to hold a number of reserves to support key actions / activities as part of the Council’s overall prudent and sustainable approach to managing its finances. However, a number of reserves would remain under review as part of the development of the budget and the new Corporate Investment Plan.

Cabinet’s attention was drawn to the fact that, at the time of finalising the Portfolio Holder’s report, the Local Government Finance Settlement for 2022/23 had yet to be announced. If announced in time, any changes emerging from the settlement would be reported to Cabinet in January 2022 when it considered its final budget proposals for recommending to Full Council in February 2022. The budget included a council tax levy increase of £5, with this level of increase expected to be confirmed as allowable as part of the finance settlement announcements. No revenue support grant had been included in the budget for 2022/23, but similarly to the late announcement last year, the Government could provide some funding again for next year, especially when reflecting on the on-going financial impact of COVID 19 on Local Authorities.

With the above in mind, the final position for 2022/23 was likely to be more positive than the £1.488m currently reported, especially as the final expected income position for business rates had also yet to be finalised.

Once the final position for 2022/23 was determined, the remaining years of the 10-year forecast would be revised, set against the budget position for 2022/23 and would be reported to Members later on in the budget setting process.

The Corporate Finance & Governance Portfolio Holder made the following statement:-

“This report provides the most up-to-date forecast and ‘builds’ on the position we considered back on 12 November. I now have three positives to report since that date, which are:-

(1)    the underlying Council Tax position, which continues to recover, with an increase in both the property base and collection fund surplus for 2022/23. In terms of the property base, this is driven primarily by an increase in raw property numbers, which have increased by over 900. Taking this favourable council tax position into account, there is now an extra £390,000 of income that has been included in the forecast compared to the figure reported in November;

(2)    although business rate income figures have not yet been included, we will do so in January when they are finalised, and we are optimistic that these should provide an improved position to the current forecast; and

(3)    we are still waiting for the Local Government Settlement to be confirmed, but we remain hopeful that the Government will continue to provide underlying support to Councils, especially with the continuing impact from COVID-19.

Hopefully these two latter points should enable us to reduce the estimated deficit further for 2022/23.

In terms of savings, we have identified just over £200,000 against the target of £450,000. It is therefore important that we continue to draw out savings and efficiencies over the later years of the forecast.

In terms of cost pressures, we have managed to limit on-going cost pressures to roughly the figure of £250,000 already built into the long-term plan. However, there are some additional cost pressures that may emerge next year but, at the moment, we think we can manage them within the overall budget and underwrite the associated risks via existing budgets.

We have been sensible and prudent over recent years and not exposed the Council to unnecessary risks that others have – some local authorities are now wrestling with the consequences of taking a less prudent approach.

The report also sets out a review of reserves, which hopefully provides some context to why they are held and dispels the myth that we are sitting on significant uncommitted reserves – as set out in the report, they all play an important part of supporting the wider financial position of the Council.

The long-term approach continues to provide the flexibility we need and prevents short-term “knee-jerk” reactions and gives us the time to make well-informed and considered decisions.

It is also worth highlighting that the Resources and Services Overview & Scrutiny Committee were unable to review the Quarter 2 financial performance position at their most recent meeting on 13 December. However, I understand that they will be bringing a number of financial issues together, including the report we are considering today as part of their wider budget review activities in January, and I look forward to receiving their comments.”

Having duly considered all of the information and advice contained in the Corporate Finance & Governance Portfolio Holder’s report and in order to enable the updated financial forecast and proposed budget position for 2022/23 to be submitted for consultation with the Resources and Services Overview and Scrutiny Committee in accordance with the requirements of the Council’s Budget and Policy Framework Procedure Rules:-

It was moved by Councillor G V Guglielmi, seconded by Councillor P B Honeywood and:-

RESOLVED that Cabinet –

(a)   approves the updated Financial Forecast and proposed position for 2022/23 as set out in the Corporate Finance & Governance Portfolio Holder’s report and the appendices thereto; and

(b)   requests the Resources and Services Overview and Scrutiny Committee’s comments on this latest financial forecast and proposed position for 2022/23.