Report of the Director of Finance.
Members received a report of the Director of Finance which set out the Council’s proposed Draft Revenue Budget 2022/23 and the Medium Term Financial Strategy 2022/23 to 2024/25.
The Panel did not raise any comments or questions on the report. However, Members noted the absence of business representatives and, given that the meeting provided a valuable opportunity for input and consultation on the annual council budget, suggested that further endeavours be undertaken towards encouraging the business community to attend.
RESOLVED: That the report be noted.
Report of the Director of Finance and Assurance.
The Forum received a report of the Director of Finance and Assurance, which set out the draft revenue budget for 2022/23 and the draft Medium Term Financial Strategy (MTFS) for 2022/23 to 2024/25 which had been considered by Cabinet at its meeting in December 2021. The report also referenced that the budget and the MTFS would be brought back to Cabinet in February 2022 for final approval and with a recommendation to full Council.
The Director of Finance and Assurance introduced the report and informed the Forum that the approach taken by the Council to the budget setting process was different to that of previous years. There was a legal requirement for the Council to deliver a balanced budget and, in order to do this, the Council was proposing to manage the budget gap for 2022/23 by using its reserves of £15.7m as a one-off measure to ‘plug’ the budget gap. The Director added that it was not ideal to use reserves to manage budget gaps but the alternative was to make immediate substantial cuts which would not be sustainable. She added that the Council was working on a strategy for future years with a view to managing the gap over the MTFS.
The Director responded to a question from a Member on the interest rate income that would be lost if reserves were withdrawn and used to manage the funding gap for 2022/23. She explained that the loss of interest would be marginal compared to other measures. She reiterated that there was a legal requirement on the Council to set a balanced budget for 2022/23.
A Unison representative asked how the loss of reserves would be funded in future years. The Director referred to table 1 (summary of key financial changes 2013/14 to 2022/23) and table 2 (changes to MTFS – prior to indicated finance settlement) of her report and explained that a further saving of £14.8m would have to be found in future years. For example, this could be achieved by restructuring debt and/or reducing expenditure. She added that various assumptions had been built-in, such as additional grant settlements from the government, an increase in Council Tax of 2.99% per annum, demographic of Harrow and expected inflation levels.
The Unison representative urged caution in that whilst an increase or a change in demographic could result in an increase in Council Tax, it would also mean that more Council services would be required and provided for. The Director of Finance acknowledged this point and stated that contingencies/growth would always be put in place.
The Director responded to additional questions from Unison and GMB representatives as follows:
· How would the sale of the Civic Centre site impact on the budget? The Director informed the Forum that this question was related to the HSPB (Harrow Strategic Partnership Board) where the Council will be putting in the Civic Centre land and equity over the period of the HSPB. She added that the Council would receive capital receipts, interest and dividends in future ... view the full minutes text for item 78
Report of the Director of Finance and Assurance.
(1) the draft budget for 2022/23 and the Medium Term Financial Strategy (MTFS) 2022/23 to 2024/25 be approved for general consultation as set out in Appendices 1 and 2 to the officer report, so that Cabinet may later consider the budget in light of the consultation responses and the equality impact assessment (s) before it is referred to Council in February 2022;
(2) it be noted that the Spending Review 2021 confirmed broad plans for public spending for 2022/23, which would impact on local government, and that the draft budget would be updated when the detail was announced in the Indicative Financial Settlement (was expected mid to late December 2021 followed by the Final Settlement no later than January 2022);
(3) the balanced budget position for 2022/23, the estimated budget gap of £14.847m for 2023/24 and an estimated balanced budget for 2024/25 based on the scenario of a Council Tax increase of 2.99% per annum over all three years of the MTFS, be noted;
(4) the use of £15.7m Budget Planning Reserve MTFS to achieve the balanced budget position for 2022/23 which was reversed out in the following year, be noted;
(5) the proposal to increase core Council Tax by 1.99% per annum 2022/23 to 2024/25 in line with Central Government spending power calculations, be noted;
(6) the proposal to increase Council Tax by 1% per annum 2022/23 to 2024/25 in line with Central Government spending power calculations in respect of the Adult Social Care Precept, be noted;
(7) the requirement to develop a fully costed budget and implementation plan to support the estimated financial challenges over the MTFS for presentation to Cabinet, be noted;
(8) no proposed structured changes to the schools funding formula for 2022/23 as set out in Appendix 3 and paragraph 1.47 to the officer report, be noted;
(9) the draft Public Health budget for 2022/23 as set out in Appendix 4 to the officer report, be agreed;
(10) the assumed funding for the protection of social care 2022/23 through the Better Care Fund (BCF) as set out in paragraphs 1.51 to 1.54 in the officer report, be noted; and
(11) the Director of Finance and Assurance, following consultation with the Portfolio Holder for Finance and Resources, be authorised to agree Harrow’s 2022/23 contribution to the London Borough’s Grant
Reason for Decision: To ensure that the Council publishes a draft budget for 2022/23 and a draft three Year MTFS to 2024/25. Final approval will be sought from Cabinet and Council in February 2022.
Alternative Options Considered and Rejected: As set out in the report.
Conflict of Interest relating to the matter declared by Cabinet Member/Dispensation Granted: None.