Agenda item

Draft 2021/22 Budget for consultation

Minutes:

Members received a report which set out the 2021/22 budget proposal for consultation with boroughs.

 

Jay Patel, Finance Director, outlined the content of the report in detail and advised that the draft budget would be discussed with the constituent Borough Treasurers the following week with the final draft budget being reported to the Authority in January for approval. Following approval, the Pay As You Throw (PAYT) and Fixed Cost Levy (FCL) would be levied. Since drafting the report, the results of the spending review had been announced which, as a result of no public sector pay rise, would have a £65,000 reduction impact on the budget. He emphasised that the strategic focus was to deliver savings by reducing residual waste and that this accounted for 67% of all spending.

 

In response to a Member’s question as to how savings were tested for robustness, the Finance Director advised that budget managers submitted bids which were then scrutinised by the Senior Management Team and a budget scrutiny process. Whilst he had a good level of confidence in most of the activities he advised that the greatest risk related to waste forecasting volumes as the Authority was reliant on boroughs budget forecasts.

 

A Member sought clarification on the source of pension savings and was advised that there was a valuation of the Pension Fund every three years and that the latest requirements meant that the Authority was no longer required to pay a lump sum every year. The latest valuation had shown the Authority to be in a better than expected position but the Finance Director added a note of caution in that valuations could go down as well as up.

 

In terms of risk, particularly in relation to COVID 19 and Brexit, the Finance Director advised that a range of activities had been undertaken in order to identify these. Some reserves had been set aside to manage the risks associated with Brexit and allowance had been made in the waste forecasting for the pandemic.

 

A Member commented that depreciation was slightly larger than expected. The Finance Director explained that this related to one significant asset, the SERC, and that the depreciation would be gradual over a period of 25 years. He added that each 5 year cycle should be fairly stable.

 

In terms of capital, the Finance Director reported that the key item was the Victoria Road improvement and that the business case would be submitted to the Authority in due course. Following a question it was agreed that the outline business case would be considered in line with the direction agreed within the Joint Municipal Waste Management Strategy Update to ensure all options were explored.  Section 19 of the report set out the reserves position and was recommended that a cautious approach be adopted and reserves be retained.

 

 

 

A Member questioned whether population growth had been factored into the budget. The Finance Director advised that, whilst it was not currently as the model used was not sophisticated enough, officers were looking to develop this.

 

RESOLVED: That (1) the 2021/22 budget for consultation with boroughs be noted;

2) the Pay As You Throw (PAYT) rates, as set out in section 15 of the report, and the PAYT levy made up of two components totalling of £52.3 million be noted;

3) the Fixed Cost Levy (FCL) of £12.9 million, as set out in section 16 of the report, be noted;

4) the recommended trade/DIY prices, as set out in section 17 of the report, be noted and the Treasurer be authorised to change these in year should the need arise;

5) the new proposed capital budgets, as set out in section 18 of the report, be noted;

6) the target level of reserves of £7.4 million to act as a buffer for managing risks and avoiding supplementary levies, as set out in section 19 of the report, be noted.

 

 

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