Agenda item

Members received a report which outlined the draft 2022-23 budget for consultation with borough Finance and Environment Directors.

A Member questioned the increase in the Pay As You Throw (PAYT) SERC charges whilst there was a reduction in growth (paragraph 15.13) and was acknowledged that there was an error in the table. This would be corrected for the final budget report to be submitted to the January Authority meeting.  The Finance Director advised that there had been a reduction in PAYT charges due to lower forecast volumes.  The Fixed Cost Levy had risen to £14.2m largely due to mattresses and haulage costs in relation to HRRC activity.

Ian O’Donnell, Treasurer, reported that the key consideration was the level of reserves.  The level of reserves was backed by an analysis of risk and in his view was appropriate.  The Authority had the lowest level of reserves when compared to other London Waste Authorities which reflected good budget management and the position that the organisation was in, that is, secure with a long-term contract.  In terms of the overall position, there had been a relatively small increase in organisational costs compared to inflation.

In response to a question about PAYT figures, the Finance Director referred to paragraph 15.9 of the report and advised that overall tonnages were down and that the PAYT levies were also decreasing which reflected the boroughs lower volumes of collected waste.  The increase in transport costs had led to an increase in the Fixed Cost Levy (FCL) charge.  He added that he would include an explanatory paragraph in the next report and was happy to discuss this separately with the Member in more detail but reassured the Members that the methodology was the same as had been used in previous years.

A Member requested clarification in terms of Deposit Return Scheme (DRS) materials and whether they reduced residual waste or recycling.  The Finance Director advised that the sensitivity analysis looked at the composition of residual waste coming through the system but in terms of the impact of the DRS, the financial modelling did not make any conclusions but simply reflected various scenarios.  The Managing Director stated that reducing waste reduced carbon throughout the waste system and that it was always better to do more collections.  The added benefit of removing food waste from residual waste was that recyclables might also be removed.

In conclusion, the Treasurer advised that there had been a formal budget process and range of challenge to provide Members with confidence that officers had tried to find savings to return to each constituent authority and that consideration had also been given as to how these could be passed back.  He thanked the officers, in particular the Finance Director, for their work and noted that paragraph 15.13 of the report required revisting.

RESOLVED:  That

(1)          the 2022/23 budget for consultation with boroughs be noted;

(2)          the payment of £0.2 million per borough for agreed improvements, principally HRRC diversion rates, be noted;

(3)          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 £50.4 million be noted;

(5)          the Fixed Cost Levy (FCL) of £14.2 million, as set out in section 16 of the report, be noted;

(6)          the recommended trade and construction prices, as set out in section 17 of the report, and delegated authority to the Treasurer to change these in year should the need arise be noted;

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

(8)          the target level of reserves of £9.2 million to act as a buffer for managing risks and avoiding supplementary levies, as set out in section 19 of the report, be noted;

(9)          the Medium and Long Term Financial Plan, as set out in section 20 of the report, be noted.