Agenda item

Prior to consideration of the Revenue Budget 2021/22 and the Medium Term Financial Strategy (MTFS) 2021/25 the Lead Member for Regeneration and Strategy was invited to address the Committee.

In opening remarks, it was noted that it had been a difficult year for all local authorities due to the financial impacts of Covid-19 which included additional costs, rising demand for services and reduced income from fees, charges, commercial revenues, Council Tax and Business Rates.  For 2021/22 central Government had allowed for a 3% Health and Social Care Precept to help meet some of additional pressures on social care budgets, which was proposed to be levied along with an additional 1.99%, resulting in a 4.99% increase in Council Tax. It was highlighted that there were significant pressures in services such as adults and children’s social care due to the demographics of the borough and an anticipated impact on a wide range of other services to vulnerable people and those on low incomes.  The budget therefore included investment in demand led services and sought to protect frontline services for vulnerable residents.  The financial pressures in 2021/22 would be severe with savings proposals set out in the appendix to the report.  The Lead Member highlighted that the longer term outlook for the town was bright with major regeneration projects coming forward in partnership with Slough Urban Renewal.  These included developments at the Montem site and Stoke Wharf, the financial benefits of which would be realised in the years ahead.

The Lead Member also highlighted that the Council was in negotiations with the Ministry of Housing, Communities and Local Government to request a Capitalisation Directive to address two one-off issues, namely the historic Slough Children’s Services Trust deficit owed to the Council totalling £5.5 and a business rates rebate following a recent tribunal decision.  The Executive Director, Corporate Services explained that prior to use of a one-off capitalisation directive there was as a budget gap of £10.154m in the 2021/22 General Fund Revenue budget.  This was due to three one-off pressures; the 2019/20 Business Rates Deficit, the Slough Children’s Services Trust historic deficit and the impact of Covid-19.

Committee Members were informed that MHCLG had recognised these one-off pressures and had indicated informally on that basis that the Council would be able utilise a one-off Capitalisation Directive to capitalise up to £12.200m.  A formal decision from the Minister was expect before the budget was set by Council on 8^th March 2021.  Whilst this direction supported the Council in addressing the revenue budget gap for 2021/22 and avoided a significant depletion of the Council’s available reserves, work would need to continue and be completed by the end of September 2021 to identify further savings to address the underlying budget gap going into 2022/23.

It was highlighted that expenditure on the Housing Revenue Account (HRA) for 2021/22 amounted to £30.1m and any income received was ring fenced for use within the HRA only.

Referring to the Capital Programme, it was noted that a regeneration programme, in partnership with Slough Urban Renewal was being delivered, an element of which would include significant affordable housing programme.

In summary, the Executive Director stated that although there had been many challenges a balanced budget was being recommended with a strategy in place to address the budget gap in the MTFS and increase reserves in future years.

During the course of the discussion, Members raised the following points:

·  A Member queried why only 33% of funds within the current capital programme had been spent. It was explained that Covid-19 had severely impacted on the delivery of the programme and that this had been taken into account when setting the Capital Strategy 2021/22.

·  Clarification was sought relating to the Public Works Loan Board and the impact of a variable interest rate on finances. It was explained that the Council budget assumed a 1% borrowing rate going forward and that decisions were made in conjunction with the advice provide by an external  the Treasury Management Advisor.

·  How much of the £19m budget gap forecast for 2023/24 related to servicing debt. Members were informed that the Council had moved from it’s previous position of selling assets to now being able to fund this through the revenue budget; resulting in the Council being more resilient than it had been previously.

·  The Chair raised a query relating to the Dedicated Schools Grant  forecast deficit at the end of 2020/21 of £16.960m, which was a £4.632m increase since 31^st March 2020 due to the overspend on the High Needs Block and whether this would have a detrimental impact on pupils and what comments had been received from the Slough Schools Forum on the matter. It was explained that the Council had developed a detailed management plan for the deficit, as required by the Department for Education (DfE), which was presented to the Schools’ Forum in January 2021. There was no expectation from the DfE however that the deficit would be paid for from general reserves.

·  A Member noted that a significant proportion of the budget was allocated for Adult Social Care (ASC) and asked how this compared to other local authorities. The Executive Director stated that this was typical for most local authorities and informed the Committee that a fundamental review of ASC would be taking place and the Committee would be provided of details relating to that.

·  Slough Urban Renewal income had been removed from the general fund expectations in the MTFS to ensure that the Council was not reliant on external profits for income to the fund and that this was based on grants received from government and council tax income etc.

·  Concern was expressed that CIPFA’s resilience index highlighted that the level of interest payable as a proportion of net revenue was a high risk for Slough BC compared to other Councils. It was noted that that Council had significant capital receipts and that the Capital Programme was within the prudential indicators.

·  A Member asked how confident the Council was that the savings target from the staffing restructure would be achieved.  It was responded that the Phase 1 restructure of senior management would save £1m and Phase 2 of the wider staffing would save between £2.5m and £3.5m.  The Corporate Management Team was committed to achieving these savings and it was noted they would partly be achieved by reducing the reliance on expensive agency staff.

The Chair then invited Councillor Strutton, present under Rule 30, to address the Committee.  Referring to the business rate rebate, Councillor Strutton asked how much the rebate amount of £5.5m equated to the overall budget, whether there were any other potential rebates, and what measures had been taken to ensure that a similar situation did not occur again. The rebate equated to approximately 4.5% of the overall budget and as referred to earlier, was part of the capitalisation request.  The Executive Director explained that specific circumstances relating to the rebate which was for a one business from a charge initially served in 2010.  Once the matter had come to the attention of current Officers in 2020 immediate action had been taken, the processes had been reviewed and the Executive Director provided assurance that he was confident that the future risk had minimised.

Councillor Strutton also asked about the depreciation of strategic asset purchases due to Covid-19 and the risks of using inter-Council borrowing.  The Executive Director stated that such borrowing was short term, usually less than a year and the risks were low.  The budget gap to 2024 was raised and the Lead Member explained the strategy was to remove all SUR returns from income expectations so that the Council’s revenue budget was not reliant on such income and would enable reserves to be built up over the MTFS period to increase financial resilience.  A question was put about rising demand pressures for adult and children’s social services and the Lead Member reiterated that the budget included growth in such services to reflect the expected demand.

At the conclusion of the discussion, the Committee noted the recommendations that Council would consider at its meeting on 22^nd February 2021 ahead of proposing the budget to Council on 8^th March 2021.  No amendments or further recommendations were made by the Committee.

Resolved –

(a)  That the Revenue Budget 2021/22 and Medium Term Financial Strategy be noted.

(b)  That it be noted that the Revenue Budget 2021/22 would be considered by Cabinet on 22^nd February 2021, prior to it being recommended to Council on 8^th March 2021.

(c)  That no amendments or further recommendations be made to Cabinet.