Subject:
|
General Fund Revenue
Budget, Capital & Treasury Management Strategy 2021/22
|
Date of Meeting:
|
25 February 2021
Policy & Resources Committee:11 February
2021
|
Report of:
|
Acting Chief Finance
Officer
|
Contact Officer:
|
Name:
|
Nigel Manvell
James Hengeveld
|
Tel:
|
01273 293104
01273 291242
|
|
Email:
|
nigel.manvell@brighton-hove.gov.uk
james.hengeveld@brighton-hove.gov.uk
|
Ward(s)
affected:
|
All
|
FOR GENERAL
RELEASE
1
PURPOSE OF REPORT AND POLICY CONTEXT
1.1
The 2021/22 council budget has been developed in unprecedented
times in which the impact on the city, its residents, businesses
and visitors is clear to see. The council has been supporting
wherever it can, including administering significant emergency
assistance, hardship and business grant funding to sustain people
and businesses throughout the pandemic as far as possible.
1.1
The council itself is also facing financial challenges following
many years of reducing government grant funding, with the added
financial impact of the pandemic on social care and homelessness
demands, as well as large losses of taxation revenues and income
from fees and charges. For 2021/22, allowable Council Tax and Adult
Social Care precept increases, together with additional resources
provided by the Spending Review, will not be sufficient to balance
the budget due to the need to provide cover for inflationary
pressures and provide investment to support Corporate Plan
priorities including funding to manage above-inflation costs and
increases in demands across critical statutory services such as
social care and homelessness. As in previous years, achieving a
balanced budget will therefore require a further substantial
savings programme of £10.644m.
1.2
The budget proposed for 2021/22 is therefore one that focuses on
survival as the country and the city hopefully emerge from the
pandemic. The budget proposals aim to maintain the financial
resilience of the council while also ensuring that the council is
able to support recovery and renewal across the city by
underpinning support for vulnerable people and those in hardship.
The budget also focuses on using public funds for the benefit of
the local economy, investing in a cleaner, more sustainable city,
and substantially investing in housing provision to continue to
alleviate homelessness, which could otherwise result in longer term
costs for the council and the city.
1.3
Government has recognised the growing potential costs of climate
change to people’s health, the environment and the economy
and is developing its green investment proposals. However, at
present it is not clear what funding will be provided to local
authorities, if any, to support climate action locally. In 2018,
this council declared a Climate and Biodiversity Emergency and in
response the Corporate Plan therefore contains plans and objectives
to respond to the emergency including the ambition of a Carbon
Neutral city by 2030. In lieu of central government funding, the
budget contains proposals to support carbon reduction but
recognises that these must be affordable and prudential in the
context of the overall budget and resources available.
1.4
By investing in active travel, energy efficiency and green spaces,
the budget proposals support the drive for improved air quality and
promotes public health by providing the means to exercise and use
alternative forms of transport. Budget proposals also recognise the
social, economic and health benefits of supporting a sustainable
recovery for the city from the pandemic. Alongside the proposals to
protect investment in Community & Voluntary services and invest
in youth services, the budget proposals are also aiming to support
young people and their futures.
1.5
This report contains the full package of General Fund Revenue
Budget and Capital Investment proposals for 2021/22 together with
the proposed Capital Strategy and Treasury Management Strategy for
2021/22.
1.6
The revenue budget proposals have been updated since the second
draft budget report, considered by Policy & Resources Committee
on 21 January 2021, and now fully reflect:
·
the provisional Local Government Financial Settlement
announcement;
·
updated projections and estimates based on latest information
informed by the month 9 in-year trends;
·
revisions to the Council Tax and Business Rates tax bases as
approved by the January Policy & Resources Committee;
·
latest announcements of capital resources;
·
changes to savings and investment proposals as detailed in the
report and appendices.
1.7
The General Fund Revenue Budget proposals for 2021/22 include:
·
a proposed increase of 4.99% on Council Tax including a 3% Adult
Social Care precept, which, together with tax base
changes, will generate resources of £5.367m;
·
provision for known pay and price inflation, employer pension
contribution changes and unavoidable contractual and financing
commitments of £4.907m;
·
a savings programme of £10.644m to contribute to funding for
investments in Corporate Plan priorities and cost pressures in
demand-led services; and
·
proposed Corporate Plan priority investments, including over
£19m funding for cost pressures in priority, demand-led
services of £22.270m.
1.8
Budget proposals are supported by Equality Impact Assessments where
appropriate which must be considered by Members alongside the
detailed budget proposals.
1.9
The proposed Capital Investment Programme for 2021/22 is set out in
the Capital Strategy and includes a total programme of investments
of £221.103m.
2
RECOMMENDATIONS:
That Policy & Resources Committee
recommends to Council:
2.1
The Administration’s proposed budget and Council Tax increase
on the Brighton & Hove element of the council tax,
comprising:
i) A
general Council Tax increase of 1.99%;
ii) An Adult
Social Care Precept increase of 3.00%;
iii) The
council’s net General Fund budget requirement for 2021/22 of
£218.571m before accounting for the exceptional Section 31
item of -£33.764m;
iv) The 2021/22
budget allocations to services as set out in the Budget book at
Appendix 1 incorporating 2021/22 savings proposals;
v) The
reserves allocations as set out in the table at paragraph
5.26;
vi) A recommended
working balance of £9.000m.
2.2
That Council notes the updated Medium Term Financial Strategy
included in the Budget Book at Appendix 1.
2.3
That Council approves the Capital Strategy for 2021/22 at Appendix
2 comprising:
i) The
strategy for funding the investment in change, including the
flexible use of capital receipts as set out in section 7;
ii) The
capital resources and proposed borrowing included at Annex A of the
Capital Strategy;
iii) The Capital
Investment Programme for 2021/22 of £221.103m included within
the Budget book at Appendix 1 and incorporating allocations to
strategic funds.
2.4
That Council notes the Equalities Impact Assessments to cover all
relevant budget options and their cumulative effect as set out in
Appendices 6 and 7.
2.5
That Council further notes the budget decision is an indicative
resourcing decision to be taken in the context of the explanation
in the Legal Implications paragraph 17.3.
2.6
That Council approves the Treasury Management Strategy Statement as
set out in Appendix 3 comprising:
i) The
Annual Investment Strategy;
ii) The
Prudential and Treasury Indicators;
iii) The Minimum
Revenue Provision policy;
iv) The
authorised borrowing limit for the year commencing 1 April 2021 of
£541m.
2.7
That Council notes that supplementary information needed to set the
overall council tax will be provided for the budget setting Council
meeting as listed in paragraph 11.3.
That Policy & Resources Committee
agrees:
2.8
That the council’s appointed S151 Chief Financial Officer be
authorised to make any necessary technical, presentational or
consequential amendments to this report before submission to full
Council.
3
FINANCIAL CONTEXT AND RISKS
3.1
Effective financial planning has become increasingly important over
recent years due to the increasing financial challenges facing the
council. Failure to effectively manage the council’s finances
will ultimately impact on service delivery and has serious
reputational implications, potentially leading to government
intervention. The financial impact of the pandemic has brought
financial resilience to the fore and many authorities are now
concerned about the level of reserves available to maintain their
financial stability. Recent examples of financial scrutiny or
intervention relating to local authorities include:
·
An external audit Public Interest Report followed by two Statutory
Section 114 reports being issued by the Chief Finance Officer (CFO)
of Croydon LBC to restrict all spending, bringing with it
associated media and reputational impact;
·
Various objections to local authorities’ statements of
accounts, particularly concerning financing decisions and
commercial property deals, requiring investigation and adjudication
by external auditors;
·
Various legal challenges from residents in respect of council
decisions, particularly where urgent cuts have had to be approved
to balance the books, most notably the upheld legal challenge to
Bristol City Council regarding proposed reductions to
children’s disability budgets;
·
Intervention by government in respect of failing services where
they can appoint commissioners to take over whole services, notably
Doncaster Met which narrowly avoided Secretary of State
intervention in Children’s Services by agreeing to create a
new trust;
·
In the severest case, Northamptonshire, where direct intervention
by government will result in dissolution of the authority and
creation of two new unitary authorities from April 2021.
3.2
The case of Croydon LBC is worthy of note having recently been
issued with two Section 114 reports by their CFO. The report
indicates that the authority has seen its reserves depleted by over
£40m within 4 years, accompanied by increasing overspends
across social care services while also under-achieving its planned
savings programmes. It also entered into substantial housing and
property arrangements which have resulted in very large borrowing
debt (over £1 billion) and which are now being reviewed
independently by the Local Government Association.
3.3
In their annual reviews, external auditors are therefore
increasingly concerned with local authorities’ arrangements
for securing value for money which includes demonstrating financial
resilience and sustainability by providing evidence of effective
medium term planning. In the current context, External Auditors
will also be looking closely at authorities’ plans and
approaches for managing the ongoing impacts of the pandemic,
particularly taxation (Collection Fund) deficits.
·
BHCC’s borrowing, currently £279m, is at the average
for Unitary Authorities. This includes £149m borrowing under
the self-financing HRA regime. By contrast, the level of borrowing
(debt) is approximately one fifth of the level undertaken by
Croydon LBC.
·
The council maintains a £9m working balance and currently has
usable earmarked reserves of approximately £33m, or around
20% of the budget, from which it can internally borrow in an
emergency.
·
The council’s revenue budget has not been overspent for at
least the last 5 years. It’s HRA and Schools Budgets (DSG)
have also been within budget.
·
The council has not had to make any unplanned use of reserves for
at least the last 5 years.
·
The council has consistently received a clean bill of health from
the External Auditor each year (i.e. unqualified and unmodified
audit opinions) including the latest opinion received in the midst
of the pandemic in October 2020.
·
The Budget Proposals for 2021/22 present a balanced recurrent
budget despite the challenges posed by the impact of the pandemic.
Some financial smoothing of one-off Covid-19 costs is proposed but
is well within the reserves available.
3.5
As always, there is no room for complacency, particularly in the
current situation with uncertainty over the end of the pandemic and
the extent of any lasting economic impacts. Close monitoring of the
situation in-year and ensuring that planning for future predicted
budget gaps begins as early as possible next financial year should
ensure that the council can take appropriate and corrective
financial management action in-year for any overspending, and can
develop plans to address any future budget gaps in good time.
4
RESOURCES AND PLANNING ASSUMPTIONS 2021/22
Provisional Local Government Financial Settlement (LGFS)
4.1
The provisional Local Government Finance Settlement for 2021/22 was
announced on 17 December 2020 and reflected the headline funding
announcements included in November’s one-year Spending
Review. This announcement included:
·
Confirmation of an allowable 3% Adult Social Care precept which
would provide an additional £4.450m if agreed;
·
Confirmation that the threshold at which an
increase in Council Tax requires a local referendum will be 5%
including a 3% Adult Social Care (ASC) precept. Any proposal to
increase council tax by 5% or more would therefore need to be
accompanied by an agreed substitute budget, which would need to be
implemented if the increase were voted down by the electorate.
·
Additional Adult Social Care grant funding of £0.944m. This
is lower than the £1.5m assumed in the December budget report
as there was a significant change to the distribution method used
for allocating the £300m nationally. This type of funding has
previously been allocated based on a Relative Needs Formula (RNF)
but on this occasion, the government have taken into account the
revenue raising ability of each council from the ASC precept and as
a result the council’s allocation is substantially lower than
predicted;
·
A new grant to support lower tier councils of £0.624m (which
this council benefits from as unitary authorities are effectively
combined upper and lower tier authorities);
·
An allocation of £8.023m from the £1.55bn additional
Covid-19 pressure funding nationally for 2021/22. It is important
to note that this funding is regarded as one-off funding for
2021/22 for the purposes of medium term financial planning;
·
Confirmation of funding provision for 75% of irrecoverable losses
of Council Tax and Business Rate Retention income (i.e. the
Collection Fund deficits) in 2020/21. For Council Tax this relates
to the reductions in revenue arising from increased Council Tax
Reduction claimants and delays in new property completions but it
has now been clarified by government that it will not include cover
for irrecoverable (bad) Council Tax or Retained Business Rate
debts. This is because the government’s assumption is that
councils will continue to pursue and ultimately recover outstanding
debts.
·
A new one-off Local Council Tax Support grant of £2.968m to
cover the impact in 2021/22 of the increased costs of Council Tax
Reduction and other help to economically vulnerable households.
This grant now takes on even greater significance for councils as
it may ultimately be needed to cover bad debts not now covered by
the 75% Collection Fund deficit protection;
·
Confirmation that the Troubled Families, additional Adult Social
Care grants, Flexible Homelessness Support Grant (now renamed
Homeless Prevention Grant), and existing Rough Sleeper funding
awarded in 2020/21 will be continued at broadly the same
levels;
·
A small inflationary increase of £0.036m to the Revenue
Support Grant from £6.630m to £6.666m; and
·
A marginal increase to the New Homes Bonus of £0.018m.
4.2
The government also announced additional Homelessness and Rough
sleeping funding of £151m nationally for 2021/22 in the
Spending Review however the council is still awaiting details of
this allocation. The distribution method for this is still unknown
at present but is predicted to provide a minimum of £1m
additional resources based on previous distributions.
4.3
The main impacts on the council’s planning assumptions that
can be inferred from the Spending Review announcement and
subsequent LGFS are as follows:
·
The pay award assumed for 2021/22 planning assumptions was 2.2%
based largely on the average of increases in recent years. However,
the Chancellor announced a public sector pay freeze, which, after
providing for the Voluntary Living Wage increase and allowing for a
similar increase to the proposed public sector pay award for staff
paid less than £24,000, would potentially reduce the cost of
the assumed pay award by £2.429m if applied to local
government.
As noted in the December Policy & Resources Committee budget
update, local government pay is negotiated separately from other
public sector pay by the National Joint Council. However, the
Chancellor’s announcement of a pay freeze indicates that this
expectation has been taken into account in the core spending power
uplifts provided to government departments, including the Ministry
of Housing, Communities & Local Government, and therefore is
reflected in the Local Government Financial Settlement. This will
be one of the factors taken into account by the employers’
side in national pay negotiations, recognising that any award
beyond a freeze will therefore be above the funding provided and
will potentially impact on service provision locally.
In lieu of any other information, financial assumptions in the
council’s budget setting process have historically always
followed the government’s expectations and associated funding
provision.
·
The predicted level of additional grant support was £11m
including £4m for Adult Social Care (ASC), £6m for
ongoing Covid-19 pressures, and £1m for Troubled Families.
This was after assuming continuation of the additional Adult Social
Care grant awarded in 2020/21 which has been confirmed. If the 3%
ASC Precept is taken up, the overall LGFS outcome indicates that
additional funding of £14.520m should be available, providing
an additional £3.520m compared to the level of funding built
into the original 2021/22 planning assumptions.
·
The forecast Collection Fund deficit as at month 9 (December) is
currently £8.529m. The Spending Review provides that 75% of
the deficit attributable to Covid-19 will be funded which is worth
approximately £4.468m. Note however, that this does not
include provision for outstanding debts which are assumed to be
ultimately recovered. The provisions further allow this to be
spread over 3 years. Overall, this reduces the call on one-off
resources to £1.586m in 2021/22.
·
One-off Local Council Tax Support grant of £2.968m to support
anticipated Collection Fund pressures in 2021/22.
4.4
The final Local Government Finance Settlement is expected to be
announced in February 2021.
Adult Social Care
(ASC) and Better Care Funding (BCF)
4.6
All additional funding for Adult Social Care has been directed
towards supporting the demand and cost pressures within the
service. The table below summarises the resources available to
support of Adult Social Care pressures in 2021/22:
Table 1: Social Care Resources
|
2019/20
|
2020/21
|
2021/22
|
ASC Precepting *
|
0%
|
2%
£2.894m
|
3%
£4.450m
|
Improved BCF
|
£9.181m
|
£9.181m
|
£9.181m
|
Adults & Children’s Social Care grant
|
£2.100m
|
£2.100m
|
£2.100m
|
Adult Social Care Grant
|
-
|
£4.715m
|
£4.715m
|
New Social Care Grant (SR2020)
|
-
|
-
|
£0.944m
|
* Subject to full Council approval for 2021/22
Referendum Threshold
4.7
The provisional Local Government Finance Settlement confirmed that
the threshold at which an increase in council tax requires
confirmation from a local referendum will be 5% including a 3%
Adult Social Care precept. Any proposal to increase council tax by
5% or more would therefore need to be accompanied by an agreed
substitute budget, which would need to be implemented if the
increase were voted down by the electorate.
Forecast Business Rate Retention and Council Tax Income
4.8
Details of the expected business rate retention income forecasts
were set out in the report to the January 2021 Policy &
Resources Committee. The council is forecast to receive
£67.000m from its locally retained share of business rates
and Section 31 compensation grants in 2021/22 which is a
‘flat cash’ assumption at the same level as 2020/21
given the uncertainties over economic recovery.
4.9
The Council Tax taxbase report was also agreed by this committee in
January 2021. Assuming a Council Tax increase of 4.99% and taking
into account changes to the taxbase, the total projected Council
Tax income in 2021/22 is £155.914m. This is an increase of
£5.367m compared with 2020/21. However, this includes an
estimated one-off negative impact of the pandemic of £1.120m
which can be covered by the Local Council Tax Support grant in
2021/22 before the position is assumed to recover in 2022/23.
4.10
The tax base calculation also incorporates the changes to the
Council Tax Reduction (CTR) Scheme approved by full Council in
January. The additional cost of proposed changes in 2021/22 is
approximately £0.350m and this is reflected in the tax base
calculation above. Full Council also approved a CTR discretionary
fund of £0.200m, requiring additional one-off resources of
£0.190m which is reflected in the table at paragraph 5.22
below.
4.11
The projected 2020/21 Collection Fund deficit has also been
reviewed as part of this process and currently stands at
£8.529m. However, the government have provided 75% funding
for the Covid-19 related element of the deficit and have also
allowed any remaining deficit to be spread over 3 years. Taking
this into account the one-off amount to be managed in 2021/22 is
£1.586m.
Other Government Grants
4.12
The grant allocations for 2021/22 have been included within the
Budget Book at Appendix 1. Some grant allocations for next year
have not yet been announced, in particular, the new rough sleeper
funding, and where these are critical to the setting of the 2021/22
budget, an estimate has been included.
Fees
and Charges
4.13
The council’s Corporate Fees & Charges Policy requires
that all fees and charges are reviewed at least annually and should
normally be increased by a minimum of either the corporate standard
inflation rate (currently 1%), statutory increases, or actual
increases in the costs of providing a service. Increasingly, linked
to the council’s approach to securing value for money in the
provision of services, services are benchmarking non-statutory fees
and charges with other providers and councils to ensure that
charges are comparable and competitive within the local context,
and can maximise income to protect essential services wherever
feasible.
5
CORPORATE PLAN INVESTMENTS & PRIORITY SERVICE PRESSURE
FUNDING
5.1
The council’s Corporate Plan contains priorities that aim for
a fairer, sustainable city and contains six outcomes that are
supported by a range commitments and actions. Full details are in
the published plan and the six outcomes supported are:
·
A city to call home
·
A sustainable city
·
A healthy and caring city
·
A city working for all
·
A stronger city
·
A growing and learning city
5.2
The investments necessary to support these outcomes are continually
developing as they are informed by local demographic and economic
trends, ongoing research and policy development, and consultation
and engagement with residents, communities, partners and other
stakeholders, for example, the work of the Climate Assembly. As the
investment requirements become more certain they are built into
both the annual budget setting process and, for longer term
objectives, into the Medium Term Financial Strategy, so far as they
can be estimated and afforded.
5.3
A major investment area for the Corporate Plan relates to housing
and homelessness including ongoing capital investment plans to
deliver new build or purchased, affordable housing and temporary
and emergency accommodation through the self-financing Housing
Revenue Account (HRA) and other innovative General Fund schemes
including the Housing Joint Venture. These plans are well advanced
and are set out in detail in the Corporate Plan and the HRA Revenue
and Capital Budget also reported to the February Policy &
Resources Committee and Budget Council. A range of additional
General Fund investments, including additional Housing First
funding, have also been identified to support the outcome of
‘A City to Call Home’ and these are set out below.
5.4
In 2018, the council declared a Climate and Biodiversity Emergency
and this is therefore a high priority for the council and supports
the Corporate Plan objective of becoming a Carbon Neutral City by
2030. Revenue and capital investments of over £10m are set
out below, including a £1m Carbon Reduction Reserve, to
provide for and advance initiatives to support the aim of a carbon
neutral city by 2030, improving the sustainability and biodiversity
of the city as well as the health and well-being of its residents
through promoting active travel and improving air quality.
5.5
Another important area requiring substantial investment concerns
services that can help to support a healthy and caring city.
Demands on Social Care services have increased exponentially during
the pandemic but even without this impact, the long term trend is
for people to live longer but often with limiting illnesses,
disabilities or mental health illnesses that require increasing
social care support to help them stay in their homes and
communities. It is nationally accepted that a long term solution to
the funding of Adult Social Care is required but, while the
government has been exploring options, it is yet to publish its
long awaited Green Paper. In the meantime, local authorities are
facing substantially increasing costs and demands and the
investment required to meet these locally in 2021/22 is estimated
at £17.243m across adults and children’s social
care.
5.6
The proposed investments also include provision for the increased
costs and demands on the Home to School Transport service which
were approved by Policy & Resources Committee on 27 May 2020.
Although this will increase the cost of the service by £1m,
this will ensure continued provision of an improved and redesigned
service which has been widely consulted on, including with the
Parents and Carers Council (PaCC). Benchmarking with authorities in
BHCC’s defined comparator group of councils, which all have
similar demographic characteristics, showed that the service budget
was 59% (or £1.4m) below the average for the group. This
investment therefore brings the council closer to the average.
5.7
Other investments include substantial revenue and capital provision
for the Brighton Youth Centre project to provide improved services
for young people in the city centre alongside Youth Voice resources
to encourage youth engagement. The budget also proposes investments
to continue to tackle inequality and disadvantage including support
for disability engagement, responding to disadvantage among young
people, supporting BAME initiatives and race education, and
providing additional resources for responding to domestic violence.
This is in addition to the recently approved changes to the Council
Tax Reduction Scheme (CTR) which will see discounts increased from
80% to 82% with no minimum awards for those in financial
hardship.
5.8
There are also proposed investments to support of those living and
working in the city and, in particular, funding is proposed to
underpin the council’s role in sustaining recovery and
renewal as the city comes through the pandemic. This includes
support to develop Community Wealth Building policies to ensure all
public sector funds are used to the benefit of the local economy as
far as possible, as well as support for the Arts Sector Recovery
Plan, development of the Madeira Terraces project and investment in
city clean-up and graffiti removal initiatives.
5.9
In total, there are proposed ongoing investments of £22.270m
and one-off investments of £2.387m to support Corporate Plan
priorities and outcomes, which also lever in £9.800m of
associated capital investments through prudential borrowing. The
revenue investments are enabled by proposed local taxation
increases (4.99%), including the 3% Adult Social Care precept,
increased government grant support, and the substantial package of
savings (£10.644m) focused on delivering services at a lower
cost through redesign and/or technological changes, as well as
generating more income from non-statutory services.
Covid-19 Pandemic Financial Impact
5.11
The Covid-19 pandemic has caused an enormous financial shock to the
whole economy, impacting people and businesses across all sectors,
including the public sector. Following 10 years of government grant
funding reductions, local authority core grant funding is now a
small element of their overall funding and local authorities
therefore increasingly rely on local taxation revenues and other
sources of income including fees & charges. The corollary of
this is that, compared with most of the public sector, the pandemic
greatly impacted the finances of local authorities. The main
financial impacts were:
·
Significantly increased numbers of Council Tax Reduction claimants
(up 13%), resulting in taxation losses;
·
Delays to construction of new housing and business premises
resulting in suppression of the tax bases and associated Collection
Fund deficits;
·
Significant impacts on Adult Social Care in order to ensure
discharge from hospitals into care settings as soon as possible.
NHS funding has helped to contribute to over 50% of the financial
impact.
·
Similarly, a large increase in costs and activity relating to
homelessness and rough sleeping in pursuit of the ‘everyone
in’ policy and keeping people safe.
·
Substantial costs of procuring and administering PPE.
·
Most significantly, large losses of fees, charges and rental
incomes due to suppressed economic and visitor activity in the
city.
5.12
At the beginning of the year, early estimates of the impact on the
council were drawn up so that the council could begin to consider,
in a worst case scenario, how it might manage the situation without
additional government funding. This indicated potential pressures
of over £50m. Government funding announcements followed
shortly, starting with announcements on Covid-19 Emergency Response
grants. However, by the end of June, the main concern remained
around taxation losses and the loss of Sales, Fees & Charges
income for which the government had made no announcements. At that
time, the council considered different scenarios for managing the
impacts, including the potential for either an Emergency Budget or
Financial Smoothing by borrowing from reserves. A best estimate was
that there could be a potential budget pressure of
£27.5m.
5.13
In the event, the government, which had started collecting local
authority financial data via the Ministry of Housing, Communities
& Local Government, responded positively and issued four
tranches of Covid-19 Emergency Response funds together with a
substantial grant to compensate for 75% of Sales, Fees &
Charges losses. Latterly, the council also successfully bid for
homelessness funding through the Next Steps Accommodation Programme
(NSAP) fund. These funds were alongside a wide range of grants to
support businesses and individuals in hardship, including the
furlough scheme which the council also accessed to a limited
extent.
5.14
Overall, the council expects to receive over £51m in funding
support for Covid-19 in 2020/21 including furlough grant, the NSAP
grant and around £7.8m of NHS funding. Alongside financial
management action, including vacancy management and actions to
minimise non-statutory spend, the council has been able to manage
the financial impact in 2020/21 as reported below.
Projected Covid-19 Impact in 2021/22
5.15
The country is still enduring the pandemic with the end of the
latest lockdown not yet known. However, there is more optimism as a
number of approved vaccines begin to be administered. For local
authorities, the government has also announced additional support
which will significantly assist the council in 2021/22 as
follows:
·
Further one-off Covid-19 grant funding of £8.203m;
·
Further rough sleeper funding, estimated to be worth
£1.000m;
·
A one-off Local Council Tax Support grant worth £2.968m;
·
Cover for 75% of the Covid-19 element of Collection Fund deficits
and the ability to spread the remaining deficit over 3 years;
·
Continuation of the Sales, Fees & Charges compensation grant
covering 75% of losses for the first quarter of 2021/22.
Table 3: Covid-19
One-off Cost Pressures 2021/22
|
£m
|
Temporary Accommodation spot purchase costs
(assumes 15 move-on’s per month are achievable)
|
1.500
|
Ongoing use of emergency (hotel) accommodation
for rough sleepers
|
0.650
|
Supported Bus routes (expected slow return to
public transport use)
|
0.560
|
Home to School Transport (quarter 1)
|
0.400
|
City Clean operational staffing (agency)
pressure (quarter 1)
|
0.600
|
Additional security/concierge cover, including
at the depot and hubs
|
0.400
|
Increased cleaning of corporate buildings
|
0.150
|
Commercial rent reductions, voids and bad
debts (not covered by Sales, Fees & Charges compensation
grant)
|
0.950
|
Suppressed income from blue badge fraud
prosecutions
|
0.013
|
Life Event services income and other one-off
cost pressures (net of 75% compensation funding)
|
0.218
|
Communications – additional Covid-19
media support and delay to restructuring
|
0.110
|
Elections – Covid-19 cost impact for PCC
elections
|
0.030
|
Revenues & Benefits – restructuring
delay due to Covid-19 activity (e.g. ongoing hardship schemes and
increased CTR claimants)
|
0.250
|
Estimate for ongoing PPE costs
|
0.500
|
Total One-Off
Covid-19 Costs 2021/22
|
6.331
|
Reserves Position and One-off Funding
Latest Financial Performance in 2020/21
5.17
Targeted Budget Management (TBM) is the council’s system of
budget monitoring and the TBM Month 9 (December) report included on
this committee agenda shows a projected underspend of £4.812m
on the General Fund, which includes a projected underspend of
£0.035m on the council’s share of NHS controlled
Section 75 partnership services. The overall underspend is a
substantial improvement of £4.842m since Month 7 (October) as
presented to the Committee in December and provides much needed
one-off resources to mitigate one-off Covid-19 costs in 2021/22,
including residual Collection Fund deficits, and meet other one-off
allocations and investments.
5.18
The improved position has resulted from a combination of effective
cost control measures including negotiated supplier reliefs,
application of the furlough scheme where applicable, and effective
deployment and vacancy management together with significant
improvements in income forecasts due to the busy summer and autumn.
There has also been improved recovery of benefits for emergency
accommodation tenants, increased funding from the NHS, and very
substantial government grant support. Other improvements are set
out in the TBM report and include:
·
A significantly reduced forecast of PPE costs which have improved
by £0.561m;
·
A reduced capital financing forecast of £0.466m due to
reported delays to capital schemes, which therefore reduces the
Minimum Revenue Provision (MRP) requirement (i.e. amount required
to be set aside for debt repayment);
·
An improved Collection Fund forecast due to a stabilisation of
Council Tax Reduction claimants and a lower than expected impact on
in-year collection performance.
5.19
The underspend of £4.812m will add to general reserves
available at the start of 2021/22. As normal at budget setting
time, all other council reserves have been reviewed to ensure they
remain adequate and relevant for their intended purpose. Where
reserves are no longer required, they can be released to support
the budget position. Conversely, where they are insufficient, a
proposed allocation may be required. Following the review,
£0.188m is assessed to be available for release and will also
add to the general reserves available at the start of 2021/22.
These two additional one-off resources are reflected in the table
below.
One-off
Resource Liabilities and Proposed Allocations
5.20
The working balance will be recommended to continue at a minimum of
£9.0m to meet general risks applicable to a unitary
authority.
5.21
Table 4 identifies the potential resources and liabilities that
will need to be taken into account in setting the 2021/22 budget.
At this stage, this assumes that spending in 2020/21 will remain in
line with the TBM Month 9 (December) projection. The in-year
position can change up or down by the end of the financial year but
estimates at this stage of the year are expected to be reasonably
accurate. For example, last year the forecast worsened by
£0.350m between month 9 and the year end, a relatively small
movement of 0.16% of the budget.
5.23
To manage the projected shortfall of £3.971m, internal
borrowing from reserves is therefore proposed and, initially, it is
proposed that these be repaid over a 10 year period starting in
2022/23. This time period can be kept under review in future
years’ budget setting rounds and the repayment period
shortened if the financial position allows.
5.24
Internal borrowing from reserves is clearly not desirable and is a
last resort for any authority. However, the Covid-19 pandemic is an
exceptional event and it is for events and financial shocks such as
this that the authority maintains not only a working balance of
approximately 4% of its net budget, but a sustainable level of
usable reserves to provide it with the necessary financial
resilience. The use of reserves proposed here will utilise
approximately 9% of current reserves and balances for financial
smoothing. Financially, this is manageable in the exceptional
circumstances and, if approved, the authority will plan for
repayment of £0.397m per annum in its Medium Term Financial
Strategy beginning in 2022/23.
5.25
The alternative choice for Budget Council is to protect reserves
and consider not making proposed allocations to support council
priorities. This is understandably a difficult choice as doing so
would not only reduce the financial support for the stated
priorities and restrict their implementation and advancement, but
it would also potentially obstruct recovery and renewal following
the pandemic, not least by reducing the circulation of public money
in the city.
Table 4: One-off Resources, Liabilities and Proposed
Allocations
|
£m
|
£m
|
Unallocated general reserves
|
|
-0.188
|
|
|
|
Revenue Budget position 2020/21
(TBM):
|
|
|
Forecast outturn underspend (as at TBM Month 9 /
December)
|
|
-4.812
|
|
|
|
In-Year Collection Fund
Position:
|
|
|
Estimated 2019/20 Council Tax collection fund deficit
brought forward
|
0.450
|
|
Estimated 2020/21 Council Tax collection fund deficit
(brought forward and in year collection)
|
2.223
|
|
Estimated 2020/21 Council Tax collection fund deficit
(reduction in Debit due to Covid)
|
2.337
|
|
Council Tax Collection Fund deficit spread over 3
years
|
-3.040
|
|
75% provision for Council Tax Collection Fund debts
spread over 3 years
|
-0.584
|
|
Sub-total Residual Council Tax Collection Fund
Deficit
|
|
1.386
|
Business Rates collection fund deficit relating to
retail and nursery relief
|
33.764
|
|
Contribution from Section 31 grant timing reserve
(retail and nursery relief)
|
-33.764
|
|
Estimated 2019/20 Business Rates collection fund
Deficit brought forward
|
0.110
|
|
Contribution from Section 31 grant timing reserve
(general)
|
-0.212
|
|
Remaining estimated 2020/21 Business Rates Retention
collection fund deficit
|
3.621
|
|
Business Rate Collection Fund deficit spread over 3
years
|
-2.414
|
|
75% provision for Business Rate Collection Fund debts
spread over 3 years
|
-0.905
|
|
Sub-total Residual Business Rate Collection
Fund Deficit
|
|
0.200
|
|
|
|
Balance of Local Council Tax Support grant available
after applying £1.120m to manage the projected one-off
Covid-19 impact on collection in 2021/22
|
|
-1.848
|
|
|
|
Projected One-off Resources available at the start of
2021/22
|
|
-5.262
|
|
|
|
Proposed One-off Allocations in 2021/22:
|
|
|
Covid-19 one-off financial impacts in 2021/22 (from
Table 3)
|
6.331
|
|
Funding for public
enquiries and City Plan Part 2 examination
|
0.190
|
|
Creation of a Carbon Reduction Reserve
|
1.000
|
|
One-off investment in Corporate Plan
priorities
|
0.662
|
|
Management of Ash & Elm dieback (health &
safety works)
|
0.600
|
|
Approved allocation: Council Tax Reduction
Discretionary Fund
|
0.190
|
|
Allocation to maintain the Welfare Reform Support
Fund
|
0.260
|
|
Total One-off Allocations in 2021/22
|
|
9.233
|
Current One-off Resources shortfall
|
|
3.971
|
Managed by:
|
|
|
Internal borrowing from reserves for 10 years,
starting 2022/23
|
|
-3.971
|
Balance
|
|
0.000
|
Memorandum Note of Future Collection Fund Deficit
Allocations
|
|
2022/23
|
|
Collection Fund
deficit allocation year 2 net of 75% S31 grant
|
1.238
|
2023/24
|
|
Collection Fund
deficit allocation year 3 net of 75% S31 grant
|
1.238
|
5.27
The proposed one-off allocations for 2021/22 are explained in more
detail below:
·
Covid-19 financial impacts (£6.331m): these are set out in
detail in the table at paragraph 5.16 above;
·
Funding for public enquiries and City Plan Part 2 (£0.190m):
this provision relates to unavoidable costs in respect of public
enquiries for the Outer Harbour and Palmeira Avenue (£0.140m)
together with the ‘Examination in Public’ of the City
Plan Part 2 (£0.050m);
·
Creation of a Carbon Reduction Reserve (£1.000m): to provide
for and advance initiatives to support the aim of a carbon neutral
city by 2030, improving the sustainability and biodiversity of the
city as well as the health and well-being of its residents through
promoting active travel and improving air quality;
·
One-off investment in Corporate Plan priorities (£0.662m):
these investments are set out in detail in the table at paragraph
5.10 of the report;
·
Management of Ash & Elm dieback (health & safety works)
(£0.600m): these allocations are in relation to the
recommendations emanating from the Tree Diseases report, which were
approved by the Environment, Transport & Sustainability
Committee at its meeting on 24 November 2020 (Item 43). The
committee recommended that Policy & Resources Committee
allocate £0.400m to manage Ash dieback and £0.200m to
manage Elm dieback. These allocations will help to manage the
spread of the diseases as well as safely removing dying and unsafe
trees.
·
Council Tax Reduction Discretionary Fund (£0.190m): This
allocation was approved by full Council on 28 January 2021 in
considering its annual review of the Council Tax Reduction Scheme.
The allocation will top up the existing recurrent budget of
£0.010m to the approved level of £0.200m.
·
Allocation to maintain the Welfare Reform Support Fund
(£0.260m). In recent years, the council has made an annual
allocation of £0.260m to maintain support for people in
hardship, in particular, those impacted by welfare reforms
including the benefit cap. This fund complements welfare benefits
and other discretionary funds including Discretionary Housing
Payments (DHP) and the Council Tax Reduction Scheme discretionary
fund. The fund is used primarily to ensure continuation of the
Local Discretionary Social Fund (LDSF) which, for example, provides
emergency assistance and vouchers for food and white goods.
6
SAVINGS PROPOSALS 2021/22
6.1
Taxation and Adult Social Care precept increases, together with
additional resources provided by the Spending Review, are not
sufficient to balance the budget due to the need to provide cover
for inflationary pressures, and the need to provide investment to
support Corporate Plan priorities including funding to manage
above-inflation cost increases and increases in demands across
critical statutory services such as social care and homelessness.
To balance the budget therefore requires a substantial savings
programme as in previous years. In this respect, savings of
£10.644m have been identified for consideration in 2021/22 as
detailed in Appendix 1.
6.2
The savings proposals presented in this report are broadly the same
as those presented to the Policy & Resources Committee on 21
January 2021. However, there have been four changes to the
proposals which have increased the savings package by a net
£0.056m from £10.588m to £10.644m. There are no
additional staffing or equality impacts from the changes which are
as follows:
i)
Proposed to increase Residential Permits in high demand areas,
initially for Zones Y and Z estimated to generate additional income
of £0.060m;
ii)
The provision of 15 additional units of emergency homeless
accommodation through the HRA is projected to increase the cost
reduction achievable on Temporary Accommodation supported by the
General Fund, increasing the saving by £0.048m from
£0.150m to £0.198m.
iii) An
original proposal was to reduce the funding to support the enhanced
model of service provision in forthcoming procurement of short term
emergency accommodation by £0.120m, reducing the investment
from £0.300m to £0.180m However, this has been revised
and the current proposal is reduce the procurement by £0.070m
rather than £0.120m, providing a budget of £0.250m to
secure better quality services. This reduces the saving by
£0.050m.
iv) There is a
small reduction in the saving opportunity regarding the proposal to
increase driveway cross-over works charges by 20%. The change is in
respect of excluding Blue Badge holders from charges which is
estimated to reduce the saving by £0.002m.
6.3
Over the previous four years, the council has focused on
identifying and delivering many savings through its Modernisation
Programme supported by significant capital investment. This was
enabled by generating capital receipts from the sale of surplus
assets to create an invest-to-save budget using the
government’s capital receipt flexibilities, which allowed
capital receipts to be applied to revenue saving projects and
programmes. The Modernisation Fund provided one-off invest-to-save
resources of £28.530m over the period 2016/17 to 2019/20 and
was key to enabling delivery of cumulative savings of
£157.100m and ongoing, annual savings of £57.600m. This
is depicted in the chart below:
6.4
The council approved continuation of the Modernisation Fund in
February 2020 over a further 4-year period to enable delivery of
substantial savings and efficiencies required over the period to
meet the predicted budget gaps set out in the Medium Term Financial
Strategy. The council also utilises the fund to continuously
improve value for money as a matter of course because this ensures
the best use of its resources and contributes to improved customer
and digital services.
6.5
At present the government have only extended capital receipt
flexibilities to 2021/22 however this may change in future
Spending Reviews. Regardless of this, there are other methods of
funding invest-to-save programmes including unsupported borrowing
where there is a good business case for doing so. Availability of
capital receipts for modernisation is also anticipated to be at a
much lower level over the next few years due to high demand for
other priority capital investments and fewer assets available or
suitable for disposal. More information on the Modernisation Fund
and its proposed application are set out in the section on
Modernisation Programme Funding below.
7.1
The Prudential Framework requires local authorities to produce a
Capital Strategy which is to be presented and approved by members
each year. The purpose of the Capital Strategy is to provide a
single place for transparency and accountability of local authority
non-financial investments and its capital investment programme,
including any commercial investments in commercial property or
loans to third parties.
7.2
The aim of the Capital Strategy is to ensure members are fully
conversant with the risks of non-financial investments and are
aware of how the risks are proportional to the council’s core
service activity. The document will include:
·
The proposed Capital Investment Programme
·
The Governance & Risk Framework
·
Potential and pending non-financial investments
·
An overview of the council’s Risk Exposure
7.3
The outcome of the recent consultation on the future lending terms
of the Public Works Loans Board (PWLB), undertaken by HM Treasury
between March and July 2020, has significant implications for the
Capital Strategy and Treasury Management Strategy. The outcome of
the consultation was announced as part of the Spending Review 2020
and confirmed that PWLB will no longer lend to local authorities
that plan to buy commercial assets primarily for yield. The PWLB
will still be available to all local authorities for refinancing.
In order to borrow from the PWLB, local authorities will now be
required to submit a summary of their planned capital spending and
PWLB borrowing for the following three years. The Capital Strategy
and Treasury Management Strategy have been updated to reflect this
change.
7.4
The strategy also reflects a change of emphasis for the
re-investment of Right-to-Buy (RTB) capital receipts arising from
the disposal of council housing properties. The strategy now
reflects that the element of RTB receipts previously set aside to
support General Fund strategic investment funds, approximately
£0.500m per annum, will now be diverted wholly to support
additional council housing provision.
7.5
The Modernisation Programme investments detailed later in the
report will be incorporated into the full Capital Strategy
alongside new and perennial capital investments that will support
sustainability and carbon reduction schemes, improved transport
infrastructure, provision for school places, major regeneration
projects, and major housing build, acquisition and improvement
programmes. Key decisions are required in respect of strategic
funds including IT & Digital investment, Strategic Investment
Funds (supporting regeneration) and Asset Management Funds. The
Capital Strategy forms part of the General Fund budget report to
ensure that the link between capital and revenue decisions is
maintained and to ensure that budget resourcing decisions are taken
in the context of the full range of proposed revenue and capital
budgets, resources, investments and savings.
Capital
Investment Programme
7.7
A significant element of the council’s capital investment is
within rolling programmes. The key programmes, including those
re-focused to support Corporate Plan priorities, are as
follows:
·
Investment in Housing Stock and acquisition through the Housing
Revenue Account;
·
The Education Capital programme, which provides investment from
central government for New Pupil Places, Education Capital
Maintenance and Devolved Formula Capital for schools;
·
Disabled Facilities Grants to help maintain people in their
homes;
·
The Local Transport Plan (LTP) to support sustainable transport and
transport infrastructure;
·
The Information Technology & Digital Investment Fund and
Modernisation Fund;
·
The Asset Management Fund (AMF) to ensure the strategic elements of
the Asset Management Plan can be supported;
·
Corporate Planned Maintenance (PMB) to ensure the operational
elements of the Asset Management Plan are supported and that
backlog maintenance does not build up unduly;
·
The Strategic Investment Fund (SIF) to support the advancement of
major regeneration schemes and initiatives;
·
Vehicle Fleet and plant replacement annual programme.
7.8
The current strategy identifies longer term capital investment
plans as well as a funding strategy and the potential outcomes for
each investment plan. This strategy includes major investment
requirements such as investment in the seafront infrastructure
including Madeira Terraces, partnership investment through major
projects such as Brighton Waterfront and the Housing Joint Venture,
Heritage Lottery Fund bids such as the Stanmer Park redevelopment,
and the Royal Pavilion Estates Regeneration. Longer term investment
for coast protection is also incorporated into the 5 year strategy
which includes potential government match-funding.
7.9
Capital receipts from the sale of surplus land and buildings
support the capital programme and the projections are regularly
reviewed. The council will continue with its strategy of
re-balancing the property portfolio by disposing of low or
non-performing commercial properties and reinvesting in more viable
property investments. This ensures costs can be minimised and
rental growth optimised to ensure best value, including social
value, is achieved. However, this must now be achieved without
reliance on PWLB borrowing which is prohibited where assets are
acquired purely for commercial yield to support the revenue
budget.
7.10
The detailed capital programme is set out in Appendix 1 (The Budget
Book) and shows the approved and proposed capital investments for
each directorate. As well as rolling programmes noted above the
programme will cover existing and new scheme proposals
including:
·
Carbon reduction and sustainability investment programmes including
an expanded Sustainable Carbon Reduction Initiative Fund (SCRIF),
the Climate Assembly Action Fund, and an augmented Warmer Homes
capital investment programme (including district heating
plans);
·
Similarly, investments in active travel including covered cycle
racks, support for green spaces (e.g. Pocket Parks) and more tree
planting, and the extension of the School Streets initiative and
low traffic neighbourhood pilots are proposed to improve
sustainability, air quality and public health;
·
Significant capital investment in the Brighton Youth Centre project
to support associated funding bids; and
·
New investment for retrofitting and renewable investment in council
housing as well as expansion of the additional council homes
investment through the HRA.
7.11
The overall Capital Investment Programme for 2021/22, including
nearly £70m HRA housing build, acquisition and improvement
schemes, is £221.103m. The proposed investments are
summarised as follows:
Table 5: Capital Investment Programme 2021/22
|
£m
|
New Housing including New Homes for Neighbourhoods, the Home
Purchase scheme, the Hidden Homes programme, the Housing Joint
Venture, Temporary Accommodation purchases and conversions, and
Housing First accommodation
|
96.612
|
Sustainability & Carbon Reduction including SCRIF,
Warmer Homes, Street Lighting, Climate Assembly Actions, Active
Travel and Solar PVs
|
19.878
|
Parks & Open Spaces including playground refurbishments,
Withdean and Stanley Deason sports pitches, Pocket Parks and
Stanmer Park redevelopment
|
2.973
|
Transport & Highways reflecting the Local Transport Plan
(LTP) allocation for 2021/22 to support a sustainable transport
infrastructure
|
5.000
|
New Pupil Places (Basic Need) to provide educational places
for pupils based on demographic changes in the city
|
28.242
|
Regeneration including Madeira Terraces, Black Rock, Valley
Gardens, Royal Pavilion Estate and Saltdean Lido
|
29.903
|
Tackling Inequality including Disabled Facilities Grant
(DFG) projects and significant investment in the Brighton Youth
Centre project
|
4.568
|
Building Maintenance including the Workstyles programme,
Planned Maintenance, Education Buildings Maintenance, the Asset
Management Fund and various security, fire and safety works
|
23.177
|
IT&D / Modernisation including the Modernisation Fund as
well as re-procurement of the Wide Area Network, investment in
digital services for customers, and ongoing investment in the
IT&D infrastructure
|
8.250
|
Vehicles & Equipment for the council’s vehicle
fleet replacement programme
|
2.500
|
TOTAL CAPITAL INVESTMENT PROGRAMME 2021/22
|
221.103
|
7.12
The Capital Strategy at Appendix 2 sets out how the programme will
be funded from a combination of government grants, capital
receipts, HRA direct revenue funding, external contributions and
prudential borrowing.
Modernisation Programme Funding (‘Modernisation
Fund’)
7.13
As noted earlier, over the previous 4 years, the council has
focused on identifying and supporting the delivery of savings
through its Modernisation Programme supported by significant
capital investment. This is enabled by generating capital receipts
from the sale of surplus assets to create an invest-to-save budget
using the government’s capital receipt flexibilities, which
allowed capital receipts to be applied to revenue saving projects
and programmes.
7.15
The Modernisation Fund is kept under review as budget plans develop
and spend-to-save opportunities and investment requirements emerge
in more detail over the planning period. The indicative profile of
the Modernisation Fund from 2021/22 onward is shown in the table
below.
Table 6: Indicative Modernisation Fund
|
Programme Area
|
2020/21
|
2021/22
|
2022/23
|
2023/24
|
Total
|
£m
|
£m
|
£m
|
£m
|
£m
|
Invest to Save
(4-Year Plans)
|
0.650
|
0.550
|
0.450
|
0.350
|
2.000
|
Customer
Digital
|
1.750
|
1.750
|
1.550
|
1.050
|
6.100
|
Modernisation
enablers
|
1.510
|
0.920
|
0.930
|
0.940
|
4.300
|
Managing staffing
changes
|
0.700
|
0.500
|
0.400
|
0.400
|
2.000
|
IT Modernisation
Investment
|
0.800
|
0.300
|
0.000
|
0.000
|
1.100
|
Total
|
5.410
|
4.020
|
3.330
|
2.740
|
15.500
|
7.16
The Modernisation Fund is expected to be deployed as follows:
·
Invest-to-Save Budget Proposals: Based on the experience of
the previous 4 years and 2020/21 to date, a further £1.350m
is estimated to be required to support implementation of specific
savings and efficiency programmes including service redesigns,
recommissioning and process improvements. Investment requirements
are currently being reviewed and finalised and will be refreshed
each year. This resource will be held in a reserve and only
released through review of business cases by the officer Corporate
Modernisation Delivery Board (CMDB). Committee approvals are also
sought where required by Financial Regulations and the
council’s constitution. In this respect the following
business cases reviewed and endorsed by CMDB are currently included
in the Invest-to-Save programme area of the Modernisation Fund:
o Health &
Adult Social Care (HASC) Modernisation Programme:
£0.334m. This critical invest-to-save funding supports
the resources required to support the HASC Modernisation Programme
which will enable delivery of proposed savings of
£4.515m in 2021/22. This business case forms part of the
“Golden Thread” of activities across HASC which
supports its Modernisation Workplan and budget strategy (see
Appendix 1). All of the projects in the workplan directly support
the achievement of savings, efficiencies and health and social care
system redesign. It will enable HASC to meet its corporate
responsibilities whilst maximising the opportunities for
integration and working toward financial sustainability of Adult
Social Care.
o Early Help
Modernisation: £0.090m. The 2021/22 modernisation
programme will include funding to complete an Early Help review
with a report and findings expected to come to the June meeting of
the Children, Young People & Skills Committee. The programme
aims at transforming Early Help services to improve outcomes for
vulnerable and disadvantaged families. This requires development of
an integrated data management system to ensure that technology,
data and information are developed and shared across the Early Help
partners to better coordinate interventions, assess vulnerability
and risk and, as a result, deliver better value for money by
reducing the demand for high cost services.
o City
Environmental Services Modernisation Programme: £0.539m.
This programme supports the ongoing modernisation of City
Environmental services (City Clean and City Parks). Longer
term, the Environment, Transport & Sustainability Committee has
approved the development of a Waste, Resources & Cleansing
Strategy. Through the Modernisation Programme, the service has been
working hard to improve the foundations of the service, which has
been essential, but realises that residents now need to see more
visible improvements. The development of the Waste, Resources &
Cleansing Strategy will build on the achievements of the Programme
and identify how the service can continue to deliver and embed
these improvements, as well as set out further opportunities for
modernisation for the service over the next five years.
Progress on modernisation activities and projects have been
periodically reported through to the Environment, Transport &
Sustainability Committee with the principle aims of the programme
being to:
§ Improve service
delivery, increase customer satisfaction and sustain regulatory
compliance through a fairer allocation of work across the
collections service, improvement of collection methods, and
introduction of new IT systems;
§ Promote a
sustainable economy by supporting low carbon growth and encouraging
businesses to reduce waste and pollution;
§ Reduce
CO2 emissions from council-owned vehicles through the
delivery of the Fleet Strategy;
§ Tackle graffiti
and tagging through the delivery of the Graffiti Strategy;
§ Encourage
people to reduce the amount of refuse they generate, promote re-use
and increase recycling, and collecting a wider range of plastics
for reprocessing when market conditions improve;
§ Develop
proposals and business case options for the introduction of a food
waste collection and composting service;
§ Modernise our
City Parks service including overseeing investment in playgrounds
and the work towards ending the use of pesticides such as
glyphosate across the council and the city.
·
Customer Digital: £4.350m is anticipated to be
required over the next 3 years to support ongoing investment in
digital infrastructure and applications and to support continued
development of the council’s digital services and integration
of data across systems and services to improve the accessibility,
efficiency and ease-of-use of on-line services. The importance of
these services and the digital infrastructure has been highlighted
by the pandemic which required numerous on-line application portals
to be developed very quickly to enable people and businesses to
apply for grants and financial assistance remotely.
·
Modernisation Enablers: £2.790m is estimated to be
required to support ongoing change and modernisation programmes
over the next 3 years. This includes everything from an effective
project management support team, business improvement analysts,
workstyles property team support, investment in ‘Our People
Promise’ for staff development and skills programmes,
together with additional specialist support where required.
·
Managing staffing changes: efficiency programmes and a
continual drive for improved value for money will often result in
changes in the level or mix of staffing and skills required across
the council. Changing staffing levels or skills will often need
financial consideration in order to effect voluntary severance for
roles or posts no longer required or needing to be replaced or
re-trained with different roles or skills. Estimated resources of
£1.300m are required to meet severance costs to manage change
over the next 3 years.
·
IT Modernisation Investment: Investment in IT equipment,
software, systems and services (e.g. voice and data) is important
to enable the organisation to remain secure, resilient and
efficient. Historically, the organisation has suffered from long
periods of under-investment which has had to be addressed over the
last 4 years through approval of large IT Capital Schemes including
Windows 10 roll-out, replacement of the Housing and Social Care
systems, General Data Protection Regulation (GDPR) security
upgrades, etc. This backlog of investment is now catching up and a
further £0.300m is included here in an attempt to avoid a
similar build-up of IT ‘investment backlog’ by
supplementing existing budgets and enabling the council to keep up
with necessary infrastructure changes.
8
STAFFING IMPLICATIONS (GENERAL FUND SERVICES)
8.1
An estimate of the posts to be deleted in relation to the draft
budget proposals has been made and indicates that approximately 37
full time equivalent (fte) posts are expected to be deleted from
the council’s staffing structure. Many of these posts are
already being held vacant in lieu of savings proposals but some may
initially result in staff being potentially placed at risk of
redundancy. This is difficult to estimate with certainty but
approximately 11 fte staff have been identified as potentially at
risk at this early stage of the process. This information has been
shared with the council’s recognised trades unions and the
staff affected in advance of the release of the Policy &
Resources report.
8.2
As in previous years, actual numbers will be dependent on the
detailed options proposed and on the results of formal consultation
with staff and unions. As previously experienced, it is likely that
some of these will be resolved through turnover, or through
redeployment to other vacancies across the council, thereby further
minimising the risk of redundancies.
8.3
As always, if the forthcoming proposals do potentially place any
staff at risk of redundancy the council will support them by:
·
Providing appropriate support to staff throughout the change
process to enable them to maximise any opportunities available;
·
Controlling recruitment and ensuring there is a clear business case
for any recruitment activity;
·
Managing redeployment at a corporate level and maximising the
opportunities for movement across the organisation;
·
Managing the use of temporary or agency resources via regular
reports to Directorate Management Teams (DMT’s);
·
Offering voluntary severance where appropriate to staff affected by
budget proposals on a case by case basis.
These measures will remain in
place as consultation with trade unions, staff and other
stakeholders is undertaken. Where necessary, a targeted voluntary
approach to releasing staff in areas undergoing change will be
managed to support service redesigns whilst ensuring that the
organisation retains the skills that will be needed for the
future.
9.1
The 2021/22 Budget Book at Appendix 1 aims to support understanding
and transparency of the council’s budget by providing:
·
Information at sub-divisional levels to aid understanding of the
wide range of services and teams in each service directorate;
·
Analysis of spending and income by category (subjective
analysis);
·
Staffing information for each service;
·
Analysis of budget movements between years;
·
Analysis of savings, investments and service pressure funding by
category;
·
Information on capital investments.
9.2
The Medium Term Financial Strategy (MTFS) planning assumptions,
resource and expenditure estimates are also included within the
Budget Book at Appendix 1. The MTFS has been revised to reflect the
latest cost, income and demand pressures and the proposed 4.99%
council tax increase, including a 3% Adult Social Care precept. The
Table below summarises how the budget is expected to change from
2020/21:
Table 7: Analysis of budget changes
|
£m
|
Revised 2020/21 base budget
|
215.606
|
Pay, Price and Pension changes
|
3.232
|
Commitments arising from previous approvals (net change)
|
1.675
|
Increased Adult Social Care funding
|
-0.944
|
Service Investments and Service Pressure Funding (recurrent)
|
22.270
|
Service Investments and Service Pressure Funding (one-off)
|
7.783
|
Covid-19 Grant 2021/22
|
-8.203
|
Estimated additional Rough Sleeper funding
|
-1.000
|
Council Tax Support Grant (to offset short term reductions in tax
base)
|
-2.968
|
Change in contribution from reserves
|
-8.236
|
Savings package 2021/22
|
-10.644
|
General Fund Net Budget 2021/22 before exceptional item
|
218.571
|
Exceptional item - contribution from reserves relating to S31
Retail and Nursery reliefs *
|
-33.764
|
Proposed Base Budget 2021/22
|
184.807
|
*
The government provided additional business rates relief for retail
and nurseries in 2020/21 in response to the pandemic. The council
is compensated for the loss of this income through Section 31 grant
which has to be accounted for in 2020/21. However, the reduced
business rates income from the award of the relief forms part of
the deficit in the Collection Fund that has to be funded in
2021/22. This causes an accounting timing difference and therefore
the compensation grant is drawn down in 2021/22 to fund the deficit
it relates to. This happens in a normal year but the scale of the
adjustment this year is exceptional.
10
TREASURY MANAGEMENT AND ANNUAL INVESTMENT STRATEGY
10.1
The Treasury Management Strategy Statement (TMSS) and Annual
Investment Strategy (AIS) are now incorporated in the budget report
to ensure that inter-related financial decisions and strategies can
be considered together. The council is required to operate a
balanced budget, which broadly means that cash raised during the
year will meet cash expenditure. Part of the Treasury Management
operation is to ensure that this cash flow is adequately planned,
with cash being available when it is needed (liquidity) and that
surplus monies are only invested into counterparties and
instruments commensurate with the council’s risk
appetite.
10.2
Another important function of the Treasury Management service is
the funding of the council’s capital plans. The capital plans
provide a guide to the council’s borrowing need, which is
essentially the longer term cash flow plan, to ensure the council
can meet its approved capital spending obligations.
10.3
The recommended TMSS at Appendix 3 follows the drafting format
recommended in the Treasury Management Code of Practice. The
Treasury Management Practices and schedules identify the practices
and procedures that will be followed to achieve the aims of the
TMSS and that underpin the council’s Treasury Management
function. These practices remain unchanged from previous years and
are considered ‘best practice’ under the Code.
10.4
The Annual Investment Strategy (AIS) for 2020/21 is also
incorporated within Appendix 3 to this report. The AIS gives
priority to security and liquidity.
10.5
Security is achieved by:
·
selecting only those institutions that meet stringent credit rating
criteria or, in the case of non-rated UK building societies, have a
substantial asset base; and
·
limiting exposure risk by limiting the amount invested with any one
institution.
10.6
Liquidity is achieved by limiting the maximum period for investment
and matching investment periods to cash flow requirements.
10.7
There are no changes to the strategy from 2020/21.
11
COUNCIL TAX SETTING
11.1
The Administration is proposing a council tax increase of 4.99%
which includes a 3% Adult Social Care precept allowed by government
within the local government finance settlement. A council tax
increase of 4.99% results in a Band D council tax of
£1,741.88 for the council’s element, an increase of
£82.77 from 2021/22; of this increase £49.77 relates to
the Adult Social Care precept.
11.2
In order to propose an overall Council Tax for the city, the
Council Tax set by the precepting authorities needs to be known and
this information will be included in the Supplementary Budget
Report to Budget Council.
Supplementary Budget Report to Budget Council
·
The final Local Government Finance Settlement 2021/22.
·
Any other grants that are announced before Budget Council.
·
The agreed Council Tax set by East Sussex Fire Authority and Sussex
Police and Crime Commissioner.
·
The statutory Council Tax calculations required under the 1992
Local Government Finance Act.
·
The full budget and Council Tax resolution for Budget Council.
12.1
Section 25 of the Local Government Act 2003 requires the Chief
Financial Officer (Section 151 Officer) of a local authority to
report on the robustness of the estimates included in the budget
and the adequacy of the reserves for which the budget provides.
This report has to be considered by the Policy & Resources
Committee and the full Council as part of the budget approval and
council tax setting process.
Robustness of Estimates
12.3
For 2021/22, funding of £19.107m has been provided to support
identified cost and demand pressures in priority, demand-led
services across Adults Social Care, Children’s Safeguarding
& Care services, and Homelessness and Rough Sleeper services
and accommodation. Provision for this level of investment
substantially mitigates the predicted demand-led service pressures
at the time of setting the budget. This considerably lessens
potential forecast risks in 2021/22 but cannot completely remove
all risks and therefore services will need to continue to
contribute to the mitigation of residual risk through management of
non-statutory budget areas as normal. This minimises the level of
any risk provisions required over and above the council’s
current working balance. In addition:
·
The authority continues to demonstrate its long track record of
managing within or close to budget despite the very challenging
financial climate. At month 9 this year, the forecast overspends
earlier in the year have been managed through a combination of
government grant support and financial management action detailed
in the report. The month 9 position is now a projected underspend
of £4.812m which provides much needed one-off resources to
support predicted one-off Covid-19 impacts and other priority
investments in 2021/22.
·
The authority’s track record demonstrates that it can manage
risk across demand-led statutory services of between 2% and 3% of
the total net budget through effective management of non-statutory
budgets and services;
·
The authority continues to enable and achieve substantial savings
through its Modernisation Programmes which have enabled
re-investment to support priority areas, meet cost pressures and
growth in demand for statutory services, and address remaining
budget gaps;
·
Although there are risks in relation to Section 75 partnership
arrangements and pressures on Clinical Commissioning Group (NHS)
budgets, the authority continues to work closely with the Clinical
Commissioning Group to jointly manage and mitigate risks as far as
practicable. This has been evidenced in the current year where the
NHS has provided nearly £8m in funding for managing
Covid-related hospital discharges;
·
The authority has maintained adequate reserves and provisions
against other known and identified risks and has made no unplanned
drawdown of its reserves or balances. The proposals in this report
recommend internally borrowing £3.971m from reserves over a
period of 10 years to manage the financial impact of Covid-19,
enabling council services to be maintained as well as providing for
continued support for recovery and renewal as the city comes out of
the pandemic through investment in Corporate Plan priorities. This
is financially acceptable in the context of the severe financial
shock caused by the pandemic and the fact that the council
maintains a working balance of £9m and will retain other
usable, earmarked reserves of approximately £30m that can be
utilised to manage financial, legal and contractual risks and
emergencies;
·
The authority has set aside appropriate one-off, discretionary
resources and funding to mitigate the impacts of Welfare Reforms
including a Council Tax Reduction Scheme discretionary fund and
Welfare Reform Support fund.
12.4
Based on financial performance over the previous 5 years and taking
into account identified risks as set out in Appendix 5, the council
is recommended to maintain its minimum working balance of
£9.000m, which is approximately 4% of the net General Fund
and represents around 3 weeks’ council tax income, as well as
maintaining other earmarked reserves to manage any short term
pressures. The working balance and other usable reserves must
mitigate general legal and financial risks including appeals and
challenges, as well as potential billing failures, civil
contingencies and other emergencies.
Adequacy of Reserves
12.6
As indicated above, current analysis of authority-level risks
indicates that a working balance at a level of £9.000m
remains prudent and appropriate having taken into account all known
and foreseeable risks in relation to the 2021/22 budget.
12.7
All specific reserves have been reviewed in detail to ensure they
are set at an appropriate level as set out in Appendix 4. The
council’s earmarked reserves fulfil specific legal or
financial requirements, for example the Insurance Fund Reserve, and
are not therefore available to support the annual revenue
budget.
Assurance
Statement of the Council’s Section 151 Officer
12.8
In relation to the 2021/22 General Fund revenue budget, the Section
151 Officer has examined the budget proposals and considers that,
whilst the spending and service delivery proposals continue to be
challenging, impacted further by the uncertainty surrounding the
pandemic, they are nevertheless achievable with effective
governance and accountability at all levels.
12.9
In terms of the adequacy of reserves, the Section 151 Officer
considers a working balance of £9.000m for 2021/22 to be
adequate, taking into account other available reserves and the
council’s track record in budget management.
13
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
13.1
The budget process allows all parties to engage in the examination
of budget proposals and to put forward viable alternative budget
and council tax proposals to Budget Council on 25 February 2021.
Budget Council has the opportunity to debate the proposals put
forward by this committee at the same time as any viable
alternative proposals. Budget Council will normally be recommended
to adopt special procedures at the start of the Budget Council
meeting, which set out the procedure and protocol applicable to any
alternative budget proposals put forward.
13.2
Any alternative proposal will need prior assessment by the
council’s appointed Section 151 Chief Financial Officer and
will not normally be allowed where an estimate is not considered to
be robust for one of the following reasons:
i)
The risk of not achieving the saving is assessed to be high;
ii)
There is insufficient evidence or information to assess the
potential saving;
iii)
The alternative proposal is adding to or bringing forward an
existing saving without further information as to how this can be
achieved;
iv)
The alternative proposal requires one-off investment or loan
financing that cannot be supported; or
v) The
alternative proposal is beyond the powers and duties of the local
authority.
School
Balances
14.1
The level of school balances as at 31/03/20 was £4.347m, an
increase of £0.122m from £4.225m at 31 March 2019 as
shown below.
Phase
|
2018/19
£’000
|
%age of budget
2018/19
|
2019/20
£’000
|
Percentage
of budget
2019/20
|
Nursery
|
64
|
8.25%
|
40
|
5.06%
|
Primary
|
3,812
|
5.15%
|
3,395
|
4.49%
|
Secondary
|
(11)
|
(0.02%)
|
784
|
1.51%
|
Special & AP
|
360
|
4.24%
|
128
|
1.19%
|
Total
|
4,225
|
3.14%
|
4,347
|
3.12%
|
Note – Special includes the
Connected Hub and Pupil Referral Unit (PRU)
14.2
In total there are 10 schools (out of 63) with deficit balances, a
reduction from 11 as at the end of 2018/19. The split of deficit
balances across phases is 8 Primary and 2 Secondary. School budget
plans for 2020/21 have incorporated these deficits.
Schools
Funding
14.3
The Dedicated Schools Grant (DSG) is divided into four
notional blocks – the schools block, the high needs block
(HNB), the central school services block (which allocates funding
to local authorities for their ongoing responsibilities towards
both maintained schools and academies), and the early years block.
Each of the four blocks of the DSG are determined by separate
national funding formulae (NFF).
14.4
In December 2020, the Department for Education (DfE)
announced the provisional HNB allocation for the 2021/22 financial
year. This settlement results in an increase in allocation to
Brighton & Hove of circa £2.920m compared to 2020/21. An
element of this, estimated to be £0.400m, relates to the
transfer of the teachers’ pay and pension grant to the HNB.
The additional allocation is in recognition of the increasing costs
of supporting children and young people with SEND and will help the
local authority manage pressures in this area, particularly in view
of no transfer of funds having been made from the Schools Block in
recent years.
14.5
For 2021/22, the overall formula budget allocations to schools have
increased by £10.697m compared to 2020/21 and this is due
to:
·
National increase in Schools Block DSG allocation (c.
£5.0m);
·
Transfer of teachers’ pay and pension grants to Schools Block
(c. £6.4m);
·
Reduction in pupil numbers (c. -£0.7m).
14.6
The introduction of the National Funding Formula (NFF) continues to
represent a significant change. To provide stability for LAs and
schools through the transition, the DfE announced in 2019 that LAs
will continue to set a local schools formula to determine
individual school budgets for 2021/22. The DfE published final
Schools Block datasets and allocations for 2021/22 on 17 December
2020.
14.7
During autumn 2020 it was agreed that no significant changes (other
than proposals previously agreed) would be made to the operation of
the formula for 2021/22. These proposals were subject to
consideration by the Schools Forum and Schools Block Working Group.
The key elements of the 2021/22 formula are summarised below and
follow the principle of moving towards the NFF on a gradual
basis:
·
increase the basic entitlement (age weighted pupil unit) factor by
£180 and £265 per pupil for primary and secondary
schools respectively to reflect the transfer of the teachers’
pay and pensions grant to the Schools Block. The basic entitlement
factor has then been further increased by the balance of funding
available after applying increases to other factors;
·
incrementally extend the use of the ‘ever-6 free school
meals’ and the income deprivation affecting children index
(IDACI) factors and reduce the weighting assigned to ‘current
Free School Meals’, as previously agreed by Schools Forum;
the cash sums being allocated are now equal across the 3 factors
within the deprivation measure;
·
increase the unit values of other additional needs formula factors
by 3% with an additional increase being applied to the low
attainment factor due to disparity with the rate in the NFF (the
low attainment unit value has been increased by 5%);
·
include a mandatory factor to ensure that minimum funding per pupil
levels (excluding premises factors) are set at £4,180 for
primary schools and £5,415 for secondary schools;
·
retain a lump sum of £130,000 per school;
·
apply a minimum funding guarantee of +1.00% per pupil.
14.8
The introduction of the new mandatory factor to ensure that minimum
funding per pupil (MFPP) levels (excluding premises factors and
before de-delegation) are set at £4,180 for primary schools
and £5,415 for secondary schools has a significant impact on
the distribution of funding to schools. Based on the proposed
formula model for 2021/22 the implications of this are shown in the
table below:
School Type
|
Number of schools attracting funding through
MFPP factor
|
Funding to be allocated through MFPP
factor
|
Primary
|
21
|
£2.422m
|
Secondary
|
1
|
£0.026m
|
Total
|
22
|
£2.448m
|
14.9
The introduction of this factor means that the schools who have
historically received the lowest levels of funding on a per-pupil
basis will receive an additional allocation within their budget
share to boost their funding levels to the minimum thresholds. This
will particularly apply to schools that receive relatively low
amounts of funding through the deprivation and low attainment
formula factors. These schools are likely to receive higher per
pupil increases than most other schools in 2021/22.
14.10 LAs will continue to set a Minimum Funding Guarantee
(MFG) in local formulae, which in 2021/22 must be between +0.50%
and +2.00% per pupil. Prior to the application of this
calculation an adjustment has been made to the 2020/21 baselines to
ensure that the impact of new delegation for teachers’ pay
and pension grants is considered. This means that schools on the
MFG will also have their pay and pensions grant funding
protected.
14.11 For 2021/22, as agreed with the Schools Forum in the
autumn, Brighton & Hove will apply the MFG at a rate of +1.00%
per pupil. The rationale for adopting this approach is
twofold:
·
an MFG of +1.00% continues to offer a degree of protection to
schools that are not otherwise gaining or sustaining funding on a
per pupil basis. However, the LA also believes that schools, who
are gaining through characteristics identified in the formula,
should receive a fair proportion of their gains; if the MFG level
is set at a higher rate it will mean that the scaling back of
formula gains would increase;
·
an MFG protection of greater than +1.00% would effectively
‘lock in’ more historical funding.
14.12
The application of the formula on the
basis outlined in this report means that the primary / secondary
funding ratio is now 1:1.27. This is a small change from the
2020/21 ratio of 1:1.29 and has moved mainly due to the additional
funding allocated to primary schools to achieve the requirements of
the minimum funding per pupil threshold.
14.13 As in previous
years academies and free schools are included in the DSG allocation
to ensure all schools, academies and free schools are funded on the
same basis using the LA’s funding formula. DfE then recoup
the funding attributable to academies and free schools and pay this
directly to the establishments.
15
COMMUNITY ENGAGEMENT & CONSULTATION
15.1
General information and advice about the council’s budget
will continue to be provided through the council’s web site
which provides information and graphics on how money is spent on
services, where the money comes from and a summary of the financial
challenges ahead.
15.2
The council will also publicise on-line its key proposals from the
budget along with information about council services, and questions
and comments invited from residents over the period leading to the
February Policy & Resources Committee and Budget Council
meetings.
15.3
Frequently asked questions and common themes have previously
emerged through the development of the annual budget and have been
responded to in our ‘Behind the Budget’ web page:
Behind the budget
(brighton-hove.gov.uk)
15.4
The frequently asked questions and themes include:
·
Doesn’t Council Tax [alone] pay for all council services?
·
How about using [i.e. raising] parking charges further?
·
[Why not] Cut pay instead of services?
·
[Why not] Make students pay Council Tax?
·
[Why not] Just cut councillors and/or their allowances?
·
[Why not] Charge wealthier people more Council Tax?
·
Extra Business Rates will solve the problem [won’t they]?
Other consultation
and engagement processes are as follows:
15.5
Information will be shared with Strategic Partners and community
groups as normal. Local Strategic Partners remain acutely aware of
the potential cumulative impact of funding pressures across public
sector agencies on the city. The City Management Board, attended by
all Local Strategic Partnership representatives, will therefore
ensure that information is shared across the sector to assess and
mitigate adverse cumulative impacts wherever possible and develop
joint actions where appropriate. Engagement with statutory partners
will continue on an ongoing basis to further share and understand
the potential cumulative impact of budget proposals across the city
as they take shape.
15.6
In particular, the council continues to engage fully with the
Brighton & Hove Clinical Commissioning Group (CCG) to ensure
that the budget processes of the two organisations are aligned and
communicated as far as practicably possible. As with the council,
the local CCG is likely to remain under severe financial pressure
due to continually increasing demands on the local health
economy.
15.7
There are ongoing briefings and discussions with the Economic
Partnership that cover potential funding sources and bids, city
regeneration, economic growth, employment and apprenticeship
strategies. Statutory consultation with Business Ratepayers will
also be undertaken as normal.
15.8
The Schools Forum, a consultative body attended by representatives
of all school phases, received a report on the potential areas of
interest and potential impact of the General Fund budget proposals
at its meeting on 18 January 2021, providing an opportunity to
feedback views on the proposals. This is a public, minuted meeting
and agenda and minutes are available on the council’s
website.
15.9
Similarly, officers of the council and members of the
Administration met with representatives of the Community &
Voluntary Sector on 13 January 2021 to discuss the draft budget
proposals and provide them with an opportunity to feedback their
views to the council and members.
15.10 For staff,
updates are provided via the council’s intranet and formal
consultation with Staff and Unions will be undertaken as normal
including Departmental Consultative Group (DCG) meetings during
January and February followed by appropriate consultation with
directly affected staff. It is recognised that the budget process
has been delayed by approximately one month due to the pandemic and
this will need to be accommodated in consultation time-lines to
ensure appropriate and meaningful consultation with staff and
unions.
15.11 Similarly, where
appropriate or required by statute, specific consultation will be
undertaken with residents and other people directly affected by
proposed changes to service delivery.
16
CONCLUSION
6
7
8
9
16.1
The council is under a statutory duty to set its budget and council
tax before 11 March each year. This report sets out the budget
assumptions to be used as the basis for Council Tax calculations in
order to meet the statutory duty. Only revenue and capital
proposals for 2021/22 and associated council tax decisions require
formal approval in February 2021. The full details of 2021/22
revenue and capital budgets are set out in the appended Budget
Book. The Medium Term Financial Strategy and capital investments
starting after 2021/22 are for noting only.
17
FINANCIAL & OTHER IMPLICATIONS:
Financial
Implications:
5
6
7
8
9
10
17.1
These are contained within the main body of the report.
Finance Officer Consulted: James
Hengeveld
Date: 01/02/2021
Legal Implications:
17.2
Whilst the Policy & Resources Committee is being asked to
recommend, and subsequently the Council asked to agree, the revenue
budget and capital strategy, the budget decision is a resourcing
decision and does not necessarily constitute final approval of what
policies will be implemented or what sums of money will be saved
under the service proposals.
17.4
For these purposes, the “budget” includes the
allocation of financial resources to different services and
projects, and setting the council tax.
17.5
Section 52ZB of the Local Government Finance Act 1992 requires a
billing authority to determine whether its relevant basic amount of
council tax is “excessive”. If the amount is excessive,
the billing authority is required to hold a referendum, with a view
to applying an alternative amount if the excessive amount is
rejected in a referendum.
17.6
The determination of whether a relevant basic amount of council tax
is excessive must be made in accordance with principles determined
by the Secretary of State. The Ministry for Housing,
Communities & Local Government (MHCLG) has stated that for the
2021/22 financial year, an increase of 5% or more, including the
Adult Social Care precept, will be regarded as excessive.
Therefore, local authorities opting for an increase of 5% or more
(including the Adult Social Care Precept) will be required to hold
a referendum.
17.7
Policy & Resources Committee has delegated power to formulate
the council’s revenue budget proposals, Capital Strategy,
including the capital investment programme, and the Treasury
Management Strategy Statement, including the Annual Investment
Strategy, and to recommend their adoption by full Council as part
of the overall budget setting process.
Lawyer Consulted: Elizabeth
Culbert
Date: 03/02/2021
Equalities Implications:
17.8
In Brighton & Hove City Council a budget Equality Impact
Assessment (EIA) process has been used to identify the potential
disproportionate impacts of proposals on groups/individuals covered
by legislation (the ‘protected characteristics’ in the
Equality Act 2010) and actions to mitigate these negative impacts
or promote positive impacts. This is a key part of meeting the
requirements of the Act and demonstrating that the council is doing
so.
17.9
In law, the potential impacts identified, and how far proposed
actions mitigate them, must be given due regard by decision-makers
when making budget and resource decisions. However, as noted under
legal implications above, in setting the budget members are making
resourcing decisions which remain subject to compliance with all
necessary legal and statutory consultation requirements.
17.10 All proposals
with a potential equalities impact in 2021/22 will have an EIA
completed and provided to all Members for the Budget Council. EIAs
are cross-referenced with savings proposals in Appendix 1.
Sustainability Implications:
17.11 One of the key
principles for developing budget proposals, aligned with the
Corporate Plan, is whether or not proposals and investments can
contribute to the 10 year carbon reduction target to become carbon
neutral by 2030. This plays out through everything from reviewing
the council’s Administrative Buildings occupancy and
facilitating more remote working for staff, to increasing the
number of electric vehicles in its fleet, through to working with
the Climate Assembly to identify further opportunities and actions.
The capital and revenue budget proposals for 2021/22 cannot address
all of the Corporate Plan objectives immediately but do aim to
provide for many initiatives to be supported and developed to
inform future budget rounds. This is further supported by the
creation of the proposed Carbon Reduction Reserve.
Any Other
Significant Implications:
Risk and
Opportunity Management Implications:
17.13 Section 12 of
the budget report includes the appointed Section 151 Chief
Financial Officer’s formal assessment of the robustness of
estimates in the budget and the adequacy of reserves and
provisions, including an assessment of the need for any additional
risk provisions. Appendix 5 of the report also sets out a detailed
assessment of risks and their potential treatment and
mitigation.
SUPPORTING DOCUMENTATION
Appendices:
1.
Budget Book 2021/22
2.
Capital Strategy 2021/22
3.
Treasury Management Strategy Statement 2021/22
4.
Review of Reserves
5.
Assessment of Risks
6.
Equalities Impact Assessment – Cumulative Impact
Statement
7.
Equalities Impact Assessment – Individual Assessments
Documents in Members’ Rooms
1. None
Background Documents
1.
Budget files held within Finance