|
Subject:
|
Draft General Fund
Budget and Resources update 2022/23
|
|
Date of Meeting:
|
2 December 2021
|
|
Report of:
|
Acting Chief Finance
Officer
|
|
Contact Officer:
|
Name:
|
Jeff Coates
|
Tel:
|
01273 292364
|
|
|
Email:
|
jeff.coates@brighton-hove.gov.uk
|
|
Ward(s)
affected:
|
All
|
FOR GENERAL
RELEASE
1
PURPOSE OF REPORT AND POLICY CONTEXT
1.1
This report provides an update on the resource position for 2022/23
to 2025/26 as far as it is known including any changes in
assumptions and the key impacts of the Chancellor’s 3-year
Spending Review 2021 announcement. It also includes revised
estimates of demographic and cost trends based on the latest
information and forecasts. This includes updated tax base forecasts
although final estimates will not be available until January
2022.
1.2
The Spending Review 2021 was a 3-year announcement which purported
to increase Local Government Spending Power by 3% in 2022/23.
However, this includes funding for social care reforms which will
be matched by new costs. Removing this shows that Spending Power
has increased by 1.8%. This is some way short of current and
anticipated demand and inflationary pressures in 2022/23.
1.3
A key point to note in the City Council’s budget position is
that the one-off Covid-19 grant awarded for 2021/22 (£8.023m)
was used to balance the recurrent General Fund budget for 2021/22.
While some aspects of the council’s finances are expected to
recover in 2022/23, including fees & charges, rents and
taxation, the loss of £8.023m is a substantial sum to cover,
particularly given that new estimated cost pressures of over
£12m are now projected in 2022/23.
1.4
The announcement of a 3-year Spending Review makes the position for
the council very clear for the next few years. The level of
resources is now known for a period of years and is not likely to
significantly fluctuate. This makes the task of balancing the
budget over the period both clear but very challenging as there is
a large budget shortfall in 2022/23 and further, albeit lower,
predicted budget shortfalls in later years.
1.5
The scale of the 2022/23 budget shortfall is such that achieving
the necessary savings in one financial year could be destabilising
as well as undeliverable due to the time and capacity required to
implement change and undertake necessary consultation and
engagement. The council will therefore need to plan its budget over
a multi-year Medium Term Financial Strategy by achieving greater
savings in later years of the MTFS period to ensure that the
position can be brought into balance by the end of the period.
However, there are limitations on the extent to which savings can
be deferred which is driven by the level and availability of
reserves. The report suggests adopting a 4-year MTFS planning
period which had previously been used by the council prior to
successive 1-year Spending Reviews and the pandemic.
1.6
While a 4-year planning period can aid management of the
challenging financial situation, it also carries additional risks.
In particular, any non-achievement or under-achievement of savings,
or any over-estimate of resources (e.g. taxation) in early years
will then place even greater pressure on later years, and without
strong financial management and governance, large deficits could
quickly build up beyond manageable levels, potentially placing the
authority in an unsustainable financial position.
1.7
This makes for a difficult balancing act as the council must avoid
making counter-intuitive savings that could result in greater
long-term costs, for example, reducing investment in proven
preventative services, while it will also wish to continue to
invest in Corporate Plan priorities, for example, Housing and
Carbon Neutral programmes, and addressing inequality.
1.8
In summary, the Spending Review, increasing cost pressures and
additional pay costs have now crystallised the council’s
financial situation and it now needs to make clear and potentially
difficult choices to avoid financial instability.
1.9
While the Spending Review is a high level announcement of
resources, the detailed allocations for each authority come through
the provisional Local Government Finance Settlement which is not
normally made available until mid-December each year. The full
impact of the settlement as well as the full set of General Fund
and HRA budget proposals and Equality Impact Assessments will come
to the February Policy & Resources Committee and Budget Council
as normal.
2
RECOMMENDATIONS:
That the Policy & Resources Committee:
2.1
Notes the updated forecasts and latest resource estimates set out
in the report.
2.2
Notes the Draft Budget Strategies and first draft savings at
Appendix 1.
2.4
Notes the predicted budget gaps set out in paragraph 4.22 totalling
£27.655m over the 4-year period, including £18.005m in
2022/23.
2.5
Agrees to adopt a 4-Year planning period for its Medium-Term
Financial Strategy.
2.6
Notes that updated financial data and information from central
government regarding the Local Government Financial Settlement
(LGFS) may impact further on the development of budget proposals
for 2022/23.
3
FINANCIAL CONTEXT AND RISKS
3.1
In 2016/17 the council adopted a 4-year planning regime to reflect
good financial planning practice and ensure that budget shortfalls
(gaps) were known well in advance and could be planned for, in
terms of identifying the necessary savings, in good time.
Unfortunately, the advent of restricted, one year Spending Reviews
for 2020/21 and then in response to the pandemic in 2021/22,
meant that budget planning necessarily reverted to an annual
process due to the removal of any certainty over future
resources.
3.2
Central Government is well aware that local authorities cannot
effectively plan for or manage the associated impacts of one-year
Spending Review announcements and has recognised this in opting to
provide a 3-year Spending Review announcement this time around. The
Spending Review is still subject to local interpretation through
the Local Government Financial Settlement, which will provide the
detailed allocations to individual authorities, however, it does
provide a much clearer picture of the resources, including Adult
Social Care precepts, available to local authorities over the next
few years.
3.3
This, however, comes with its own challenges. The report details
below that the Spending Review, while providing some additional
resources, falls considerably short of enabling the City Council to
close its predicted budget shortfalls, which remain very
challenging. Knowing the resources likely to be available for the
next 3 years is helpful for planning but also means that there is
unlikely to be significant deviation from this financial envelope
over the period. There is therefore no opportunity to defer or
delay decision-making, and the challenge of balancing the budget
over the medium term needs to begin in earnest with the 2022/23
budget.
3.4
For this reason, the council is advised to adopt (revert to) a
4-year planning period for its Medium-Term Financial Strategy
(MTFS) which would cover the Spending Review period plus one year.
Given the scale of financial challenge over the MTFS period, the
council may need to borrow further from its reserves in the short
term to balance its budget over the MTFS period. The committee will
note that, alongside the annual budget, the MTFS will therefore
become a more important and substantial financial plan as it will
be the mechanism by which the council can demonstrate and
articulate its plans to achieve financial balance and
sustainability over the medium term.
·
The likely requirement to plan for the repayment of reserves over
the medium term period, including reserves of £1.471m used to
‘financially smooth’ the 2021/22 budget;
·
Cover for Collection Fund taxation losses (deficits) experienced in
2020/21 due to the pandemic which government allowed to be spread
over 3 years starting in 2021/22;
·
The numbers of people supported in, and the cost of, Emergency and
Temporary Accommodation and associated support services has been
increasing year-on-year and has been further exacerbated by the
pandemic. Although short term funding has been received to meet
accommodation costs through the pandemic, if people are not
successfully ‘moved on’ to sustainable accommodation or
settings, this will increase baseline numbers further and the
impact on the council’s budget will be potentially very
substantial over the next few years.
·
The council’s increasing reliance on income from fees and
charges, particularly parking and permit revenues. Fees &
Charges are related to visitor and economic activity and behaviours
which can change over time, potentially affecting income levels (up
or down).
·
Similarly, the council’s commercial property portfolio, which
provides substantial rental income of around £9m, is known to
be highly geared toward the retail sector, which had been declining
prior to the pandemic and may now be further impacted in the medium
term;
·
The council is also highly reliant on suppliers and providers who
may be impacted, at least in the short term, by Brexit and/or the
pandemic either in terms of the cost of supplies or cost of labour,
or the impact on supply chains. Suppliers/providers may also be
impacted by the National Minimum Wage increase (6.6%) and/or the
National Insurance increase. This could result in increased
contractual costs filtering through to the council.
·
Increased pay costs resulting from: inflationary pressures which
are driving up pay awards; the cost of increasing the
council’s minimum pay grade (including the Real Living Wage
increase); the increasing cost of market supplements due to
national and local labour supply issues, and; the cost of resolving
the recent industrial dispute.
3.7
Managing the council’s finances, i.e. achieving financial
balance, over a medium term financial period is a realistic
approach given the scale of the financial challenges but carries
additional risks. As mentioned above, borrowing from reserves to
financially smooth the budget over a period of years is not
uncommon practice but it is still not desirable. There are also two
distinct types of financial smoothing i) borrowing from reserves to
cover one-off pandemic costs that are unlikely to recur or
continue, or ii) borrowing from reserves or balances to balance a
recurrent (annual) budget gap. These are discussed further
below:
i)
One-off Covid-19 impacts: The 2022/23 budget process will
attempt to separately identify cost pressures that are expected to
be short-term and related directly or indirectly to the pandemic.
Ideally, one-off resources would be identified to cover these costs
but if this is not possible in full, a modest level could be
smoothed by borrowing from reserves and then providing for annual
repayments over a suitable timeframe. The timeframe will depend on
the reserves available and when they are needed for their original
earmarked purpose.
ii)
Imbalanced recurrent revenue budget – financial
smoothing to address annual budget gaps can only be undertaken for
a short period over the MTFS period because it is an imbalance of
ongoing, recurrent expenditure and will therefore require greater
recurrent savings in later years to replenish reserves – any
decision to defer savings to a later year/s must be supported by
robust plans, including recognition that failure to achieve savings
in later years may lead to drastic consequences or measures
including:
-
Depletion of reserves;
-
Spending controls and restrictions (including a S114 notice);
-
Unplanned cuts or reductions to services;
-
Unplanned staffing reductions through redundancy, voluntary
severance and vacancy controls;
-
Diversion of capital receipts from capital investment and the
unplanned sale of assets to shore up revenue (i.e. capitalisation)
in the short term.
3.8
Further discussion of the Medium Term Financial Strategy and a
potential approach for managing the budget over the next 4 years is
discussed in Section 5 below. The following section details the
outcome of the Spending Review alongside updated estimates of other
costs and resources.
4
RESOURCES AND PLANNING ASSUMPTIONS 2022/23
Spending Review 2021 (SR21)
4.1
The Spending Review 2021 announced on the 27 October 2021 covers a
3-year period and provides key information that will inform the
provisional Local Government Finance Settlement (LGFS) for 2022/23,
expected to be provided in mid-December.
4.2
The key headlines from the announcement are as follows:
·
£1.6bn pa increase in local government core funding from
2022/23 (i.e. no further increases over the 3 years). Locally, if
the allocation is based on previous settlements this would equate
to a £6.280m pa increase in core funding assuming that all
existing Social Care Grants continue at their current level.
However SR21 does not include separate compensation for the 1.25%
National Insurance increase/social care levy which is a £1m
pa cost for the General Fund. The Budget does refer to compensation
for the public sector but this does not include local
government.
·
An allowable 1% Adult Social Care precept for each year over the
3-year period which could provide approximately £1.6m in
2022/23, growing to £1.7m by 2024/25.
·
The increase in core funding is separate from the £5.4bn
funding to implement Social Care Reforms announced in
September. The government estimate £3.6bn of the
£5.4bn will be passed to local government over the 3-year
period. The remaining £1.8bn will be allocated to improving
the wider social care system including the quality and integration
of care. However, this funding is expected to be more than matched
by new costs.
·
The council tax referendum principles will not be confirmed until
the LGFS, however, government has stated the intention for this to
remain at 2%.
·
There are a range of reliefs announced to business rates with the
most significant being a 50% relief for the Retail Hospitality and
Leisure sector (up to a cap) and the freezing of the business rates
multiplier. The government has stated that councils will be fully
compensated for the loss in Business Rates revenue from these
measures.
·
As part of the government’s commitment to end rough sleeping,
SR21 provides £639m per annum by 2024/25. No detail is
available regarding allocation of this funding but it is expected
that, as a minimum, it should see the continuation of existing
funding streams including Homeless Prevention Grant and Rough
Sleeper Initiative (RSI) funding.
·
The government announced an increase to the National Minimum Wage
of 6.6% to £9.50 from April 2022. However, the council
currently pays the Real Living Wage which will increase from
£9.50 to £9.90 (4.2%) and which will need to be
provided for within the estimates.
·
£560m has been allocated for Youth Services over the next 3
years targeted at areas most in need through the Youth Investment
Fund.
·
The government has allocated £2.6bn over the 3-year period to
provide school places for children with special educational needs
and disabilities. This is assumed to be capital investment to
support councils in providing places locally. The method of
accessing and distributing this funding is not yet known.
·
The government intends to overhaul the New Homes Bonus grant but
the current allocation methodology will remain for 2022/23 although
it will be a one-year allocation. Therefore, any additional
resources through this grant will need to be treated as
one-off.
·
The council currently receives £0.950m through Troubled
Families grant (now renamed Supporting Families). The government
has included additional funding for Supporting Families of circa
£170m nationally over the 3-year period but will not announce
how funding will be allocated, and if it will at least be at the
current level, until 2022 and therefore a proportion of this grant
is potentially at risk.
4.3
Overall, the Spending Review could potentially improve the
council’s resources when compared with the resource
assumptions reported to this committee in July as shown in the
table below and reflected in the table at paragraph 4.20:
|
Table 1:
Budget Planning
– Funding Assumptions
|
Assumed
Funding
£m
|
Estimated
SR2021
£m
|
|
Additional core funding
|
0.000
|
6.280
|
|
Additional Social Care funding
|
2.000
|
0.000
|
|
Additional Social Care Precept at 1% (if
approved)
|
0.000
|
1.580
|
|
Additional ongoing support for Covid-19
impact
|
3.000
|
0.000
|
|
Supporting (Troubled) Families Grant
continuation
|
0.946
|
0.946
|
|
Homelessness/Rough Sleeping
|
1.000
|
0.000
|
|
National insurance/Care Levy
increase
|
0.000
|
-0.986
|
|
Total
|
6.946
|
7.820
|
|
Increase in
Resources compared with July Budget Planning Funding
Assumptions
|
|
0.874
|
Updated Service
Pressures & Investments
4.4
The planning assumptions for demographic, service and cost
pressures and planned investments from July have been updated and
included in the following table:
|
Table 2:
Investments &
Service Pressures
|
Original Recurrent Pressure Funding 2022/23
(July)
|
Latest Recurrent Pressures Identified
2022/23
(Nov)
|
Latest Short-Term Pressures
(including Covid)
|
|
|
£m
|
£m
|
£m
|
|
Health & Adult Social Care
|
4.000
|
3.212
|
0.000
|
|
Families, Children & Learning (incl.
Adults Learning Disabilities
|
4.600
|
5.171
|
0.000
|
|
Environment Economy &Culture
|
0.000
|
1.437
|
1.200
|
|
Housing, Neighbourhoods & Communities
|
2.500
|
1.235
|
1.683
|
|
All Other Services
|
1.500
|
1.411
|
0.000
|
|
Corporate Plan Priorities/Climate Change
|
1.000
|
1.000
|
0.000
|
|
Total
|
13.600
|
13.466
|
2.883
|
4.5
The table indicates a very high level of recurrent cost pressures
and investments of £13.466m based on current trends and
estimates, together with estimated one-off cost pressures and
impacts of £2.883m (of which £2.083m are Covid-19
related). As can be seen in paragraph 4.20 this reduces the
recurrent budget gap by £0.134m alongside other changes to
the financial projections. The short-term pressures, if confirmed,
would be a significant call on one-off resources likely to require
internal borrowing from existing reserves with subsequent
repayment.
Investment in Corporate Plan
Priorities
4.6
The original planning assumptions included provision of £1m
for priority investments to support key Corporate Plan objectives
including addressing climate change and moving toward a carbon
neutral city by 2030. Proposed investments include a tax base
change relating to a proposed increase in support provided by the
Council Tax Reduction Scheme which will require £0.331m
subject to Policy & Resources and full Council approval in
December. Detailed allocation of Corporate Plan and Climate Change
priority investment, including capital programme financing, will be
provided to February Policy & Resources Committee.
Local Government Finance
Settlement and Tax base Forecasts
4.7
As noted above, full details of government funding for councils is
not likely to be announced until mid-December. It is not clear
whether the settlement will be a multi-year or annual settlement
but the likelihood is that it will be for 2022/23 only.
4.8
A key area is the continuing support for Adult Social Care. The
table below sets out the ongoing funding applicable to Adult Social
Care and the potential resources provided by the Spending
Review:
|
Table 3: Social Care Resources
|
2020/21
|
2021/22
|
2022/23
|
|
ASC Precepting *
|
2%
£2.894m
|
3%
£4.400m
|
1%
£1.580m
|
|
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
|
£4.715m
|
|
New Social Care Grant (SR2020)
|
-
|
£0.944m
|
£0.944m
|
* Subject to full
Council approval for 2022/23
Council Tax
4.9
The council tax increase for 2022/23 is currently assumed at 1.99%
and the Spending Review confirmed this is expected to be the
maximum increase without triggering a local referendum. This
excludes the allowable Adult Social Care precept of 1% which, if
approved, would mean an overall increase of 2.99%.
4.10
The main impacts of the pandemic on council tax income emanated
from a marked increase in the number of Council Tax Reduction (CTR)
claimants (16%), delays in housing development completions, and
reduced council tax collection, particularly for older debts. For
2022/23 the assumption is that collection rates should return to
normal levels at 99% and there has been an increase in the number
of property developments progressing and completing. The number of
CTR claimants peaked in June 2021 and has been steadily reducing
since then and this trend is expected to continue into 2022/23. The
number of student exemptions has also declined. Overall the tax
base is projected to increase by 2.08% for 2022/23 which reverses
the reduction of -1.36% in 2021/22. The final taxbase estimates
will be presented to this committee in January 2022.
Business
Rates estimate for 2022/23
4.11
The spending review included an announcement that there will be a
freeze on the business rates multiplier in 2022/23. The council
will be compensated for the loss in extra revenue for this
announcement which will be based on the September 2021 Retail Price
Index increase of 4.9%. This means the council will receive
£2.812m additional compensation grant above the level assumed
in July.
4.12
The Spending Review also included provision for a range of
additional targeted rate reliefs in 2022/23 with the most
significant being a 50% reduction for the Hospitality, Retail and
Leisure sector (subject to a cap for larger businesses). The loss
of income to the council will be fully compensated by
government.
4.13
The projections in July for 2022/23 included a 1% growth in the tax
base and this assumption remains. The combination of new business
developments and lower than anticipated empty property reliefs (for
business failures) is expected to provide a net growth of 1%.
4.14
Further work is being undertaken to review the provision for
successful business rates appeals as more detailed data has been
provided from the valuation office (VOA). An estimate of
£0.500m is currently included in the savings proposals but
ultimately will need to be reflected in the taxbase report to this
committee in January 2022.
4.15
The Spending Review also announced that business rates revaluations
will move to a 3 year cycle rather than 5 years from 2023. This is
intended to make the valuations more accurate and in turn reduce
the number of business rates appeals. The Secretary of State for
Levelling Up, Housing & Communities announced that the
government would no longer be progressing the policy of increasing
the local share of business rates to 75%.
Budget Gap
(Shortfall) 2022/23
4.16
The Moderate View planning scenario in July highlighted a potential
budget shortfall of £12.930m in 2022/23 based on known and
estimated cost pressures and predicted Spending Review resources.
However, this was predicated on the achievement of cost management
measures across demand-led budgets of £5.100m, meaning that
the overall resource shortfall to address was £18.030m. These
were the planning assumptions that officers were asked to work with
pending the outcome of the Spending Review 2021 (SR21).
4.17
The early announcement of the Health & Social Care Levy and
announcements of substantial government funding for social care
reforms over a 3-year period caused further uncertainty over the
outcome of the Spending Review for local government and suggested
that it may be more favourable than assumed in July. Against this
backdrop of uncertainty, officers developed potential savings and
cost management measures but this process has become increasingly
challenging after over a decade of delivering large savings and
efficiency packages of over £170 million. The authority is
now in a position of potentially having to make considerably more
difficult choices including reduction or cessation of non-statutory
services but a more certain resource position was clearly required
before detailed exploration of more complex and severe measures
could be embarked upon.
4.18
At this stage in the process, potential first draft savings of
£8.540m have been identified and are included at Appendix 1.
Any staffing impacts in these first draft proposals have been
notified to the Trade Unions and the full set of savings shared
with the cross-party Member Budget Review Groups. However, as
detailed below, the Spending Review has not provided significant
additional resources compared to those assumed in July while
significant additional cost pressures have arisen since July which
mean that there is now further work to do to identify measures to
close the budget shortfall in 2022/23.
4.19
The budget gap projection for 2022/23 has now been revised to take
into account the following:
i)
The outcome of the Spending Review 2021 which has provided an
additional £0.874m compared to the resources assumed in
July;
ii)
Latest estimates of the resources expected to be provided by the
Council Tax and Business Rates tax bases next year and beyond;
iii)
Updated cost and inflationary pressure estimates for all services
including demand-led services where latest demographic trends have
been used as shown in Table 2 above;
iv)
An analysis of cost pressures that are expected to be of a
temporary nature including those related to the impact of the
pandemic as shown in Table 2 above;
v)
Significantly, increased estimates for pay costs of £4.065m
including:
-
Upward revision of the provision for the Local Government NJC pay
award offer from 1.50% to 1.75% in 2021/22 and 1.50% to 2.00% in
2022/23 in the light of increasing inflation (£0.951m);
-
Additional provision in respect of the council’s decision to
set its minimum pay band to Scale 3. This subsumes the increase in
the Real Living Wage of 4.2% (combined cost is £0.392m);
-
Other pay and grading costs emanating from grading appeals or
re-evaluation of roles following service changes
(£0.250m);
-
Provision for the cost of resolving the recent industrial dispute
including equal pay compliance costs (£1.808m);
-
Provision for an increase to the Social Worker market supplement
due to an increase in current market rates across the region
(£0.664m).
|
Table 4: Budget Gap
Latest 2022/23
|
£m
|
|
2022/23 Budget Gap as at July 2021
|
18.030
|
|
Increase in estimated net resources from
SR2021 assuming 1% ASC precept
|
(0.874)
|
|
Increased income from the latest estimated
Council Tax base
|
(0.191)
|
|
Increased income through Business Rates
retention inflation compensation
|
(2.618)
|
|
Net reduction in recurrent service
pressures
|
(0.134)
|
|
Increased pay offer for 2021/22 from 1.50% to
1.75%
|
0.321
|
|
Increased provision for 2022/23 Pay Award from
1.50% to 2.00%
|
0.630
|
|
Increased Market Supplement for Social
Workers
|
0.664
|
|
Provision for increasing the Council’s
minimum pay band (incorporating the Real Living Wage increase)
|
0.392
|
|
Provision for the cost of implementing the
industrial dispute resolution
|
1.808
|
|
Other minor adjustments to assumptions
|
(0.023)
|
|
Budget Gap before
Savings Proposals
|
18.005
|
|
First Draft Saving Proposals to date (Appendix
1)
|
(8.540)
|
|
Remaining Budget
Gap
|
9.465
|
4.21
The table above indicates that a remaining budget gap of
£9.465m will need to be addressed, assuming the allowable 1%
Adult Social Care Precept is taken up by full Council. However, the
final budget gap will need to be further updated but cannot be
fully determined until:
i)
The provisional Local Government Financial Settlement is received
and analysed (expected mid-December);
ii)
The Council Tax, Council Tax Reduction and Business Rate tax bases
have been fully revisited in late December/early January;
iii)
The Investments & Service Pressures above have been further
reviewed and confirmed and the statutory review of the robustness
of estimates has been undertaken by the S151 Chief Finance
Officer.
Medium Term Financial Strategy Update 2022/23 to 2025/26
·
1.99% annual Council Tax increases;
·
1.00% Adult Social Care precepts for 2022/23, 2023/24 and
2024/25;
·
Annual Tax base growth of 0.75% for Council Tax and 1.00% for
Business Rates;
·
2.00% assumed inflation rate for Business Rate uplifts;
·
3-year estimated SR21 funding as per announcement;
·
2.00% pay award from 2022/23 onwards;
·
3.00% income budget uplifts from 2023/24 onwards;
·
2.00% increases to Social Care third party payments
·
0.75% to 1.00% cash limited increases to non-pay budgets;
·
Continuation of Troubled Families (now Supporting Families)
funding;
·
Continued investment to meet demographic growth across demand-led
services;
·
Continued investment in Corporate Plan priorities in 2022/23 and
2023/24;
·
Repayment of reserves used for Covid-19 one-off costs over a 10
year period (subject to availability of reserves).
Table 5: Projected Medium Term Financial
Strategy
|
Summary MTFS and
Budget Gaps
|
2022/23
|
2023/24
|
2024/25
|
2025/26
|
|
|
£m
|
£m
|
£m
|
£m
|
|
Commitments (from previous decisions)
|
5.876
|
1.116
|
0.863
|
0.118
|
|
Provision for grant reduction/ending
|
8.023
|
|
|
|
|
Net Inflation (on Pay, Prices, Income,
Pensions)
|
5.283
|
4.314
|
4.846
|
4.974
|
|
Subtotal
|
19.182
|
5.430
|
5.709
|
5,092
|
|
Demographic, Service and Other Cost Pressures
(recurrent and one off covid)
|
14.549
|
6.000
|
5.000
|
4.250
|
|
Corporate Plan Priorities & Climate Change
Investment
|
1.000
|
1.000
|
|
|
|
New grant funding assumed
|
(6.280)
|
|
|
|
|
Projected Net Tax Base changes
|
(8.866)
|
(6.440)
|
(6.658)
|
(6.372)
|
|
Assumed 1% ASC precept
|
(1.580)
|
(1.650)
|
(1.711)
|
|
|
Predicted Budget
Gaps
|
18.005
|
4.340
|
2.340
|
2.970
|
|
Savings
|
(8.540)
|
|
|
|
|
Remaining Budget
Gaps
|
9.465
|
4.340
|
2.340
|
2.970
|
Overview
of the Financial Position
5.1
The council’s financial position is clearly very challenging
with the resources from the Spending Review being insufficient to
address the inflationary, demographic and demand-led cost pressures
experienced by the council this year and projected next year and
beyond. While the council has seen large annual savings packages in
years gone by, occasionally in excess of £20m, after over a
decade of savings packages totalling over £170m, principally
to manage government grant reductions and growing adult and
children’s social care demands, the ability to generate
additional savings becomes increasingly challenging and potentially
involves more difficult choices. Opportunities for process or
technological efficiencies, management and administrative savings,
reductions in office accommodation, increases in fees, charges,
rents and fines, procurement economies and reductions in
non-statutory, discretionary services have been and continue to be
taken. While there are undoubtedly further opportunities to
explore, their magnitude and scope is, in some areas, decreasing
over time.
5.2
The scale of the financial challenge in 2022/23 suggests that more
complex and potentially contentious proposals are likely to need to
come forward for consideration by Policy & Resources Committee
for recommendation to Budget Council. While alternatives can be
explored and indeed put forward to Budget Council by any political
group, ultimately, rejection of all such proposals may leave the
authority in an unbalanced budget position with potentially serious
consequences as outlined in paragraph 3.5 above and as experienced
by a growing number of authorities experiencing financial
difficulties.
Budget
Process and Addressing the Budget Gap
5.3
The budget process this year has been hampered by a range of
factors including many services still responding to the pandemic or
its impacts, severe recruitment and capacity issues across key
services, the industrial dispute, and, perhaps most significantly,
the uncertainty over resources from the Spending Review and the
lateness of the announcement. The timetable is therefore under
pressure but a number of first draft budget proposals, totalling
£8.540m, have been worked up and have been tested
sufficiently to be put forward for information at Appendix 1.
5.4
Following the announcement of the Spending Review and an assessment
of its financial consequences for BHCC, the projected budget gap
for 2022/23 needed to be reassessed. As noted earlier, this also
required updated estimates of demographic and inflationary cost
pressures based on latest trends and data, a review of tax base
resources, and an assessment of the costs of the industrial dispute
resolution and other changes to pay cost assumptions. The overall
effect is that the budget gap has only slightly changed from
£18.030m to £18.005m before savings. However, this
includes £4.065m unplanned, additional pay costs since
July.
5.5
Assuming that all first draft savings proposals of £8.540m
were to be accepted, this still leaves a remaining budget gap of
£9.465m in 2022/23. Officers therefore began working on
additional ‘stretch’ proposals in early November and
these will be worked-up in detail for the Budget Report in February
and will be shared confidentially with all groups and Trades Unions
(where there are staffing impacts) as soon as they are available
during December and January.
5.6
In the light of increasing inflation, all discretionary fees &
charges have also been put under immediate review alongside those
where opportunities for increasing income were already under
consideration. Not increasing all discretionary fees & charges
in line with current inflation means that income would fall in real
terms and would contribute a lower proportion toward the cost of
services. Fees & charges proposals are normally taken to
service committees for approval and therefore service committees
will need to be fully aware of the budget position and the need to
ensure income maintains pace with inflation as a minimum.
5.7
The key question in considering development of the 2022/23 General
Fund budget concerns whether or not additional savings of
£9.465m can be identified and accepted by Budget Council for
delivery in 2022/23. This would not only be likely to involve very
difficult choices but is likely to carry very high delivery risks.
For this reason, the budget process will strengthen its focus on a
medium term strategic approach aiming to balance the budget over a
4-year Medium Term Financial Strategy period. Medium term
strategies to balance the budget could include:
i)
Continued use of the Modernisation Fund and other Spend-to-Save
investments that either enable or generate revenue savings or avoid
future cost growth (i.e. reduce the projected Demographic, Service
or Other Cost Pressure in Table 5 above);
ii)
Property and asset management strategies including further
reductions in office accommodation and/or operational buildings,
saving running costs and/or generating rentals;
iii)
Income generation strategies including fees & charges increases
and/or new discretionary fees & charges;
iv)
Continuing to drive procurement savings through increased use of
spend data and analysis, tighter control over specifications, and
improving performance monitoring of contracts;
v)
Targeted service redesigns to eliminate duplication, improve areas
with inefficient integration points, prioritise areas for
technological and digital efficiencies, consider further
partnership working, including with the Community & Voluntary
Sector, and prioritising high value-added functions and preventive
services. This may mean divesting from some non-statutory
services;
vi)
A review of the level of forecast risk that the authority is
prepared and able to manage, particularly in relation to demand-led
budgets. A prudential approach is necessary and estimates must be
robust but overstating cost and service pressures may mean that
services are unnecessarily cut or reduced to balance the budget.
The S151 CFO will therefore work with services to develop a more
detailed risk strategy, which may mean that forecasts can be
revisited and/or assumptions regarding future cost management or
cost avoidance savings can be increased to reduce the funding
requirement.
vii)
Making more systematic use of and giving full consideration to
benchmarking information to aid understanding and decision making
by focusing attention on areas where the authority is experiencing
relatively high costs and/or poorer outcomes compared to contextual
comparators (i.e. authorities with similar socio-economic
characteristics). There are more details on this below;
viii) Some
or all of the above could be supported by external and independent
support and advice from sector experts, for example the LGA, Cipfa
or ADASS, to help the authority identify where its costs and
performance do not compare well and where there may be
opportunities to improve costs and/or outcomes over the medium
term.
5.8
The above and other strategies will be used to develop
‘stretch’ budget savings proposals over the 4-year
period, always in the context of the Council’s Corporate Plan
and the priorities therein.
|
Latest benchmarking data
|
Spend (£) per capita
of relevant population
|
|
BHCC
|
CIPFA Nearest Neighbours
|
|
Adult Learning
Disability (per 18+)
|
157
|
139
|
|
Adult Social Care
excluding Adult LD (per 18+)
|
261
|
286
|
|
Children and Young
People Services (per 0-17 year-old)
|
1,102
|
936
|
|
Concessionary Fares
and Supported buses
|
42
|
19
|
|
Cultural &
Sports Services
|
57
|
47
|
|
Environmental and
Regulatory Services
|
81
|
76
|
|
Highways and
Transport Services
|
32
|
38
|
|
Housing General Fund
Services
|
85
|
39
|
|
Planning &
Development Services
|
11
|
18
|
|
Parking (net
income)
|
-86
|
-22
|
Note, the Cipfa nearest group currently includes Bristol, Coventry,
Leeds, Liverpool, Medway, Newcastle upon Tyne, Nottingham,
Plymouth, Portsmouth, Reading, Salford, Sheffield, Southampton,
Southend-on-Sea and York.
5.10
As noted, this cannot be regarded as definitive information as to
whether or not BHCC is high (or low) cost or offers good value for
money. For example, work has been undertaken in Children’s
Services to identify those characteristics that cause family
breakdown and increased incidence of child protection, such as drug
and alcohol issues and domestic violence, and this has generated a
more appropriate set of contextual neighbours that suggests BHCC
costs are much closer to the average for these more relevant
authorities for this particular service area. However, being aware
of the authority’s costs and exploring differences is a good
discipline and demonstrates an awareness of and focus on value for
money.
5.11
Benchmarking information will therefore be used to pinpoint where
further exploration and understanding of cost differentials could
be beneficial and may assist the authority in making decisions
concerning the level of spending on services. This is particularly
relevant in the context of adult and children’s social care
spending increasing as a proportion of the council’s overall
budget from 56% in 2012/13 to around 68% in 2022/23. Due to the
statutory nature of these services and much reduced government
funding over the last decade, the need to fund these services
effectively squeezes out spending on other local services and
therefore being clear that spending on all services is
proportionate and offers good value for money compared to best
practice and similar authorities is important.
5.12
As before, services will also set out draft Budget Strategies which
will indicate the overall direction of travel for the delivery of
services in each directorate and set out each directorate’s
approach to supporting Corporate Plan priorities.
5.13
Draft Budget Strategies also set out the service and financial
context within which each directorate is operating, including any
key demographic, demand or cost pressures affecting statutory or
priority areas and requiring additional investment. They will also
indicate where there is a plan or opportunity for capital
investment to meet Corporate Plan priorities, e.g. new build
housing, and give an indication of ‘Areas of Focus for
Savings’ which are likely to form part of the finalised
budget proposals coming forward to February Policy & Resources
Committee and Budget Council. Draft Budget Strategies are included
at Appendix 1 along with first draft savings proposals.
5.14
It should be noted that consultation processes in relation to any
budget proposals will be in accordance with the timetable set out
in Section 7 but, for the avoidance of doubt, nothing can fetter
the necessary statutory or agreed consultation processes required
to ensure that there is meaningful consultation with residents,
staff or other stakeholders potentially affected by budget
proposals.
Reserves Position and One-off Funding
Current
Reserve Levels and Usage
5.15
The level of reserves and balances held by an authority is becoming
increasingly important in assessing their financial health and
sustainability. The City Council maintains a recommended working
balance of £9m and has other earmarked reserves of around
£30m which can be borrowed from temporarily. However,
together with the financial smoothing in 2021/22 referred to
earlier, the council has already approved the use of reserves to
support other initiatives on a temporary basis pending repayment.
While these reserves will therefore be returned, it does mean that
the level of cash-backed reserves available is suppressed until
these are fully repaid. The reserves currently ‘loaned’
and the relevant payback periods are as follows:
Table 6: Current
Calls on Reserves
|
Reserve
|
Amount
Deployed
£m
|
Repayment Period
|
Repayments Start
|
|
Financial
Smoothing of the 2021/22 General Fund Budget
|
1.471
|
10 years
|
2022/23
|
|
Term Time Only (TTO) back pay settlement for
schools
|
3.300
|
10 years
|
2021/22
|
|
Surface Water Action Management Plan
|
0.385
|
10 years
|
2020/21
|
|
Waste PFI
|
0.170
|
4 years
|
2021/22
|
|
Royal Pavilion & Museums Trust Cash
Facility (£4m max facility)
|
1.000
|
Up to 10 years
|
2021/22
|
|
Brighton Youth Centre
|
0.325
|
6 years
|
Est 2022/23
|
|
Other Contingent Liabilities
|
3.000
|
10 years
|
2022/23
|
|
Total Borrowed
|
9.651
|
|
|
Latest Position in 2021/22
5.16
The forecast outturn position in the current year is important
because it affects the availability of one-off resources. A
projected underspend adds to the one-off resources available while
a projected overspend will need to funded from one-off resources or
carried forward to the next financial year, adding to the financial
challenge.
5.17
In-year financial performance is monitored through the
council’s Targeted Budget Management (TBM) framework and the
TBM Month 7 (October) report elsewhere on the agenda shows a
projected year-end overspend of £3.396m on the General Fund.
The overall overspend has reduced by £0.763m since Month 5
and includes the estimated cost of the increased 2021/22 pay award
offer, increasing the council’s minimum pay grade, and the
cost of resolving the recent industrial dispute.
5.18
The council’s share of the net deficit on the Council Tax and
Business Rates collection funds, after allowing for Section 31
deficit smoothing grant, is forecast to be £0.941m and must
also be funded from one-off resources in the 2022/23 budget.
5.19
Table 7 identifies potential resources and liabilities that will
need to be taken into account in setting the 2022/23 budget. At
this stage, this assumes that spending in 2021/22 will be in line
with the TBM Month 7 (October) report projections included
elsewhere on this agenda.
5.20
The table shows an estimated shortfall in resources of
£4.337m based on the current TBM (month 7/October) and
collection fund positions. The potential one-off requirements
identified in the table mean the shortfall in resources increases
to £5.427m assuming one off covid costs are covered through
financial smoothing. This position is expected to change and will
be updated for the February budget report. The main factors
expected to affect the position are:
·
The latest TBM position which will be updated for month 9
(December). Any improvement to the current overspend forecast will
increase available one-off resources and vice versa;
·
A comprehensive review of reserves and provisions which is
undertaken annually as part of the budget process;
·
A further review of in-year Collection Fund (tax yield)
performance. Any improvement will reduce the shortfall and vice
versa;
·
Updated estimates of short term cost pressures including Covid
related costs.
|
Table 7: One-off
resources, liabilities and potential allocations (as at Month
7/October)
|
£m
|
£m
|
|
Unallocated general reserves
|
|
0.000
|
|
|
|
|
|
Revenue Budget position 2021/22 (TBM):
|
|
|
|
- Forecast outturn
overspend (as at TBM Month 7/October)
|
|
-3.396
|
|
|
|
|
|
Collection Fund
position 2021/22:
|
|
|
|
- Estimated 2021/22
Council Tax collection fund net deficit including 3 year
smoothing
|
-2.147
|
|
|
- Estimated 2021/22
Business Rates Retention collection fund net surplus including 3
year smoothing
|
0.668
|
|
|
- Contribution from
Section 31 grant towards 3 year smoothing
|
0.538
|
|
|
Sub-total: Projected
Collection Funds position
|
|
-0.941
|
|
|
|
|
|
Shortfall before
allocations
|
|
-4.337
|
|
|
|
|
|
Potential One-off
Allocations in 2022/23:
|
|
|
|
- Latest Short Term
Covid-19 service pressures
|
-2.083
|
|
|
- Diseased Trees
removal
|
-0.600
|
|
|
- Planning –
Public enquiries
|
-0.050
|
|
|
- Planning –
Guidance for liveable cities
|
-0.150
|
|
|
Total short term
service pressures
|
|
-2.803
|
|
|
|
|
|
- Allocation to Council
Tax Reduction Discretionary Fund
|
-0.190
|
|
|
- Allocation to Welfare
Reform Support Fund
|
-0.180
|
|
|
Total one off
commitments
|
|
0.370
|
|
|
|
|
|
Current One-off
Resources Shortfall
|
|
-7.510
|
|
|
|
|
|
Financial smoothing of one off Covid-19
service pressures
|
|
2.083
|
|
|
|
|
|
Net One-Off Resource
Shortfall
|
|
-5.427
|
5.21
The table above clearly indicates a very substantial call on
one-off resources. As indicated above, there are a number of
factors likely to cause a change to these figures while further
work is also needed to fully understand Covid-19 and one-off
pressures and consider options for mitigating some of these
costs.
Capital Investment Programme and Capital Strategy 2022/23
Capital
Investment Programme
5.22
The detailed capital investment programme will be brought to the
February Policy & Resources Committee as normal. The capital
programme will update existing capital schemes for any change in
phasing and/or cost estimates. The programme will cover existing
and new scheme proposals including:
·
Housing Schemes including HRA schemes and the Housing Joint
Venture;
·
Education & Skills investments including provision for school
places;
·
Sustainable Transport including Local Transport Plan
investments;
·
Major Regeneration schemes including the Strategic Investment Fund
(SIF), Brighton Waterfront, Madeira Terraces, Valley Gardens and
New England House;
·
Other Investment Funds including the Asset Management Fund, Planned
Maintenance and IT&D Fund;
·
Carbon reduction and sustainability investment programmes including
Solar Panels and the Sustainable Carbon Reduction Initiative Fund
(SCRIF);
·
Major IT & Digital implementation and replacement
programmes.
5.23
Other investment options and capital financing routes are currently
being explored and will come forward to February Policy &
Resources Committee subject to the affordability of financing
options, viable outline business cases, or available capital
resources including capital receipts.
5.24
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 is achieved. However,
this is now considerably more challenging as borrowing from the
PWLB is now prohibited for commercial property investment. Capital
receipts are generally under severe pressure due to competing
demands and there are significant calls on receipts to support the
following objectives:
·
Funding of annual investment funds such as the SIF and AMF referred
to above;
·
Rebalancing of the commercial property portfolio;
·
Additional capital investment towards achievement of carbon neutral
2030;
·
Support for accelerating housing supply schemes; and
·
Funding of the Modernisation Fund which supports implementation of
savings and improvement programmes (see below).
Modernisation Programme Funding
5.25
Over the previous 5 years and in the current year, the council has
utilised the government’s capital receipt flexibilities to
provide it with an invest-to-save resource that can be used to fund
temporary revenue costs provided these underpin service
improvements and/or generate future revenue savings. Given the very
large savings programmes evident over the last decade or more, the
council has used this facility to provide a Modernisation Fund to
enable delivery of annual savings programmes and support other
improvements and modernisation that have longer term benefits. The
Modernisation Fund is resourced by generating capital receipts from
the sale of surplus assets in accordance with the council’s
Asset Management Strategy.
5.27
Subject to this review, the Modernisation Fund is currently
expected to be deployed as follows:
·
Invest-to-Save Budget Proposals: Based on the experience of
the previous 4 years, £2.000m 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 but are currently
significantly over-subscribed. This resource will be held in a
reserve and only released through review of business cases by the
officer Corporate Modernisation Delivery Board. Committee approvals
are also sought where required by Financial Regulations and the
council’s constitution.
·
Customer Digital: £2.600m is anticipated to be
required over the next 2 years to support ongoing investment in
digital infrastructure and applications and to support ongoing
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 investment is
set at a lower level than in previous years as the underpinning
work to develop the necessary technology platforms has been
completed.
·
Modernisation Enablers: A further £1.870m is estimated
to be required to support ongoing change and modernisation
programmes over the period. This includes everything from an
effective project management support team, business improvement
analysts, workstyles property team support, investment in
‘Our People Promise’ and 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 with
different roles or skills. Estimated resources of £0.800m are
required to meet severance costs to manage change over the
remaining 2-year period.
·
IT Modernisation Investment: This related to back-log
investment in IT equipment, software, security, systems and
services (e.g. voice and data) to enable the organisation to remain
secure, resilient and efficient. This was in response to historic
under-investment which has had to be addressed over the last 4
years including network and infrastructure upgrades. No further
investment is required from the Modernisation Fund from 2022/23 as
step increases in the IT&D budget have now been built into the
Medium Term Financial Strategy to ensure the infrastructure can be
properly funded and maintained in future.
5.28
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
Modernisation Fund requirements over the remaining 2 years of the
current fund is shown in the table below.
|
Table 8: 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
|
5.29
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 investments in commercial property or loans to third
parties.
5.30
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 activities. The document will include:
·
The proposed Capital Investment Programme
·
Potential and pending non-financial investments
·
An overview of the council’s Risk Exposure
5.31
The Modernisation Fund above will be incorporated into the full
Capital Strategy alongside new and perennial capital investments
that will support major regeneration projects, improved transport
infrastructure, provision for school places, and major housing
improvements and new build programmes. Key decisions are likely to
be required in respect of strategic funds including IT &
Digital investment, Strategic Investment Funds (supporting
regeneration) and Asset Management Funds. The Capital Strategy will
form 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.
Staffing Implications (General Fund Services)
5.33
At this stage in the budget process it is not possible to determine
how many posts and staff may ultimately be affected by forthcoming
proposals to address the remaining budget gap in 2022/23. An
estimate of posts and staff affected, including any staff
potentially at risk of redundancy, will be made for the February
Policy & Resources report and will be shared with trades unions
in early January. As in previous years, actual numbers will be
dependent on the detailed options proposed and on the results of
formal consultation where required. As previously experienced, it
is likely that a significant number of these posts are already
being held vacant and some will become vacant through normal
turnover, thereby minimising the risk of redundancies.
5.34
At this stage, the first draft budget proposals indicate that 11.6
FTE posts could be deleted from the council’s staffing
establishment and that this could put 3.5 FTE posts at risk of
redundancy.
5.35
If the first draft proposals and later proposals do potentially
place any staff at risk of redundancy the council’s approach
is to support staff by:
·
Providing appropriate support to staff throughout the change
process to enable them to maximise any alternative 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 and financially
viable 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.
6
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
6.1
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 24 February 2022.
Budget Council has the opportunity to debate the proposals put
forward by this Committee at the same time as any viable
alternative proposals.
6.2
Any alternative proposal will need prior assessment by the Section
151 Chief Finance Officer and Chief Executive 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;
v)
The alternative proposal is beyond the powers and duties of the
local authority.
Budget Timetable
7.1
The Timetable for draft and final budget proposals is given in the
table below. This timetable does not include detailed plans for
ongoing consultation with stakeholders as this will be determined
in conjunction with those involved.
Table 9: Budget
Timetable
|
Date
|
Event
|
Notes
|
|
2 Dec 2021
|
Policy & Resources Committee (P&R)
|
Draft Budget & Resource Update report
including Budget Strategies;
Budget Monitoring (TBM) month 7 report.
Review of the Council Tax Reduction Scheme for
2022/23
|
|
16 Dec 2021
|
Council
|
Approval of the Council Tax Reduction Scheme
for 2022/23
|
|
Dec to early-Jan
|
Development of ‘stretch’ budget
proposals
|
Further work and refinement of draft budget
proposals incorporating the impact of the Provisional Local
Government Financial Settlement
|
|
Mid-Dec
|
Provisional Local Government Financial
Settlement
|
Receipt and analysis of the provisional
settlement expected around mid-December.
|
|
Jan 2022
|
CFO/HR/Unions
|
Further sharing of ‘stretch’
budget proposals
|
|
Jan 2022
|
Department Consultative Group’s
|
Sharing and explaining ‘stretch’
Budget Proposals for the relevant directorate if required.
|
|
w/c 11 Jan 2022
|
Member Budget Review Group
|
January P&R finance reports (see below)
shared with cross-party Finance Leads.
|
|
27 Jan 2022
|
P&R
|
Council Tax Base report;
Business Rates tax base report.
|
|
By 31 Jan 2022
|
CFO/HR/Unions
|
Sharing overall final budget package
|
|
10 Feb 2022
|
P&R
|
General Fund and HRA Revenue & Capital
Budget reports;
TBM month 9 report.
|
|
24 Feb 2022
|
Budget Council
|
General Fund and HRA Revenue & Capital
Budget reports.
|
7.2
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.
7.3
The council will also widely publicise its online social media
inviting residents and stakeholders to give us their views and
ideas on Twitter via #BHBudget. Social media continues to be an
effective, low cost, mechanism for engaging with residents and
other stakeholders. Key proposals from the budget plan will be
publicised, along with information about council services, and
questions and comments invited from residents immediately following
their publication over the period leading to the February Policy
& Resources Committee meeting.
Other consultation
and engagement processes are as follows:
7.4
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.
7.5
In particular, the council will be engaging fully with the Brighton
& Hove Clinical Commissioning Group (CCG) with the intention of
aligning the budget processes of the two organisations 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 and the backlogs caused by the pandemic.
7.6
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.
7.7
For staff, updates will be 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 December and January followed by appropriate
consultation with directly affected staff.
7.8
Similarly, where appropriate or required by statute, specific
consultation will be undertaken with residents, businesses and
other people directly affected by proposed changes to service
delivery.
7.9
Many different stakeholders are interested in proposals for fees
and charges which are often linked with budget proposals. Please
refer to the relevant service committee where proposals are
normally considered and approved. The list of meetings is set out
in the table below.
|
Table 10: Approval
of Fees & Charges
|
|
Fees & Charges
Area
|
Meeting
|
Date
|
|
Children & Young People
|
Children, Young People & Skills
Committee
|
10/01/22
|
|
Planning
|
Tourism, Equalities, Communities & Culture
Committee
|
13/01/22
|
|
Libraries
|
Tourism, Equalities, Communities & Culture
Committee
|
13/01/22
|
|
Seafront, Outdoor Events and Venues
|
Tourism, Equalities, Communities & Culture
Committee
|
13/01/22
|
|
Environmental Health and Trading Standards
|
Environment, Transport & Sustainability
Committee
|
18/01/22
|
|
City Parks and City Clean
|
Environment, Transport & Sustainability
Committee
|
18/01/22
|
|
Parking and Highways
|
Environment, Transport & Sustainability
Committee
|
18/01/22
|
|
Bereavement Services
|
Environment, Transport & Sustainability
Committee
|
18/01/22
|
|
Private Sector Housing – HMO
Licensing
|
Housing Committee
|
19/01/22
|
|
Housing Revenue Account
|
Housing Committee
|
19/01/22
|
|
Life Events (excluding Bereavement
Services)
|
Policy & Resources Committee
|
10/02/22
|
|
Licensing and Enforcement
|
Licensing Committee
|
17/02/22
|
|
Adult Social Care Non-residential care
services
|
Health & Wellbeing Board
|
08/03/22
|
8
CONCLUSION
6
7
8
9
8.1
The council is under a statutory duty to set its budget and council
tax before 11 March each year. This report sets out the latest
budget assumptions, process and timetable to meet the statutory
duty. The Spending Review 2021 announced resources for a 3-year
period including an increase in core spending for local government
of 1.8% (excluding new social care costs/funding) in 2022/23, which
includes a potential 1% annual Adult Social Care precept. This is
not sufficient to address this council’s predicted cost
pressures resulting in the need to identify substantial cost
reductions and savings. The report advises that this will need to
be achieved over a 4-year Medium Term Financial Strategy (MTFS)
period.
9
FINANCIAL & OTHER IMPLICATIONS:
Financial
Implications:
5
6
7
8
9
10
9.1
These are contained within the main body of the report.
Finance Officer Consulted: James
Hengeveld
Date: 22/11/21
Legal Implications:
9.2
Policy & Resources Committee has delegated power to formulate
the council’s revenue budget proposals and Capital Strategy
and to recommend their adoption by full Council as part of the
overall budget setting process.
9.3
Any decisions taken as part of the budget setting process are
subject to compliance with relevant legal requirements before
implementation. The early draft budget plans and savings proposals
contained in this report are for noting and are subject to change,
and do not commit the council to implement any specific savings
proposals. When specific decisions on budget reductions are
necessary, focussed consultations and the full equality
implications of doing one thing rather than another will need to be
considered in appropriate
detail.
Lawyer Consulted: Elizabeth
Culbert
Date: 22/11//21
Equalities Implications:
9.4
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 we are doing
so.
9.5
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.
9.6
All proposals with a potential equalities impact in 2022/23 will
have an EIA completed and provided to all Members no later than the
February Policy & Resources Committee. As normal, these will be
cross-referenced with savings proposals. Staffing EIAs will also be
completed alongside the formal consultation process on proposed
staffing changes and feedback will be provided in the February
report.
9.7
Feedback will be used by officers to revise the first drafts of
EIAs into final versions which will be available to members to
scrutinise as they consider the budget proposals at Budget Policy
& Resources and Budget Council. They will also be published on
the council website.
Sustainability Implications:
9.8
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 Building
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 and developing the Carbon Neutral Programme. The
capital and revenue budget proposals for 2022/23 cannot address all
of the Corporate Plan objectives immediately but will provide for
many initiatives to be supported and researched to inform future
budget rounds.
Any Other
Significant Implications:
Risk and
Opportunity Management Implications:
9.10
The level of financial risk provisions, including the working
balance and reserves, will need to be reviewed for 2022/23 in the
light of the Month 9 budget monitoring position (TBM), the outcome
of the Local Government Financial Settlement, the delivery risks
inherent in savings proposals, the projected ongoing impact of the
pandemic, and available resources. The level of any risk provisions
will clearly need to strike a balance between putting scarce
resources to one side when there are growing pressures on service
delivery.
9.11
The budget report to February Policy & Resources Committee will
include the Chief Finance Officer’s formal assessment of the
robustness of estimates in the budget proposals and the adequacy of
reserves and provisions, including an assessment of the need for
any additional risk provisions.
SUPPORTING DOCUMENTATION
Appendices:
1.
Draft Directorate Budget Strategies and First Draft Budget
Proposals 2022/23
2.
Draft Equality Impact Assessments for Draft Budget proposals
Documents in Members’ Rooms
1. None
Background Documents
1.
None