Subject:
Draft General Fund Budget and Resources Update
2023/24
Date of
meeting: 1 December 2022
Report
of:
Chief Finance Officer
Contact
Officers:
Name:
Nigel Manvell
James Hengeveld
Tel:
01273 293104
01273 291242
Email:
nigel.manvell@brighton-hove.gov.uk
james.hengeveld@brighton-hove.gov.uk
Wards
affected: All
For general
release
The special
circumstances for non-compliance with Council Procedure Rule 3,
Access to Information Procedure Rule 5 and Section 100B(4) of the
Local Government Act 1972 (as amended), (items not considered
unless the agenda is open to inspection at least five days in
advance of the meeting) were that the information set out in this
report relied upon the Governments Autumn Statement which was only
published on 17th November 2022.
1
PURPOSE OF REPORT AND POLICY CONTEXT
1.1
This report provides an update on the council’s General Fund
resource position for 2023/24 to 2026/27 including any changes in
assumptions and estimates together with the key impacts of the
government’s Autumn Statement, announced on 17 November 2022,
as far as they can be interpreted locally.
1.2
Looking back, the Spending Review 2021 was a 3-year announcement
which purported to increase Local Government Spending Power by 3%
in 2022/23, although a significant element of this was provided
from local taxation through an Adult Social Care Council Tax
precept of 1%. In the event, a 3% increase in spending power was
clearly insufficient to meet the inflationary and demand pressures
experienced this year including September RPI inflation of 12.6%
(CPI of 10.1%) and a local government pay award with an average
cost of 6.3% for the council. This primarily explains the
council’s £11.6 million forecast overspend in the
current financial year.
1.3
When setting the 2022/23 budget, a high level of savings were again
required to address a projected budget shortfall (gap) and achieve
a balanced budget, a legal requirement. The shortfall, as in
previous years, was largely driven by increasing demands for adult
and children’s social care and pressures on Emergency and
Temporary Accommodation (homelessness), with which neither
government funding nor local taxation (capped by government) have
kept pace. In common with previous years since 2009/10, this
continued the necessity of identifying substantial annual savings
through a mixture of economies and efficiencies, changes to service
delivery, service reductions, and increased fees & charges.
Savings of £12.5 million were required for 2022/23 but this
was reduced to £10.5 million by borrowing £2 million
internally from earmarked reserves to ‘smooth’ the
financial impact of a further large savings target.
1.4
For 2023/24 the position has become considerably more challenging,
not only due to the continuing trend of costs and demands
outstripping national and local funding increases for local
government, but this is exacerbated by abnormally high inflation,
the impact of the associated cost of living crisis on demands for
services, and a weakened national and local visitor and business
economy impacting on fees & charges and taxation incomes. The
Chancellor’s Autumn Statement announced resources that will
help to improve the position when compared to the
‘midpoint’ budget scenario set out in the July Policy
& Resources Committee report, however, in July, additional
resources of over £11 million were already assumed in the
midpoint scenario to arrive at a projected budget gap of £21
million. At present, the best estimate is that the Autumn Statement
will bring additional resources of £8.470 million compared to
the July assumption. However, unfortunately some costs,
particularly the Local Government pay award, are also higher than
assumed in July by £6.4 million. The combined effect is a
revised budget shortfall of circa £19 million in 2023/24 and
£54 million over a 4-year period.
1.5
While the authority has seen very large shortfalls of circa
£20 million before, during periods when government grant
reduced substantially under austerity and deficit reduction
policies, the context was very different with low inflation, low
interest rates and a growing economy both locally, nationally and
globally. In the current context of high inflation, increasing
interest rates, increasing service demands driven by the cost of
living, and a weakened economy, managing a large budget shortfall
of nearly £19 million presents a serious and unprecedented
challenge which, together with substantial in-year pressures
reported elsewhere, will be a severe test of the authority’s
financial resilience and sustainability.
1.6
While the Autumn Statement is a high level announcement of
resources, the detailed allocations for each authority come through
the provisional Local Government Finance Settlement which is likely
to be later than normal (late December), compressing even further
the planning, consultation and decision-making processes for
developing final budget proposals. 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 updated budget gaps set out in paragraph 4.23 totalling
£53.739m over the 4-year period, including £18.930m in
2023/24.
2.5
Notes the potential actions and routes that the authority may need
to consider if it is unable to develop and agree a balanced budget
for 2023/24, including accommodating the impact of any projected
overspend for 2022/23 as at month 9 (December).
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 2023/24.
3
FINANCIAL CONTEXT AND RISKS
3.1
The Budget and Resources Update report to July Policy &
Resources Committee, as in the previous two years, provided a
scenario-based analysis of potential costs, funding and resources
for 2023/24 based on best, mid-point and worst case assumptions. In
the event, inflation and pay award assumptions in this exercise
fell short of reality and the Local Government pay award costs
alone have added an additional cost of £3.3 million to the
assumptions made in July alongside further increases to energy
costs and new pressures emerging around recruitment and labour
market challenges. There are also additional demands arising from
the cost of living crisis impacting on children’s social care
and homelessness budgets, including a sustained increase in Council
Tax Reduction claimants of around 2% which could increase
further.
3.2
The report in July indicated that with building financial
pressures, the authority would need to take a longer term view and
focus on managing its budget and resources over a 4-year
medium-term planning period. This is important for a number of
reasons including:
·
Continuing to demonstrate that the council is setting its annual
budgets in the context of understanding its longer term financial
sustainability;
·
Demonstrating that any use of reserves or balances in the
short-term to support the budget is financially sustainable (i.e.
repayable) in the medium term, and;
·
Ensuring that any budget shortfalls (gaps) in future years are
identified early to enable longer term programmes of change to
generate savings, efficiencies or income to be identified and
instigated as soon as practicable.
i)
Single-year
financial settlements: Central
government announced a high level, multi-year Spending Review
(SR2021) but followed this up with a short-term, one-year Local
Government Financial Settlement (the third in a row). The recent
Autumn Statement announced on 17 November provides some information
on funding over a 2-year period but is also only expected to result
in a one-year Local Government Financial Settlement.
ii)
Setting financial
limits annually: Similarly, the
government has consistently made decisions on an annual basis
concerning key financial parameters including whether or not
additional Council Tax precepts will be allowable, annually
determining the level of Council Tax increase allowable without the
need for a local referendum, and determining business rate caps and
reliefs each year. The Autumn Statement indicates that the increase
in Council Tax and ASC Precept will apply from 2023/24 and
the assumption is therefore that it will be allowable for at least
4 years. This is critical and confirmation on this point is being
sought but the statement is currently taken as read.
iii)
New bidding
processes:Significantly,
there are also an increasing number of funding streams, both
capital and revenue, that are now subject to national bidding
processes, giving even less certainty over funding. Most notably
for this council, funding for homelessness and rough sleeping, arts
and cultural services, Levelling Up, and sustainable transport are
subject to numerous bidding rounds.
iv)
Financial
reforms:The Social Care
charging reforms were supported by a 3-year government funding
package which is now known to be wholly insufficient. The Autumn
Statement has deferred implementation from October 2023 to October
2025, but will allow local authorities to retain the funding to
meet current Adult Social Care cost and demand pressures. This will
therefore only defer the pressure (estimated at £8m in BHCC)
unless further funding is announced for 2025/26.
There
are also other potential financial reforms, including the Fair
Funding Review and Business Rates changes, which are still awaiting
clearance. In relation to Fair Funding, the government converted
part of local authorities’ 2022/23 Revenue Support Grant into
a one-off ‘Services Grant’ in lieu of the potential
re-distributional impacts of the Fair Funding Review. A policy
statement on this and other aspects of local government finance is
expected at the end of November 2022.
3.4
All of the above makes medium-term financial planning very
challenging and perilous at a time when local authority budgets are
under growing and sustained pressure due to inflation and economic
conditions.
3.5
Financial scenario planning has therefore become increasingly
important over recent years due to the continuing uncertainties
over the local government financing and funding regime and
increased levels of risk in forecasting costs and income. Managing
these risks is important because the council only has finite
one-off resources to manage any unfavourable movements in costs,
funding or income. As seen nationally, when these risks become
unmanageable and impact on financial sustainability this can have
serious reputational implications and, in cases where this has
happened, the level of external scrutiny, challenge and/or
government intervention will normally increase, including:
·
Notification to and involvement of the Department of Levelling Up,
Housing & Communities (DLUHC) where potential financial
difficulties have reached a critical point including expectation of
a statutory Section 114 report being issued by an authority’s
Section 151 Chief Financial Officer (CFO).
·
Public Interest reports being issued by External Auditors where
they believe the authority is failing to act appropriately
regarding financial matters or risks.
·
Appointment of independent financial reviewers, usually where a
local authority has identified the need to request a
‘capitalisation direction’ from government whereby it
needs to sell capital assets and use capital receipts to fund
revenue expenditure in the short term to keep afloat. The
government’s web site currently lists 9 authorities that have
been subject to financial review and have subsequently been granted
a capitalisation direction.
·
In severe cases, usually where a review identifies serious failings
of either leadership or governance, appointment of Commissioners to
run the council or parts of the council on behalf of the Secretary
of State, for example, Liverpool City Council.
·
In the severest case, Northamptonshire, direct intervention by
government resulted in the dissolution of the authority and
creation of two new unitary authorities from April 2021.
3.6
In their annual reviews, external auditors are therefore
increasingly concerned with local authorities’ financial
resilience and sustainability, including providing evidence of
effective medium term resource planning. In the current context,
external auditors will be looking closely at authorities’
plans and approaches for managing the impacts of inflation.
·
The requirement to plan for the repayment of reserves over the
medium term period, including reserves of £3.754m used to
‘financially smooth’ the impact of Covid on the 2021/22
and 2022/23 budget over a 10-year period, and a further
£1.983m used to smooth the 2022/23 budget due to the scale of
savings required;
·
Similarly, 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 continuing to be supported in, and the cost
of, Emergency and Temporary Accommodation and associated support
services following the pandemic. The rate of ‘move-on’
to sustainable accommodation or settings has slowed due to
availability of alternatives and the complexity of cases which is
having a substantial, ongoing financial impact.
·
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). There are signs that the economy is slowing and this may
impact on some incomes, or the potential for generating further
incomes, in the short to medium term.
·
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 by labour supply issues and the ‘cost of
doing business’. Social care providers are also impacted by
the National Minimum Wage increase (6.6% this year and 9.7% in
2023/24) and energy costs. This could result in further increases
to contractual costs if they cannot mitigate costs increased
charges.
·
Increased pay costs resulting from inflationary pressures which are
driving up pay awards as well as the increasing cost of market
supplements or other remuneration due to national and local labour
supply issues for some roles.
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 Autumn Statement alongside updated estimates of
other costs and resources.
4
RESOURCES AND PLANNING ASSUMPTIONS 2022/23
Autumn
Statement 2022
4.1
The Autumn Statement announced on the 17 November 2022 covers a
2-year period and provides key information that will inform the
provisional Local Government Finance Settlement (LGFS), expected to
be provided in late December. However, the settlement itself is
expected to be for 1-year only.
4.2
The key headlines from the Autumn Statement are as follows:
·
Council Tax excessive rule (cap) changed from 1.99% to 2.99%. An
Adult Social Care precept of 2% is also allowable. Both appear to
be available for up to 5 years.
·
£1 billion additional Adult Social Care funding split
£400m to local authorities and £600m via the NHS
(Better Care Fund). Assumed resources for BHCC are £3.170m
based on a 50:50 share of the Better Care Fund element.
·
Social Care charging reforms deferred for 2 years but local
authorities to be allowed to retain associated funding of
£1.3 billion in 2023/24, rising to £1.9 billion in
2024/25 (£6m, rising to £8.7m for BHCC).
·
Business Rates frozen and various reliefs extended or enhanced.
This not only saves on rates bills for council-owned properties and
schools but, through Section 31 Grant protection, will bring
£5.760m additional resources in respect of government
protection for the September RPI uplift.
·
National Insurance levy increase (1.25%) reversed but also removed
from the Services Grant with no overall benefit to the
council.
·
Importantly, £1 billion for the Household Support Fund which
will ensure that the cost of living crisis can continue to be
supported locally alongside the Council Tax Reduction Scheme,
Discretionary Housing Payments, Section 17 Preventive payments, and
grant support to money advice services and the food partnership.
The Household Support Fund allocation for BHCC is expected to be
£4.280m.
·
The Autumn Statement was silent on the New Homes Bonus and it is
not clear if this has now ceased completely.
4.3
Overall, the Autumn Statement should improve the council’s
resources when compared with the ‘mid-point’ resource
assumptions reported to this committee in July as shown in the
table below and reflected in table 4 at paragraph 4.21:
|
Table 1: Budget
Planning – Change in Funding Assumptions
|
Assumed
Funding
July
£m
|
Estimated
Autumn
Statement
£m
|
|
Additional Social
Care funding
|
4.000
|
3.170
|
|
Deferral of ASC
reforms and retention of funding
|
0.000
|
6.000
|
|
Business Rate
uplift
|
5.760
|
5.760
|
|
Additional Social
Care Precept
|
1.650
|
3.300
|
|
Additional
allowable Council Tax increase
|
0.000
|
1.650
|
|
Supporting
(Troubled) Families Grant continuation
|
0.946
|
0.946
|
|
Homelessness/Rough
Sleeping
|
0.000
|
0.000
|
|
National
insurance/Care Levy reversal
|
0.000
|
0.986
|
|
Change in
Services Grant (removal of levy)
|
0.000
|
-0.986
|
|
Total
|
12.356
|
20.826
|
|
Increase in
Resources compared with July Mid-point Funding
Assumptions
|
|
8.470
|
Updated
Service Pressures & Investments
4.4
The planning assumptions for demographic, service and cost
pressures from July have been updated and included in the table
below. In contrast to the stable periods of inflation experienced
for many years, the table shows the very substantial impact of the
high inflation experienced throughout the current year and expected
to continue into 2023/24, albeit at a reducing level.
|
Table
2:
Investments &
Service Pressures
|
Original
Recurrent Service
Pressures
2023/24
(July)
|
Latest Recurrent
Pressures Identified
2023/24
(Nov)
|
Latest Short-Term
Pressures
|
|
|
£m
|
£m
|
£m
|
|
Inflation Related
Pressures
|
|
|
|
|
2022/23 pay award
above 2% base provision
|
2,700
|
6,000
|
|
|
2023/24 pay award
above 2% base provision (4%)
|
2,025
|
2,835
|
|
|
Energy contract
inflation
|
1,050
|
1,410
|
|
|
Waste PFI
contract inflation
|
1,200
|
300
|
|
|
Children's Social
Care – provider cost increases
|
2,200
|
2,721
|
|
|
Adult Social Care
(including Learning Disability services) – provider cost
increases
|
6,500
|
6,158
|
|
|
Temporary
Accommodation and Rough Sleepers – cost pressures
|
600
|
930
|
|
|
Home to School
Transport - cost pressures
|
|
666
|
|
|
Inflationary
pressures - all other services
|
|
1,200
|
|
|
Total
Inflationary Pressures
|
16,275
|
22,220
|
|
|
|
|
|
|
|
Demographic
Pressures
|
|
|
|
|
Looked after
children and Care Leavers
|
2,300
|
694
|
|
|
Adult Social
Services incl. Learning Disabilities
|
5,400
|
5,479
|
|
|
Temporary
Accommodation & Rough Sleepers
|
1,800
|
1,925
|
|
|
Home-to-School
Transport demand
|
0
|
671
|
|
|
Other Cost
Pressures
|
|
|
|
|
Housing Benefit
Subsidy (Reg 13)
|
400
|
450
|
|
|
Orbis Services -
revised cost shares (ACRs) and disaggregation costs
|
1,100
|
1,529
|
|
|
Income
Pressures
|
1,308
|
2,154
|
100
|
|
Employee Budget
pressures (incl. agency/relief)
|
1,147
|
1,888
|
|
|
All Other
Services Pressures
|
975
|
1,605
|
|
|
Ash Dieback and
Elm Works
|
|
|
600
|
|
Counter Terrorism
legislation for open spaces
|
|
|
70
|
|
Electronic
document management (WRBS)
|
|
|
150
|
|
Total
Demographic and Cost Pressures
|
14,430
|
16,395
|
920
|
|
All
other budget changes and commitments
|
1,695
|
195
|
|
|
Total Cost
Pressures and Investments
|
32,400
|
38,810
|
|
|
Increase in Cost
Pressures and Investments
|
|
6,410
|
|
4.5
The table indicates a very high level of recurrent cost pressures
and investments of £38.810m based on current trends and
estimates, together with estimated one-off cost pressures and
impacts of £0.920m. As can be seen in paragraph 4.21, while
there are significantly increased resources provided by the Autumn
Statement, the net impact is a reduction of the recurrent budget
gap by only £2.060m. The short-term pressures, if confirmed,
would be a significant call on one-off resources which may not be
available, subject to other demands and the projected overspend in
the current year.
Investment in Corporate Plan Priorities
4.6
Investment in Corporate Plan priorities in previous years has been
a mixture of continuing to support the growth in demand and
complexity of adult and children’s social care together with
funding increased homelessness demands on emergency and temporary
housing. There have also been significant capital investments for
schemes such as Brighton & Hove Warmer Homes, the Carbon
Neutral Programme and investment in Parks infrastructure enabled by
borrowing at historically low interest rates. This is alongside
major investment in house building and house purchase enabled
through the Housing Revenue Account self-financing regime.
4.7
In the current environment of severely straitened resources, the
focus will need to be on protecting statutory services for
vulnerable children and adults, and continuing to address
homelessness to avoid additional demands on council and NHS
services. However, the Household Support Fund will enable a range
of continued support for the cost of living crisis and
hardship.
Local
Government Finance Settlement and Tax base Forecasts
4.8
As noted above, full details of government funding for councils is
not likely to be announced until late December. The settlement is
likely to be for 2023/24 only.
4.9
A key area is the continuing support for Adult Social Care. The
table below sets out the ongoing and new funding applicable to
Adult Social Care and the potential resources provided by the
Autumn Statement:
|
Table
3: Social Care Resources
|
2021/22
|
2022/23
|
2023/24
|
|
ASC
Precepting
|
3%
£4.400m
|
1%
£1.580m
|
2%
£3.300m
|
|
Improved Better
Care Fund
|
£9.181m
|
£9.459m
|
£9.459m
|
|
Adults &
Children’s Social Care grant
|
£7.759m
|
£10.816m
|
£12.656m*
|
|
Better Care Fund
Autumn Statement assumed 50% Share
|
|
|
£1.330m*
|
|
Deferral of ASC reforms and retention of funding
|
|
|
£6.000m*
|
* Estimated resources as allocations are not
announced until late December.
Council
Tax
4.10
At the mid-point, the council tax increase for 2023/24 was assumed
to be 1.99% with a further 1% for an Adult Social Care precept,
totalling 2.99%. The Autumn Statement has increased the excessive
council tax limit (referendum principle) to 3% and increased the
Adult Social Care precept to 2% from 2023/24. Therefore the maximum
council tax increase allowable without a referendum will be 4.99%
from 2023/24 onwards.
4.11
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 was that collection rates should start to
return to normal levels 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 steadily reduced
until late 2021 but has since seen a reversal with an increase in
numbers during 2022/23 which is an indicator of challenging
economic conditions.
4.12
This trend is contrary to the planning assumption which was for a
continued fall of claimants throughout 2022/23 of 4% whereas
claimant numbers have increased by 2%. However, this has been
partially offset by the average value of awards falling slightly.
Elsewhere, the number of student exemptions has not reduced as
expected and the number of claimants for the Severely Mentally
Impaired (SMI) exemption has continued to increase to the extent
that Brighton & Hove has, proportionately, one of the highest
levels of SMI exemptions in the country.
4.13
Overall the tax base is projected to increase by 0.75% for 2023/24.
The final taxbase estimates will be presented to this committee in
January 2023.
Business
Rates estimate for 2023/24
4.14
The Autumn Statement included an announcement that there will be a
freeze on the business rates multiplier in 2023/24. The council
will be compensated for the loss in extra revenue for this
announcement which, in line with previous years would be based on
the September 2022 Retail Price Index increase of 12.6%. This
increase was reflected in the July 2022 budget estimates.
4.15
The Autumn Statement also included provision for a range of
additional targeted rate reliefs in 2023/24 with the most
significant being an increased relief for the Hospitality, Retail
and Leisure sector from 50% to 75% (subject to a cap for larger
businesses). The loss of income to the council will be fully
compensated by government through S31 grant.
4.16
The projections in July for 2023/24 included a 1.5% growth in the
tax base and this assumption remains. The growth is as a result of
new business developments and lower than anticipated successful
rating appeals.
4.17
A new Rating list is due to be implemented in April 2023.
Revaluations are now on a 3-year cycle rather than 5 years. Any
revaluation increases or decreases are planned to be adjusted to
ensure local authorities are no better or worse off. However this
is a complex adjustment and there is a risk that the council is not
fully protected against loss.
Budget Gap (Shortfall) 2023/24
4.18
The ‘midpoint’ planning scenario in July highlighted a
potential budget shortfall of £20.990m in 2023/24 based on
known and estimated cost pressures and predicted government funding
announcements. The best case indicated a £12.920m shortfall.
These were the planning assumptions that officers were asked to
work with pending the outcome of autumn funding announcements,
requiring minimum savings proposals of £13m and
‘backstop’ savings proposals of up to £21m (i.e.
the midpoint) to be developed.
4.19
At the midpoint, cost and demand pressures of £32.400m were
estimated in respect of a continued increase in adult and
children’s social care demands, and high levels of inflation
on energy, supplies, and contractual costs, particularly social
care providers, as well as a higher Local Government pay award.
These estimates have been updated for the latest information and
this has increased estimated cost and demand pressures to
£38.810m.
4.20
At this stage in the process, potential first draft savings of
£12.596m have been identified and are included at Appendix 1.
Any staffing impacts in these first draft proposals have been
notified to the Trade Unions at Departmental Consultative Group
meetings. However, as detailed below, while the Autumn Statement
has provided additional resources compared to those assumed in
July, cost pressures have also increased in the interim, in
particular, the Local Government NJC pay award is £3.3m
higher than the midpoint estimate in July.
4.21
The budget gap projection for 2023/24 has therefore been fully
revised to take into account changes in resources emanating from
the Autumn Statement (as far as they can be estimated) and revised
costs and pressures. The table below summarises the overall impact of
these changes, starting with the predicted midpoint budget gap as
at July followed by positive or negative changes compared with the
assumptions made in July. Draft savings proposals are also
included to arrive at a remaining budget gap. At the draft stage
these are around the minimum level set in July due to the
uncertainty surrounding the local government financial settlement
and other potential changes to forecasts.
|
Table 4: Budget
Gap Latest 2023/24
|
£m
|
|
2023/24
‘Midpoint’ Budget Gap as at July 2022
|
20.990
|
|
Additional
Resources set out in Table 1
|
(8.470)
|
|
Additional cost
pressures and other changes set out in Table 2
|
6,410
|
|
Budget Gap before
Savings Proposals
|
18.930
|
|
Draft Saving
Proposals to date (Appendix 1)
|
(12.596)
|
|
Remaining Budget
Gap
|
6.334
|
i)
The provisional Local Government Financial Settlement is received
and analysed (expected late December), in particular, confirming
the distribution of major Adult Social Care resources;
ii)
The Council Tax, Council Tax Reduction and Business Rate tax bases
have been fully revisited in late December/early January and
updated for latest data and trends;
iii) The
cost pressures above have been further reviewed and confirmed and
the statutory review of the robustness of estimates has been
completed by the S151 Chief Finance Officer.
4.23
At this stage, it appears highly likely that significant further
savings will need to be put forward to balance the budget and these
will be considered in light of the provisional Local Government
Financial Settlement and are discussed further in Section 5
below.
Medium
Term Financial Strategy Update 2023/24 to 2026/27
·
2.99% annual Council Tax increases for 2023/24 to 2026/27;
·
2.00% Adult Social Care precepts for 2023/24 to 2026/27;
·
Annual Council Tax tax base growth of 0.75% in 2023/24, 0.90% for
2024/25, 0.60% for 2025/26 and 0.75% for 2026/27;
·
Business Rate Retained growth of 1.5% for 2023/24, 1.00% for
2024/25 and 0.75% for 2025/26 and 2026/27;
·
Business Rates Retained inflationary increase of 12.6% for 2023/24,
4.00% for 2024/25, 1% for 2025/26 and 0% for 2026/27;
·
4.0% (average) pay award cost for 2023/24, 3.0% for 2024/25, and
2.5% thereafter;
·
3.00% income budget uplifts for 2023/24, 3.5% for 2024/25 reverting
to 3.00% per annum thereafter. Note these are minimum budget
targets, but do not determine actual fees, charges or rent
increases;
·
5% to 8% increases to Social Care third party payments in 2023/24
(reflected in service pressure funding), 3.5% for 2024/25, 3.0% for
2025/26, and 2.50% in 2026/27.
·
Variable 0.75% to 3.00% cash limited increases to non-pay budgets
(e.g. premises, supplies and services);
·
Continuation of Supporting Families funding;
·
Continued investment to meet demographic growth across statutory
demand-led services.
Table 5: Projected
Medium Term Financial Strategy
|
Summary MTFS and
Budget Gaps
|
2023/24
|
2024/25
|
2025/26
|
2026/27
|
|
£m
|
£m
|
£m
|
£m
|
|
Budget
Commitments (from previous decisions)
|
1.467
|
2.684
|
1.109
|
0.427
|
|
Change in use of
reserves
|
1.488
|
2.366
|
-0.274
|
-0.876
|
|
Net standard
Inflation (on Pay, Prices, Income, Pensions)
|
7.456
|
9.527
|
8.371
|
7.700
|
|
Exceptional
inflationary costs
|
19.385
|
1.040
|
0.200
|
0.200
|
|
Subtotal
|
29.796
|
15.617
|
9.406
|
7.451
|
|
Demographic,
Service and Other Cost Pressures (recurrent)
|
16.395
|
14.400
|
16.750
|
14.750
|
|
New grant funding
assumed (Adult Social Care)
|
(9.307)
|
(4.650)
|
(0.143)
|
(0.146)
|
|
Projected Net
Business Rates Retention/Section 31 grant increases
|
(8.553)
|
(4.434)
|
(1.337)
|
(0.564)
|
|
Projected Net Tax
Base changes assuming 2.99% increase
|
(6.101)
|
(7.325)
|
(6.643)
|
(7.283)
|
|
Assumed 2% ASC
precept
|
(3.300)
|
(3.480)
|
(3.670)
|
(3.890)
|
|
Predicted Budget
Gaps
|
18.930
|
10.128
|
14.363
|
10.318
|
|
Savings
|
(12.596)
|
|
|
|
Overview
of the Financial Position
5.1
The council’s financial position is clearly very challenging
with the resources from the Autumn Statement 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 nearly £200m 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 and greater delivery risk.
5.2
Opportunities for technological and digital efficiencies,
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 and explored. While there are undoubtedly
further opportunities to explore, their magnitude and scope is
inevitably decreasing with each successive annual savings
round.
5.3
The scale of the financial challenge in 2023/24 and over the next 4
years, particularly in the current economic context, indicates that
more fundamental and potentially contentious proposals are likely
to need to come forward for consideration by Policy & Resources
Committee for recommendation to Budget Council.
Budget Process and Addressing the 2023/24 Budget Gap
5.4
Previous years’ Spending Reviews have been received late in
the autumn due to the pandemic. The Autumn Statement this year is a
very late announcement due to other factors, leaving local
authorities in a position of significant uncertainty and hampering
financial planning. The expected receipt of the Provisional Local
Government Financial Settlement on 21 December continues the trend
of increasingly late notifications. The timetable is therefore
under pressure but a range of budget savings proposals have been
worked up since July and, at this stage, a minimum level of
proposals have been put forward for information at Appendix 1.
5.5
The remaining budget gap outlined in Table 4 above is subject to
confirmation and revision as set out in paragraph 4.22. However, at
this stage the indication is that either further savings and/or
resources of £6.334m will need to be identified for the final
budget package in February. Officers have worked on both more
challenging ‘backstop’ savings options and longer term
proposals that could deliver savings and economies over the 4-year
medium term period. These will be considered once the outcome of
the Local Government Financial Settlement is known and a review of
the council’s tax bases has been completed in late
December/early January.
5.6
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;
ii)
Property and asset management strategies including further
reductions in office accommodation and/or operational buildings,
saving running costs, business rates, security 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, integrate
services, 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, discretionary services including
outsourcing where appropriate;
vi) 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.
5.7
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. They will also
indicate where there is a plan for capital investment to meet
Corporate Plan priorities and give an indication of ‘Areas of
Focus for Savings’ including any invest-to-save Modernisation
Fund requirements. The draft strategies will be updated for the
final Budget Package to February Policy & Resources Committee
and Budget Council. Draft Budget Strategies are included at
Appendix 1 along with first draft savings proposals.
5.8
It should be noted that consultation processes in relation to any
budget proposals will be in accordance with the timetable set out
in Section 9 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, trades unions, or other stakeholders potentially affected by
budget proposals.
Reserves
Position and One-off Funding
Current Reserve Levels and
Usage
5.9
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, as at 31 March 2022, had other
‘useable’ earmarked reserves of around £28m which
can be borrowed from temporarily. However, together with the
financial smoothing undertaken in 2021/22 and 2022/23, and the
spreading of one-off Covid Pandemic costs over 10 years, the
council has already approved various uses of reserves to support
other requirements. 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 ‘borrowed’ temporarily and their relevant
payback periods are as follows:
Table 6: Current Internal Borrowing from Earmarked Reserves
|
Reserve
|
Amount
Borrowed/
Outstanding
£m
|
Repayment
Period
|
Repayments
Start
|
|
Financial
Smoothing of Covid one-off impacts
|
3.546
|
10
years
|
2022/23
|
|
Financial
Smoothing of 2022/23 budget
|
1.983
|
4
years
|
2024/25
|
|
Term Time Only
(TTO) back pay settlement for schools
|
2.640
|
10
years
|
2021/22
|
|
Surface Water
Action Management Plan
|
0.270
|
10
years
|
2020/21
|
|
Waste
PFI
|
0.085
|
4
years
|
2021/22
|
|
Royal Pavilion
& Museums Trust Cash Facility (£4m max
facility)
|
2.000
|
Up to 10
years
|
2023/24
|
|
Total Internally
Borrowed
|
10.524
|
|
|
Latest
Position in 2022/23
5.10
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.
5.11
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 £11.637m on the General Fund.
The overall overspend has reduced by £1.477m since Month 5
and includes the estimated cost of the 2022/23 pay award.
5.12
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 £3.309m and must
also be funded from one-off resources in the 2023/24 budget.
5.13
Table 7 summarises the potential resources and liabilities that
will need to be taken into account in setting the 2023/24 budget.
At this stage, this assumes that spending in 2022/23 will be in
line with the TBM Month 7 (October) report projections included
elsewhere on this agenda.
5.14
The table shows an estimated shortfall in one-off resources of
£16.468m after taking account of other expected one-off
requirements. 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
reduce the call on 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 call on one-off
resources and vice versa;
·
Updated estimates of short term cost pressures and other one-off
resource requirements.
|
Table 7: One-off
resources, liabilities and potential allocations (as at Month
7/October)
|
£m
|
£m
|
|
Unallocated
general reserves
|
|
0.000
|
|
|
|
|
|
Revenue Budget
position 2022/23 (TBM):
|
|
|
|
- Forecast outturn
overspend (Month 7/October)
|
|
-11.637
|
|
|
|
|
|
Collection
Fund
position
2022/23:
|
|
|
|
- Estimated 2022/23
Council Tax collection fund net deficit
|
-1.841
|
|
|
- Estimated 2022/23
Business Rates Retention collection fund position
|
0
|
|
|
- Year 3 council
tax collection fund covid smoothing repayment
|
-1.520
|
|
|
- Year 3 Business
Rates Retention collection fund covid smoothing
repayment
|
-1.207
|
|
|
- Contribution from
Section 31 grant towards 3 year smoothing
|
+1.259
|
|
|
Sub-total:
Projected Collection Funds position
|
|
-3.309
|
|
|
|
|
|
Shortfall before
allocations
|
|
-14.948
|
|
|
|
|
|
Potential One-off
Allocations in 2023/24:
|
|
|
|
- Various one-off
pressures
|
-0.320
|
|
|
- Diseased Trees
removal
|
-0.600
|
|
|
- Elections 2023
balance of funding required
|
-0.230
|
|
|
- Council Tax
Reduction Discretionary Fund
|
-0.190
|
|
|
- Welfare Reform
Support Fund (LDSF)
|
-0.180
|
|
|
Total one off
commitments
|
|
-1.520
|
|
|
|
|
|
Current One-off
Resources Shortfall
|
|
-16.468
|
5.15
The table above clearly indicates a very substantial call on
one-off resources which, together with resources already borrowed
temporarily from reserves, would outstrip available reserves and
balances, potentially placing the authority in a serious financial
predicament. However, 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 one-off pressures and
consider options for mitigating some of these costs. The severe
pressures experienced in-year are discussed in more detail in the
accompanying Targeted Budget Management Month 7 report including
measures to try and minimise any overspending. One-off allocations
will need to be carefully considered in the light of the Month 9
in-year forecast and may not all be supportable.
6
Capital Investment Programme and Capital Strategy 2023/24
Capital
Investment Programme
6.1
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, Kingsway to the Sea, Madeira Terraces
and Valley Gardens;
·
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 Carbon Neutral Programme;
·
Major IT & Digital implementation and replacement programmes
including the replacement of Corporate HR, Payroll and Finance
systems.
6.2
Investment options and requirements are kept under review 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.
The council’s challenging financial position may require some
capital investment programmes to be revisited in terms of
affordability, particularly where they are financed from
borrowing.
6.3
Capital receipts from the sale of surplus land and buildings
support the capital programme and the projections are regularly
reviewed. The council needs to 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 to protect its commercial rent income. 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;
·
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
6.4
Over a number of years, 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.
6.6
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: A further £1.050m is anticipated to
be required in 2023/24 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 £1.163m 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 for ‘Future Ways
of Working’, 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 at least
£0.400m are required to meet severance costs to manage change
in 2023/24.
·
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 expected to be required from the Modernisation Fund
from 2022/23 provided that step increases in the IT&D budget
built into the Medium Term Financial Strategy are funded. However,
this may depend on the availability of recurrent General Fund
resources.
6.7
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
|
1.163
|
4.523
|
|
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
|
2.963
|
15.723
|
6.8
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.
6.9
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
6.10
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.
7.1
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 2023/24. 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
ahead of publication. 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 number of posts are already being held vacant and
some will become vacant through normal turnover, thereby helping to
reduce the risk of redundancies.
7.2
At this stage, the first draft budget proposals indicate that 38.6
FTE posts could be deleted from the council’s staffing
establishment and that this could put 24.3 FTE posts at risk of
redundancy. This information was shared with relevant service
managers and trades unions ahead of publication to ensure that they
can support their staff and members respectively.
7.3
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.
7.4
These measures will remain in place as consultation with trade
unions, staff and other stakeholders is undertaken.
8
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
8.1
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 23 February 2023.
Budget Council has the opportunity to debate the proposals put
forward by this Committee at the same time as any viable
alternative proposals.
8.2
Any alternative proposal will need prior assessment by the Section
151 Chief Finance Officer and Chief Executive 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 exceptionally
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
9.1
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
|
|
24 Nov
2022
|
Publication
|
Publication of
Draft Budget proposals on the council’s web site (1 Dec
Policy & Resources agenda)
|
|
1 Dec
2022
|
Policy &
Resources Committee (P&R)
|
Draft Budget
& Resource Update report including Budget
Strategies;
Budget Monitoring
(TBM) month 7 report.
|
|
Dec to
early-Jan
|
Development of
further budget proposals
|
Further work and
refinement of draft budget proposals incorporating the impact of
the Provisional Local Government Financial Settlement
|
|
Late
Dec
|
Provisional Local
Government Financial Settlement
|
Receipt and
analysis of the provisional settlement expected on or about the 21
December.
|
|
Jan
2023
|
CFO/HR/Unions
|
Further sharing
of any additional budget proposals affecting staff
|
|
Jan
2023
|
Department
Consultative Group’s
|
Sharing and
explaining and additional budget proposals affecting staff for the
relevant directorate if required.
|
|
w/c 9 Jan
2023
|
Member Budget
Review Group
|
January P&R
finance reports (see below) shared with cross-party Finance
Leads.
|
|
19 Jan
2023
|
P&R
|
Council Tax Base
report;
Business Rates
tax base report;
Review of the
Council Tax Reduction Scheme for 2023/24
|
|
By 30 Jan
2023
|
CFO/HR/Unions
|
Sharing overall
final budget package and staffing impacts (assuming publication on
1 Feb)
|
|
1 Feb
2023
|
Publication
|
Publication of
Final Budget proposals on the council’s web site (9 Feb
Policy & Resources agenda)
|
|
2 Feb
2023
|
Full
Council
|
Approval of the
Council Tax Reduction Scheme for 2023/24
|
|
9 Feb
2023
|
P&R
|
General Fund and
HRA Revenue & Capital Budget reports;
TBM month 9
report.
|
|
23 Feb
2023
|
Budget
Council
|
General Fund and
HRA Revenue & Capital Budget reports.
|
9.2
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.
9.3
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:
9.4
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.
9.5
In particular, the council will be engaging fully with the Sussex
Health & Care (NHS) with the intention of aligning the budget
processes of the two organisations as far as practicably possible.
As with the council, Sussex Health & Care is likely to remain
under severe financial pressure due to continually increasing
demands and winter pressures.
9.6
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.
9.7
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.
9.8
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.
9.9
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
|
09/01/23
|
|
Planning
|
Tourism,
Equalities, Communities & Culture Committee
|
12/01/23
|
|
Libraries
|
Tourism,
Equalities, Communities & Culture Committee
|
12/01/23
|
|
Seafront, Outdoor
Events and Venues
|
Tourism,
Equalities, Communities & Culture Committee
|
12/01/23
|
|
Environmental
Health and Trading Standards
|
Environment,
Transport & Sustainability Committee
|
17/01/23
|
|
City Parks and
City Clean
|
Environment,
Transport & Sustainability Committee
|
17/01/23
|
|
Parking and
Highways
|
Environment,
Transport & Sustainability Committee
|
17/01/23
|
|
Bereavement
Services
|
Environment,
Transport & Sustainability Committee
|
17/01/23
|
|
Private Sector
Housing – HMO Licensing
|
Housing
Committee
|
18/01/23
|
|
Housing Revenue
Account
|
Housing
Committee
|
18/01/23
|
|
Life Events
(excluding Bereavement Services)
|
Adult Social Care
& Public Health Committee
|
10/01/23
|
|
Adult Social Care
Non-residential care services
|
Adult Social Care
& Public Health Committee
|
10/01/23
|
|
Licensing and
Enforcement
|
Licensing
Committee
|
13/10/22
|
10
CONCLUSION
6
7
8
9
10.1
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 Autumn Statement announced resources for a multi-year
period including, additional resources for Adult Social Care, an
increase in allowable Council Tax increases, and an Adult Social
Care precept. These are not sufficient to address this
council’s predicted cost pressures resulting in the need to
identify substantial cost reductions and savings in 2023/24 and
over the Medium Term Financial Strategy.
11
FINANCIAL & OTHER IMPLICATIONS:
Financial Implications:
5
6
7
8
9
10
11.1
These are contained within the main body of the report.
Finance Officer
Consulted: James Hengeveld Date: 21/11/22
Legal Implications:
11.2
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.
11.3
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: Date: Elizabeth Culbert
Date:21/11/22
Equalities Implications:
11.4
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.
11.5
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.
11.6
All proposals with a potential equalities impact in 2023/24 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.
11.7
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:
11.8
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
implementing the Carbon Neutral Programme.
Any Other Significant
Implications:
Risk and Opportunity Management
Implications:
11.10 The level of
financial risk provisions, including the working balance and
reserves, will need to be reviewed for 2023/24 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 a suppressed
economy, and available resources. The level of any risk provisions
and balances will clearly need to strike a balance between putting
scarce resources to one side when there are growing pressures on
maintaining essential and statutory services.
11.11 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
2023/24
2.
Draft
Equality Impact Assessments for Draft Budget proposals