Report by Director of Finance

Further to Minutes 39 and 53 of the Policy Committee meetings held on 15 December 2022 and 20 February 2023 respectively, the Director of Finance submitted a report on the Budget and Medium-Term Financial Strategy (MTFS) for the three years 2023/24 – 2025/26.  The report provided an update on the results of the budget consultation exercise as well as changes arising from the publication of the Provisional Local Government Finance Settlement and other changes that had arisen since the report to Policy Committee in December 2022. The following documents were attached to the report:

·       Appendix 1 – The Medium-Term Financial Strategy (MTFS) 2023/24 – 2025/26

·       Appendix 2 – Summary of the General Fund (GF) budget proposals 2023/24 – 2025/26

·       Appendix 3 – General Fund Revenue Budget by Service 2023/24 – 2025/26

·       Appendix 4 – Detailed General Fund Budget Changes 2023-24 to 2025-26

·       Appendix 5 – The Housing Revenue Account (HRA) budget proposals 2023/24 – 2025/26

·       Appendix 6 – The Dedicated Schools Budget proposals 2023/24 – 2025/26

·       Appendix 7 – The General Fund and HRA Capital Programmes 2023/24 – 2025/26

·       Appendix 8 – The Flexible Use of Capital Receipts Strategy 2023/24 – 2025/26

·       Appendix 9 – Fees and Charges proposals from April 2023

·       Appendix 10 – Equality Impact Assessment of the budget proposals

·       Appendix 11 – Summary of the Response to the Budget Consultation

·       Appendix 12 – Summary of the Results of the Residents Survey 2022

The report explained that the underpinning rationale of the Medium-Term Financial Strategy was to deliver a balanced and affordable 2023/24 budget and ensure that the Council’s finances were robust and sustainable over the medium term, and that in the longer term the Council’s finances were not reliant on the unsustainable use of one-off reserves or funding. The Strategy was informed by the Council’s Vision: “to ensure that Reading realises its potential – and that everyone who lives and works in Reading can share in the benefits of its success” and the Corporate Plan themes of Healthy Environment, Thriving Communities and Inclusive Economy.

The report set out the budget assumptions which included: Council Tax increases of 2.99% plus an Adult Social Care precept of 2.0% for the first two years of the MTFS (2023/24 to 2025/26) with increases of 1.99% and 1.0% respectively in 2025/26; delivery of £9.841m (£9.591m services and £0.250m corporate) of efficiencies and increased income across the period; a contingency provision over the three years (£4.1m 2023/24; £4.9m 2024/25; and £5.1m 2025/26) to mitigate possible slippage or non-achievement of higher risk savings and/or income targets over the period; a housing rent increase of 7.0% (Government Cap) in 2023/24, returning to a rent increase in line with approved policy of CPI + 1% in subsequent years; General Fund capital investment of £188.0m and Housing Revenue Account (HRA) capital investment of £151.3m over the period 2023/24 to 2025/26; and £3.580m of transformation funding (over the period 2023/24 to 2024/25) to support delivery of efficiency savings assumed within the MTFS, taking the total transformation funding to £21.729m across the whole life of the Delivery Fund.

The deficit on the Dedicated Schools Grant High Needs Block was anticipated to be £4.3m by 31^st March 2023. An updated deficit recovery plan would be presented to Schools Forum in March 2023.  The Government recognised that there was a national SEND funding crisis and in 2022/23 the Department of Education had launched a “Delivering Better Value” programme inviting 55 local authorities to take part.  Reading was one of the authorities invited to join the programme and work had started in February 2023.  Further details were set out in paragraphs 4.5 and 4.6 and in Appendix 6 of the report.

The preparation of the 2023/24 Budget and MTFS 2023/24 – 2025/26 had again been challenging due to the continuing uncertainty caused by the wide-ranging implications of inflation and the ‘cost of living’ crisis, Covid-19, the war in Ukraine, climate change, and, despite a multi-year Autumn Statement, yet another one-year Local Government funding settlement from Central Government.

The following motion was moved by Councillor Brock and seconded by Councillor Ennis and CARRIED:

Resolved -

That, taking due regard of the results of the budget consultation exercise (as outlined in Appendices 11 and 12 of the report), the 2023/24 General Fund and Housing Revenue Account budgets, Capital Programme and Medium-Term Financial Strategy as set out in Appendices 1-10 be approved, whilst noting the following:

(a)         the Council’s General Fund Budget Requirement of £164.411m for 2023/24 and an increase in the band D Council Tax for the Council of 2.99% plus an additional 2.00% Adult Social Care Precept, or £91.30 per annum, representing a band D Council Tax of £1,921.02 per annum, excluding precepts from Police and Fire, as set out in paragraph 4.3 to the report;

(b)    the proposed efficiency and invest to save savings of £3.810m together with additional income of £1.485m in 2023/24 required to achieve a balanced budget for that year as set out in Appendices 2 and 3 to the report;

(c)     the overall savings proposed within the MTFS of £9.841m (of which increases to income, fees and charges was £2.902m) and three-year growth changes to service budgets of £20.431m as set out in Appendices 3 and 4 to the report;

(d)    the budgeted net contribution to earmarked reserves totalling £6.128m, as set out in paragraph 3.25 of Appendix 1 to the report;

(e)      the Housing Revenue Account budget for 2023/24 of £49.229m as set out in Appendix 5 to the report and the average increase of 7.0% in social dwelling rents from April 2023;

(f)     the allocation of £93.765m Dedicated Schools Grant (DSG) as set out in Appendix 6 to the report;

(g)     the General Fund and Housing Revenue Account Capital Programmes totalling £188.045m and £151.304m respectively, as set out in Appendices 7a and 7b to the report;

(h)    the Strategy for the use of flexible capital receipts to deliver future transformation and ongoing savings as set out in Appendix 8 to the report;

(i)     the Fees and Charges set out in Appendix 9 of the report;

(j)       the Equalities Impact Assessment as set out in Appendix 10 to the report.

A recorded vote having been demanded, the voting was as follows:

For the motion: 32 

Councillors Ayub, Barnett-Ward, Brock, Challenger, Cross, Davies, C Dennis, G Dennis, Eden, Edwards, Emberson, Ennis, Gavin, Gittings, Griffith, Hacker, Hoskin, Keeping, Khan, Kitchingham, Lanzoni, Leng, Lovelock, McEwan, Moore, Mpofu-Coles, Page, Rowland, Terry, Thompson, Woodward and Yeo.

Against the motion: 10

Councillors Carnell, Cresswell, Keane, McElroy, McGonigle, Mitchell, Robinson, R Singh, White and Williams.