Agenda item

2021/22 Budget & Medium-Term Financial Strategy 2021/22 - 2023/24

This report provides an update on the results of the budget consultation exercise and asks the Committee to recommend to Council the Draft 2021/22 General Fund and Housing Revenue Account budgets, Draft Capital Programme and Medium Term Financial Strategy.

Minutes:

Further to Minute 65 of the meeting held on 14 December 2020, the Executive Director submitted a report providing an update on the results of the consultation on the Draft Budget and Medium Term Financial Strategy (MTFS) and asking the Committee to recommend to Council the Draft 2021/22 General Fund and Housing Revenue Account budgets, Draft Capital Programme and Medium Term Financial Strategy.  The following appendices were attached to the report:

 

·       Appendix 1 - Summary of General Fund Budget 2021-22 to 2023-24

·       Appendix 2 - General Fund Revenue Budget by Service 2021-22 to 2023-24

·       Appendix 3 - Detailed General Fund Budget Changes 2021-22 to 2023-24

·       Appendix 4 - Housing Revenue Account Budget & Reserves 2021-22 to 2023-24

·       Appendix 5 - General Fund and HRA Capital Programme 2021-22 to 2023-24

·       Appendix 6 - Flexible Capital Receipts Strategy

·       Appendix 7 - Fees and Charges

·       Appendix 8 - Equality Impact Assessment

·       Appendix 9 - Dedicated Schools Grant (DSG) Funding 2021-22

·       Appendix 10 - Budget Consultation

·       Appendix 11 - Residents Survey 2020

 

The report provided an update on the results of the budget consultation exercise, changes arising from the publication of the Local Government Finance Settlement as well as other changes that had arisen since the draft budget had been submitted to the meeting on 14 December 2020.  The Final Local Government Financial Settlement had been published on 4 February 2021 and initial review indicated that there had been no changes from the Provisional Settlement that affected Reading.

 

The report explained that the proposed MTFS was informed by and supported delivery of the Council’s Corporate Plan priorities including its commitment to address the climate change emergency.  The underpinning rationale of the MTFS was to deliver a balanced and affordable 2021/22 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 report noted that preparation of the Budget and MTFS had been particularly challenging due to uncertainty caused by the implications of the Covid-19 pandemic. Savings proposals of £28.0m had been identified to mitigate against budget pressures, but it had not been possible at this stage to completely close the budget gap in 2022/23 and 2023/24 on a recurring and permanent basis. The 2021/22 budget had been balanced by utilising £2.776m of one-off earmarked reserves, but continued use of earmarked reserves to balance the budget was not sustainable so additional savings of £3.649m would need to be identified as part of the 2022/23 budget setting process.  The MTFS also assumed the use of £9.906m of the Direct Revenue Financing of Capital Earmarked Reserve in the current financial year (2020/21) to reduce the ongoing Minimum Revenue Provision (MRP) charge to the revenue budget. This reserve had been set aside to mitigate against capital receipts not being realised and available for use as previously expected.  Other budget assumptions including on council tax, efficiencies and increased income, contingency provision and government funding were set out in the report.

 

The report explained that an in-year underspend on the General Fund Revenue Budget of circa £4.8m in 2020/21 was currently forecast. This was primarily due to the Corporate Contingency budget not being required due to Covid grants from Central Government mitigating against non-delivery of savings in-year. It was assumed that any budget surplus would be transferred into earmarked reserves to offset the budgeted drawdown from reserves referred to above.

 

The report noted that the Strategy built on previous work to stabilise the Council’s financial position and build reserves back to more robust levels.  This had enabled investment in core infrastructure to drive efficiency improvements, facilitate service redesign and thereby manage pressures within demand-led services. This invest to save approach provided for a robust financial position going forward and enabled services to continue to be delivered. The Budget Strategy relied on significant service transformation to drive increased efficiency savings and income generation, but service cuts were not required.

 

Items 93-95 were considered together for recommendation to the Council meeting on 23 February 2021.

 

Resolved –

 

          That, taking due regard of the results of the budget consultation exercise and resident’s survey (as outlined in Section 3 and 4, and set out in more detail in Appendices 10 and 11), the Draft 2021/22 General Fund and Housing Revenue Account budgets, Draft Capital Programme and Medium Term Financial Strategy as set out in Appendices 1-9 be endorsed and recommended to the Council meeting on 23 February 2021, noting the following:

 

a)       the Council’s General Fund Budget Requirement of £146.166m for 2021/22 and an increase in the band D Council Tax for the Council of 1.99% plus an additional 3.00% Adult Social Care Precept, or £84.44 per annum, representing a band D Council Tax of £1,776.60 per annum, excluding precepts from Police and Fire, as set out in paragraph 9.2;

 

b)       the proposed utilisation of one-off grant funding in 2021/22 to award £70 to residents in receipt of Local Council Tax Support to help mitigate the increase in Council Tax in the current circumstances as set out in paragraph 5.3;

 

c)       the proposed efficiency and invest to save savings of £13.7m together with additional income of £1.4m in 2021/22 required to achieve a balanced budget for that year as set out in Appendices 2 and 3;

 

d)       the overall savings proposed within the MTFS of £28.0m (of which increases to income, fees and charges is £5.4m) and three-year growth changes to service budgets of £19.5m as set out in Appendices 2 and 3;

 

e)       the budgeted draw from earmarked reserves totalling £2.776m to balance the 2021/22 budget (as set out in paragraph 5.18);

 

f)        the Housing Revenue Account budget for 2021/22 of £43.647m as set out in Appendix 4 and the average increase of 1.5% in social dwelling rents from April 2021 giving a revised weekly average social rent of £104.11;

 

g)       the General Fund and Housing Revenue Account Capital Programmes as set out in Appendices 5a and 5b;

 

h)       the Strategy for the use of flexible capital receipts to deliver future transformation and ongoing savings as set out in Appendix 6;

 

i)        the Fees and Charges set out in Appendix 7 of the report;

 

j)        the Equalities Impact Assessment as set out in Appendix 8;

 

k)       the allocation of Dedicated Schools Grant (DSG) as set out in Appendix 9.

Supporting documents: