Agenda item

2022/23 Budget & Medium-Term Financial Strategy 2022/23 - 2024/25

Report by Director of Finance

Minutes:

Further to Minutes 55 and 73 of the Policy Committee meetings held on 13 December 2021 and 14 February 2022 respectively, the Director of Finance submitted a report on the Budget and Medium Term Financial Strategy (MTFS) for the three years 2022/23 – 2024/25.  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 2021.

The report stated that the Department for Levelling Up, Housing and Communities (DLUHC) had published the Final Local Government Financial Settlement on 7 February 2022, which included an announcement on the allocations in respect of Public Health Grant. The allocation for Reading was £10.316m, an increase of £0.282m over the 2021/22 allocation. As the grant was ringfenced and any increase/decrease to the Council’s grant allocation was offset by a corresponding increase/decrease in expenditure, the MTFS assumed a nil impact on the budget gap.  Initial review indicated that there were no other impacts from the Final Settlement for Reading.

The underpinning rationale of the Medium-Term Financial Strategy was to deliver a balanced and affordable 2022/23 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”, as well as its Corporate Plan themes:

§  Healthy Environment;

§  Thriving Communities; and

§  Inclusive Economy.

The preparation of the 2022/23 Budget and MTFS 2022/23 – 2024/25 had again been challenging due to the continuing uncertainty caused by the wide-ranging implications of the Covid-19 pandemic and, despite a multi-year Spending Review announcement, yet another one-year Local Government funding settlement from Central Government.  The budget assumptions included:

a)  Council Tax increases of 1.99% plus an Adult Social Care precept of 1.0% for all three years of the MTFS (2022/23 to 2024/25);

b)  Delivery of £19.940m (£19.690m services and £0.250m corporate) of efficiencies and increased income across the period;

c)  A contingency provision over the three years (£3.6m 2022/23; £4.8m 2023/24; and £6.3m 2024/25) to mitigate possible slippage or non-achievement of higher risk savings and/or income targets over the period;

d)  A housing rent increase of 3.1% (September 2021 CPI only) in 2022/23, returning to a rent increase in line with approved policy of CPI + 1% in subsequent years;

e)  General Fund capital investment of £171m and Housing Revenue Account (HRA) capital investment of £140m over the period 2022/23 to 2024/25; and

f)   £5.706m of transformation funding (over the period 2022/23 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 report had been updated from the version presented to Policy Committee on 14 February 2022, to reflect the Public Health Grant allocations announced as part of the Final Local Government Finance Settlement and the latest interest rate forecasts following the increase of the Bank Rate to 0.50%.

A motion was moved by Councillor Brock and seconded by Councillor Ennis and CARRIED as set out in the resolution below.

The following amendment was moved by Councillor White and seconded by Councillor McElroy and LOST:

‘In the recommendation relating to 2022/23 Budget & Medium Term Financial Strategy to 2025 (Agenda item 8), insert “subject to an additional recommendation (k) below” after the words “…the 2022/23 General Fund and Housing Revenue Account budgets, Capital Programme and Medium Term Financial Strategy as set out in Appendices 1-10 be approved, and…”

Add a new Recommendation (k) as follows:

This Council notes:

      At least 6999 households in Reading live in fuel poverty. The Resolution Foundation estimates that this could triple without appropriate intervention

      Winter Watch is one of the council’s initiatives to tackle fuel poverty. It has a budget of £50,000. This pays for a worker and £10,000 for very low-cost energy efficiency measures

      Unfortunately this is not enough to make a dent tackling fuel poverty across the town.

This Council resolves:

      To increase the Winter Watch budget to £150,000, for one year, so more can be done to tackle fuel poverty especially the installation of higher cost home energy conservation measures such as solid wall insulation.

Make any consequential amendments to the revenue and capital budgets arising from the above amendment.”’

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

For the motion: 6    Councillors McElroy, McGonigle, O’Connell, White, Whitham and J Williams.

Against the motion: 34

Councillors David Absolom, Debs Absolom, Ayub, Ballsdon, Barnett-Ward, Brock, Carnell, Challenger, Davies, Eden, Emberson, Ennis, Gittings, Hacker, Hoskin, Khan, Leng, Manghnani, McEwan, Mitchell, Mpofu-Coles, Page, Pearce, Robinson, Rowland, Rynn, R Singh, Skeats, Sokale, Stanford-Beale, Stevens, Terry, R Williams and Woodward.

The following amendment was moved by Councillor O’Connell and seconded by Councillor McGonigle and LOST:

‘In the recommendation relating to 2022/23 Budget & Medium Term Financial Strategy to 2025 (Agenda item 8), insert “subject to an additional recommendation (k) below” after the words “…the 2022/23 General Fund and Housing Revenue Account budgets, Capital Programme and Medium Term Financial Strategy as set out in Appendices 1-10 be approved, and…”

Add a new Recommendation (k) as follows:

“In view of the Climate Emergency this council resolves to increase the spending on tackling this emergency.

In relation to paragraph 7.6 of the report, amend the following bullet point:

·       £200,000 for tree planting including a new bowser and towing vehicle in 2022/23 and further annual funds of £100,000 for 2023/24 and 2024/25.

Make any consequential amendments to the revenue and capital budgets arising from the above amendment.”’

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

For the motion: 6    Councillors McElroy, McGonigle, O’Connell, White, Whitham and J Williams.

Against the motion: 33

Councillors David Absolom, Debs Absolom, Ayub, Barnett-Ward, Brock, Carnell, Challenger, Davies, Eden, Emberson, Ennis, Gittings, Hacker, Hoskin, Khan, Leng, Manghnani, McEwan, Mitchell, Mpofu-Coles, Page, Pearce, Robinson, Rowland, Rynn, R Singh, Skeats, Sokale, Stanford-Beale, Stevens, Terry, R Williams and Woodward.

Resolved -

That, taking due regard of the results of the budget consultation exercise (as outlined in Appendices 11 and 12 of the report), the 2022/23 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 £149.990m for 2022/23 and an increase in the band D Council Tax for the Council of 1.99% plus an additional 1.00% Adult Social Care Precept, or £84.44 per annum, representing a band D Council Tax of £1,829.72 per annum, excluding precepts from Police and Fire, as set out in paragraph 4.3 of the report;

(b)      the efficiency and invest to save savings of £6.471m together with additional income of £1.682m in 2022/23 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 £19.940m (of which increases to income, fees and charges would be £3.853m) and three-year growth changes to service budgets of £25.186m as set out in Appendices 3 and 4 to the report;

(d)      the budgeted contribution to earmarked reserves totalling £0.695m, as set out in paragraph 3.25 of Appendix 1 to the report;

(e)      the Housing Revenue Account budget for 2022/23 of £46.033m as set out in Appendix 5 to the report and the average increase of 3.1% in social dwelling rents from April 2022;

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

(g)      the General Fund and Housing Revenue Account Capital Programmes 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 changes to 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: 25 

Councillors David Absolom, Debs Absolom, Ayub, Barnett-Ward, Brock, Challenger, Davies, Eden, Emberson, Ennis, Gittings, Hacker, Hoskin, Khan, Leng, McEwan, Mpofu-Coles, Page, Pearce, Rowland, Sokale, Stevens, Terry, R Williams and Woodward.

Against the motion: 15

Councillors Ballsdon, Carnell, Manghnani, McElroy, McGonigle, Mitchell, O’Connell, Robinson, Rynn, R Singh, Skeats, Stanford-Beale, White, Whitham and J Williams.

Supporting documents: