The Leader and Cabinet Member for Finance introduced the report which set out the draft 2021/22 revenue and capital budgets and the draft Medium Term Financial Plan (MTFP).  He said the plan took the Council through the current Covid-19 pandemic and hopefully through the aftermath of its impact.  The Leader and Cabinet Member for Finance welcomed the Government’s decision to postpone the Fair Funding Review and drew attention to the significant financial support Government had provided to achieve a balance in the current 2020/21 budget, outlined in paragraph 2.2 on page 6 of the report and detailed in Item 5 on the Agenda.

The Leader and Cabinet Member for Finance spoke about the Chancellor of the Exchequer’s announcements made in November 2020, which had relieved some of the expected financial pressures. These were detailed in the bullet points at 2.4 on page 7 of the report – grant funding to cover Covid-19 related expenditure costs for 2021/21 for Quarter 1 2021/22, further reimbursement of losses on Fees and Charges for Quarter 1 2021/22, Council Tax support for poorer households and maintenance of the New Homes Bonus.

Referring to the use of Reserves, the Leader and Cabinet Member for Finance said that this could not be used in normal circumstances to balance the budget, but unused pools of Business Rates, made available to the Council for growth funding, could and would be used for the next two years for recovery and resilience purposes.  He said this was in line with the Council’s Corporate and Recovery Plans, and Affordable Housing which was a coalition priority.

The Leader and Cabinet Member for Finance said that long-term financial sustainability required a small increase in Council Tax of £4.95 per annum, in line with the three year MTFP, agreed by the Council in February 2019.

The Leader and Cabinet Member for Finance said that the Chancellor’s spending review announced a public sector freeze, but he intended SBC’s staff to receive a settlement to reflect the contribution made during this difficult civic year.

The Leader and Cabinet Member for Finance drew attention to the 2021/22 MTFP on page 13 of the report and highlighted the serious financial challenges faced by the Council in the current climate, as the impacts of Covid-19 increased expenditure and reduced income.  He said that the priorities of the coalition needed to be focused.

The Leader and Cabinet Member for Finance said that over £3.2million was required to balance the budget and he drew attention to the table at 3.5 on page 11 of the report which set out  the alternative actions of offsetting pressure of £1,137,050 on the revenue budget.  He said any support from the Government, and reserves, would be used to achieve a balanced budget.  The Leader and Cabinet Member for Finance said there was no intention to make cuts in staff numbers or services, as SBC already had less resources than many other Councils, but the use of reserves was an emergency measure in the current crisis.  He explained that the report would be considered by the Scrutiny Committee before coming back to Cabinet.

The Leader and Cabinet Member for Finance said that the Section 151 Officer had Section 114 powers when a Council could not maintain or achieve a balanced budget.  He highlighted paragraph 2.20, and said there was no possibility of this happening in Swale and that astute financial management had left the Council in a better position than many other Councils, partly because the Council had not relied on investment in property as a source of new income.

In response to a question about staff pay from the Deputy Leader and Cabinet Member for Planning, the Leader and Cabinet Member for Finance said the intention was to agree a 2% pay rise for staff, subject to negotiations with union representatives.

Recommended:

(1)  That the draft 2020/21 revenue and capital budgets be endorsed.

(2)  That the Medium Term Financial Plan be endorsed.