Budget and Council Tax for 2021/22
The Leader introduced the report by explaining that it had already been agreed by Cabinet on a number of occasions and had been thoroughly examined by the Scrutiny Committee. He said that the financial planning of the Council had been overwhelmed by the Covid-19 pandemic and he highlighted its impact on Council finances and services as well as on the local communities and local economy.
The Leader referred to the impact that Government’s decisions had on Swale, drawing attention to the high level of borrowing to finance the furlough scheme as well as business grants, community hub funding, rough sleeper initiatives, winter grants and support for local government. He warned of the financial consequences in the future that the high levels of borrowing to fight the disease would have, including mass and repeat vaccinations and he also highlighted the need for additional funding in NHS and mental health care.
Referring to the restrictions on entertainment and hospitality, the Leader said he hoped to soon see demand for Swale’s local hospitality and entertainment.
The Leader reminded Members that the Chancellor of the Exchequer would be introducing his budget on 3 March 2021 and he hoped he would not introduce premature measures to start paying off the debt before the economy had time to grow again.
The Leader explained that many local Councils faced the prospect of issuing Section 114 Notices, but SBC were not in that position and had managed its way through the current financial year through good management and financial backing. He referred to the estimated £4million gap (approx. 20% on top of SBC’s budget) had said that approximately the same amount of Government funding had been received.
Turning to the 2021/22 budget, the Leader said that Government had provided over 50% more than the £1m anticipated, and the call on reserves was therefore smaller than predicated, at £662k. He stressed that the use of reserves was not a long-term solution, but the current situation was extraordinary and the only alternative would be serious staff reductions or a freeze on staff pay, neither of which were palatable. The Leader said that a 2% pay award for staff had instead been agreed, as indicated in the Medium-Term Financial Plan, at a cost of £263k. He said that staff reductions or a pay freeze would have been a poor way of acknowledging the outstanding contribution staff had made in the current crisis.
The Leader warned that whilst, with support from Government, a balanced budget could be presented, further future challenges might emerge for Local Government which would need monitoring by Government. He said whilst Government had met a large share of the costs of the Covid-19 pandemic, core funding over the last decade had not kept pace with demand and need, and Government needed to consider the role of local government, the capacity for devolution and the role of districts in local economic growth. He said transparency on the future funding of Councils, whilst understandably delayed, was needed in the near future.
The Leader explained that the Council tax rise for Swale’s part of the precept of £4.95 pa for a Band D property took the annual cost to £184.32, a rise of 9p per week and a weekly cost in Council Tax of £3.54 for Swale services. He explained that Swale’s precept was only a small part of the total charge with KCC raising their charge by £67.50, Police and Crime Commissioner by £15 and Kent Fire and Rescue by £1.53, resulting in an overall Council Tax increase of £88.98 per year, or 4.91%. The Leader said that three-quarters of Council Tax income went to KCC and some residents had the additional costs of Parish precepts as set out on page 11 on Appendix 1.
The Leader said that whilst his intention was for the current robust reserves to remain robust, some reserves might be needed to help support economic and social resilience for the local community. He highlighted the table on page 51of the report which set out the funding reserves, and drew particular attention to:
· Special Projects Fund, supported by the Business Volatility Fund;
· Town Centre Fund, drawn from Economic Growth funding which was set aside by the previous administration to assist KCC with a road design project;
· Economic Development Fund of £1.1million;
· Improvement and Resilience fund of £1mllion to make one-off public improvements for the sake of Swale’s community; and
· Housing and Commercial Growth fund of £1.7million to be used to support housing strategies including the setting up of the Rainbow Housing Company.
The Leader said that all funds were made available to the Council to improve the local community but had previously been dormant.
The Leader drew Members’ attention to Appendix III on page 18 of the report which set out the Council’s Capital Strategy which was considered by Cabinet on 10 February 2021. He explained that the Chartered Institute of Public Financing and Accountancy (CIPFA) and the Government discouraged borrowing for income generation purposes and, unlike SBC, some other Councils were in difficulty because their budgets were too dependent on diminishing income from property investments. The Leader said that the previous administration had invested in the Sittingbourne Town Centre (STC) project and Members of the current administration were seriously opposed to the project which they considered was a commercial risk. He said that nobody could have anticipated the current Covid-19 pandemic and he hoped for a major increase in demand for the leisure facilities provided at Bourne Place, Sittingbourne.
Referring to the investment in Swale Rainbow Homes Ltd, the Leader said that the initial borrowing for the project could be financed by predictable and appropriate rental income whilst the property asset value would be expected to increase in the future.
The Leader spoke about the refurbishment of Swale House and said that the £3million budget could increase or decrease once Cabinet considered its use in the future, the real level of savings from adaptions, the likely future market for lettings to business and the priorities for capital investment.
The Leader stressed that borrowing was not an easy option, but the Council were borrowing to invest in affordable housing because that was the highest priority and was financially sustainable. He said that whilst internal borrowing was the most cost-effective, borrowing from the Public Works Loan Board was becoming more reasonably accessible and borrowing from a mixed source was possible in the future.
The 2021/22 Medium Term Financial Plan (MTFP), and the departmental budget variables was set out in Appendix III on page 27 of the report, and had been considered by Cabinet and Scrutiny Committee. The Leader said the overall strategy had been discussed frequently by a Cabinet sub-group and with the inception of Cabinet Advisory Committees and then a full Committee system, he anticipated all Members having a future greater say in budget strategy.
In considering the MTFP for 2021/22, the Leader said that a combination of Tranche 5 Covid-19 pandemic funding, the unexpected Lower Tier Services Grant and the grant for Council Tax losses, had reduced the initial funding gap of £3million by £1.377million and along with the additional £276k above expected grant from New Homes Bonus, and a small increase in revenue support, the Council were in a much better position than expected. He added that other resisted pressures on expenditure and cost savings leaving a lower demand were already reported elsewhere.
Finally, the Leader said that the future outlook to 2024 was demanding and uncertain but SBC was in a much better place than many other Councils. He thanked the Chief Financial Officer, the Financial Services Manager and their team.
In proposing the recommendations as set out in the report, the Leader proposed an additional recommendation. He said that KCC had made a £6million allocation of one-off Covid-19 pandemic emergency grant funding to fund Council Tax Hardship Relief Support and this would be used to reduce the 2020/2021 Council Tax bill for all existing Council Tax Reduction Scheme (CTRS) working age households by a maximum of £50 or the total Council Tax liability if this is lower than £50. As a result, he proposed the following recommendation:
“That the Council’s Council Tax Reduction Scheme be amended to reduce the Council Tax bill for CTRS working age households by a maximum of £50 or the total Council Tax liability if this is lower than £50”.
In seconding the recommendations The Deputy Cabinet Member for Finance reserved his right to speak.
In response, the Leader of the opposition thanked the Leader for his detailed analysis. He paid tribute to the Chairman and members of the Scrutiny Committee for the vigorous examination of the report and said that Scrutiny and the Policy and Performance Officer were a fundamental part of Local Government. He sent his good wishes to the Policy and Performance Officer who recently retired. The Leader of the opposition said that budgets were all about choices and he did not agree with all of the choices or the priorities in the budget. He said there were too many priorities and he could not support all five recommendations, although he had confidence in the Section 151’s assessment of the overall financial position. The Leader of the opposition referred to the Leader’s acknowledgement of Government support through the Covid-19 pandemic, and was pleased that KCC had made the additional £50 available as outlined in Recommendation (5).
The Deputy Cabinet Member for Finance thanked the Finance Team.
In accordance with SI 2014 No. 165, a recorded vote was taken and voting on Recommendation (1) was as follows:
For: Baldock, Beart, Bonney, Bowen, Carnell, R Clark, Darby, Davey, Dendor, Fowle, Gibson, Gould, A Hampshire, N Hampshire, Harrison, Horton, Hunt, Ingleton, Jackson, Jayes, Knights, MacDonald, Marchington, Ben A Martin, Ben J Martin, McCall, Neal, Palmer, Perkin, Pugh, Saunders, Simmons, P Stephen, S Stephen, Thomas, Truelove, Valentine, Whelan, Whiting, Winckless and Woodford. Total equals: 41
For: Baldock, Bonney, Carnell, Darby, Davey, Gibson, Gould, Harrison, Jackson, Jayes, Knights, Ben A Martin, Ben J Martin, McCall, Palmer, Perkin, Rowles, Saunders, P Stephen, S Stephen, Thomas, Truelove, Valentine, Whelan, Winckless and Woodford. Total equals 26.
Against: Beart, Bowen, R Clark, Dendor, Fowle, A Hampshire, N Hampshire, Horton, Hunt, Ingleton, MacDonald, Marchington, Neal, Pugh, Simmons, Whiting: Total equals 16.
In accordance with SI 2014 No. 165, a recorded vote was taken and voting on Recommendation (5) was as follows:
For: Baldock, Beart, Bonney, Bowen, Carnell, R Clark, Darby, Davey, Dendor, Fowle, Gibson, Gould, A Hampshire, N Hampshire, Harrison, Horton, Hunt, Ingleton, Jackson, Jayes, Knights, MacDonald, Marchington, Ben A Martin, Ben J Martin, McCall, Neal, Palmer, Perkin, Pugh, Rowles, Saunders, Simmons, P Stephen, S Stephen, Thomas, Truelove, Valentine, Whelan, Whiting, Winckless and Woodford. Total equals: 42.
(1) That Members note the Chief Finance Officer’s opinion on the robustness of the budget estimates and the adequacy of reserves.
(2) That Minute Number 447/02/21 approved by the Cabinet on 10 February 2021 on the report on the Medium-term Financial Plan and the 2021/22 Revenue and Capital Budgets be approved.
(3) That the resolutions contained in Appendix I be approved.
(4) That in accordance with the proposals contained within SI 2014 no. 165 that a recorded vote be taken on the 2021/22 Budget and Council Tax.
(5) That the Council’s Council Tax Reduction Scheme be amended to reduce the Council Tax bill for CTRS working age households by a maximum of £50 or the total Council Tax liability if this is lower than £50.