The Leader introduced the report and explained that it had been considered by the Cabinet Advisory Committees, Cabinet and Scrutiny Committee and a sub-group of Cabinet considered budget details and strategy regularly.

He thanked Cabinet, the Director of Resources, the Head of Finance and Procurement, Senior Officers and the finance team.  He acknowledged the thanks given to officers at Scrutiny Committee for the greater clarity and presentation of the financial reports.

The Leader referred to Appendix I and II which detailed how the Council Tax totals for the Borough had been calculated and he said it was proposed that the Swale precept for a Band D Property be £189.27, a 2.7% rise which equated to £4.95pa, a weekly rise of 9.5p.  He acknowledged that whilst this was a small amount, along with other increases in household spending, the overall Council Tax increase for Band D properties with an average Parish precept was over £60.  The Leader said that the £4.95 increase was written into the Medium-Term Plan agreed by Council in 2019 and he had honoured that decision.

The Leader spoke of the challenges faced by Central Government, highlighting rising inflation, fuel costs and pressure on wages to keep up.  He referred to Government borrowing during the Covid-19 pandemic and the expectations of improved health and social care financing.  The Leader said that it was therefore unlikely that lower tier Councils would receive generous funding in the immediate future and Councils would have to face up to the inflationary pressures.  He drew attention to paragraph 3.3 of Appendix III on page 56 of the report which made provision for inflationary costs on the Council’s contracts which would be reviewed and monitored.

Drawing attention to the Council’s reserves, the Leader said that Central Government anticipated the use of reserves in order to avoid impacting services.  He compared Swale’s favourable position to another Council in Kent that had to draw on £5million from reserves, needed to find £7million in service savings in the coming year and had to make significant increases in car park charges. 

The Leader said that Council income had remained static over time due mostly to the real term reduction in Central Government funding.  He highlighted that Councils had become dependent on business rate income which could be variable and he listed the decline in support Swale had received from Central Government from £3.9million in 2017 to £2million for 2022/23.  He warned it would fall further to £1.1million the following year.

The Leader said that Councils had previously been encouraged to supplement their income through property investments but now Government warned Councils only to invest for regenerative purposes which the Sittingbourne Town Centre was.  He said that Councils faced additional financial restraint due to the Covid-19 Pandemic and whilst Central Government helped financially through the height of the pandemic, it no longer offered assistance yet the costs continued in expenditure and income was reduced.

The Leader said the budget had to be balanced by law and £1.65million would be used from the Budget Contingency reserve fund to achieve this.  He warned that it was not proposed to do this every year but to achieve savings from services over and above those already made would be irresponsible.  The Leader said Councils needed greater clarity from Central Government about funding and what level of services were expected.  He added that the Budget Contingency reserve for this year was established and this did not require funding from the General Fund which remained at a sustainable level.

The Leader said that SBC were not a well-funded Council but dismissed the view that it had not been prudent on the revenue budget over the previous three years and in comparing the last budget report of the previous administration which referred to the need to use reserves to help smooth 2018-19 and 2019-20 said there was little difference between 2019 and 2022, other than the impact of underfunding.

Drawing attention to the savings requirement of £1.65million shown in Appendix III, the Leader highlighted the net expenditure on Environment and Leisure which had increased by £387k, largely due to a loss of car park income of £300k as a result of the Covid-19 Pandemic and this was not refundable to the Council.  There was also an increase of £533k in Corporate and Finance due to Pension and Minimum Revenue Provision costs that were previously covered by reserves.  The Leader said these extra costs had been covered by extensive efforts to produce savings as listed in Appendix III, which also showed staff salary savings and increases, and assumed a 2% rise in staff pay.

Turning to the Special Projects Fund which funded one-off spending that made improvements to Swale and helped aid recovery from the Covid-19 Pandemic, the Leader said that just under £3.2million had been allocated.  He said that £1million of business rate reserves had been allocated to an Improvements and Resilience fund, £250k had been allocated to a Sheppey Improvement Fund and £1.55million to the improvements to Master’s House.  A further £887k had been reserved for High Street Improvements in Sheerness, Faversham and Sittingbourne, for which work had already commenced.  The Leader highlighted the benefits to the community via small capital projects, grants to organisations and environmental initiatives and said that some of the projects were listed in the capital report for 2021/22.

The Leader acknowledged that it was Council tax payers money and that the administration had sought to give the public benefits to their community rather than keep savings for no purpose as the previous administration had.  He said that the one-off funds would be comprehensively reported on in due course and it was not intended to supplement these funds further in the next year.

The Leader spoke about the Capital programme and reserves.  He said that the Capital Programme underlined the wide range of improvements taking place, funded by a combination of internal and external funds, Section 106 Agreements, capital receipts, special projects, High Street funding and improvement and resilience.  The Leader said these would take time and resource to fully deliver and so the focus for the following year was on two projects, Swale House and Rainbow Homes. 

The Leader said that the Council had long established that the General Fund should remain stable at £1.5million minimum.  He said he was anxious to preserve it and it would not be called upon to meet the budget gap  The Leader said that the falling balance in the General Fund was principally due to transferring the 2020/21 underspend from the General Fund to a Covid Recovery Fund of £1.042million in case of extraordinary pressures in the current year due to the Covid-19 Pandemic.  He said the pressures had not materialised and he hoped to be able to return a substantial amount to the General Fund.  The Leader said that reserves had grown in recent years because of the wide range of business rate reserves allocated for growth projects and this money could not be used for anything else.

Finally, the Leader spoke about the challenging times for the public sector and wider economy.  He said that the Council’s budget was stretched with years of tight budgeting and limits to Central Government support, and the unexpected health crisis and whilst the budget was currently manageable, greater clarity about future funding and expectations of service delivery was needed.  The Leader proposed the recommendations.

Councillor Angela Harrison seconded the recommendations.

The Leader of the main opposition group thanked the Director of Resources, the Head of Finance and Procurement and the Finance Team.  He praised the layout of the report which gave a better understanding of reserves and said whilst he respected the Budget choices, he did not agree with them.

In accordance with Council Procedure Rule 19(5), a recorded vote was taken and voting was as follows:

For: Baldock, Bonney, S Clark, Darby, Davey, Henderson, Gibson, Gould, Harrison, Jackson, Knights, Ben J Martin, McCall, Nissanga, Palmer, Rowles, Saunders, P Stephen, S Stephen, Tatton, Thomas, Truelove, Valentine, Whelan, Winckless and Woodford. Total equals 26.

Against: Beart, Bowen, Dendor, Eakin, Fowle, A Hampshire, N Hampshire, Horton, Hunt, MacDonald, Marchington, Neal, Simmons, Whiting: Total equals 14.

Abstain: 0.

Resolved:

(1)  That Members note the Director of Resource’s opinion on the robustness of the budget estimates and the adequacy of reserves.

(2)  That Minute number 501/02/22 approved by the Cabinet on 9 February 2022 on the report on the Medium Term Financial Plan and the 2022/23 Revenue and Capital Budgets be approved.

(3)  That the resolutions contained in Appendix I be approved.

(4)  That in accordance with the proposals contained with SI 2014 No. 165 that a recorded vote be taken on the 2022/23 Budget and Council Tax.