Medium Term Financial Plan and 2021/22 Budget
- Meeting of Cabinet, Wednesday, 10 February 2021 7.00 pm (Item 447.)
- View the background to item 447.
The Leader and Cabinet Member for Finance introduced the report which set out the council’s budget proposals for 2021/22, the Medium Term Financial Plan (MTFP) and the Capital Strategy. He updated Members on the Government support received since December 2020, as advised at the Scrutiny Committee on 20 January 2021.
Referring to the table at paragraph 2.2 on page 6 of the report, the Leader and Cabinet Member for Finance said that the settlement figure of £1,470,472 included Tranche 5 funding, a higher level of New Homes Bonus than expected and an unexpected new grant for lower tier Councils. He said that a further grant of £198k to meet the reduced costs of Council Tax income was also expected. He added that the settlement figure was over 50% greater than planned for, and this was a great relief. The Leader and Cabinet Member for Finance said that grants awarded were needs-based, SBC had high needs and the grants received had reduced the levels of savings required and demands on reserves to achieve a balanced budget for 2021/22. The call on reserves had now reduced from over £1million to £662k. The Leader and Cabinet Member for Finance said that it was not sustainable to balance a budget with reserves but in the current Covid-19 pandemic this was necessary.
The Leader and Cabinet Member for Finance warned of future financial challenges but said that in recognition of the hard work by staff, a 2% pay increase had been agreed by the union and would be implemented in the next financial year.
The Leader and Cabinet Member for Finance drew attention to the £4.95 per annum increase in Council Tax for a Band D property, taking the Swale precept to £184.32 per year, excluding Parish precepts. He reminded Members that SBC’s precept was only part of the charge and said that Kent County Council’s precept would increase by £67.50, the Police service by £15 and Kent Fire and Rescue by £1.52, for a Band D property, resulting in an overall rise of £88.98 (4.91%) per annum, excluding Parish precepts.
In drawing attention to Appendix II, the Leader and Cabinet Member for Finance explained that the Budget Variations had been report to Cabinet and Scrutiny Committee and would be considered at the next Full Council meeting on 24 February 2021.
The Leader and Cabinet Member for Finance referred to paragraphs 2.9 and 2.10 which explained how CIPFA and Central Government discouraged borrowing for income generation purposes. He said that many Councils whose budgets had depended on declining property investments now found themselves in a difficult position. He referred to borrowing from the Public Works Loan Board (PWLB) and said that future capital borrowing might include PWLB loans and internal borrowing. The Leader and Cabinet Member for Finance 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 paragraph 2.14 on page 9 of the report, the Leader and Cabinet Member for Finance spoke about the investment in Swale Rainbow Homes Ltd and 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 significantly in the future. The Leader and Cabinet Member for Finance said that £3million was included in the Capital Programme for Swale House refurbishment but this figure was provisional. A report would be presented to a future Cabinet meeting, as the future use of Swale House, the level of savings from adaptations, the likely market for letting accommodation and capital investment priorities of the Council needed to be considered.
Finally, the Leader and Cabinet Member for Finance said that borrowing had an impact on any revenue budget and investment in any capital projects needed a return. He proposed the recommendations 1 to 7 as set out in the report which were seconded by the Deputy Leader and Cabinet Member for Planning.
A Member drew attention that the Lower Medway Internal Drainage Board precept in the table in paragraph 3.3 on page 10 should be 3.6%, not 2%.
(1) That the 2021/22 Revenue Budget proposals be approved.
(2) That the proposed Council Tax Band D increase of £184.32 for 2021/22 be approved.
(3) That the Medium Term Financial Plan be noted.
(4) That the Capital Strategy be approved.
(5) That the Capital Programme proposals be approved.
(6) That the additional amount of Council Tax for Parish Precepts be noted.
(7) That the Minimum Revenue Provision Statement as set out in Appendix VIII be approved.