Agenda item

The Executive Member for Financial Sustainability introduced the report which followed on from the paper presented to the Executive last month. This set the scene for the budget and the revised Medium Term Financial Plan for 2023 to 2027 and detailed the events which impacted the Council’s finances. He said that various assumptions were being made in the preparation of the budget at this stage, to include the raising of Council Tax by the allowed maximum of £5 (on a Band D property) without a referendum.

The Executive Member for Financial Sustainability said that another year of receiving the New Homes Bonus was possible as Government funding was again being rolled forward and that the Council’s Transformation Project, which was key for delivering the savings required  was well underway. He said that the re-phasing of the capital programme and revenue impacts of capital financing had been agreed to reduce savings requirements.

The Chairman asked what the Executive’s position would be if the Government’s Autumn Statement relaxed an Authority’s ability to raise Council Tax by more than the current maximum of £5 as rumoured. The Executive Member for Financial Sustainability said that he was hesitant to comment as this was only a rumour, but that there would still be caution in raising Council Tax significantly above the current maximum if this did transpire.   

Councillor Huggins asked for the Executive’s position regarding the rolled forward New Homes Bonus being considered as a windfall and not a continuous prop to budgets. The Executive Member for Financial Sustainability said that he would not describe the New Homes Bonus as a windfall, but that it was certainly helpful. He said that as per the report, £400,000 of potential bonus had been put aside for the refreshing of the District Plan, with £400,000 put into reserves for future funding pressures.

Councillor Crofton asked for further information regarding the delay in the Hertford Theatre Project.  The Executive Member for Financial Sustainability said that the original business case did expect the Council to be receiving an income from the Theatre earlier than now expected, but as with any major project delays did occur. He said that the delay to the project was due to several factors, with tenders going back out to the market on three occasions to get a contractor on site.

Councillor Crofton said that it was disappointing that there was no information within the report relating to the Council’s investment portfolio, namely a profit and loss spreadsheet for Millstream Property Investments Ltd (Millstream). The Head of Strategic Finance and Property said that as per the Council’s Constitution, Millstream’s Business Plan went to Council each year for approval. He said that the Audit and Governance Committee’s remit was to carry out audit function, but as Millstream was a separate private company the Council had no involvement in its audit function (bar some input into its external auditors).

The Head of Strategic Finance and Property said that ‘investment property’ had a particular definition within the Council’s accounts, with some properties therefore not classified as such, i.e.  Jackson Square Car Park - which was classed as an operational asset. He said that should the Committee require detailed information regarding every profit-making property he would have to consult with the Property Team. 

Councillor Crofton said that Millstream should be accountable to the Audit and Governance Committee as it was part of East Herts Council, and that the information presented to Council was not adequate. The Head of Strategic Finance and Property said that the report which goes to Council included a Part 2 appendix.He reiterated that Millstream was a private company, of which the Council was a shareholder. He said that he would need to take advice from the Monitoring Officer to check the mechanics relating to Councillor Crofton’s request and would then come back to the Committee.  

Councillor Crofton referred to paragraph 1.14 of the report and asked for further clarification regarding the controls to the capital programme. The Executive Member for Financial Sustainability said that the Council had an ambitious capital programme which had tied up capital reserves. He said that borrowing was planned carefully, and that nothing else could be added to the programme. He added that re-phasing may be a possibility, but there was no need to borrow further beyond what was agreed at Council in March.

The Chairman referred to page 131 of the report which detailed that budget proposals should be based on contract inflation up to 4% and asked if this was based on an average of 4% for the life of the Medium Term Financial Plan. The Head of Strategic Finance and Property said that the 4% applied to the 2023/2024 period, with 4% for the provision of the national pay award and 4% for contract inflation. He said that as the Medium Term Financial Plan covered five years it was assumed that inflation would fall back. He said that the inflation of 9% on the refuse contract was made up of a basket of items, the largest of which were increases to private sector pay and the cost of diesel.  

The Chairman referred to page 135 of the report which related to the additional funding for the waste contract and asked for clarification on where these funds were coming from. The Head of Strategic Finance and Property said that the proposed changes to the weekly food collection would save money, but that there were lots of unknowns and risks around the contract. He reassured Members however that there was flexibility available to enable tweaks to the contract should issues arise.  

The Chairman referred to page 136 of the report and asked if the Council would consider offering more than the current 50% work from home scheme to employees under the Transforming East Herts Programme. The Head of Strategic Finance and Property said that to do so would enable the Council to rent out further office space, or possibly move elsewhere but this did have consequences both in terms of creativity, interaction with colleagues and staff preferences. 

The Chairman referred to page 136 of the report and asked how likely it was that the significant sources of additional income noted would be received. The Head of Strategic Finance and Property said that the increase to planning fees were highly likely. He said that New Burdens Funding will be received as per the New Burdens Agreement, but much will depend on how this funding is calculated and the attitude to garden waste fees. 

The Head of Strategic Finance and Property asked if the Committee felt they would benefit from a Hertfordshire Waste Partnership representative speaking at a future meeting on waste funding models. Members agreed that this would be beneficial.

The Chairman referred to page 138 of the report and asked for further detail on the General Fund. The Head of Strategic Finance and Property said that at this stage reserves were being used to balance the budget, which were low compared to other councils. He said that borrowing was being kept back for any unforeseen events, using cheaper short-term borrowing rates as per advice from the Treasury. 

The Chairman referred to page 144 of the report and asked if the £800,000 of savings required related to the current year. The Executive Member for Financial Sustainability said that that this was the case, with work done so far showing that much of these savings could be achieved from structural changes and further efficiencies, details of which will follow later in the cycle. He said that in relation to future years all areas of Council spending would need to be closely looked at.

RESOLVED – that the Budget 2023/2024 and Medium Term Financial Plan 2023 – 2028 Preparation Report and appendices be noted and received.