Agenda item

Budget 2022/23 and Medium Term Financial Plan 2022-25

Report to follow.

Minutes:

The Executive Member for Financial Sustainability presented the recommendations in the Budget 2022/23 and Medium Term Financial Plan 2022-25 report. Councillor Williamson ran through the key highlights of the report as follows:

· Budgets have been set around an increasingly challenging background, with diminishing funding from government and many uncertainties about future funding, limited means by which the Council can now raise its own revenue, and more recently the position has been exacerbated by the higher costs and reduced income brought about by Covid.

· The Financial Sustainability Strategy that focused on income from commercial property development was voided after the Treasury announcement in November 2020 which effectively stopped access to the borrowing that would have been required.

· Within the 2022 planned savings, areas where the council could improve its income position were looked at, including £444k for increasing car parking revenue through a general uplift in tariffs, and introducing charges for evenings and Sundays.

· For a period of several years this Council successively either frozen, reduced or introduced only limited increases. The Government have expected local authorities to raise their own funds so need to increase Council Tax by the maximum allowed (without a referendum), which was £5 per year on a Band D property.

· Despite these plans, still not enough to close the gap in the budget. The Leadership Team were able to identify a further £238k of operational savings, making a total reduction in internal operational costs of £1m across this last year and the next. However, this still leaves a gap of £481k.

Councillor Williamson ran through the main savings proposals:

· The Fees and Charges Policy seeks to reclaim the full cost of provision where a service is non-statutory. Residents Parking Zones is one service where the revenue received has dropped significantly behind the actual cost of provision and by raising the price to meet the cost removes £100k of subsidy to this service.

· Sunday parking charges would be treated like the other days of the week. This would produce a further £70k of revenue.

· The Community Grants budget would be reduced by 25%. However there was no longer a split between revenue and capital grant pots so more of the budget could be used to support revenue funding for projects. A further £8k will be removed from the budget and replaced from the East Herts Lottery Community Chest Fund.

· The Citizens Advice Service would get a reduction in funding from the current £152k by £13k next year then £10k for each of the following two years. The Council would continue make very pro-active efforts to find external funding sources for the CAB, along with other ways we already support the CAB financially outside of our own funding.

Councillor Williamson said that the proposals in the report have identified sufficient savings to bridge the gap, enabling a balanced budget. The Medium Term Financial Plan showed that the Council’s total net expenditure for the next year is £11.526m.

Councillor Williamson said that whilst the proposals presented a balance budget, there would need to for further substantial savings in the future. The Council’s Transformation Programme would be covering areas such as resourcing, procurement, income streams, and operational needs. It would enable the Council to ensure resources were focussed on the corporate plan priorities.

Councillor Williamson said that the Department of Levelling Up, Housing and Communities announced a roll-forward of funding which will provide the Council with an unexpected £1.4 million of New Homes Bonus money. He said that it was proposed to put it straight into the reserves in order to improve financial resilience.

Councillor Williamson said the total amount of capital investment across the district next year would be £27.6 million, of which the main projects represent £21.7m.

Councillor Williamson proposed that the recommendations in the report be supported. Councillor Pope seconded the proposal.

Councillor Goldspink proposed an amendment to Recommendation C. She proposed the following:

1) “In the section on Revenue Budget Proposed Savings and Charges for Residents’ Parking Zones (RPZs), We propose that the new charges should be £60 for the first permit and £110 for the second one, whilst a Full Consultation is held with all the residents who presently live in these Zones, to ask them if they would consent to a less-costly scheme –(an RPZ-lite) which could possibly be brought in in 2 years’ time when the present contract ends.

We understand the wish to recover the full cost of the services which the Council runs, but this parking Zone Scheme is enormously expensive and it has been heavily subsidised for many years. We think that very few people knew the size of the subsidy, and the dramatic increase in proposed charges has come as a huge shock. Residents are being asked to pay £72 when they previously paid only £41, and £144 instead of £82. These increases are way above the rate of inflation and we consider them to be unreasonable. So, we are proposing smaller increases, which would still reduce the Council’s subsidy, but by a smaller amount. We propose that the charges should be £60 and £110. The deficit to the Council’s Revenue would be funded from general reserves.

Therefore the Budget be amended as follows:

a) Appendix A MTFP be deleted and replaced with an amended Appendix A attached as Annex 1to this amendment;

b) Appendix B Savings Proposals, the page on RPZ permit costs be deleted and replaced with the pages attached as Annex 2 to this amendment; and

c) Appendix G Fees and Charges, the page on parking be deleted and replaced with the page attached as Annex 3 to this amendment.”

The amendment was seconded by Councillor Wilson.

Councillor Goldspink said that she understood the wish to recover the full cost of services but the Residents Parking Zone (RPZ) scheme was enormously expensive as it had been heavily subsidised but residents were not aware of this. She said the increases were way above inflation and considered them to be unreasonable. Councillor Goldspink said that the deficit to the revenue would be funded through the general reserves and she would like to see a consultation happen with all residents in the RPZs to gauge their opinion on a modified scheme. This would cost £21k again funded by general reserves.

Councillor Williamson said that the RPZs were enormously expensive and had benefitted from a heavy subsidy and therefore the fees had to be adjusted. He said if the Council maintained the subsidy and did not recover the full cost; it would negate the Fees and Charges Policy that was approved by Council in December 2021.

Councillor Wilson felt it was unconscionable to raise the RPZ fee by 75%. He said residents were already suffering from a rise in other household bills and the Conservative administration was proposing to deliver a further blow to finances. He said there had been a failure to introduce new cycling routes meaning residents had to use a car. Councillor Wilson believed that a smaller increase in fees and a revised scheme would be a better proposal. He queried if the Council would be open to a legal challenge as the proposed increase had not been out to consultation yet.

Councillor Goldspink closed the debate by acknowledging that the scheme had been highly subsidised but residents were not aware of the real cost and had not been given a choice in the matter. She said she had received many distressed emails and phone calls from residents about the increase and said if the Council approved this amendment, it would show the council cared.

A recorded vote was held on the amendment proposed by Councillor Goldspink. The result was as follows:

FOR

Councillors Beckett, Bell, Brady, Crystall, Dumont, Frecknall, Goldspink, Redfern, Townsend, Wilson

AGAINST

Councillors Alder, Bolton, Buckmaster, Bull, Curtis, Deering, Devonshire, Drake, Goodeve, Haysey, Kaye, Kemp, Newton, Page, Pope, Reed, Rowley, Ruffles, Rutland-Barsby, Snowdon, Stowe, Symonds, Ward-Booth, Williamson

ABSTAIN

Councillor Crofton

For: 10
Against: 24
Abstain: 1

The motion to amend the recommendation was LOST.

Councillor Dumont then proposed an amendment. He proposed the following:

“We are acutely aware that many people in East Herts are being hit very hard by the rising cost of living at the moment, and many are really struggling to pay their bills. They are worried for themselves and for their children. By using part of the unexpected New Homes Bonus the Council would reduce the tax burden a little and would demonstrate its care for its residents. We therefore propose the following amendment:

a. That the New homes Bonus transfer to reserves be reduced by £156,670;

b. That £156,670 be transferred from the General Fund to the Collection Fund to create a discretionary council tax discount under section 13A (1) (c) of the Local Government Finance Act 1992 and that discount to be proportionate to a maximum of £2.50 at Band D to be applied only to a liability balance, i.e. credits will not be applied to exempt properties, properties in receipt of 100% Council Tax Support or where other discounts have reduced the liability by 100%;;

c. That Council notes this will reduce the increase in the East Herts Council Tax payable by residents by 50% but will protect resources going forward as the full £5 increase will have been set for Council Tax Referendum purposes.

d. Appendix A MTFP be deleted and replaced with an amended Appendix A attached as Annex 4 to this amendment

e. Appendix D Reserves be deleted and replaced with an amended Appendix D attached as Annex 5 to this amendment.

f. Consequent on this amendment passing then Item 11 Council Tax Resolution be amended as shown in yellow on the Council tax Resolution attached as Annex 6 to this amendment.”

The amendment was seconded by Councillor Townsend.

Councillor Dumont thanked the Chief Financial Officer for his additional work on the amendment. He said that he was proposing that £156,670 of the unexpected New Homes Bonus windfall be transferred to the general fund to create a discretionary council tax discount of £2.50. Councillor Dumont said that this would soften the blow of the rising cost of living and the proposal would not affect the Council’s ability to raise Council Tax in the future.

Councillor Kemp said all Members wanted to help residents and sympathise with them when facing an increased cost of living. However, he said that the £2.50 discount would equate to 20 pence a week and queried how much this would help set against £156k disappearing out of reserves which could be of more use in the future.

Councillor Williamson recognised that some residents faced financial hardship and the council had measures in place to assist them. He said that the council’s Council Tax support scheme was the most generous in Hertfordshire. He said that if a £2.50 discount was applied for the coming year, residents could face an increase of £7.50 the following to make up the shortfall in funding. Councillor Williamson said that the council had reduced its dependence on the New Homes Bonus and said it would be a mistake to go back.

Councillor Ward-Booth referred to the £150 Council Tax discount funded by the Chancellor’s £9 billion support package. He said this was a contrast to just the £2.50 discount offered by the Liberal Democrats.

Councillor Curtis said that the discount would not have any practical effect on residents but it would be complicated to deliver and administer.

Councillor Dumont thanked the Council for considering the amendment and said it would have been a gesture to residents.

A recorded vote was held on the amendment proposed by Councillor Dumont. The result was as follows:

FOR

Councillors Beckett, Bell, Dumont, Goldspink, Townsend, Wilson

AGAINST

ABSTAIN

Councillors Brady, Crofton, Crystall, Frecknall, Redfern

For: 6

Against: 24
Abstain: 5

The motion to amend the recommendation was LOST.

Councillor Snowdon then proposed an amendment to the recommendations. He proposed the following:

“Insert into Budget 2022/23 and Medium Term Financial Plan as recommendation F.

That Council agrees the following:

This Council notes:

· That at the 15^th December 2021 Full Council meeting, Council backed the Fees and Charges policy which gave rise to the new RPZ policy

· That as a general principle non-statutory services should be provided on a full cost recovery basis.

This council believes:

· That costs for non-statutory services should be as low as possible

· That those who don’t use non-statutory services should not be asked to cross-subsidise those that do

· The charging policy provides for full cost recovery. This council will endeavour to reduce the cost base of its services, so that full cost recovery charges are as low as possible

· That full cost recovery charges can go down in future years as well as up

This council resolves:

· That the principle of the Fees and Charging policy is that any future reductions in the cost base (or increases in the revenue from the scheme) will feed through to lower RPZ permit costs

· To ask the Audit and Governance Committee to investigate the cost base of the RPZ scheme

· To invite resident groups in RPZ scheme areas who no longer wish to have an RPZ to approach the council to look at further options.”

Councillor Ward-Booth seconded the amendment.

Councillor Snowdon said that Members have received a lot of correspondence in relation to the RPZs. He said the Council approved a Fees and Charges policy in December 2021 to recover the full cost of services; this could either go up or go down. The amendment proposed that the Audit and Governance Committee investigate the cost base of the service to ensure it provided the best value for money.

Councillor Haysey thanked Councillor Snowdon for the amendment and thought it was a sensible approach to look at services moving forward.

Councillor Wilson welcomed the idea about talking to residents about the RPZs but felt it was too late to do this. He revisited his earlier question about there being no consultation undertaken and questioned whether any future consultation had been pre-empted.

The Monitoring Officer confirmed that the proposals in front of Members were within the legislation and a decision on the budget would not pre-determine future decisions.

A recorded vote was held on the amendment proposed by Councillor Snowdon. The result was as follows:

FOR

AGAINST

None

ABSTAIN

Councillors Beckett, Bell, Brady, Crofton, Crystall, Dumont, Frecknall, Goldspink, Redfern, Townsend, Wilson

For: 24
Against: 0
Abstain: 11

The motion to amend the recommendation was CARRIED and become part of the substantive recommendations.

A recorded vote was then held on the substantive recommendations and the result was as follows:

FOR

AGAINST

Councillors Beckett, Bell, Brady, Crystall, Dumont, Frecknall, Goldspink, Redfern, Townsend, Wilson

ABSTAIN

Councillor Crofton

For: 24
Against: 10
Abstain: 1

RESOLVED – That (A) the East Herts share of the Council Tax for a Band D property in 2022/23 be set at £184.09, an increase of £5, the maximum permitted within the Council Tax Referendum principles;

(B) The Budget 2022/23 and the Medium Term Financial Plan 2022 – 2027 as shown In Appendix A be approved;

(C) The savings plans summarised in Appendix B be approved for implementation and that Council require that compensating savings, delivered to the same timescales, have to be put in place and reported to the next Council meeting should the Executive decide that any savings proposals should not proceed, or are reduced by 10% or more;

(D) The capital programme set out in Appendix C be approved;

(E) The schedule of charges for 2021/22 set out in Appendix G, with an average increase of 5%, be approved; and

(F) This Council notes:

· That at the 15^th December 2021 Full Council meeting, Council backed the Fees and Charges policy which gave rise to the new RPZ policy

· That as a general principle non-statutory services should be provided on a full cost recovery basis.

This council believes:

· That costs for non-statutory services should be as low as possible

· That those who don’t use non-statutory services should not be asked to cross-subsidise those that do

· The charging policy provides for full cost recovery. This council will endeavour to reduce the cost base of its services, so that full cost recovery charges are as low as possible

· That full cost recovery charges can go down in future years as well as up

This council resolves:

· That the principle of the Fees and Charging policy is that any future reductions in the cost base (or increases in the revenue from the scheme) will feed through to lower RPZ permit costs

· To ask the Audit and Governance Committee to investigate the cost base of the RPZ scheme

· To invite resident groups in RPZ scheme areas who no longer wish to have an RPZ to approach the council to look at further options.

Councillor Ward-Booth proposed and Councillor Curtis seconded a motion to adjourn the meeting after Item 15, Pay Policy Statement. On being put to the meeting and a vote taken, the motion was declared CARRIED.

RESOLVED – that the meeting be adjourned after Item 15, Pay Policy Statement.

Supporting documents: