Agenda item

To consider the movement within the proposed MTFP from Financial Lockdown Version 1

The Committee considered a report, set out in agenda pages 21 to 40, which gave an overview of the movements of the revenue and capital budgetary positions since the publication of financial lockdown version 1.

John Kaiser (Executive Member for Finance and Housing) and Graham Ebers (Deputy Chief Executive (Director of Resources and Assets)) attended the meeting to answer Member queries.

It was noted that the only addition in terms of concluding the MTFP was a supplementary bid of £250k to cover the inflationary costs of the re-tendering for the supplier of home to school transport after the previous supplier went out of business. The cheapest tender came in at an additional £60k per term when compared to the previous supplier.

The Local Government Finance Settlement was only a one year settlement, and a great deal of uncertainty remained with regards to several factors including inflation, adult social care funding, construction costs, and the ongoing implications of the pandemic. Given the level of uncertainty, it was commented that a mid-year review to assess the presumptions made within the Medium Term Financial Plan (MTFP) may be pertinent. The Executive Member commented that officers would have the option of providing a paper to the Executive asking for a supplementary budget estimate should services face additional costs in-year.

During the ensuing discussions, Members raised the following points and queries:

·           How much additional funding did Wokingham Borough Council (WBC) receive within the Local Government Finance Settlement? Deputy Chief Executive response – WBC had received no revenue support grant, the same business rates as this financial year, a £0.83m reduction in new homes’ bonuses, and additional £0.931m social care grant, and an additional £1.7m in other grants such as Covid-19 support funding. Overall, WBC would receive an additional £1.8m in funding, whilst inflationary pressures alone placed £8m of additional costs on the Council.

·           How would the additional £6m in revenue expenditure, after additional grants, be covered? Deputy Chief Executive response – A combination of service efficiencies and increasing Council Tax and the Adult Social Care precept would cover much of the costs. After the additional £250k bid for the re-tendering of home to school transport, approximately £2.5m of the revenue budget would be funded through reserves.

·           With regards to the predicted approximate £13m capital budget deficit over the next 3 years, what pending might be reduced to address this? Deputy Chief Executive response – This was the cumulative position of 3 years of spending and it could be addressed in a number of ways, such as re-profiling into future years, reducing the ambition or size of the scheme, finding additional income through grants or capital receipts, or as a last resort by increasing borrowing against the Council Tax payer which had not been done for a considerable amount of time. The numbers proposed this year were not dissimilar to the figures presented this time last year.

·           Were the figures presented in relation to Adult Social Care still uncertain in view of the Adult Social Care bill? Deputy Chief Executive response – The figures being presented were the best figures to WBC’s knowledge at this time, and had been run by the relevant Executive Member and Director. However, this had to be taken in the context of a number of uncertainties including inflationary pressures, Covid-19, and the proposed Adult Social Care reforms.

·           What was the strategy with relation to when reserves reached worrying levels? Deputy Chief Executive response – The reserves were predicted to be at around the £8m mark which was a reasonable level, though not ideal. Historically, reserve levels of around £10m were a much more comfortable position, and the concern was that WBC could not keep using reserves year on year as the £8m mark would soon be eroded. Given this, it was commented that a mid-year review of the budgetary position could be presented to the Committee during the 2022/23 municipal year.

·           How did WBC compare to neighbouring authorities in terms of Covid-19 expenditure, and had enough inflationary costs been built in to the proposals? Deputy Chief Executive response – WBC had managed to collect the highest percentage of their Council Tax in the country, however income had suffered more than at neighbouring authorities due to how WBC’s leisure contract was constructed which had resulted in less Government support. Car parking had held up reasonably well, however outgoing costs were one of the highest compared to neighbouring authorities due to the level of intervention made by WBC which had resulted in a number of supplementary estimates being taken to the Executive.

·           What was the additional £400k in 2023/24 in relation for staffing resource for Adult Social Care proposed for? Deputy Chief Executive response – This was proposed to deliver the transformation programme in order to create efficiency savings over time. The £400k was being brought forward from year 3 to year 2 in order to deliver ongoing change and improvement earlier.

·           Had WBC heard any additional information with regards to the capital bid, CS 1, for the additional £6m in grant funding? Deputy Chief Executive response – This was in relation to the basic needs grant which had not been formally announced, and once more detail was received this would be assessed alongside all capital grants and the forecast would be adjusted.

·           Had the additional forecasted car parking income via the increase of charges been abandoned, or delayed? Deputy Chief Executive response – The proposals showed that there was no proposed increase for 2022/23, and the decision to raise or increase the charges in future would remain, as it always had, in the hands of Members.

·           In was noted that the savings proposals relating to income from solar farms and delivery of 1000 houses over 4 years at 5 percent had been merged with the community investment income bid.

·           It was noted that the intention to deliver as many social and affordable homes as possible remained, however due to the significant increase in construction costs it may be difficult to realise a return of between 5 and 7 percent. This would be monitored as this could be a short term issue.

·           Could more detail be given with relation to the community investment bid? Deputy Chief Executive response – This was previously known as the property investment group, which invested in the community for the benefit of the community whilst making income over and above the cost of inflation. Whilst there would be lesser returns in some areas due to the inability to be able to invest solely commercially anymore, the increasing cost of electricity presented other options for WBC in terms of the agreed and proposed solar farms.

·           It was noted that the proposed crematorium was not going ahead, and the proposed credits had been removed from the proposed income stream.

·           Could more detail be given with regards to the review of corporate accommodation? Executive Member and Deputy Chief Executive response – As a result of the pandemic a number of operational efficiencies had been realised including a hybrid model of working. As a result, WBC required a smaller operational footprint and work was underway to assess the most effective and efficient use of our accommodation. There had been a big increase in the number of homeless in the Borough, and options could be explored to reformat some of WBC’s property to make better use of the space.

·           It was suggested that some of the unused WBC accommodation could be offered to small businesses and start-ups at discounted rates.

·           How long might WBC feel the effects of the additional revenue expenditure relating to the pandemic? Deputy Chief Executive response – Additional staffing and capacity would be covered by the Community Outbreak Management Framework, with much of these costs due to be reimbursed with the grant ending in March 2022. It was entirely possible that in the absence of further Government funding, supplementary estimates may need to be submitted to continue the undertaking of the pandemic response.

·           It was noted that the special items bid related to additional capacity within the transitions team was no longer required as this was now being made a permanent resource.

·           It was noted that the special item bid for reintegration of Trading Standards and Environmental Health was being deferred to year 2.

·           In the backdrop of increasing construction costs, would there be any reduction in planned builds relating to SCAPE projects? Executive Member and Deputy Chief Executive response – Plans and commitments were being assessed to ascertain what money was precisely needed for each project. As these were such big projects, budgets were usually overestimated and the proposed figures were just a more precise version based on current knowledge.

·           Would the re-profiling of funding for some flood alleviation schemes result in delays to essential works? Executive Member and Deputy Chief Executive response – Professional officers had considered that some schemes planned for year 1 would now be more appropriate in year 2. Additional detail could be sought from the Assistant Director for Highways and Transport.

·           It was noted that detail regarding the capital bid for feasibility and first stage of new non-highway crossing would be sought from the Assistant Director for Highways and Transport.

·           Was it unusual to have re-profiled figures being much smaller than the original predicted spend for large capital bids? Deputy Chief Executive response – This was not that unusual, and this was done to accurately predict how much of the total spend would be used in each year rather than assuming that all of the budgeted spend would occur in year one.

·           Were there any additional capital spend challenges in relation to Adult Social Care? Deputy Chief Executive response – The biggest issue of self-provision was shared between Adult Social Care and Children’s Services. Should suitable land or facilities be identified and a business case support development then both services could see additional self-provision in future.

·           Could more detail be given in relation to the savings predicted from electric vehicle charge points? Deputy Chief Executive response – This bid was initially placed as expenditure only, however the premise was now to provide charging points in a responsible way to cover WBC’s own costs. Any assumptions made now would likely be even greater in future due to the rising costs of electricity.

·           Had the proposed works to the California crossroads been delayed? Executive Member response – The wider SDL had not come forwards as quickly as was anticipated, and to carry out the works as scheduled would cause major disruption to residents.

·           Were works planned to the Shinfield eastern relief road? Executive Member response – This would big a big cost which would be assessed as time moved forwards. There needed to be a great deal of confidence over any works, and works outside of general maintenance and checking the road was safe was not required at this time.

·           How much income was predicted to be generated from solar farms? Deputy Chief Executive response – In summary, £1m per annum over 25 years was predicted over and above the cost of borrowing. The ‘per year’ income would start lower, and increase as more sites came fully online.

·           Were all proposed savings still viable and achievable? Executive Member and Deputy Chief Executive response – The process in place required the relevant Executive Member and Director to sign off on all major proposals. As the Chief Financial Officer, the Deputy Chief Executive could not put forward a budget that he did not believe was reasonable or achievable. Key performance indicators had been reinforced this year, and officers had the opportunity to submit supplementary estimates should they require additional funding in-year. It was noted that even statutory funding increases would require Executive approval prior to spending.

·           The Chairman commented that this process was an invaluable part of the budget setting cycle, despite the time taken involving Executive Members, Committee Members and senior officers, as it enabled a detailed oversight of proposals prior to budget Council.

·           The Committee thanked John Kaiser and Graham Ebers for their attendance at all of the budget scrutiny meetings, their answers to queries and questions, and for putting together budget proposals in the context of a very uncertain time.

RESOLVED That:

1)     John Kaiser and Graham Ebers be thanked for attending the meeting;

2)     Detailed answers be sought from the Assistant Director for Highways and Transport, and circulated to the Committee;

3)     A mid-year review of the budgetary position be scheduled for September 2022;

4)     Officers draft the annual report of the Committee’s work in relation to the budget scrutiny process, for submission to budget Council and the Executive, to be agreed in consultation with the Chairman.