Agenda item

To consider a report from the Cabinet Member for Finance (copy enclosed)

The Cabinet Member for Finance presented a report which set out the spending plans for the Council in its first draft Revenue Budget 2023/24 and Medium Term Financial Plan (2023 -2028) for Westmorland and Furness Council, and included the proposed Capital Programme 2023-2028.

The budget proposals set out the financial considerations and estimates on the different elements of Local Government funding (including the Council Tax requirement for 2023/24), national and local financial pressures and proposed savings as well as plans for the future to invest and transform the Council to achieve its Council Plan priorities.

The Cabinet Member took members through the report including some of the key elements presented.

He informed members that the proposals included protection of frontline services in recognition that there was a need to stabilise, harmonise and integrate services as the Local Government reorganisation process continued.

The Council’s financial plans had been prepared at a time of significant global and national uncertainty both economically and fiscally.  The war in the Ukraine had contributed to a surge in energy prices, driving high inflation across the world.  Impacting on the cost not only of energy but also on goods and services. The Bank of England was increasing interest rates to as part of a wider fiscal policy to manage inflation however this had pushed up the cost of borrowing for families and businesses as well as government.  Economic growth had slowed and a recession was still forecast for 2023

The cost of living crisis was continuing and this was affecting all residents in different ways and this was resulting in increased demand for support services including welfare support and advice and guidance, increased uptake of free school meals and increased request for hardship support. Partly this was provided through the Government Household Support grant and partly funded direct by the Council.

The Cabinet Member detailed the considerations for proposed council tax increases and council tax harmonisation, and business rates and grants.

With reference to the Medium Term Financial Plan 2023-28 and revenue spending plans the Cabinet Member felt this presented a broadly reassuring picture.  In November Cabinet Members were updated on the estimated Budget Gap position for 2023/24. This reflected the work that had been done to aggregate the District Council major funding streams and expenditure plans and included the disaggregated County Council position. The potential budget gap reported to Cabinet in November was £19m. 

Since then further work had been done to finalise the funding and expenditure disaggregation figures.  Based on the Q2 forecast outturn position for 22/23 all sovereign councils had identified any material recurring pressures for 23/24 and had also reviewed the planned savings built into their MTFP’s to establish if these remained deliverable in the new Unitary Councils.

There were inevitable LGR implementation pressures both permanent and temporary that would be incurred in 2023/24. Some of this was due to the disaggregation of County Council services and the need for duplication of staff across a number of services and another factor was the complexity of the ICT systems resulting in a number of legacy systems needing to be maintained in the short term and the system architecture needing to be developed to enable and facilitate transition to new systems.

Westmorland and Furness Council needed to identify savings of just under £10m for 2024/5 rising to £15m in 2026/7.  The Cabinet Member felt these gaps to be relatively small given the size of the authority, and he was confident that these savings could be found as long as work started immediately on transformation of the Council.

However, the Cabinet Member said the short term outlook was more challenging.  On top of the impact of inflation and the immediate impact of double running costs from LGR the Council needed to include that significant investment to ensure savings and improvements were delivered in coming years. 

Overall the deficit would be circa £26m this year, and Westmorland and Furness Council was required to deliver a balanced budget and this amount was unable to be delivered from reserves.

As a consequence the Council had requested additional support from Government in the form of a Capitalisation Direction.  This would give the Council the flexibility to use capital financing to fund revenue costs in exceptional circumstances.  

The Cabinet Member informed members that this was similar to an overdraft facility to be used if required, and was an approach adopted by other councils that had been through LGR. He felt this was the right thing to do to give the Council some breathing space to allow time to get the new Council up and running and identify the savings needed in the medium term.

The Cabinet Member for Finance then moved the recommendations.

Cllr J Brook thanked the Cabinet Member for presenting the budget and acknowledged the time and effort that had been taken by both members and officers to produce this historic budget.

The budget clearly set out the foundations which would allow the journey of Westmorland and Furness Council to begin.  The intention was that Westmorland and Furness would be a great place to live and work.  He seconded the recommendations.

The Chair then opened the meeting up to debate.

Cllr D Brook spoke to say that he recognised what a challenging year this had been for everyone, and he was pleased to see this, the first budget for the new council.  He would be supporting the budget as proposed.

Cllr Carrick rose to acknowledge that the delivery of the council’s first ever budget was a critical stage in the process for the new Westmorland and Furness Council, and represented a key milestone in the countdown to Vesting day, but also gave an insight into what the future would hold.

She congratulate the officers on the creation of this balanced budget, which skilfully incorporated the operational funding needed to run the council, alongside the additional money required to pay for the extensive transformational changes that would need to take place, to produce the savings promised.

From 1 April, Locality Boards would be established on broadly the historic District council boundaries and would be able to carry out activities delegated to them by the Cabinet or Council.  Cllr Carrick said that although it was proposed that a small level of funding would be allocated to these Boards, there was widespread concern that rather than delivering devolution at a very local level, the reform proposals were merely replacing the previously centralised decision making that took place at Carlisle, with centralised decision making from Kendal.

Cllr Carrick commented that she thought there would be opportunities for the new Westmorland and Furness Council to do things differently in future but felt the budget as presented, offered very little clarity about what residents could expect to see this next year other than how much it would cost them.  She would not be supporting this budget.

Cllr Dew reminded members that the increase of 4.99% for Council tax was not a Government policy, instruction or requirement.  He does not think the increase is justified.  He was disappointed that the Council had requested additional support from Government in the form of a Capitalisation Direction with the intention of using £16m to create savings.  He had hoped the money received from the Capitalisation Direction would have been enough to allow Council tax increases to be kept to a minimum instead of 4.99%.

Cllr Callister thanked all the officers  that had worked to get the Council to the stage of being able to produce a sustainable budget.  What a journey this had been and what a fantastic achievement.

Cllr Brereton also thanked the officers for the draft budget but was disappointed as he felt it was light on detail and showed little of the promises for devolution of decision making.  He felt locality boards were being shaped so that there would be no local democracy, and the lack of available funding would mean all members would suffer from a severe reduction in the ability to influence decisions made on highway work in localities.  Local knowledge would be crucial to the success of this going forward.

The Cabinet Member for Transport would be supporting the budget and did not agree with Cllr Brereton’s view on Locality Boards.  He reminded all members that the current budget had been produced on the basis of the Council being safe and legal on Day 1. 

Budgets had been planned for Transformation projects which would see changes to the way in which services were provided in future and in due course funding would be passed down to locality boards along with the opportunity to influence local services.

Cllr Drake was disappointed to see that phases 2 and 3 of Ulverston Leisure Centre had not yet been approved for inclusion into the Capital Programme, although she did understand why.  The Scheme would provide valuable health benefits to the town and the residents in Ulverston and she hoped to receive more positive news on this in the near future.

Cllr Philips felt there was still uncertainty had the realisation of risks around the budget for the financial 20232/23.  His concern was about the balance and utilisation of the reserves.  He felt, with such a high level of risk that the high level of reserves should be reduced, and that the Council should not be asking Government for additional Capitalisation Direction when the reserves were so high.

Cllr Cooper also asked this same question.

Cllr Dixon referred to the recommendation on page 29 of the pack and the intention to introduce the 100% council tax premium on second homes.  He was encouraged to see this especially given the large number of second homes in the area, which meant that young locals struggled to get on the property ladder.

Cllr Edwards asked for clarification on which areas would have to pay for bin collections. He mentioned specifically Lindal –in-Furness which was spread between two of the current sovereign councils, with different charging policies.

Cllr Burns spoke in support of the budget, recognising what a challenging year this had been for a number of reasons.  She felt the recruitment and retention of staff would be an issue going forward and she would also like the Council to consider a further aspiration of ‘no child goes hungry’ in Westmorland and Furness.  Cllr Burns would like the Council to lobby the Government to provide additional funds for free school meals.

Cllr Archibald thanked those members that supported the draft budget.  The vision for this Council was ambitious and aspirational and it would endeavour to help communities where possible.  The Cabinet was very concerned about areas of poverty and deprivation and the link between this and suicide rates.  The number of residents using foodbanks was on the increase and inflation costs were rising.  He looked forward to working with all members to try to bring about the changes needed to tackle this.

He then spoke about climate change and biodiversity and the threats to be faced in relation to these.  The Council would have the opportunity to accelerate biodiversity enhancement going forward.

Cllr Hamilton mentioned the housing stock in Barrow in Furness and the work that had been done there to ensure rents were reduced for renters during the past year.

Cllr Murray commented that he was delighted to see the values stated in the Council plan were reflected in many of the budget decisions/recommendations.

The Cabinet Member exercised his right of reply and started by saying that the budget figures in front of members were nothing like the figures quoted in the business case for Local Government Reorganisation, but this draft budget had been produced based on real figures.  It had been a challenging time for all concerned.

He referred to the comments made about locality boards and the level of decision making, and reassured all members that funding had been made available to all locality boards, and that Cabinet would be looking again at devolving decisions to these in the near future.

With reference to the high level of reserves the Cabinet Member said this would be reviewed during the year, however, he reminded all members that Westmorland and Furness would be a significant council and would need significant reserves.

The Cabinet Member responded to the question asked by Cllr Edwards re: waste collection services in Lindal-in-Furness to say that there were 3 different systems currently in operation for the collection of fees for waste and these would be harmonised over time.  Currently there was no best practice and for Day 1 this would not change.

He ended by saying Westmorland and Furness Council recognised that child poverty was real and on the increase and Cabinet would be looking at measures to try to resolve this.        

Upon conclusion of the debate and in line with regulations a recorded vote took place.

RESOLVED,       that the Shadow Authority

(1)     notes the responses to the budget consultation;

(2)     notes the Director of Resources/(Section 151 officer) Section 25 Report as at Section 5 including her review of the robustness of the estimates and the adequacy of the reserves;

(3)     agrees to a 2.99% increase in general council tax and an additional 2% increase for the Adult Social Care precept for 23/24 resulting in an overall increase of 4.99%;

(4)     agrees to Harmonise Council Tax levels for Westmorland and Furness in the first year, as contained in paragraphs 3.28 to 3.33 of the report;

(5)     agrees to the intention to introduce a 100% Council tax premium on second homes from 1 April 2024, subject to the Levelling Up Bill achieving royal assent;

(6)     agrees subject to the approval of 2.2 and 2.3 to a Council Tax requirement of £152.700m which results in a Band D Council Tax of £1,740.89 for Westmorland and Furness Council, noting the two separate reports to Shadow Authority on Calculating and setting the 2023/24 Council Tax Base;

(7)     agrees to a Net Revenue Budget Requirement of £268.478m:

a)    a five-year Medium Term Financial Plan 2023/24 -2027/28 (see Appendix A).

b)    The schools budget for 2023/24 of £155.5m including £71.1m for academies and free schools and other providers

c)    The use of reserves and levels of forecast reserves contained in the MTFP (See Appendix A)

d)    The Fees and Charges Policy for 2023/24 (see Appendix C)

e)    The Senior Leadership Pay Policy Statement for 2023/24 (see Appendix F)

f)     Housing Revenue Account - balanced budget including the use of £0.770m earmarked reserves and a 3.5% increase on dwelling and garage rents.

g)    Treasury Management Strategy for 2023/24 (Appendix D)

h)    Capital Programme for 2023/24 of £104.164m (set within a five-year programme 2023-2028 of £252.786m.

i)      Equality Impact Assessment (EIA) for Council Tax changes, Fees and charges increases and the Housing Revenue Account rent increases. (See Appendix G)

(8)        agrees that the slippage or accelerated spend position on the District Council and disaggregated County Council 2022/23 capital programmes at 31 March 2023 is included within the 2023/24 Westmorland and Furness capital programme and reviewed as part of Q1 budget monitoring;

(9)        delegates to the Director of Resources (Section 151 officer) in consultation with the Finance portfolio holder and Asset portfolio holder to approve the capital strategy for 2023/24. This will be then reported back to Council at the earliest opportunity;

(10)     delegates to the Director of Resources (Section 151 officer) in consultation with the Finance portfolio holder to finalise the fees and charges schedule (2023/24) in accordance with the approved Fees and Charges policy;

(11)     delegates to the Director of Resources (Section 151 officer) the full range of powers including taking all decisions, implementing decisions and acting as the authorised signatory for the Council to ensure the safe transfer of the Cumbria Pension Fund assets from Cumbria County Council to Westmorland and Furness on the 1 April 2023.

The meeting then broke at 12.30 and reconvened at 12.45pm.

Cllrs Audland and Mitchell left the meeting at this point.