Agenda item

Purpose: to set out the financial planning assumptions for the four years ahead over the period of the Medium Term Financial Strategy (MTFS). This includes the latest assumptions on Government funding, and reform of Local Government Finance, and implications for the savings requirement in future budgets. The report also includes items that are to be consulted upon over the period 11 November to the 23 December 2024.

Councillor Iain Cottingham (Executive Portfolio Holder: Finance and Resources) and Joseph Holmes (Interim Chief Executive) presented the report on the Medium Term Financial Strategy (Agenda Item 9).

The following points were raised in the debate:

·       Members asked if the Council was borrowing to fund services. It was explained that the Council borrowed to fund capital expenditure. Also, the High Needs Block deficit was being financed through the general fund and as the deficit grew, the financing cost would also rise.

·       Officers were asked about the impact of recent Employer NI increases. It was expected that central government would exempt local authorities from paying this, or there would be an appropriate contra-entry. However, it was recognised that suppliers may pass on the additional costs.

·       Members asked whether the Collection Fund Deficit and the Capital Financing Cost Deficit could be avoided. It was explained that the Collection Fund Deficit was the difference between what the Council had expected to raise in Council Tax and Business rates vs the outturn. The Capital Financing Cost Deficit was related to increases in borrowing costs. This may come down in future, subject to the size of the Council Funded Capital Programme. Further details would be provided in the final Budget in March. Also, additional borrowing was incurred where clients came into care and the Council had a charge over their property, until such time as the charge could be repaid.

·       Officers were asked if community bonds were being considered. It was confirmed that they were, but any decision would depend on prevailing market rates.

·       Members noted that parking charges had already increased and asked if it was proposed to increase them again. Officers confirmed that it was not proposed to increase parking charges further.

·       Members noted that Thames Valley Police’s opposition to turning off streetlights between 12 - 5am was not reflected in the consultation document. Members requested that they be added to provide a balanced view.  They also asked that responses made on the basis of the original wording be disregarded. The Portfolio Holder had not seen the TVP comments, but he undertook to review them and see if they could be added to the consultation.

Action: Review the TVP comments and decide whether they could be added to the consultation document.

·       It was highlighted that the purpose of the consultation was to elicit feedback from partners as well as residents. Officers were asked if key partners were actively invited to respond. Officers confirmed that the consultation had been shared with partners and the Police and Crime Commissioner had responded. However, Members noted that the majority of respondents would be residents, who would only see the three pieces of evidence supporting the proposal. It was felt that residents would want to know if the proposal would be likely to lead to an increase in crime. Members asked if TVP had any factual evidence about the impacts of turning off street-lights, and suggested that their views should have been sought prior to consulting residents.

·       It was noted that the consultation included a proposal to close the Downlands Leisure Centre, which attracted 4,500 visits per year. This would save £30,000 pa, with the loss of five jobs. It was suggested that residents might find this perverse when the Council had spent £230,000 to benefit one football group. Officers explained that the running costs of the leisure centre were revenue expenditure, while works at Faraday Road were capital expenditure, so they were not like-for-like comparisons.

·       Councillor Cottingham indicated that there was a question around the number of visits made by feepaying members vs visits by schoolchildren. He also queried the £30,000 savings from five jobs. Members of the Scrutiny Commission expressed concern at the lack of confidence in the figures. It was noted that at a previous meeting of the Executive, a figure of 9,000 visits had been quoted, which excluded school use. The same report had quoted that there were just two active members of the leisure centre.

Action: Officers to check if the wording in the consultation document for the Downlands Sports Centre proposal should be updated.

·       It was noted that the leisure centre had been conceived as a way of supporting the school and Members asked if there was another way to maintain the income. Officers explained that discussions had taken place with the Council’s leisure contractor, but the centre had low use relative to other sites. It was stressed that the decision would be taken in February, and this would be informed by the consultation results and the final local government settlement. Also, the budget would come back to Scrutiny Commission in early February.

·       Members asked if the school could run the leisure centre and employ the staff directly.

·       It was noted that the Executive report had said that it was necessary for anyone who used the sports centre to drive there. However, there were over 600 homes in Compton, with 200 more homes likely in the near future. Also, the consultation did not make it clear that the centre had significantly reduced public opening hours compared to other sites. As such, it was felt that the consultation did not present a rounded picture.

·       Members asked how many of the other local authorities seeking Exceptional Financial Support (EFS) from central government were small unitary authorities. Officers indicated that the majority were upper tier authorities, of which several were smaller unitary authorities. These had to deliver the full range of services. It was noted that West Berkshire Council had the lowest level of reserves of any top-tier local authority in the country. Officers explained that the 1% premium on the cost of repaying EFS had recently been withdrawn. A policy statement on the future of EFS and the flexible use of capital receipts was awaited.

·       Members asked about further savings proposals mentioned in the report. It was confirmed that these would be in the report to Scrutiny Commission in February.

·       Officers were asked about risks associated with inflation and tax changes. It was noted that inflation had recently increased slightly. While local authorities were likely to be exempt from paying the recent increases in employers’ NI contributions, care providers would have to pay them. Although last year’s settlement wasn’t ‘inflation busting’, the market was seeing increasing demand and decreasing supply, so price rises were forecast. The Council had expressed concern to central government about profiteering by children’s and family services providers owned by hedge funds/sovereign wealth funds from outside the UK that had profit margins of 25-30%. Local authorities were calling for greater regulation and increased competition. Nevertheless, it was confirmed that the Council would never put children at risk, even if it meant going into EFS.

·       Members noted that WBC’s social care costs had risen from 56% to 75% of total spend over seven years. Officers confirmed that WBC had started from a lower position than other local authorities, but it had quickly caught up. This upward trend could not be sustained.

·       Officers were asked about the £25M loan from the Public Works and Loan Board that was due to be repaid after just one year. It was explained that the current policy was for short-term borrowing, but once interest rates fell, the Council would switch to longer-term borrowing. This was included in the capital financing charge. Every year that the Council had a council-financed capital programme, this generated an increased borrowing need. Further details would be set out in the treasury management report as part of the budget papers in February. It was noted that the high needs block deficit was now included within the financing requirement. This would be £17.5M by the end of the year, which would cost the Council £2M to fund the overdraft. Nationally, it was estimated that local authorities were covering a £3B - £4B high needs block overdraft.

·       Members asked if local authorities were lobbying central government about the impact of the high needs block deficit. It was confirmed that discussions were ongoing with MCLG, and direct representations were being made to central government. Also, the Council would respond to the provisional finance settlement. In addition, the Local Government Association, and County and District Network were highlighting the issue.

·       Proposed cuts to mobile libraries were discussed. Members asked if collaboration with other local authorities had been considered to save money/improve services.  It was explained that proposed face-to-face visits would deliver an improved service. Accessibility issues with the existing service were highlighted, including one location where the mobile library stop was outside the village that it served. It was also noted that the vehicle was approaching the end of its economic life.

·       Concerns were expressed that the proposed mobile library service would be run by volunteers rather than trained librarians and it was suggested that service users would want to choose their own books rather than have books selected for them. It was explained that users would be able to choose their own books online. There would be opportunities for volunteers to engage with residents and help to tackle social isolation. Also, it was highlighted that a pop-up library was being trialled in Compton. The proposed model was consistent with the Family Hubs approach (i.e. outreach in local communities).

·       It was noted that income streams were not forecast to change over the next four financial years. Officers explained that there would be a fair funding review from 2026/27. In the absence of further details, officers had assumed that there would be no net change.

·       Members asked about the proportion of Band G and H properties in the district and the value of such properties. Members also asked about the number of residents would be likely to make voluntary donations. Officers confirmed that 8% of properties were rated in Bands G and H.  It was difficult to give current values, since Council Tax Bands were based on 1991 values.

·       It was noted that residents could reduce their inheritance tax liability by giving money to charity. The Council was looking at setting up a charitable trust for this purpose.  One legacy had already been received.

·       It was highlighted that in an ideal world, there would be no consultation on budget cuts, but the Council was facing financial pressures and was exploring all options to achieve a balanced budget and avoid going into EFS.

RESOLVED to note the report.