Decision Maker: Cabinet, Council
Decision status: Recommmend Forward to Council
Is Key decision?: No
Is subject to call in?: No
Purpose: to recommend the budget to Council
Cabinet considered the head of finance’s report on the budget for financial year 2022/23. The report included a draft revenue budget, a capital programme for the period 2022/23 to 2026/27, the prudential indicators, and a medium term financial plan covering 2022/23 to 2026/27. Cabinet was asked to recommend the report to the Council meeting on 17 February 2022.
Councillor Ian White, Chair of the Scrutiny Committee, addressed Cabinet on the process for the committee to consider the draft budget. This year the committee was trying a new method. It would meet on 7 February to consider Cabinet’s budget proposals. The committee would consider whether to make any recommendations to Cabinet before the Council meeting on 17 February. For this purpose, the leader had set a reserve date for a Cabinet meeting on 8 February to consider any recommendations from Scrutiny Committee and to consider whether Cabinet should amend its budget proposals to Council. Councillor White thanked the leader, Cabinet members and the head of finance for their understanding and assistance, and reported that the success or otherwise of this trial would be reviewed at a later date.
The Cabinet member for finance introduced the report. The budget proposals would help chart the council back to a more stable financial position. The council’s finances were recovering from the position the administration had inherited at the district council elections in 2019. The council’s finances were also recovering from the Covid-19 pandemic, which still was ongoing. The Cabinet member for finance praised his predecessor for work in starting this recovery.
This year Cabinet was keen to do more to implement the corporate plan and focus on financial sustainability. To assist, a thorough review of the council’s budget expenditure had been carried out. This had achieved substantial revenue base budget savings. He thanked officers for their work. This had been helped by the council’s accountancy team returning in-house. He believed that many of the decisions made by the council since 2019 were beginning to bear fruit, as reflected by the significant savings in the base budget. There was now more income and less expenditure, all without having to cut services provided to local residents.
The Cabinet member reported that this year’s budget had been prepared at a time when the council faced key financial challenges. The council tax in 2021/22 was the eighth lowest in the country for a shire district council and significantly below the national average, despite South Oxfordshire district being in the expensive South East. The council was restricted in how much it could increase its council tax. Also, the council had not benefitted from the business rates’ retention scheme. Although it had benefitted in the past from the new homes bonus scheme, the continuation of this funding was under review by the government. The result of this was that the cost of running the council exceeded the grant it received from government. The revenue budget set for 2021/22 had predicted that the use of the council’s reserves that was unsustainable over the medium to long term. Following the thorough review of the base budget, the medium term financial plan now predicted a significantly better position with less reliance on reserves. The transformation activities planned during 2022/23 were central to tackling the budget gap for future years.
The budget proposed no cuts to services and included revenue provision to support the council’s corporate plan priorities in climate action, nature recovery, and community wellbeing. Council tax was proposed to increase by £5 for a Band D property—the maximum allowed. However, there was no long long-term promise of a funding framework from the government, and the current settlement was only for one year. The medium term financial plan showed a fundamental structuring towards sound financial planning, a transformation from previous years, and included an element for exit costs at the close of the current corporate service contract, funded through capital reserves. The capital programme included several new schemes to be funded from the community infrastructure levy income, and also income from section 106 receipts to support affordable housing schemes. The Cabinet member moved the recommendations as set out in the report.
Cabinet members thanked the Cabinet member for finance, and the head of finance and his team, for their work in preparing the budget. Cabinet members highlighted several elements of the budget proposals: a change in emphasis towards greater creativity resulting in positive change. The council had learned important lessons form the Covid-19 pandemic; officers and councillors had adapted well to support the local community. It was important that strategies were developed to support the community, and that the council continued to support the voluntary and community sector, where their work matched the council’s corporate plan objectives. Funding in the budget to support the climate action plan work, nature recovery and new housing was welcomed also. Cabinet was pleased with the inclusion of capital projects to be funded by the community infrastructure levy. The decision to work on a joint local plan, with Vale of White Horse District Council, and to develop new offices shared with the Vale, would save significant sums. The office development would also help with the regeneration of an important site in Didcot.
In summary, Cabinet considered that the budget proposals represented an impressive transformation. In-sourcing of service provision had helped this process, as had the work to review the council’s base budget requirement. The move to new offices and the preparation of a joint local plan would save significant costs. The budget would ensure financial sustainability and showed a positive direction of travel. There would be no cuts to services in 2022/23. Cabinet supported the budget proposals.
RECOMMENDED to Council to:
(a) set the revenue budget for 2022/23, as set out in appendix A.1 to the head of finance’s report to Cabinet on 3 February 2022;
(b) approve the capital programme for 2022/23 to 2026/27, as set out in appendix D.1 to the report, together with the capital programme changes as set out in appendix D.2 and appendix D.3 to the report;
(c) set the council’s prudential limits, as listed in appendix E to the report;
(d) approve the medium-term financial plan to 2026/27, as set out in appendix F to the report;
(e) allocate £500,000 to fund the Communities Capital and Revenue grant scheme;
(f) ask officers to review the Medium-Term Financial Strategy following the announcement by the Secretary of State for Levelling Up, Housing and Communities of changes to the council’s future funding streams; and
(g) agree that the Cabinet member for finance, in conjunction with the head of finance, may make minor adjustments to the report and the prudential indicators, should they prove necessary prior to its submission to Council on 17 February 2022.
Report author: Richard Spraggett
Publication date: 22/02/2022
Date of decision: 03/02/2022
Decided at meeting: 03/02/2022 - Cabinet