To receive a briefing on the revenue budget 2023/24 and capital programme to 2027/28 from the Head of Finance, and for Scrutiny Committee to ask questions they may have to the Head of Finance and Cabinet Member for Finance and Property Assets.
Head of Finance presented a budget briefing to committee, supported by Cabinet Member for Finance and Corporate Assets. Strategic Finance Manager was present virtually.
A presentation was given using slides and can be viewed on the recording.
Cabinet member opened the item. Head of Finance briefed the committee on the following:
Section 1: Revenue
· Context of budget setting – our legal duties, what a balanced budget means - appropriate reserves without heavy reliance on them. Over recent years there had been improvement in having less reliance on reserves at the council.
· Appendix A1 – base budget 2023-24, what formed part of the base budget.
· Appendix B1 and B3 – discretionary items, such as temporary funding for 2023-25.
· Core revenue spending power had increased by 5.3% - settlements, government grants and council tax. Significant increase in core revenue spending power in response to economic climate. New Homes Bonus had gone down, reduced to four years from six. Uncertainty from central government on the future of this. Included a one-off funding guarantee of £883k. Revisions to council tax were in line with the council tax referendum principles.
· A member asked about the history of reserves. Head of Finance responded that in 1996 council housing stock was sold, and money was put into reserve, however financial crashes result in using reserves. Now, we get more grant funding than previously. We had a low council tax base also. More detail would be provided in the presentation
· A member asked for clarity on the assumptions made about inflation over the MTFP. This would be covered in the presentation.
Section 2: Capital
· Details of schemes in Appendix D2 and D3 (CIL funded).
· Didcot North East leisure centre will be funded by S106 receipts, also from Valley Park receipts. Vale would need to pay some of those receipts.
· Didcot Wave pool – Valley Park receipts, with some to be paid by Vale
· Query on how we would ensure Vale receipts were paid. Head of Finance responded it was in Vale’s budget. Council Leader added that Valley Park, being in Vale, would be closest to Didcot in terms of utilising community facilities, which Valley Park would be missing. These community assets would benefit South and Vale residents.
· Discussion had about assessment of risk. A question was asked about whether entering into a contract with Vale regarding the above projects was more secure. Leader explained the decision was made to enable facilities to be ready in line with the new housing.
Scrutiny members were in agreement to suggest that officers consult the Legal team regarding the potential to enter into a contract with VOWHDC, in relation to new South Oxfordshire based Capital projects, where SODC have agreement with VOWHDC to part fund projects which are of benefit for both districts.
· A discussion was had about the arrangements for briefing on the budget. The intention from officers was that this would be watched by anyone who wanted to, and questions were welcomed from all members.
Resolved: Head of Finance would check with cabinet members to consider whether a further briefing was needed considering it was being recorded already and open to questions. The recording and slides will be available to all.
· A discussion around income generation at leisure centres – Cabinet member for Community Wellbeing did explain this was mixed. Business case will be set out for new facilities to ensure income generation.
Section 3: Medium Term Financial Plan (MTFP)
· Key variables/assumptions shown of expenditure and income
· Inflation – applied what we see as inflation. Consideration given to contracts ending.
· See appendix F – row 25 expectations of inflation. Row 43 shows cost increases offset with inflationary increases.
· Core government funding assumptions – uncertainty, assumption was that government funding will reduce and council tax raises.
· 2025 onwards, the balances looked challenging but there were many variables that could not be predicted with much certainty. However, the assumptions made lead to solvency at the end of the period.
· Alternative scenario given where the one-off funding was left in the MTFP.
· Strong progress on transformation work, leading to financial stability.
· Including IT strategy, Cornerstone, grounds maintenance, customer service and front-of-house, development management
Committee discussed confidence levels and inflation predictions. Head of Finance also explained that tweaks were applied on staff salary and complexity of contract costs, so the result was more pessimistic.
A member asked about long-term assets and investments and the potential to liquidate if necessary.