Minutes:
The Director of Finance,
Governance and Property introduced the report and stated that an
updated version of Appendix 2 had been provided to Members, as the
table had been realigned. He described how the report explained the
Council’s current financial position, and had been discussed
by Cabinet last week. He then outlined that in the previous six
month’s there had been considerable pressures in some areas,
and highlighted one area of pressure as children’s social
care, which had received additional funding and improved their
OFSTD score at the last inspection. The Director of Finance,
Governance and Property also highlighted that adult’s social
care was under financial pressure, which was common on a national
scale, and pressure on the Housing General Fund, which was due to
increased numbers of people presenting themselves as
homeless.
The Director of Finance, Governance and Property then moved on to
the forecasted financial position in 2020/21 and clarified that an
indicative financial assessment had been carried out before
Christmas, but the Council were still waiting on the final
allocations of this due to purdah delays. He explained that
preliminary findings from this appeared hopeful, and budget
allocations had already increased, so he felt the Council were in a
good financial position. He added that last year the Council had
undertaken a Spending Review and Fair Funding Review, but due to
only one-year spending agreements from central government, these
were not at the forefront, although the Council could make an
estimate for the next two to three years. He stated that additional
funding received would go towards adult and children’s social
care, and increased homelessness grants.
The Director of Finance, Governance and Property then moved on to
discussing council tax and the governance process for setting this.
He explained that the Cabinet recommendation to increase council
tax would go to the relevant scrutiny committee for comment, which
would then feedback into Cabinet in February, and would be sent to
Full Council for decision. He stated that the proposed budget would
see an increase in 2% for the adult social care precept, which was
the maximum it could be raised by, and an increase in general
council tax by 1.49%, which was not the maximum of 1.99%. He
commented that this would increase the Council’s base going
forwards, as tax was a more stable income compared to
investments.
The Director of Finance, Governance and Property drew the
Committee’s attention to paragraph 4.4 on page 9 and
clarified the figures outlined in the table, including the current
council tax banding, total number of properties, and average net
charge, which took into account discounts, tax schemes and support
provided. He stated that council tax bands A-C made up 70.4% of all
properties, and a 1% council tax rise would equate to an additional
19p per week. He then drew the Committee’s attention to the
Medium Term Financial Strategy (MTFS) on page 13 of the agenda,
which outlined that the increase in council tax and adult social
care precept would increase funding to the council by
£1,337,000 working total, which would increase the surplus
next year to £4million. He added that even with the proposed
increase in council tax, the Council’s surplus would only
raise to £1.4million in year 2 and £45,000 in year 3.
He clarified that without an increase in council tax, the council
would be in deficit in the financial year 2020/21.
The Chair opened debate and stated that in total council tax would
be rising by 3.49%. He queried the background to this, and asked
what central government’s policies were on local authorities
increasing taxes, particularly special precepts. The Director of
Finance, Governance and Property stated that the government had
only proposed a one-year funding settlement, but central government
had also struggled to fund adult social care. He stated that local
authorities had ongoing powers to increase council tax and
precepts, but local authorities were currently waiting on a White
Paper for further clarification. The Chair then highlighted point
2.3 on page six of the agenda, and asked how the council were
reducing staff expenditures. The Director of Finance, Governance
and Property replied that this was a continuing aspect of the
council’s budget, and included reducing sickness related
expenditure and overtime costs; and monitoring the amount of agency
staff compared to permanent staff employed by the council. He
mentioned that this was regularly considered at Directors Board,
and in previous years, a target had been set to reduce staff
expenditure, but that was not the case in this financial year. He
summarised and commented that a reduction in staff expenditure
would not be achieved through staff redundancies.
The Chair then queried the increase in budget allocation and asked
how much revenue was included in this. The Director of Finance,
Governance and Property replied and highlighted page 13 of the
agenda, which stated that in 2020/21 an increase in tax would
increase revenue by £3.1million, as well as an increase in
business rates. He stated that almost £2.5million would be
received from central government. The Chair asked if the working
total surplus could be achieved in 2020/21 without increasing
council tax, to which the Director of Finance, Governance and
Property replied that a net £2.6million could be achieved,
but the surplus could not be carried forward.
The Chair moved onto discussing the position of investment and
highlighted page 13 of the agenda. The Director of Finance,
Governance and Property stated that borrowing was not just
investment, but related to the amount of capital expenditure. He
added that temporary revenue from borrowing could be used for
investment and Thurrock Regeneration Limited (TRL), and that the
base amount of investment related income was £1.7million,
with the rest going to TRL. He clarified that the majority of
information relating to investment was discussed in the next item,
but the headline figure was £30million net income from
investment. The Chair then asked about the CIPFA guidance, outlined
at point 4.31 on page 8 of the agenda, and queried how much
confidence officers had in this investment income, and whether
CIPFA would change the guidelines relating to investment for
Councils. The Director of Finance, Governance and Property
responded that CIPFA only produced guidelines, and explained that
the Council’s investments were capital backed, compared to
CIPFA guidance that mainly discussed non-capital backed
investments. He stated that CIPFA were mainly worried about
councils investing in property outside of the borough, particularly
in areas such as housing and shopping centres. He commented that
Thurrock were investing bond issues in the energy sector, and no
property investment had been purchased. He clarified that he had
spoken with the Ministry of Housing, Communities and Local
Government (MHCLG) and the National Audit Office, who had never
said to not undertake investments, and were moving towards local
government self-financing. He summarised and stated that he did not
know if CIPFA or government regulations might change in the future,
but if they did then the Council would revisit their investment
approach. The Chair commented that if the rules were to change then
that revenue stream would be at risk and issues would arise with
investments, which would lead to a loss of funding. He asked if the
investments revenue could be made-up from other streams if it were
lost. The Director of Finance, Governance and Property replied that
if central government did change the rules regarding investments
then a transition period would be put into place, and many other
local authorities used investment in the same way as Thurrock. He
stated that Thurrock had built into the budget increased interest
payable which helped to stabilise long-term investments.
Councillor Fletcher asked three questions, the first being if
officers were concerned that council tax was not being increased to
its full amount, as officers had been concerned last financial year
that it would have an impact. He then asked about potential
population increases, as 32,000 new homes were being proposed
across the borough, and if this would have an effect on council tax
income and had been factored into the budget. Finally, Councillor
Fletcher asked about potential problems that were associated with
capital projects, such as overspend and delays, and if these were
included in the budget. The Director of Finance, Governance and
Property replied to each question in turn and stated that in answer
to the first question, officers felt worried when council tax was
not increased to its maximum, as even a 1.49% increase reduced the
Council’s income by £4-500,000 per year. He stated that
if council tax were increased by the maximum amount of 1.99%, the
budget would be in surplus of £1.2million or
£1.3million in year 3, compared to the current outlook of
£45,000. He clarified that council tax was the most
sustainable form of income for the council, as it was not affected
by national changes, and because of this, he felt that council tax
should increase by 3.99%. The Director of Finance, Governance and
Property then answered Councillor Fletchers second question and
stated that some modelling work had been undertaken relating to the
increased population and increased costs. He stated that
expenditure would change if the population increased, for example,
more would be spent on adult and children’s social care, as
well as the potential for a new waste collection round. He
described how the finance team had been working with the planning
team to discuss the increased amount of council tax that would be
collected through population growth, as well as the increased
expenditure. He summarised and stated that new houses, even with
the increase in council tax associated with this, would increase
the pressure on services for the Council. The Director of Finance,
Governance and Property then answered Councillor Fletcher’s
third question and stated that the capital programme would be
discussed as part of Item 6, but if a project overspent then
funding would have to be found. He stated that the funding options
were ranked, so external funding bids were the best way to fund
projects, then through capital receipts, and finally through
borrowing as there was costs associated with this such as interest
and MRP, also known as depreciation. He commented that recently
there had been lots of discussion regarding the funding of the A13
project, which had been through the audit process, but this would
not affect the Council’s funding until next year or the year
after. He summarised and stated that when the funding results of
this project were finalised, they would be built into the
budget.
Councillor Hague commented that he felt lots of work had been put
into this budget by officers and Members from all parties. He felt
that the Council’s finances seemed stable, but asked if the
increase in council tax was as low as possible, as although there
was pressure on services, an increase in council tax could put
additional pressure on residents. He was supportive of the increase
in council tax, as it had not been increased by the maximum level,
which would help residents who had their own financial priorities.
He felt this would lead to growth for the council, whilst not
over-burdening residents. The Chair also asked if residents in
financial difficulty had been considered when writing the budget,
as inflation and the cost of living had also risen. He highlighted
that further mitigation to help some residents may be necessary, as
some would experience a rise in rents, service charges, and council
tax. The Director of Finance, Governance and Property replied that
an equality assessment had been carried out and was attached as an
appendix to the report and table 4.4 showed the real impact the
council tax increase would have on residents. He added that the
additional money raised through council tax could be used to
support the borough’s most vulnerable residents. The Director
of Finance, Governance and Property then highlighted that only 50%
of HRA tenants paid any rent, so the most vulnerable in society
received the support they needed, but he appreciated that some
people would be caught in the middle.
The Chair stated he felt the situation for some residents was
already difficult as the economic situation could be tough. He
outlined appendix 2 of the report and felt that although
£900,000 of savings was being made, this could be increased
through effective spending and finding further efficiencies. The
Director of Finance, Governance and Property replied all
directorates were searching for savings and efficiencies, but the
MTFS proposed a modest figure, as if the figure was larger,
directorates would be forced to make top-down cuts. He added that
although the MTFS identified almost £1million in savings,
officers would not just stop once this figure was met, and would
continue to try to increase income, reduce expenditure and focus on
efficiencies. He highlighted the work the procurement and
commercial teams had done in finding savings, in collaboration with
the transformation team.
The Chair then asked about a recent motion that had been brought to
Full Council regarding climate change, and asked what actions had
been considered in the budget to mitigate climate change and the
impact this would have on residents. The Director of Finance,
Governance and Property replied that amounts from the budget
surplus had been set aside specifically to look at air quality
around the borough. He added that following the motion, Governance
Group, which included the Leader, Monitoring Officer, and Leaders
from all parties, had agreed to set up a Task Force to consider
climate change, and its members would include elected Members,
residents and external partners. He stated that this would fall
under the remit of the Director of Place, and an update would be
provided to Full Council next week.
The Chair then asked what obligations the Council had to fulfil in
balancing the budget, as he understood that the budget had to be
balanced for one year, not the full span of the 5 year MTFS. The
Director of Finance, Governance and Property replied that a
balanced budget meant one that Thurrock could afford, so the
Council could run at a loss if reserves could be used to fund this.
He stated that Thurrock Council did not use this definition though
and for Thurrock, a balanced budget meant one where income was
equivalent to expenditure. He mentioned that the Council’s
Section 151 Officer he had to consider a three-year budget, and
although it did not have to balance, he had to feel confident that
the council could afford it. He clarified that he did not have to
consider years four and five of the MTFS.
Councillor Rigby commented on the table at 4.4, and asked which
residents could receive discounts on their council tax bill. The
Director of Finance, Governance and Property replied that the most
common council tax discount was the single person discount, which
included people such as one-parent families, even if they had adult
children that attended university, and widowers, who all received a
25% discount. Councillor Churchman then highlighted the residents
who fell in the middle and were not overtly vulnerable, but not
secure either, such as residents who were privately renting but
were waiting for council housing, and had seen an increase in their
service charges.
The Chair asked what the level of democratic oversight and
accountability there was for corporate projects was, such as the
proposed Civic Offices development. He proposed an additional
recommendation which read as follows: “The Corporate Overview
and Scrutiny Committee recommends to Cabinet and Council that the
budget should include the following points:
1. A triple freeze be agreed for rents, service charges and council
tax
2. Cabinet to scrap the Civic Offices project
3. Cabinet to agree to net zero emissions by 2030”
The additional recommendation was put to a vote, the outcome of
which was as follows:
Votes for: Councillors Fletcher and Gerrish (2)
Votes against: Councillors Churchman, Hague and Rigby (3)
RESOLVED: That:
1. The Committee commented on the proposed council tax level with
mind to the comments set out in the report.
2. The Committee commented on the draft budget as set out within
this report to inform final budget proposals at Cabinet on 12
February 2020.
Supporting documents: