The Treasurer presented a report which sought Members’ approval for the Authority’s budget for 2021-22, the Authority’s precept, as required by law, for 2021-22 and its Medium Term Financial Plan (MTFP) for 2021-26.
The Authority was required to approve its budget and set the Council Tax precept for the financial year commencing 1st April 2021. The Authority was required to take into account Government funding, precept regulations and organisational demands. This requirement was supported by the production of a MTFP with the annual budget forming the first year of the MTFP. The creation and maintenance of the MTFP was fundamental in promoting good financial planning and delivery of value for money. The MTFP was Appendix 1 to the report.
Members had considered the Authority’s financial position at their Planning Session on 15th January 2021 where they had the opportunity to challenge the assumptions and proposals being put forward by officers as part of the draft budget and MTFP.
The Treasurer reported that the report followed a similar format to those that had been presented in previous years. The current and ongoing impact of Covid-19 made it much more difficult to forward plan with the usual level of relative confidence. The report attempted to summarise the current understanding of the impact of Covid-19. However, a range of factors could alter the situation and it would be important to regularly return to check assumptions and financial performance to enable financial plans to be reviewed and updated as the impact of Covid-19 becomes clear.
The 2021-22 budget proposals were based on the Local Government Finance Settlement for 2021-22, a one-year settlement. The Settlement included Council Tax Referendum Principles that allow for an increase in council tax of up to 2%, without triggering a local referendum. If Members were to agree an increase of 1.99% in the council tax, this would generate an additional £646k council tax income compared to 2020-21, based on the tax bases of Band D equivalent properties. When other elements of funding were included such as revenue support grant and business rate income - the overall net revenue budget would increase by £1.37m compared to the previous year, including two one-off grants totalling £2.48m.
Members were referred to Table 2: Construction of Proposed 2021-22 Revenue Budget within the report which showed the proposed adjustments to the revenue budget. The increase in funding of £1.372m would not be sufficient to balance the budget and therefore savings proposals of £0.499m had been identified to ensure that planned spending matched the level of proposed resources. The proposals represent a balanced budget of £46.203m for 2021-22. The proposed increase in council tax of 1.99% would result in a Band D precept of £80.87: an increase of £1.58 (or 3p per week) for a Band D property. Should Members wish to propose a council tax precept increase of less than the 1.99%, further savings would be required in order to balance the budget.
Members were referred to Appendix 2A of the report which detailed the Commitments and Growth. The commitments reflected the impact of previous decisions that have a financial consequence in 2021-22 or were due to legal or regulation changes. Due to the uncertainty surrounding business rates income, the impact of Covid-19 support on collection funds and the grants that would be received, there was a high risk that the estimated amounts included in this budget would significantly change. As a result of this the budget included a transfer to reserves within the commitments.
The Treasurer advised that there was one other area of potential financial support from the Government called ‘The Local Tax Income Guarantee’. This would be calculated by the Government at the end of the current financial year and related to a calculation of the actual council tax and business rate losses in 2021. He had received an email from a Home Office official explaining that the Government would be producing a policy paper which would be available later this week. Officers would review the position when further information was made available.
The Head of Finance outlined the Medium Term Financial Plan for 2021-26 and referred to Table 1 – Funding within the report which set out the forecast funding available over the period of the MTFP.
The Chair confirmed that he had written to the Prime Minister twice regarding the pay freeze for public sector workers outside of the NHS, urging the Government to reconsider its decisions. To date a response had not been received.
A Member raised a question on the Indicative Capital Programme and asked if the Service was required to make greater savings would the capital schemes need to be paused. In response, the Head of Finance advised that the schemes were indicative at present and that decisions on schemes like Wilmslow and Crewe would need to be considered in light of the prevailing financial situation.
A Member raised a question on the Integrated Risk Management Plan (IRMP) Reserve. The report stated that the present Capital Strategy suggested that this reserve would be virtually exhausted by March 2024 and the Members sought clarity on what would happened after that date. In response, the Treasurer advised that part of the Strategy would be to review all levels of earmarked reserves and challenge these going forward. If all reserves were depleted then there would be a greater reliance on borrowing to finance the Capital Strategy.
A Member asked if there was a minimum amount of reserves that the Service should hold. In response, the Treasurer advised that there was no required amount set. However, 5% of the budget had been adopted as a figure to be held in a general reserve. This percentage was mentioned in the National Framework for fire and rescue services too.
Members raised further questions about borrowing. In response, the Head of Finance advised that interest rates were monitored on a daily basis and that officers were prepared to apply for borrowing at any time to receive the best possible rate. The Service also used external Treasury Management Advisers who were aware of the borrowing requirements. At the present time there was no indication that interest rates were likely to rise.
 he Medium Term Financial Plan, as set out in Appendix 1 of the report be approved;
 the Budget Requirement of £46.203m as set out in Table 1, paragraph 24 of the report be agreed, noting the adjustments for inflation, growth, one off items and savings as set out in Table 2, paragraph 27 and detailed in Appendix 2 of the report;
 the proposed council tax increase of 1.99% be approved and Band D council tax precept of £80.87 be set for 2021-22;
 the levels of council tax precept as set out in Table 4 paragraph 48 of the report be agreed;
 the proposed capital programme for 2021-22 set out in Table 3 paragraph 42 of the report together with its associated financing be approved;
 the Capital Strategy set out in Appendix 3 of the report be approved;
 the Reserves Strategy set out in Appendix 4 of the report be approved;
 the Statement of Robustness of Estimates set out in Appendix 5 of the report be noted; and
 the Financial Health Targets as set out in paragraph 44 of the report be adopted.