Agenda item

To consider and provide a recommendation to Cabinet on the proposals set out in the attached report.

Lee Colyer, Director of Finance, Policy and Development introduced the report that provided an update to the budget projections for the 2021/22 budget.

Discussion and responses to Members questions included the following:

-       Since approval of the draft budget, Government had set out the provisional Local Government Finance Settlement which confirmed the Council Tax threshold for this Council of £5 over the current years rate. 

-       Government expected the Council to increase Council Tax by £5 in their assessment of the Councils resources that would be available to deliver local services.

-       The final settlement would be confirmed by Parliament in February.

-       A final allocation of New Homes Bonus of £454k would be received, which would help reduce the use of Reserves in balancing the Revenue Budget. 

-       The Government had stated there would be a replacement to the New Homes Bonus and had described the new scheme as ‘a new, more targeted approach that rewards Local Authorities where they are ambitious in delivering the homes we need’.

-       In terms of Business Rates, the system that rewarded Local Authorities that attracted investment into their area and delivered growth would continue for a further year.  TWBC would continue to be part of the Kent Business Rates Pool.

-       TWBC continued to support residents and businesses throughout the pandemic.  This had had a dramatic effect on the Council’s finances which was unlikely to improve in the foreseeable future.

-       Unemployment and Collection  Rates, which were being assisted by national support packages  were holding up better than anticipated.

-       £1.935m would still be required from Reserves to fund  the provision of local services for next year.  This was an improvement on the £3m identified in the draft budget.

-       The Council’s assets would still require substantial investment, with additional growth project funding of £2.8m.  This was in addition to rolling forward the existing Capital Programme.

-       The report included a table (A List) of schemes which for health and safety reasons or where external funding was in place would require funding.

-       The report also included a B List of £2m worth of works which was required to keep the Town Hall, Assembly Hall, Car Parks and Leisure Centres operational. 

-       This was in addition to the £1m a year the Council spent on planned and responsive repairs to its assets. 

-       The temporary use of Reserves and the additional Capital Schemes would reduce the level of Reserves held by the Council.

-       Reserves could only be used once.  The cost of providing existing services would be greater than the level of income raised each year.  It would therefore be necessary to act, to bring the Revenue Budget back into balance without reliance on Reserves from April 2022. 

-       The drain on Reserves was further exacerbated by the unsustainable costs of existing assets.  A review would be required to identify those that had sufficient demand and purpose to continue to invest, and those that should be sold or repurposed.

-       When appropriate, Reserves should be replenished to pre-pandemic levels.

-       A budget survey was undertaken.  This sought to test the budget strategy to test the use of Reserves to protect local services for the year 2021/22.

-       The survey also tested the level of Council Tax increase the public felt appropriate and how to fund the local response to the Climate Change Emergency.  The public were also asked how they would allocate funding for services should income levels not recover due to the consequences of the pandemic.  And that would balance the budget.

-       The responses received from the survey totalled 575 (compared with 199 last year). 

-       Public opinion supported the use of Reserves (91%).

-       The public also supported the need to increase Council Tax by £5 (74%).

-       Respondents said they would support a reduction in all Council services from April 2022 in order to balance the budget, with the exception of Community Safety and Public Conveniences. 

-       Respondents also indicated they would accept a significant reduction in a number of services:

o   Committee, Mayoral and Member services

o   Museum

o   Planning and Building Control

o   Property and Maintenance Costs

-       There was strong support for setting fees and charges locally (69%).

-       There was agreement on the importance of climate change and recognition that  any action would require savings from existing budgets and an increase in income in order to fund this.

-       The 5 year projections shown in the report were there to emphasis that should the Council not act, then very quickly, each year, the deficit would compound.

-       Savings would have to come from 2 main sources, the reduction in the cost of services and from assets.

-       TWBC operated in a two tier area with Kent CC the primary Local Authority.  If Kent CC had to make substantial savings it would have implications for the residents of Tunbridge Wells. 

-       Kent CC would also be increasing their Council Tax bills and this would result in an average increase of £100 per resident.

-       The draft budget worked on high level estimates for employment costs.  The report showed detailed costings which had resulted in an overall reduction. Employment cost comparisons with other Councils was not recommended as services and local priorities differed. 

-       TWBC now had more understanding of the Government support packages and was better able to map the effects of the pandemic on income streams.  This allowed the Council to update the figures on sales, fees and charges.

-       The funding figures for List A and B were proposed figures that the Council would be asking for approval in principle only.  There would be no action taken until and unless figures were costed and a decision taken that the spend identified was needed. 

-       When Government announced the provisional Local Government Settlement, they multiplied their forecast tax base by the increased Council Tax charge.  However, the Tax Base Central Government used was an estimate based on previous years and on the basis that the Tax Base always went up.  The Tax Base for all authorities in Kent had actually fallen as a result of more households that did not pay 100% of their Council Tax bill.

-       At some point Central Government would have to use the updated Tax Base figures and this would show that Local Authority spending power had decreased, not increased.

-       TWBC’s level of spending power was calculated on how much income was received from Council Tax receipts (which was half the level received by Maidstone).  TWBC also received one of the lowest levels of retained Business Rates.  This was due to Tunbridge Wells having low levels of deprivation and was therefore only allowed to retain £2m. 

-       TWBC had also received one of the lowest levels of New Homes Bonus.

-       New Homes Bonus hadn’t really worked for TWBC.  Delivering housing growth took time, TWBC had just started to deliver as the scheme came to an end.  The planned consultation process by Government on the proposed new scheme had not taken place.  Government were now expected to announce the new scheme in the spring, but details were currently scarce.

-       Mayoral costs overall were approximately £40k. 

-       The Council would need to make decisions related to its assets within the next 24 months. 

-       In general terms the Council was spending a significant amount of its revenue budget on maintenance and Business Rates.  It was also spending a significant amount of its Reserves maintaining the capital costs of its asset portfolio. A review would need to identify where the Council could reduce the costs of its assets based on demand, level and delivery of services and office accommodation.  

-       The cost of revenues and benefits was included in the £2.3m and came under the heading of Shared Services.

-       Interest and borrowing rates were expected to remain very low for the foreseeable future. 

-       Should the Council decide to invest in new Capital schemes then there would be the opportunity to borrow.

RESOLVED – That the recommendations to Cabinet as set out in the report be supported.