Agenda item

Revenue Management Quarter 4

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


Jane Fineman, Head of Finance, Procurement and Parking introduced the report set out in the agenda.


Discussion and questions from Members included the following:


-       The Finance Team were congratulated for finalising the Council’s accounts by the end of May 2023. 

-       The introduction of the new Fees and Charges were staged and took effect towards the end of the last financial year.  They generated about  £300k more than had originally been projected.

-       The budget deficit of £943k was based on the assumption that the 48 vacancies in the Council were filled.

-       The Council were mindful that staff vacancies needed to be filled.  It was hoped the People’s Strategy, when published, would help achieve this.  The Council continued to advertise but at the moment it was struggling to make any significant headway in trying to reduce the number of vacant posts.

-       The People’s Strategy would be one of the Council’s core policy documents so would need to go through the usual approval process.  It was hoped that it would be adopted by February 2024.

-       There was no guarantee that the vacancies would be filled in the next 12 months.  If the vacancies were not filled, the money saved would cancel out the deficit. 

-       However, this was not a healthy position for the Council.  The Council were reliant on its staff to continue delivering the services but the current shortfall meant the position would soon become unsustainable.

-       The level of service that the Council needed to deliver to its residents was starting to suffer.  Experienced staff had left and new staff required training. Staff sickness had also risen.

-       The budget included a vacancy factor which accounted for the turnover of staff.  In 2022/23 it was £260k, for 2023/24 it would be £340k.  An increase of £80k as the Council recognised the problems it was having in recruiting staff.

-       The savings over 2022/23 due to staff vacancies was £1m.  If you subtracted the additional £80k and then divided the balance by four, you would have a figure of £230k which the Council could then contribute towards the £944k deficit. 

-       At quarter one of 2023/24 the Council would be in a position to start projecting for the year ahead.

-       It was noted that there was quite a large jump at year end from where the Council thought it would be at Quarter 3 and where the Council ended up in Quarter 4.  The biggest jump was in staff costs as department managers continued to be hopeful they would be able to fill vacancies.

-       The aim was to be able to find staff so the Council didn’t have a £1m variance for staff costs next year.

-       An alternative would be for the Council  to start to use agency staff.  But this was expensive. 

-       The Local Plan was difficult to budget for.  The Council didn’t budget for the Local Plan on a year by year basis.  It was usually funded from Reserves.  Because of a number of issues the £1m set aside for the Local Plan wasn’t taken from Reserves last year.  It was expected the £1m would be needed this year. 

-       In terms of staffing, all Heads of Service had a plan to deliver their service and had the freedom to utilise their budget either by direct recruitment or the use of agency staff. 

-       There were different issues that affected different departments.  Heads of Service would work with HR to establish how best to tap into any particular market depending on the expertise required e.g. Planning or Finance.

-       The People’s Strategy would set out how the Council could recruit and retain staff and to look at what services the Council was trying to deliver.

-       It might be the case that the Council was not best placed to deliver some of the services, but it would be for Cabinet Members, alongside Heads of Service to balance the services that had to be delivered against the budget available.  This was all part of the process when setting the budget.

-       It was very difficult to forecast forward.  Funding from Central Government was provided on an annual basis.  In addition there were a number of variables that go into the Council’s Business Rate growth.  The Council had to then factor in issues that were completely outside their control e.g. Covid.

-       The budget was put together with the information available at that time.  The quarterly monitoring reports allowed the Council to provide an update during the year.  So any movements could then be forecast.

-       The Council also tried to make use of market intelligence e.g. information from the Bank of England – however, recently, national forecasts had been unreliable which had compounded the Council’s ability to accurately forward forecast.

-       Based on the information available at the time, it was fair and reasonable for Cabinet to take appropriate action to ensure the budget balanced by the end of the year.

-       The Chief Executive as Head of Paid Services and the Head of Human Resources would be responsible for delivering the People’s Strategy.

-       The list of all current vacancies was listed in Appendix G.

-       If overtime was paid, it was paid in single time.  Otherwise, the Council offered flexible working which allowed staff to manage their time, taking account of any additional hours worked. 

-       There was no requirement for staff to work within a certain distance from the Town Hall. 

-       It was not possible to know in advance whether the Council would generate Business Rate growth.  It was difficult to predict and reliant on a number factors.  It was not just Business Rate growth, it was net growth above the baseline.  The Valuation Office set the rateable value, and the Council collected on the basis of that value.  However, if a business was successful on appeal, that would net down the Council’s growth.

-       The Council was very susceptible to a number of very large employers who made use of consultants to chase down the rateable value in order to secure a refund.

-       Because of the volatility, it was not prudent to assume Business Rate growth money every year.

-       Business Rate growth money should in any case not be used as part of the Revenue budget.  It shouldn’t be used to provide services as to do so would be assuming a level of income that couldn’t be guaranteed. 

-       The correct use for this money was to use it to fund the Capital Programme – and this is what the Council does so as to ensure it had sufficient funding going forward.

-       The money received from Business Rate Growth could in theory be used as part of the Revenue budget, but then the Council would not have a Capital Programme. 

-       The level of appeals currently totalled £13.5m which meant there was a lot of risk.  And this was just for refunds, it didn’t cover businesses going bust.

-       It was agreed that a Members Briefing on Business Rates would be arranged.

-       In addition to having a People’ Strategy, the Council had a Business Continuity Plan.  This came into play during the pandemic where the Council were able to divert staff to essential services as necessary.

-       With reference to recommendation 2 of the report, car parking charges were increased quite early on to deal with the deficit.  Given there was now no deficit, the car parking strategy on charges should be reviewed.

-       For clarification, the report showed that the Council did not have a deficit for 2022/23.  All Councils would project a deficit going forward because their income streams could only go up by 3% (capped) and expenditure was rising by 10%. 

-       Last year, only one District Council in Kent didn’t have a deficit.  The level of funding available was insufficient to meet the level of expenditure.  Councils therefore started with a deficit and then during the year, worked towards reducing it by year end. 

-       Quarter 4 report was historical.  To ask Cabinet to consider something for the current year fell outside the scope of this report. 

-       The cost of using Agency staff should be considered where the needs of the Council to deliver its services outweighed the additional expense.

-       It was noted that it was not Cabinet’s responsibility to recruit staff, it was the responsibility of the Chief Executive as Head of paid services and HR. 


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

Supporting documents: