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Cabinet Business Papers CABINET BUSINESS PAPERS for the Cabinet meeting to be held on Tuesday 15 December 2020 1 of 327 Cabinet Business Papers Contents Items for decision Pages Priority – All Budget Proposals - 2021/22 4-23 Corporate Plan Implementation Plan 24-51 Council Tax Base 2021/22 and the Council Tax Collection Fund Position for 52-64 2020/21 Financial Position: Quarter 2 – 2020/21 65-84 Priority – Safe and Supportive Communities Accommodation Plan - Skelton 85-94 Priority – All Outside Bodies and Community Organisations 2020/21 95-102 Priority – More and Better Jobs Area Growth Plan Refresh 2021-2025 103-136 Priority – Proud Places Eston Precinct Project - Site Assembly 137-144 Redcar Town Deal – Town Investment Plan 145-153 Priority – Prosperity for All Attractive and Vibrant Places Arlington Chapel, Loftus Proposals 154-161 Items for information Priority – Cleaner and Greener Annual Energy & Carbon Report 2019-2020 162-192 2 of 327 Delegated decisions Adults & Communities 193-251 Children & Families 252-257 Growth, Enterprise & Environment 258-301 Resources 302-327 3 of 327 Member Report Budget Proposals - 2021/22 Public To: Cabinet Date: 15 December 2020 From: Managing Director (Head of Decision type: Key - Budget Paid Service) Portfolio: Resources Forward Plan reference: RD0061 Priority: All priorities Ward(s): All 1 What are the recommendations? 1.1 It is recommended that Cabinet: • Propose a balanced revenue budget for 2021/22, and an indicative balanced budget for 2022/23, • Agree to consult on the investment programme with businesses in the borough, • Agree to consult on a 1.99% increase to Council Tax • Agree to consult on a 2% increase to the Adult Social Care Precept • Agree to consult on the technical changes needed to the Council’s Council Tax Support scheme 2 What part of the Corporate Plan does this report deliver, and how? 2.1 The medium term financial strategy and budget proposals for 2020/21 are integral to the Council’s ability to deliver the entirety of the Corporate Plan, ensuring the financial resources available to the Council come together in a robust plan to fund the agreed priorities. 2.2 Well planned revenue, capital and treasury activities are also essential in ensuring the medium term financial strategy of the Council is robust and promotes financial resilience and sustainability. 2.3 Approach and Key Principles The Council has previously planned its finances over three year cycles, aligned to the comprehensive spending reviews undertaken by government which inform the level of funding available to local government. However recently, due to Brexit last year and Covid-19 this year, the Government have foregone multi-year planning with one year only settlements being issued. 4 of 327 Version 7 (08/03/2017) 2.4 The current Medium Term Financial Strategy (MTFS) was approved in February 2020 and covered the years 2020/21 to 2022/23, following on from the previous three year MTFS that expired 31 March 2020. As Government are delaying their comprehensive spending review again until Summer 2021 and issuing a one-year only settlement for 2021/22, this budget proposals report will remain within the current MTFS period and will seek to update assumptions for the latter two years of 2021/22 and 2022/23. Once Government have undertaken their comprehensive spending review in 2021, the MTFS will be refreshed and extended in line with that. 2.5 Over the last decade the Council has strived to maintain a focus on its priorities and continue to deliver good services, in the context of reducing resources and increased demand for support. In the previous MTFS, part of the strategy for achieving this was the utilisation of reserves to fund expenditure requirements, recognising that this was a temporary measure and that subsequent permanent solutions would be needed. 2.6 The current MTFS has addressed this, setting a balanced revenue position across the three years without reliance on reserves, and promoting a key focus on financial resilience and sustainability. This also went towards addressing the ‘except for’ value for money opinion issued by our external auditors as part of their audit completion report for the 2018/19 financial year, that was in relation to concerns regarding sustainability of resource deployment. 2.7 As part of their audit completion report for the 2019/20 financial year, the auditors have recognised the positive progress made in stabilising the council’s financial position, but have left in place their ‘except for’ value for money opinion due to the lower level of reserves now held by the council. 2.8 Therefore, a key focus for the 2021/22 budget will be to retain the emphasis on financial resilience and sustainability and try to protect and replenish the council’s reserve levels where possible. 2.9 Revenue Budget Proposals The revenue budget has three key building blocks: • Income and Funding • Services Investments • Driving Change Efficiency Improvements 2.10 As explained above, the current MTFS has existing assumptions across these three blocks for balanced positions in 2021/22 and 2022/23, and this budget proposals report will set out a refresh of these assumptions for consultation, to inform the final 2021/22 budget to be set by Council on the 25 February 2021. 2.11 This refresh has needed to be more substantial in nature than would otherwise have been required due to the significant impact of the cyber-attack and subsequent coronavirus pandemic. Both incidents have adversely affected the surety of financial forecasts, but evidence from this year to date has shown substantial impact across funding sources, service costs and income levels, some aspects of which will continue into next year. 2.12 The refreshed assumptions within this budget proposals report have been informed by a process of analysis and due diligence of the available evidence and intelligence, involving the key managers of services right across the council. 5 of 327 Version 7 (08/03/2017) Income and Funding 2.13 Government Funding Government announced their one year spending review for 2021/22 on 25 November. The national context for the spending review was the considerable impact of Covid on the public finances, with a huge contraction in the economy this year, record levels of peacetime borrowing and underlying debt forecast to continue rising through to 2026. There is recognition that this is unsustainable over the medium term, and therefore once the economy starts to recover, a responsibility to reintroduce balanced public finances. 2.14 As part of this, government forecasts of medium term departmental spending have reduced by £10bn compared to the March 2020 Budget. When taken along with protected / prioritised sectors like the NHS, Defence and Education, this could signal some challenging years ahead for local authorities in terms of government finance settlements. It is hoped the medium term picture becomes clearer when the Governments comprehensive spending review is undertaken in 2021. 2.15 For 2021/22, the headline quoted for local government was an increase in core spending power of 4.5%. However, the majority of this does not translate into additional funding allocated by government, with most assumed to come from local council tax increases. The breakdown of this assumed spending power increase at a national level is: • a 2% increase in core council tax for all councils • a 3% increase in the adult social care precept for all councils with social care responsibilities • £300m additional grant funding for social care • Indexation of 0.5% for revenue support grant and business rates 2.16 Alongside the permanent items above, the spending review announced some one-off provision to support local authorities with Covid-19 pressures next year. At a national level, the government has said it ‘expects’ to provide over £3 billion in additional support to local authorities, broken down as: • £1.550 billion to meet additional expenditure pressures as a result of Covid • £670 million to support households least able to afford council tax payments • £762 million to compensate for 75% of irrecoverable losses of council tax and business rates revenues relating to 2020/21 • Extending the existing fees and charges income compensation scheme for a further three months to the end of June 2021. 2.17 Whilst the spending round has been received by local government with some positivity, this is from the short-term perspective of coping with the immediate impact of Covid. There is still concern when looking beyond next year, with the need to look through Covid and understand how the longer term financial challenges faced by local authorities will be catered for. 2.18 The estimated impact of this one year spending round has been factored into the Council’s funding position as part of this budget proposals report. This has been added to with the fourth tranche of Covid grant received this year, which as highlighted in the Quarter 2 update to Cabinet, will be carried forward into 2021/22 to help address the funding pressures from reduced council tax and business rates income, including a delay to the national resetting of business rates baselines. 6 of 327 Version 7 (08/03/2017) 2.19 More detail is awaited as part of the provisional local government finance settlement expected to be released in the week commencing 14 December 2020. Any required updates following the announcement of the settlement will be reported through to Cabinet and incorporated into the final budget put forward for full Council approval on 25 February 2021. 2.20 Discussions with Government regarding support for the impact of the cyber-attack are on-going, and any support that is confirmed will be factored into the financial position at that time 2.21 Fees & Charges Fees and charges provide an important income stream to the Council and are an essential element of the Medium Term Financial Strategy.
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