General Fund Budget Setting 2021/22
- Meeting of Cabinet, Monday, 1 February 2021 7.30 pm (Item 72.)
- View the declarations of interest for item 72.
That a resolution be placed before the meeting of the Council on Tuesday, 23 February 2021, specifying the Council Tax to be levied in the Borough of Gravesham.
The Assistant Director (Corporate Services) presented the draft budget and proposals for 2021/22. The report contained the General Fund Revenue and Capital Estimates for 2021/22, as well as the revised estimates for 2020/21 and longer term budget projections, as set out in the Council’s Medium Term Financial Plan. She noted that the pandemic had created new challenges for the future sustainability of the Council, which had been compounded by the ongoing and prolonged uncertainty around the future funding of local government. Members were advised that format of the budget report included a covering summary report which outlined the budget setting context and proposals with a series of appendices providing the detail.
The Assistant Director (Corporate
Services) highlighted the following points:
· Appendix 2 - The budget had been prepared on the basis of the Provisional Local Government Finance Settlement announced on 17th December.
· Similarly to last year, this was a one year only settlement pending the outcome of the Spending Review and Fair Funding Review.
· There had been a number of cuts to local government funding over the last 10 years and attention was drawn to the table under point 3 of Appendix 2 showing that there has been no increase in the business rates baseline this year. However, there was a continuation from last year of Government eliminating ‘negative Revenue Support Grant’ for Gravesham and this was budgeted to be £244k. In addition, the provisional settlement had introduced a new Lower Tier Services Grant intended to ensure that no lower tier council had a decrease in spending power. For Gravesham, the provisional settlement indicated that this grant would be £126,260.
· The graph in point 11of the report showed the assumed increase in Core Spending power for 2021/22 of 1.4% This assumed a rise in Council Tax receipts which had been reflected by the Medium Term Financial Strategy.
· The Council had secured indicative New Homes Bonus funding for 2021/22 of £311,050. This was below the level of funding that was previously in the Medium Term Financial Plan due to there being only 55 net additions to the housing stock of the Borough due to the pandemic, less than the 167 net additional homes needed to be delivered to meet the 0.4% national baseline.
· This had resulted in an increase of Core Spending power per dwelling in the Borough of c.2% or £252. This is the sixth lowest in Kent.
· With regards to Business Rates for 2021/22 Gravesham would continue to be part of the Kent pool.
· The current Medium Term Financial Strategy covered the period to 31 March 2021 and in the absence of any certainty from the Government on local government funding, it had been decided that the Council would produce another one year Medium Term Financial Strategy, effectively a holding statement, until the outcomes of the Spending Review, Fair Funding Review and Business Rates reforms were known.
· In relation to the Council Tax charge - the Provisional Finance Settlement announcement had indicated the continued flexibility for district councils in setting Council Tax levels by permitting district councils to raise Council Tax by 2% or up to and including £5 (whichever was higher) without triggering the requirement for a referendum. Therefore, the budget had been prepared on the basis of a £4.95 or (2.3%) increase, taking the Council’s element of the charge from the current level of £208.08 to £213.03.
· It was proposed that working balances remain at £5.25m, this comprised of minimum working balances of £2m and General Reserve of £3.25m.
· The draft Capital Programme for 2021/22 was expected to cost £52.3m. The main items being works for Heritage Quarter of £5m, Elizabeth Huggins Cottages £2m and The Charter £27m.
The Director (Corporate Services) confirmed that she was confident about the budget proposals which once again had been built in the face of a lack of funding arrangements plus ten years of sustained cuts and the effects of the pandemic. However, she noted that whilst it had been difficult the Council was still in a strong position because of work undertaken previously and the budget continued to deliver the Council’s objectives including employment opportunities. However, the impact of Covid had resulted in a budget gap of £2.6m emerging in 2025/26 in the Medium Term Financial Plan.
The Leader drew attention to the fact that this would be a recommendation from Cabinet to Council and all Members would be invited to attend that meeting. He considered the budget to be a responsible programme and congratulated finance officers on their positivity.
The following comments were made during discussion on this subject:
· Attention was drawn to the table on page 105 of the report and it was highlighted that this excluded the work the Council had undertaken to provide services for its residents. The pandemic had resulted in a difficult year for everyone and an increase in Council Tax would be a difficult decision. However, it was further noted that most of the increases came from Kent County Council and the Kent Police Authority.
· Cabinet was advised that 60% of circa 43,000 residences in the Borough, fell below Council Tax Band D and that the Council would continue to offer support to residents and to signpost to other means of help and advice. 18% of properties fell within the higher bands and that Gravesham had a high concentration of low band residences which made it difficult to generate significant receipts.
· It was noted that a high proportion of core spending power had previously been provided by the Government through direct funding and the Director (Corporate Services) confirmed of local authorities’ core spending power, 96% was now funded from local taxation and the primary funding source for the Council was the council tax.
· It was requested that residents be assisted to clearly understand the division of the council tax between precepting authorities and that the Council was the collection authority and only received 12%. It was also noted that the format of council tax bills was prescribed in legislation and that the Council had to pay a fixed amount to all precepting authorities, such as Kent County Council, the Kent Police Authority and parish councils etc. irrespective of whether the Borough Council had been able to collect the full amount of council tax due. Whilst it was noted that this would be balanced in later years, the Council had to bridge the funding gap in the meantime which affected cash flow.
· It was felt that the number of dwellings Band D and below that would pay an increase in Council Tax of less than £5 per year could not be overemphasised.
The Chief Executive reported the Local Government Association (LGA) and the District Councils’ Network (DCN) had been lobbying the Government on four key issues:
1. It was widely considered that the New Homes Bonus threshold being held at 0.4% did not hold up to scrutiny and was arbitrary.
2. Greater longevity and higher amounts of Covid funding for local government was a necessity.
3. Leisure Trusts – the Council had provided cumulative support to GCLL of £1m in the absence of any meaningful financial support to council-owned leisure centres operated by Trusts such as GCLL.
4. There was an inequality in referendum principles for Council Tax considerations between, for example, county councils and district councils. District council could increase their Council Tax up to £5 per year. Other preceptors such as KCC and Kent PCC had far greater flexibility and parish councils had no referendum principles and could therefore could levy an increase greater than that of district councils. Lobbying was being undertaken to increase local discretion and flexibility in the Final Local Government Finance Settlement for District Councils.
The Chief Executive advised that details on the Government’s final settlement were due to be received in the next week and he undertook to ensure that Members were briefed as soon as possible.
The Leader concluded that the proposed budget was a very strong base and that the reserves had been affected by the introduction of Universal Credit and then by the pandemic. The reserves needed to be rebuilt to enable the Council to face the future. The biggest issue for the budget had been the continued Government austerity. Council Tax may be the only source to provide an uplift in funding for services. Despite all the efforts of the staff during Covid, central government had set out that there would be no increase in salaries, except for those on lower incomes. However, the Council was in a strong position.
Resolved that a resolution be placed before the meeting of the Council on Tuesday, 23 February 2021, specifying the Council Tax to be levied in the Borough of Gravesham for the year 2021/22.
- 1. GF Estimates Report 2021-22 - Summary Version, item 72. PDF 131 KB
- 2. Appendix 2 - Government Funding, item 72. PDF 153 KB
- 3. Appendix 3 MTFS 2021-22, item 72. PDF 73 KB
- 4. Appendix 4 -General Fund Revenue Budget, item 72. PDF 73 KB
- 4a. Appendix 4a GBC Cabinet Budget Book Service View 21-22, item 72. PDF 1 MB
- 5. Appendix 5 Council Tax, item 72. PDF 96 KB
- 5a. Appendix 5a Council Tax Freeze Impact, item 72. PDF 448 KB
- 5b. Appendix 5b. MTFP - V12 - 2020-21 Cabinet 01.02.2021 - CTax £4.95 increase in 2021-22, item 72. PDF 78 KB
- 5c. Appendix 5c. MTFPV12 - 2020-21 Cabinet 01.02.2021 - CTax freeze in 2021-22, item 72. PDF 78 KB
- 6. Appendix 6 - GF Working Balances, item 72. PDF 103 KB
- 6. Appendix 6a. Reserves Policy 2020, item 72. PDF 335 KB
- 6. Appendix 6b Assessment of GF Working Balance Level 2021-22, item 72. PDF 131 KB
- 7. Appendix 7 Capital Programme 2021-22, item 72. PDF 72 KB