Agenda item

Financial Update and Balancing the Budget

Decision:

Cabinet approves the implementation of the revised Car Parking Charges set out at Appendix One to the report and delegates authority to the Parking & Environmental Enforcement Services Manager to undertake all necessary action to implement these charges.

 

Minutes:

The Director (Corporate Services) advised that, in the last decade, the Council had experienced a sustained period of challenge to its financial sustainability.

 

In response to ongoing funding cuts from Central Government since 2010/11, in 2016 the Council adopted a four-year Medium Term Financial Strategy (MTFS) in response to the rising challenges to its financial position and embarked on a multifaceted programme of activity intended to optimise income generation, innovate service delivery of services and ensure that resources were appropriately focused on the needs of the borough.

 

The Council demonstrated its ability to deliver against this programme and, in February 2020, was able to announce that £4.25m of base budget reductions had been reflected in its Medium Term Financial Plan (MTFP) and that the Council had in place a sustainable financial plan for the next 10 years, the period which was covered by the MTFP.

 

Since March 2020, the Council had been responding to further funding pressures alongside managing the consequences of the COVID-19 pandemic and macroeconomic factors.

 

During the 2022/23 financial year, the Cabinet received various reports providing information on the service delivery and financial risks to the Council, residents and businesses stemming from the economic situation at that time and its impacts on the Council.

 

The report provided Members with an updated position statement on the Council’s financial position, both from a General Fund and HRA perspective, and presented the actions to be progressed by the Council as a means of proactively managing the Council’s ongoing financial sustainability.

 

The Director (Corporate Services) advised that the timing of the report was particularly pertinent as the Council begins to consider revenue and capital budgets for General Fund and HRA Services for 2024/25 and beyond, with budget proposals to be presented to all Members in February 2024.

 

The latest budget monitoring information from Q2 (six-month period to 30 September 2023) indicated the ongoing in-year challenges to the Council, principally driven by factors beyond the Council’s control. Growing demand pressures and economic factors over the last decade had required the Council to actively manage its budgetary position. As an illustration of this, the Council’s net budget requirement in 2010/11 was £14.4m. Taking into account inflation this would have increased to £23.4m for the current financial year. The actual net budget requirement for 2023/24 was £14.1m.

 

Despite proactive management of the budget position, the Council’s current projected revenue expenditure plans exceed the anticipated income the Council will be expected to be able to generate from council tax and business rates receipts, fees and charges and funding directly from Central Government. The continuous reduction of Central Government funding had shifted the Council from a position where expenditure on Council services was primarily met by secure, known funding sources to a situation where funding for Council services was met from more volatile, local income sources, including council tax. Therefore, decisions taken by Full Council around annual council tax levels had a significant impact on the Council’s financial position for the year and as a starting point for council tax setting in future years.

 

The Director (Corporate Services) advised that the Council now needed to accelerate the activity it had already identified as set out in its MTFS to balance the budget position.

 

The report provided an overview of the external factors affecting the Council’s financial position and set out a number of actions that the Council intended to progress ahead of setting the budget for 2024/25.

 

Section 6 of the report detailed short term responses to the Council’s financial position; the Council could choose to review its agreed level of working balances or reserves however it should be noted that this would only provide a one-off, in-year benefit and not address the overall budgetary gap faced by the Council.  For this reason, it was essential that the Council followed a programme to manage spend within approved budget amounts whilst taking proactive action to further reduce its expenditure and increase income where possible.

 

Section 7 of the report detailed how the Council intended to respond to those pressures; Full Council approved a revised five-year MTFS building on 5 key initiatives set out in February 2022 to help improve the financial position. The Council will be accelerating these initiatives in the coming months as a means to restore financial stability:-

 

·         Reviewing Fees and Charges;

·         Budget Rationalisation;

·         Trading and Commercial;

·         Asset Optimisation; and

·         Continuous service reviews.  

Further to the information contained within the main body of the report, the Cabinet was informed that officers had also reviewed the current car parking fees. 

 

Gravesham’s car parking fees were last increased in February 2019 and therefore, to ensure competitiveness and effective use of space, a complete review was required which created an opportunity to consider an increase in fees.  In terms of determining a proposal to increase the current car parking fees, the objectives of the review were to:-

 

a)    retain the two-hour free parking on Saturdays;

b)    retain the free of charge parking on Sundays;

c)    retain the overnight free of charge parking every day from 6pm – 8am;

d)    keep our car parking fees close to the average fees charged across Kent whilst also recognising that Gravesham was unique in terms of transport links into London; and

e)    continue to offer local workers and shoppers an advantageous price, over commuters, in our long stay car parks. 

A range of different tariff increases were modelled using current usage levels and following an extensive exercise, a tariff was selected that applied an incremental increase to each tariff band across the short and long stay car parks whilst also ensuring the objectives as outlined above. 

 

Should the proposed tariff be agreed by Members, it will generate in the region of an additional £335,000 per annum based on current usage levels. The proposed fee increases would be mitigated by the free parking periods, the discount schemes that the Council offer to people that work in the town centre and to people who park on a regular basis and wish to purchase a season permit. The intention would be to implement the new tariff with effect from 1 February 2024.

 

The Cabinet expressed concern regarding the financial pressures the Council was facing which were outside of the Council’s control and the need to deliver £4.6 million in base budget reductions. The Council continued to look at services with a view to increase income, reduce costs and improve efficiencies however acknowledged that it would need to make some difficult decisions in the near future in order to meet the budget reduction target.

 

The Cabinet noted that, since publication of the report, agreement had now been reached on the 2023 pay award for local government employees which would have a further impact on the budget. The Director (Corporate Services) informed Members of the agreement that had been reached and advised that the pay award had been modelled into the MTFP which will consequently have an impact on future years.

 

The Cabinet acknowledged that the budget now relied upon an increase in council tax and the consequential impact of not increasing council tax.

 

The Director (Corporate Services) advised that the MTFP reflected an increase of council tax by 3% as recommended by the Secretary of State and that any change to that increase would have an impact and would be detrimental to the budget. The Director (Corporate Services) reiterated that the Council, as billing authority, issued the council tax bill on behalf of itself and the other preceptors such as Kent County Council, Kent Fire and Rescue etc. however the proportion kept by the Council was significantly low. 

 

The Cabinet stated that even if the Council was to agree to not increase council tax; KCC could still increase council tax which Gravesham would be required to collect, on its behalf, as the billing authority.

 

The Cabinet was also informed that it was unlikely that the Council would receive confirmation of the provisional local government financial settlement until mid-end of December 2023.

 

Resolved that the implementation of the revised Car Parking Charges set out at Appendix One to the report be approved and delegated authority be given to the Parking & Environmental Enforcement Services Manager to undertake all necessary action to implement these charges.

 

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