The Lead Member for Resources, Mr L. Breckon CC, has been invited to attend for this item and items 11 and 12 below.
The Commission considered a report of the Director of Corporate Resources which set out the provisional revenue and capital outturn for 2021/22. A copy of the report marked ‘Agenda item 10’ is filed with these minutes.
The Chairman welcomed Mr L. Breckon CC, Lead Member for Resources, who attended for this item.
Arising from discussion the following points were made:
Members raised concerns regarding the expected
increased shortfall in the budget by 2025/26 and questioned if there was any
realistic chance of fair funding coming to fruition to ease the pressures
faced. Members agreed this was not a situation of its making and many
councils were suffering as a result. Members were disappointed to hear
that the fundamental government review of fair funding which the Council had
pursued for some years was unlikely to happen. Though a consultation on
funding was expected to take place this summer, this was not expected to result
in any meaningful changes that would benefit the Council.
A member questioned whether there was anything
the Council could do to improve the speed with which it adopted new
roads. The member suggested that promoters that funded large schemes would
benefit from greater certainty on this issue, providing assurance that might
encourage them to deliver the infrastructure required.
It was suggested that a review of
underperforming assets with a view to disposal to help address the increased
gap might be beneficial. A member commented that some assets, such as Beaumanor Hall, were particularly costly and whilst the
disposal of such an asset would not be the preferred approach, the financial
circumstance might require this. The Lead Member for Resources responded
to confirm that the Council’s asset register was being regularly reviewed and
action taken in respect of those considered to be consistently
underperforming. Beaumanor Hall would be
considered as part of that ongoing process. Members recognised that the
Council might be required to consider sale and savings options which might be
unpalatable given the financial pressures it faced.
Members questioned the change in expectations
regarding rising inflation, noting the forecast in February when the MTFS had
been agreed was that this would be a short term
issue. The Director explained that this had aligned with the then
prediction of the International Monetary Fund (IMF). Commentary early in
the year predicted inflation would spike and then fall rapidly to the Bank Of England target. However, since then the forecast
had changed to suggest inflation would spike much higher and stay higher for
longer, the key impact being the war in the Ukraine. Members commented
that this was making an already challenging situation more difficult and again
expressed disappointment at the lack of progress with fair funding which would
help alleviate such issues. A member commented that it was also
unfortunate that the Council did not secure a level three County Deal which
also might have helped address future funding pressures.
(v) In response to questions raised, Members noted that another factor affecting the increased budget gap would be the possible increase in the national living wage from £10.50 to £11.50; a 10% increase on a budget of £200m equating to an extra £20m staff cost to the Council. It was recognised that such factors were outside the Council’s control.
Members raised concerns about the additional
pressure inflation was putting on the capital programme and noted that the
Council, whilst mindful of its statutory duties to provide road and school
infrastructure, would be more heavily reliant on adequate developer funding
being secured when planning permission was granted by local planning authorities.
Members noted that a hybrid approach was
currently being adopted regarding the building of new schools. For large
developments with a single developer this was best undertaken by the developer
themselves. They were incentivised to provide schools on a timely basis
for the benefit of schemes overall. However, for a collection of smaller
developments or where there were multiple developers on site, such an approach
could be problematic. In such circumstances the Council often needed to
build the required school or make provision for additional places on existing
sites, but it was noted that there was often a shortfall in developer funding
to cover the cost of this approach. The Council was therefore seeking to
put the onus on developers to provide, or to collaborate better with the
Council to provide, schools/school places to ensure a more joined up and
financially viable approach. Members noted that Government Planning
reforms were still awaited which might affect the future approach taken.
A Member raised concerns about the slippage in
costs for capital schemes and queried what impact this had on the Council’s
revenue costs in terms of officer time spent etc. The Director confirmed
that such costs had been assessed and found, at that time, not to be significant.
However, the position was becoming more difficult, due to much higher
construction inflation, and further mitigation was being considered, hence the
proposal to allow funds to be invested in bank risk sharing schemes, as set out
in another report to be considered by the Commission later on
Proposed capital works at Romulus Court were
queried given the Council was seeking to vacate a number of locality
based sites. Members noted that the term of the lease on this particular premises did not expire for some time and in any
event, vacating the site would be costly, though the position was constantly
being reviewed as appropriate.
(x) A Member urged the Lead Member for Resources to consider the proceeds of any sale of the current records office being used to fund the new proposed relocation of the archive, collections and learning hub to the County Hall site.
That the provisional Revenue and Capital Outturn for 2021/22 be noted.