The Commission considered a report of the Director of Corporate Resources, which provided an update on the worsening short and medium term financial position in light of the current economic climate. The report also detailed the changes proposed to be made to the previously agreed 2022-26 capital programme following the latest review and covering the specific revenue budget monitoring position as at the end of period 4 (the end of July). A copy of the report marked ‘Agenda Item 13’ is filed with these minutes.
Arising from discussion, the following points were made:
The budget gap for this year would be addressed through the use of contingencies. Corrective action
would also be taken to push back a number of capital
programme schemes. The position would remain difficult for the following
financial year and most likely for the next four years.
It was recognised that the Council like many
other organisations was facing overlapping crises. The capital programme
had been affected by the Covid pandemic and was now further being affected by
the cost of living crisis and rising inflation.
Inflation had risen rapidly in a short space of
time which was affecting many areas of the Council’s budget. This was a
matter outside the Council’s control but the steps being taken to consider
measures to mitigate this were welcomed. It was further noted that the
Cabinet would be considering a report at its meeting later this month on what
those potential measures might be. Members were assured those proposed to
be taken forward would follow the usual member decision making and consultation
processes at the appropriate time.
It was noted that direct energy costs had risen
from £3m to £5m and would likely increase further to £7m in the next financial
year. The impact of such additional costs was alarming.
A member expressed concern that the Council,
after years of austerity, had few options and many discretionary services had
already been cut over the last decade.
It was questioned what the Cabinet were doing to
lobby Government to address the fundamental problem for Leicestershire, in that
it was one of the lowest funded authorities in the country. The Leader
Member for Resources, Mr Breckon CC, confirmed that he and Cabinet colleagues
were continuing to push its fair funding campaign. Though no government
help was expected in the short term this work would continue.
A member raised concerns if the Council froze
vacancies at a time when recruitment and retention was already difficult and
questioned what added pressure this would put on officers and service
continuity. The Director confirmed that nationally recruitment was a
difficult issue, and the Council was experiencing these pressures in services
such as children’s social care. Members were assured that any vacancy
freeze would not be applied in such areas, but a considered and targeted
approach would be taken.
A member questioned what was being done to
ensure the Council’s suppliers were in good shape given how many small
businesses were being particularly hard hit by the current economic
pressures. The Director confirmed that the Council was in contact with
its suppliers, but whilst targeted work to support them during Covid had been
undertaken, the Council no longer had the resilience to continue this.
Any further assistance provided would be dependent on further funding from
The Director clarified that the Council’s
exposure to lost business rates would be limited, due to the MTFS assumption
that Business Rate growth would be “reset” next year. The growth for the Council was currently £6m
and there was no on-going assumption of a benefit from the Business Rate Pool.
A member commented that the Council needed to
speed up its decision making around the disposal of some assets which had
become considerably costly. Members were assured that when considering whether or not to retain or sell an asset a rounded approach
was taken with revenue costs being balanced against capital receipts.
(xi) When property schemes for the Corporate Asset Investment Fund were appraised in line with the Strategy, a 6% minimum return was sought. This would be reviewed as interest rates increased and other types of investment also considered.
the revenue budget monitoring position as at the end of period 4 (the end of
July) be noted;
(b) That the current economic pressures affecting the Council’s budget be noted with concern and the steps being taken to mitigate this recognised.