Finance Planning and Medium Term Strategy Report 2019 to 2024
Decision Maker: Cabinet
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
The November Financial Planning and Medium
Term Strategy Report will provide an update on the economic
outlook, pressures, risk areas and set out the revenue funding
deficit for 2019-24 together with proposals to close the funding
The report was introduced by the Cabinet Member for Finance and Performance, Councillor Andy Wilson. He highlighted that:
· Local government financing was uncertain, with Government’s Fair Funding Review and Business Rates Retention both stalled; and further compounded by the unpredictable political landscape.
· The expected four-year Government spending review had not occurred, instead there had been a one-year cyclical spending round causing difficulties in planning for the future.
· Lambeth was currently overspending in Children’s Services and was managing Adults and Health pressures with one-off funding; with both areas having uncertainty of future income.
· The last Budget review identified a £38m spending gap and Lambeth was still required to find an additional £6m savings, but aside from £100,000, no savings would impact on frontline services and was to come from efficiencies and improved income generation.
Cabinet next heard from Councillor Liz Atkins, Chair of the Overview and Scrutiny Committee (OSC):
· The protection of frontline services and the most vulnerable was welcomed, but the difficulty of setting financial strategies with one year funding commitments and Brexit impacts was noted.
· Further information was required on addressing climate change, business rates pooling, and the forthcoming business rate evaluation.
· The effects of the Public Works Loan Board (PWLB) 1% rate increase on the capital programme was queried.
· The focus on growth was welcomed, especially given the difficulties of meeting savings in Adults’ and Children’s Social Care.
· Reviews of council tax and voluntary contributions were needed.
· Resident Services covered most savings, but were failing to recover income on waste and events.
· The impact of cuts on the most vulnerable concerned the OSC, which did not want to see funding balanced on those suffering the most and requested that service delivery offer value for money and positive outcomes. Evidence of progression on the proposals would also be required.
· It was requested to include CIPFA benchmarking on future reports to compare with peers and assess whether the Council was meeting its residents’ needs.
Councillor Pete Elliott, Green Party Opposition Standards and Monitoring Member, noted that:
· The absence of frontline Adults and Children’s Social Care savings was welcomed, but it was queried why more savings from Policy and Communications, and Legal and Governance, could not be made.
· There was little evidence of resources being used for the climate emergency; with the cycling infrastructure capital investment too low to create liveable neighbourhoods and car-free roads.
· High levels of incinerated waste meant increasing investment in waste and recycling was negated.
· Lambeth’ Housing Standard was poor and needed improvement, and raised questions on the Council’s contractor relationships, whilst empty properties investment and not estate regeneration was required.
In response to the above representations, Cabinet Members advised that:
· Cabinet, nor the Council, was complaisant with contractors and put the interests of residents first.
· Lambeth had upgraded 23,000 homes over the last five years, improving residents’ lives.
· The housing focus and priorities had been decided by residents, with the considerable investment the first in 30 years and Lambeth could be proud of its delivery.
· Voluntary contribution schemes, such as in Westminster, would not translate to the demographics and council tax base found in Lambeth, although the Council was reviewing broadening contribution remits. Whilst the administrative costs of the scheme were thought to be small, the possible income stream was also likely to be small and Members were not confident that the drastic funding cuts would be mitigated by this policy.
· CIPFA data would be used to benchmark Lambeth against other local authorities in future and officers would review when best to report this.
· The refurbishment of empty homes instead of regeneration would not impact greatly on homelessness or temporary accommodation lists; however, the Council had increased tax on empty properties and land, forecast to generate £200,000, and was taking action to free up existing resources for housing.
· Funding cuts in Policy and Communications, or Legal and Governance would not yield considerable savings, and would decrease the ability to inform residents or hear their views.
· Full Council would likely be asked to utilise reserves in its Budget, and this would detail CIPFA benchmarking and whether the use of resources was a suitable proposition.
· The Capital Investment Programme was meeting delivery targets, with the Parks services delivering health initiatives and continued to win awards.
The Cabinet Member for Finance and Performance, Councillor Andy Wilson; and, Christina Thompson, Director of Finance and Property, responded to questions as follows:
· The Business Rates 75% pilot would cease next year, but with London boroughs to continue a policy of pooling at a lower rate meant Lambeth would receive an additional £700,000 funding, treated as one-off.
· The PWLB 1% rate increase was unexpected and impacted on capital expenditure and consequently also on the capital programme, which would be brought to February Cabinet.
· Lambeth had one of the lowest levels of reserves in London, and was having to utilise earmarked reserves. A review of the General Fund balance would help ensure security, but required prudent management and responding to unexpected strategic issues would use these reserves.
· There were no additional saving proposals for Adult nor Children’s Social Care outside of efficiency savings, but they still had to find efficiency savings and minor service reduction from previous review.
The Leader of the Council, Councillor Jack Hopkins, summarised the discussion as follows:
· Lambeth had come a long way since 2006 when it had no reserves, during a period of cuts and financial uncertainty, whilst providing services for residents, however the successful management of these services required long-term certainty.
· Lambeth needed to be risk aware, ensure the impact of expenditure, and reduce service demands.
· He concluded by thanking officers for their work in delivering a strong budget.
Medium Term Financial Strategy
1. To approve the Council’s Medium-Term Financial Strategy as set out within the report.
2. To note the continued uncertainty regarding elements of government funding, price and demand pressures and the need to ensure that budgets set each year are sustainable during the settlement period to 2023/24 and beyond.
3. To note the current funding gap of £6.001m for 2020/21 to 2023/24 and how we have reduced this gap through brought forward savings and new proposed savings, which are detailed within section 2.
4. To approve the principle of a five-year planning cycle for capital with overall budget agreed for each delivery area.
5. To note the financial position of the Council budget in 2019/20 and the actions in pace to balance it over the period.
6. To note the revised total of £386m for the three-year Capital Investment Programme 2019/20 to 2021/22 as described in Section 4 and summarised in appendix 2, and with how the programme is financed within Appendix 3.
London Business Rates Pool
7. To approve in principle to the creation of the London Business Rates Pool for 2020/21.
8. To delegate authority to the Chief Finance Officer in conjunction with the Cabinet Member for Finance to agree the operational details of the pooling with the participating authorities.
Report author: Hamant Bharadia
Publication date: 22/11/2019
Date of decision: 18/11/2019
Decided at meeting: 18/11/2019 - Cabinet
Effective from: 30/11/2019