Agenda item

Financial Planning Report 2019/20 to 2023/24

Contact for information: Amaris Wong, Group Manager, Strategic Finance; awong1@lambeth.gov.uk

 

Minutes:

Christina Thompson, Director of Finance and Property, introduced the report and stated that:

 

·         The purpose of the report was to update the medium term financial strategy, setting out the local government funding situation and the Council’s spending and budget monitoring

·         This was a period of uncertainty for local government finance, with the latest funding settlement from central government being a one-off

·         Grant funding was continuing and in some cases expanding, such as the new social care grant. However, demand pressures were also increasing

·         The overspend related mostly to Children’s Services. It was noted that the Children’s Services Scrutiny Sub-Committee met the previous evening to consider the budget in that area, among other issues

The Chair explained that the committee had asked the Trade Unions and People’s Audit for contributions, and a written submission had been received from People’s Audit raising three issues. Addressing these, the Director of Finance and Property said that:

 

·         The work to identify savings to fill the funding gap, which this year stood at roughly £6m, was carried out with the support of Finance, and detailed proposals were tested and agreed by Cabinet Members before being signed off

·         In relation to the unspecified £1m lump sum in Appendix 1 for income generation activities, work was starting now to identify opportunities for four years hence. There had been previous scrutiny from members on this which would no doubt continue

·         It was correct that there had been slippage in the capital programme. Work was being done to look at ways of improving the monitoring of the programme including setting out a yearly profiled spend

·         It was not possible to provide the five year CIPFA code breakdown of the budget in the way described due to changes in the number and make-up of Council directorates over that period

·         It was accepted that it was good practice to include more comparative data; while some services did this it was not currently done on a whole council basis

In response to questions from Members, Christina Thompson, Director of Finance and Property; Fiona McDermott, Strategic Director for Finance and Investment; Andrew Eyres, Strategic Director for Integrated Health and Adult Care; Sara Waller, Co-Strategic Director for Sustainable Growth and Opportunity; and Fiona Connolly, Executive Director for Adult Social Care stated that:

 

·         The London business rates pilot pool was running for a second year. Last year 100% of annual growth was pooled and distributed as agreed by the authorities involved, yielding benefits over and above what the Revenue Support Grant would have been. The advantages which accrued from the business rates pilot were being treated as one-offs rather than being set into the base budget. London Councils had estimated that the Council would gain around £700k from next year’s pooling arrangement. The future 75% retention would not necessarily be a pool and would be shared with the Greater London Authority (GLA) on a 75/25 basis

·         A revaluation of business rates was expected next year. This was a national government decision over which local authorities had no control but was likely to impact on growth. The Council had certain discretionary powers to lower business rates in some cases

·         Modelling had been carried out regarding the possibility of introducing a voluntary contribution from residents. There were a number of options regarding how such a fund would operate and what value it could bring which were being evaluated. The target was to launch such a scheme in the new financial year

·         Assumptions had been made regarding the continuation of certain grants such as the Better Care Fund and Adult Social Care Grant and Lambeth was planning on a similar basis to other authorities. However, an ageing population with increasingly complex needs meant it was necessary to deliver better value for money in the care system. Assurance had been undertaken in this regard

·         Under the Lambeth Together integration, the Council and partners were moving towards a neighbourhood model which would localise care and build resilient support

·         The ongoing work to meet the Council’s climate change ambitions had been costed and managed within the budget presented. There would be a further report to Cabinet in July 2020 on the climate emergency which would be fully costed and baselined and the Citizens’ Assembly was planned for the early part of next year. The work being done to establish the emissions baseline would allow the Council to better understand the financial implications

·         It was important to recognise that capital expenditure was already being directed at climate change issues, such as energy reduction and cycle lanes

·         A piece of work was done in 2016 looking at income streams and how these compared with other authorities. As a result, a number of charges were uplifted and additional discretionary charges were introduced. Benchmarking work was ongoing and it was anticipated that fees and charges would increase in line with inflation and statutory obligations. The current target for fees and charges was £58.5m and this was forecast to be exceeded by £3.7m. This meant there was confidence future income targets would be met

·         Impact analysis was carried out when proposals to increase fees and charges were brought forward. The recent decision around adult social care fees and charges had been assessed by the Corporate Equalities Impact Assessment Panel who were assured by the mitigations being put in place

·         Right to buy receipts were capital so could not be applied to the revenue budget. Some receipts were recycled through the GLA but still utilised

·         The interest rate charged by the Public Works Loan Board had recently increased by 1%. This would affect new borrowing only but would have an impact on the capital programme and the way in which it was funded. Work was being done with Cabinet Members to prioritise the capital programme. The funding available was forecast to support £70m borrowing over the next four years but may need to drop by around £10m due to the rate increase

RESOLVED:

 

1.    That budget and expenditure comparisons with other councils in Lambeth’s CIPFA comparator group should be routinely included in future budget reports

2.    To request further information on the London business rates pooling arrangements for 2020/21 with a particular focus on expected benefits or drawbacks for Lambeth

3.    To request details of the forthcoming business rates revaluation and its effects for Lambeth, including expected mitigation, as soon as this information becomes available

4.    That all future budget reports should include a detailed analysis of the financial implications of the Council’s climate emergency response

5.    That further detail be provided to the committee regarding the modelling work that has been done to assess options for the introduction of a voluntary contribution from residents. This should include information on forecast value, costs and governance arrangements as well as maintenance and distribution of the funds

6.    That the committee continues to be concerned at the pressures on adult social care and the potential effects of increased fees and charges on service users, and requests a future update on the extent to which the service is delivering positive outcomes and value for money in the face of these pressures

7.    That further details regarding the impact of the 1% increase in the Public Works Loan Board interest rate on the Council’s capital programme be provided to the committee

8.    That the committee notes the reliance on income generation to meet the bulk of the savings set out and wishes to receive future updates on how these proposals are progressing against the stated targets

 

 

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