Agenda item

Further to Minute 76 of the Cabinet, the City Council considered a report of the Director of Finance which set the Council's Revenue Budget for 2021/22, the Capital Programme for 2021/22 to 2025/26 and the Council’s Capital, Treasury Management and Commercial Investment Strategies.

The report followed on from the Pre-Budget Report approved by Cabinet on 15^th December 2020 which has since been subject to a period of public consultation. The proposals within this report will now form the basis of the Council's final revenue and capital budget for 2021/22 incorporating the following details:

·  Gross budgeted spend of £774m (£30m increase from 2020/21).

·  Net budgeted spend of £244m(£5m and 2% higher than 2020/21) funded from Council Tax and Business Rates less a tariff payment of £19.8m due to Government.

·  A Council Tax Requirement of £146.3m (£4.9m and 3% higher than 2020/21), reflecting a City Council Tax increase of 4.9% detailed in the separate Council Tax Setting report on today’s agenda.

·  A number of new expenditure pressures and technical savings proposals.

·  A Capital Strategy including a Capital Programme of £220.4m  including expenditure funded by Prudential Borrowing of £32.2m.

·  The Council’s Medium Term Financial Strategy and an updated Treasury Management Strategy, Capital Strategy and a Commercial Investments Strategy.

The financial position in this Budget Report is based on the Final 2021/22 Local Government Finance Settlement. The core funding position broadly matches that of 2020/21 although there are several new one-off funding streams, linked in the main to the effects of COVID-19. This position after 2021/22 remains uncertain and will be subject to the Government’s medium-term spending decisions and decisions about any revised local government financial allocation model and a new Business Rates retention model. As a result, it is impossible to provide a robust financial forecast at this stage and the Council has included some prudent planning figures. Initial assumptions indicate the likelihood that there will be a substantial gap for the period following 2021/22. The view of the Director of Finance is that the Council should be planning for such a position.

The Pre-Budget Report was based on an increase in Council Tax of 4.9% and this position has been maintained for the final proposals in this report. This incorporates an increase of 1.9%, which is within the Government’s limit of 2% above which a referendum would need to be held plus a further 3% Adult Social Care (ASC) Precept line with Government expectations. The Precept was trailed in the 2020 Spending Review and included in the Local Government Settlement as the means for councils to maintain their “core spending power”. Pending the delayed ASC Green Paper – the policy document which it is hoped will set out future funding arrangements for ASC – the precept is essential to enable councils including Coventry to manage increases in the costs of care. In total, the rise in Council Tax bills will be the equivalent of around £1.25 or less a week for a typical Coventry household.

The Local Government Finance Settlement was announced as having broadly maintained local government funding, supplemented with new grant funding to compensate councils for the effects of the  Covid pandemic. In reality, the Council’s Budget position includes forecast costs and income loss from Covid for which it will not receive total compensation.  Overall, the Council has been left needing to address a significant financial gap which has been balanced by additional Council Tax resources, lower costs in contingency budgets and a proposed contribution from reserve balances.  All these proposals are set out in detail in Appendix 1. Where these are different to the proposals that were included in the Pre-Budget Report, this has been indicated within the appendix.

The proposals do not provide the Council with a balanced medium term position beyond 2021/22. The Council’s current medium term bottom line incorporates a combination of future inflationary and service pressures, uncertain specific grant resources and potential Government resource reductions. Some of the future funding assumptions are speculative at this stage and will be revised through 2021 as any changes to local government finance and as the longer term impacts of Covid become clearer. The initial approach will however be dictated by a need to make significant further efficiencies from, or generate further income within, Council services. The Council’s development of a ‘One Coventry’ transformation programme is currently being refined and is planned will become a key part of work programmes to feed into Budget proposals for 2022/23.

Whatever the future holds for national changes local government finance the Council remains committed to strengthening its own financial self-sustainability and the need to support the vibrancy and growth of the city. Over the coming year the Council will invest in both new and existing schemes and support its existing financial interests, including those that have been affected detrimentally by Covid. The Council’s view is that this continues to be the correct approach. A more passive strategy would risk the Council being further exposed to central government funding decisions and losing value within its portfolio of external interests. The Council’s existing financial resilience and its belief in the city’s long-term economic strength mean that this remains an ideal time to commit to Coventry’s reset and recovery.

The recommended Capital Programme proposals are a key part of the Council’s approach and amount to £220.4m in 2021/22. The proposals reflect the Council’s ambitions for the city and include: the latter stages of extensive public realm works in the city centre; extensive highways infrastructure works including specific schemes relating to air quality, Pinchpoint and the Eastern Green Housing Infrastructure Fund (HIF); final stages of the redevelopment of Coventry Railway Station (the Station Masterplan); the initial construction phase of a second office building within the Friargate district of the city; the initial construction phase also of the Council’s Materials Recycling Facility and continuation of the A46 link road to the south of the city. Over the next 5 years the Capital Programme is estimated to be £480m as part of on-going massive investment delivered by and through the City Council.

The annual Treasury Management Strategy, incorporating the Minimum Revenue Provision policy, and also the Commercial Investment Strategy are set out. These cover the management of the Council’s treasury and wider commercial investments, cash balances and borrowing requirements. These strategies and other relevant sections of this report reflect the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Treasury Management Code and Prudential Code for Capital Finance, as well as statutory guidance on Minimum Revenue Provision (MRP) and Investments. The Council’s Medium Term Financial Strategy, considered previously by the Council’s Finance and Corporate Services Scrutiny Board and consistent with the proposals in this report was also included for approval as an Appendix to the report.

A further amendment, as detailed in Appendix 1 to these minutes, was moved by Councillor Sawdon seconded by Councillor Ridley and lost.

A second amendment, as detailed in Appendix 2 to these minutes, was moved by Councillor Ridley and seconded by Councillor Sawdon and lost.

RESOLVED that the City Council:

(1)  Approve the Budget proposals in Appendix 1.

(2)  Approved the total 2021/22 revenue budget of £774m in Table 1 and Appendix 3, established in line with a 4.9% City Council Tax increase and the Council Tax Requirement recommended in the Council Tax Setting Report considered on today's agenda.

(3)  Noted the Director of Finance’s comments confirming the adequacy of reserves and robustness of the budget in Section 5.1.2 and 5.1.3.

(4)  Established an Innovation and Development Fund as set out in section 5.1.2 with decisions on the Fund delegated to Strategic Management Board following consultation with the Leader, Deputy Leader and Cabinet Member for Strategic Finance and Resources.

(5)  Approved the Capital Strategy incorporating the Capital Programme of £220.4m  for 2021/22 and the commitments arising from this programme totalling £479.6m between 2021/22 to 2025/26 detailed in Section 2.3 and Appendix 4 (that element represented by reports on the same agenda in relation The Albany Theatre and the Collections Centre is subject to approval of these reports).

(6)  Approved the Council’s Treasury Management Strategy and Minimum Revenue Provision Statement for 2021/22 in Section 2.4 and the Prudential Indicators and limits described and detailed in Appendix 6a, the Commercial Investment Strategy for 2021/22 in Section 2.5 and Appendix 5, the Commercial Investment Indicators detailed in Appendix 6b and the Medium Term Financial Strategy in Appendix 7.

Note:  In accordance with the Constitution, recorded votes were taken in respect of both the amendments and the Recommendations.

The Councillors voting for and against the first amendment as detailed in Appendix 1 to these minutes were as follows:

Result: Lost   

For: 12

Against: 34

Abstentions: 1

The Councillors voting for and against the second amendment as detailed in Appendix 2 to these minutes were as follows:

Result: Lost   

For: 13

Against: 34

The Councillors voting for and against the Recommendations were as follows:

Result: Carried

For: 33

Against: 14

Abstain: 0