Agenda item

Report of the Director of Finance

The Cabinet considered a report of the Director of Finance that outlined, as a basis for consultation, a set of new revenue budget proposals for 2022/23 to 2024/25 which represented changes to the Council’s existing Budget. Consultation views were also sought on the potential level of Council Tax and Adult Social Care Precept increases for 2022/23. The final Budget proposals and the Council Tax and Adult Social Care Precept increases would be subject to Council approval in February 2022. An appendix to the report provided details of the Pre-Budget Financial Position.

The Council’s overall future strategy was set out in the “One Coventry Council Plan” which described the Council’s key priorities including: improving the quality of life for Coventry people, especially the most vulnerable; promoting the growth of a sustainable Coventry economy and ensuring that residents shared in the benefits; and making the most of assets and working closer with partners and residents to enable people to do more for themselves. Implicit within the plan was the Council’s commitment to delivering a range of core services to everyone in the city. The Plan was currently being revised and it was intended that it would be brought for approval during the first part of 2022. Much of the policy content would remain similar to the current version although it was expected that there would be some significant changes.

The expected developments in relation to the system of local government finance continued to be delayed. The Secretary of State for Levelling Up, Housing and Communities had announced that a future move to 75% Business rates retention would not now proceed although the current assumption was that wider 50% retention and existing arrangements for Business Rates pools and pilots would continue for the foreseeable future. In the Council’s case this would mean continued membership of the Coventry and Warwickshire Business Rates Pool and the West Midlands Combined Authority Business Rates Pilot, both of which continued to offer potential positive financial benefits. At present though, neither further reform to the fundamental nature of the Busines Rates and Council Tax arrangements within local government nor the fair funding review of local government appeared imminent.

The Chancellor of the Exchequer did announce the Autumn Budget and Spending Review 2021 (SR2021) on 27th October 2021. This presented a three-year horizon for Government spending in the form of Departmental Spending Limits (including local government). This indicated some further financial support for local government although at the time of writing the Council was still awaiting the 2022/23 Provisional Local Government Finance Settlement which would include details on a number of key funding announcements which would dictate the funding envelope within which the Council would need to operate next year. As a result, the financial Pre-Budget position set out in this report was assumption sensitive and was likely to be subject to significant changes in some important areas prior to the setting of the final Budget in February 2022. A note of caution was urged both due to the pressures which were likely to need to be met over the coming budget period and with the expectation that the detail for local government was likely to be restricted to a one year settlement despite the 3 year horizon of SR2021.

Initial interpretations of SR2021 were that it did include some stabilising elements to help councils manage pressures that they had either foreseen previously or which had emerged more recently. Although much detail remained to be set out and enormous uncertainty remained, the report included a less austere outlook for the Council than had been possible for some years. It remained the case though that the report and the Council’s Medium Term Financial Strategy (considered at the same meeting of Cabinet as this report) continued to focus on the immediate term in managing the current and pressing challenges facing the Council and the city. Several critical areas of work needed to be finalised as the Budget cycle concluded which it was planned would enable the Council to balance the position for 2022/23. 

The financial proposals in the report did not include any new service cuts. It was anticipated that this could be avoided due to the impact of SR2021 plus the likelihood of being able to implement a range of technical measures. This could include using one-off resources (in the form of reserves) to meet one off pressures if required, although no such measures were proposed at this stage. The Council’s view remained that it wanted to avoid the need to reduce vital services and would seek to explore all possible avenues to do this. That being said, the report did not include sufficient measures to present a balanced budget in 2022/23, with a financial gap of £3m still remaining at this stage. The report included a range of approaches set put in Section 5.1 which were intended would balance this position.

The pre-existing Medium Term Financial Strategy included an approach incorporating a number of transformation themes such as commercialisation and digitalisation. This work had been somewhat delayed through 2020 and 2021 as the Council shifted its focus by necessity to meeting the challenge of Covid. Initial work done to revise the One Coventry Council Plan and an accompanying framework to improve the Council’s ability to sustain an effective performance framework were underway and would be implemented in the first part of 2022. This was expected would form an increasing focus of the Council’s activity beyond 2021/22 to improve the manner and cost effectiveness with which the Council was able to deliver services to its citizens.

The proposals in the report were made as a basis for public consultation and the results of the consultation would be reflected in the final Budget Report in February 2022 and considered as part of the final decisions recommended in that report. Further work would be undertaken to confirm all the financial assumptions between now and the final Budget Report in February 2022.

An outline of the resources and the spending and savings proposals were provided in Section 2 of the report and on a line-by-line basis in Appendix 1 to the report. The Council’s Council Tax assumptions and the basis on which it was consulting, was set out in Section 2 of the report.

An indicative outline was included within the report for the Council’s prospective Capital Programme for 2023/24 based on current knowledge. This would be updated in the February 2022 Budget Report, reflecting the most up to date programme information available. The draft Programme was based overwhelmingly on pre-existing decisions and patterns of expenditure.

RESOLVED that the Cabinet approves as a basis of consultation: the revenue spending and savings options in Section 2 of the report and Appendix 1 of the report; the broad Capital Programme proposals in sections 2.6 to 2.9 of the report; the approach in relation to Council Tax and the Adult Social Care Precept in Section 1.7 of the report including a Council Tax rise of just under 2% and an Adult Social Care Precept of 1%.