Agenda item

Budget Report 2022/2023

Minutes:

The Cabinet considered a report of the Chief Operating Officer (Section 151 Officer), which set out the proposals for the Council’s final revenue and capital budget for 2022/23.

 

The report followed on from the Pre-Budget Report approved by Cabinet on 14th December 2021, which had since been subject to a period of public consultation.  The proposals within the report now formed the basis of the Council's final revenue and capital budget for 2022/23 incorporating the following details:

 

  Gross budgeted spend of £749m (£25m decrease from 2021/22)

  Net budgeted spend of £237m (£6 and 3% lower than 2021/22) funded from Council Tax and Business Rates less a tariff payment of £19.3m due to Government.

  A Council Tax Requirement of £153.4m (£7.1m and 5% higher than 2021/22); 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 £145.1m including expenditure funded by Prudential Borrowing of £23.9m.

  The updated Treasury Management Strategy, Capital Strategy and a Commercial Investments Strategy.

 

The financial position set out in the Budget Report was based on the Final 2022/23 Local Government Finance Settlement.  Although the core funding position broadly matched that of 2021/22, the Settlement included some significant new one-off grants that will help the Council to manage the pressures it faces, in particular in relation to social care and the wider costs of inflation.  The position after 2022/23 remains uncertain despite the Government’s medium-term spending plans being set out in the Spending Review published in October 2021.  A review of the local government financial allocation model will begin in 2022, although it is not yet certain whether this will be completed in time for 2023/24 Budget Setting.  As a result, it is not possible to provide a robust medium term financial forecast at this stage and the Council has provided some prudent planning figures for future years.  Initial assumptions indicate the likelihood that there will be a substantial gap for the period following 2022/23. The view of the Chief Operating Officer is that the Council should be planning for such a position.

 

The Pre-Budget Report was based on an increase in Council Tax of 2.9% and this position had been maintained for the final proposals in the report now submitted.  This incorporated an increase of 1.9%, which was within the Government’s limit of 2% above which a referendum would need to be held plus a further 1% Adult Social Care (ASC) Precept in line with Government expectations.  The Precept was trailed in the Autumn Budget Report and Spending Review 2021 and included in the Local Government Settlement as the means for councils to maintain their “core spending power”.  The precept was essential to enable councils including Coventry to manage increases in the costs of care.  In total, the rise in Council Tax bills would be the equivalent of around £1.00 a week for a typical Coventry household including the rises in precepts for Police and Fire.

 

The Local Government Finance Settlement helped the Council to close the significant financial gap which it has at the start of the Budget process.  Further measures include the identification of additional Council Tax resources and new commercial and other income streams.  All these proposals were set out in detail in Appendix 1 of the report.  Where these were different to the proposals that were included in the Pre-Budget Report, this had been indicated within the Appendix.  There were no new service savings required as a result of this budget.

 

The proposals did not provide the Council with a balanced medium term position beyond 2022/23.  The Council’s current medium term bottom line incorporated a combination of future inflationary and service pressures and the fall out of uncertain specific grant resources.  Some of the future funding assumptions were speculative at this stage and would be revised through 2022 as any changes to local government finance become clearer.  The initial approach would however be dictated by an intention to review and update technical information as it becomes available to the Council and to identify further efficiencies from, or generate further income within, Council Services.  The Council is seeking currently to update its policy priorities and these will be included as part of the ‘One Coventry Plan’ which will be approved later this year.  Through 2022 it will also refine and implement a programme of activity designed to review how best to deliver its services, improve integration between some of them and optimise the effectiveness of others.

 

Whatever the future holds for national changes to local government finance the Council remained 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 would continue to invest in and pursue activities that strengthen its existing financial interests and those of the city although this would be done within the restrictions imposed by Government in relation to access to borrowing from the Public Works Loads Board.  The Council’s view was that a positive and ambitious strategy would be preferable to a more passive approach which would leave the Council more vulnerable to central government and the wider pressures on local government services.  The Council’s existing financial resilience and its belief in the city’s long-term economic strength meant that this remained an ideal time to commit to Coventry’s reset and recovery.

 

The recommended Capital Programme proposals were a key part of the Council’s approach and amounted to £145.1m in 2022/23.  The proposals reflected the Council’s ambitions for the city and included: extensive highways infrastructure works including specific schemes relating to air quality, Pinchpoint schemes and the Housing Infrastructure Fund (HIF); work moving towards completion of the second office building within the Friargate district of the city; the Council’s share of capital loan financing to progress the construction phase of the city’s new Materials Recycling Facility; continuation of the A46 link road to the south of the city and initial stages of the City Centre South redevelopment.  Over the next 5 years the Capital Programme was estimated to be £365m 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 were set out within the report.  These covered the management of the Council’s treasury and wider commercial investments, cash balances and borrowing requirements.  These strategies and other relevant sections of the report reflected 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 budget proposals also included additional investment for ICT licensing and assurance requirements.  A proportion of this investment related to Microsoft licensing as part of the Council’s Enterprise Agreement renewal, which needed to be in place by 1st April 2022.  As a consequence, the report included recommendations relating to the procurement of the renewed Microsoft Enterprise Agreement covering the Council’s use of the core Microsoft software packages for a three year period from 1st April 2022. 

 

The Cabinet agreed to:

 

1.  Authorise the procurement of a new three-year contract for a reseller for the renewal of the Council’s Microsoft Enterprise Agreement for the 3 year period from 1st April 2022 (per paragraph 2.2.2 of the report)

 

2.  Delegate authority to the Chief Operating Officer and the Director of Law and Governance to agree the contract award following the procurement process.

 

An 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, seconded by Councillor Sawdon and lost.

 

RESOLVED that the City Council:

 

1.  Approve the spending and savings proposals in Appendix 1 of the report.

 

2.  Approve the total 2022/23 revenue budget of £749m in Table 1 and Appendix 3, established in line with a 2.9% City Council Tax increase and the Council Tax Requirement recommended in the Council Tax Setting Report considered on today’s agenda.

 

3.  Note the Chief Operating Officer’s (Section 151 Officer) comments confirming the adequacy of reserves and robustness of the budget in Section 5.1.2 and 5.1.3.

 

4.  Approve the Capital Strategy incorporating the Capital Programme of £145.1m for 2022/23 and the and the commitments arising from this programme totalling £365.5m between 2022/23 to 2026/27 detailed in Section 2.3 and Appendix 4.

 

5.  Approve the Council’s Treasury Management Strategy and Minimum Revenue Provision Statement for 2022/23 in Section 2.4 and the Prudential Indicators and limits described and detailed in Appendix 6a, the Commercial Investment Strategy for 2022/23 in Section 2.5 and Appendix 5, and the Commercial Investment Indicators detailed in Appendix 6b.

 

Note: In accordance with the Constitution, a recorded vote was taken in respect of the Recommendations.

 

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

 

For

Against

Abstain

Councillors:

Councillors:

Councillors:

Total: 0

R Bailey

F Abbott

M Mutton

 

J Birdi

N Akhtar

G Lloyd

 

J Blundell

P Akhtar

R Nazir

 

M Heaven

L Bigham

J O’Boyle

 

T Jandu

R Brown

K Sandhu

 

S Keough

J Clifford

P Seaman

 

M Lapsa

G Duggins

B Singh

 

J Lepoidevin

B Gittins

R Singh

 

P Male

G Hayre

R Thay

 

A Masih

P Hetherton

A Tucker

 

B Mosterman

A Hopkins

D Welsh

 

G Ridley

J Innes

Lord Mayor

 

T Sawdon

AS Khan

 

 

R Simpson

R Lakha

Total: 29

 

 

A Lucas

 

Total: 14

K Maton

J Mutton

 

 

 

 

 

 

 

 

 

 

Result: Lost

 

For: 14

Against: 29

Abstain: 0

 

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

 

For

Against

Abstain

Councillors:

Councillors:

Councillors:

Total: 0

R Bailey

F Abbott

M Mutton

 

J Birdi

N Akhtar

G Lloyd

 

J Blundell

P Akhtar

R Nazir

 

M Heaven

L Bigham

J O’Boyle

 

T Jandu

R Brown

K Sandhu

 

S Keough

J Clifford

P Seaman

 

M Lapsa

G Duggins

B Singh

 

J Lepoidevin

B Gittins

R Singh

 

P Male

G Hayre

R Thay

 

A Masih

P Hetherton

A Tucker

 

B Mosterman

A Hopkins

D Welsh

 

G Ridley

J Innes

Lord Mayor

 

T Sawdon

AS Khan

 

 

R Simpson

R Lakha

Total: 29

 

 

A Lucas

 

Total: 14

K Maton

J Mutton

 

 

 

 

 

 

 

 

 

 

Result: Lost

 

For: 14

Against: 29

Abstain: 0

 

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

 

For

 

Against

Abstain

Councillors:

Councillors:

Councillors:

Total: 0

F Abbott

M Mutton

R Bailey

 

N Akhtar

G Lloyd

J Birdi

 

P Akhtar

R Nazir

J Blundell

 

L Bigham

J O’Boyle

M Heaven

 

R Brown

K Sandhu

T Jandu

 

J Clifford

P Seaman

S Keough

 

G Duggins

B Singh

M Lapsa

 

B Gittins

R Singh

J Lepoidevin

 

G Hayre

R Thay

P Male

 

P Hetherton

A Tucker

A Masih

 

A Hopkins

D Welsh

B Mosterman

 

J Innes

Lord Mayor

G Ridley

 

AS Khan

T Sawdon

 

R Lakha

Total: 29

R Simpson

 

A Lucas

 

 

K Maton

Total: 14

 

 

 

 

 

 

 

 

 

Result: Carried

 

For: 29

Against: 14

Abstain: 0

 

Supporting documents: