Agenda item

To receive a briefing on the revenue budget 2023/24 and capital programme to 2027/28 from the Head of Finance and for Scrutiny Committee to ask the Head of Finance and Cabinet Member for Finance and Property Assets questions.

Chair explained that Head of Finance was presenting a budget briefing to committee, supported by the Council Leader, who was covering items seven and eight in place of the Cabinet Member for Finance and Corporate Assets, who could not attend the meeting. If any confidential items needed discussing, committee could vote for a confidential session at the end of the agenda. Strategic Finance Manager was present virtually.

A presentation was given using slides and can be viewed on the YouTube recording for the full information: https://www.youtube.com/@SouthandValeCommitteeMeetings

Head of Finance briefed the committee on the following:

Section 1: Revenue

• Context of budget setting – our legal duties, what a balanced budget means - appropriate reserves without heavy reliance on them. Over recent years there had been improvement in having less reliance on reserves at the council.
• Appendix A1 – base budget 2023-24, what formed part of the base budget. A net expenditure decrease of £1.1 million. There were beneficial effects of the interest rate rise, but also needed to consider cost increases in conjunction.
• Appendix B1 and B3 – discretionary items, such as temporary grant funding for 2023-25.
• Core revenue spending power had increased 4.9% - settlements, government grants and council tax. Increase in core revenue spending power in response to economic climate. New Homes Bonus had gone down, reduced to four years from six overall. Uncertainty from central government on the future of this. Through increased grant funding and interest rates, a fair sum was put to reserves.
• Extra surplus on collection funds. Council tax will go up via increasing tax base and within referendum rules on increasing council tax rates.
• Included a one-off funding guarantee of £2.3 million. Revisions to council tax were in line with the council tax referendum principles.

Section 2: Capital

• Details of schemes in Appendix D1 (internal funding) and D2/D3 (CIL funded).
• Wantage teaching pool will be funded by S106 receipts from the Valley Park development.
• Didcot Wave pool and Didcot North-East Leisure centre (in South Oxfordshire) – Valley Park S106 receipts would be used from Vale of White Horse District Council. Due to these leisure facilities being the nearest catchment area for Valley Park (Vale) residents to make use of, as there would not be those facilities on site. Didcot was Valley Park resident’s nearest town (South Oxfordshire)

Section 3: Medium Term Financial Plan (MTFP)

• Key variables/assumptions shown of expenditure and income
• Inflation – applied what we see as inflation. Consideration given to contracts ending over time.
• See appendix F – row 28 expectations of inflation. Row 40 shows cost increases offset with inflationary increases.
• Core government funding assumptions – uncertainty, assumption was that government funding will reduce and council tax rises.
• 2025 onwards, the balances looked challenging but there were many variables that could not be predicted with much certainty. However, the assumptions made were prudent regarding lack of certainty on government funding.
• Alternative scenario was given where the one-off funding was left in the MTFP.
• Strong progress on transformation work, leading to financial stability - including IT strategy, Cornerstone, grounds maintenance, customer service and front-of-house and development management.

Committee discussed the prudent approach and asked for clarification, discussing the balance between potential government funding decreases and increases in council tax. With reduction of New Home Bonus, the one-off funding figure from central government was the balancing number after council tax increases were factored in (bespoke figures for each council provided to central government).

Discussion was had regarding borrowing options. It was explained that potential borrowing was to fund capital programmes only when capital receipts had been used. Borrowing against the life of an asset.