Agenda item

For Scrutiny Committee to consider the report of the Head of Finance on Budget Setting 2024/25, and make any recommendations to Cabinet (papers to follow).

Cabinet member for Finance and Property introduced the item, and thanked officers involved for their support, particularly with resource challenges that were encountered and the added pressure of an external audit that needed completing. Cabinet member requested that anything of commercial sensitivity, such as future contract negotiations, would be suited for confidential discussion. Head of Finance was present to answer questions. Members asked questions, some of which were clarifications answered within the meeting. Chair added that the committee were to consider the budget setting process and that particular line item queries could be considered at full council. The below summarises the main points raised:

·       A member asked for clarification on the base budget number. It was confirmed that line 17, the base budget, was a net figure. We can add explanation of gross amounts that lead to the net amounts in future reports. Action: Gross amounts to be added in future reports as discussed.

·       Regarding the Medium-Term Financial Plan (MTFP) and assumptions used: a member felt that forecasting income and expenditure was difficult, however it was likely true that it was easier to forecast expenditure over income. Can revenue incomes be seen as over conservative? Cabinet member explained that a less conservative and a more conservative option had been provided, but it was difficult to know what would happen due to uncontrollable variables such as central government leadership changes, rate of planning applications and interest rates as examples. There were four major contract renewals coming up in the next two years, and it was very difficult to know what the market was likely to be at those times when contract renewal was due. We decided that costs should be estimated as being the same as present, realising that this might go up or down. Member asked can we have sensitivity analysis? Cabinet member added that there were so many sensitivities that it may not be feasible to commit to modelling all variables. Head of Finance added that he may be able to take this point away and add other variables in future. Action: officers to consider modelling other variables in future budget setting reporting.

·       D2 appendix: capital programme – a member asked about council contribution to building properties. Cabinet member explained that this  figure was for buildings which were 50% funded by government for the Homes for Ukraine Scheme. We had so far purchased 19 properties under this scheme.

·       Appendix A3 – regarding staff salaries, a member questioned the change in the figure. Cabinet member explained that the increase was inflation, related to the staff pay settlement. The spending profile was cumulative rather than one-off increases each year. Referring to 24/25 and 25/26.

·       Regarding the base budget challenge exercise that was conducted with service areas, the chair asked for details on that and what the outcomes were? Cabinet members explained the chosen areas included the waste contract renewal, areas which were the biggest and which we had most control over. Each cost code was detailed. Proposed essential growth items were reviewed and proposed income was looked at and whether that could be raised. Each Cabinet member for each cost code, including Head of Finance and Cabinet member for Finance, would challenge officers on whether there was any duplication. It was felt it was worthwhile to interrogate those three chosen areas and it made officers justify reasons for the budgets.

·       Appendix A4 essential growth – Cabinet member explained it captured everything we know about. We weren’t expecting any other essential growth areas. It was confirmed by Cabinet member that the budget outturn reports overall picture tended to be reasonably close to predictions.

·       Page 19 – salary increments had increased to reflect staff moving up the  salary spine / increments – a member asked were we hoping to grow our own expertise / staffing using budget after 5CP arrangements end? Noting that the transformation team cost was the same for a few years. Cabinet member explained the increment (moving up pay scale bands) did increase. Cabinet member stated that for the purpose of the budget, we had assumed the staffing cost was the same. Head of Finance explained that some staff will reach the top increment and won’t have a pay increase also. There would be staffing related to contract changes, but we needed to wait and see what those changes would require.

·       Can we do a three-year MTFP over five-year? Officer responded that five year was considered minimum best practise.

·       A member asked about grounds maintenance – at what point does the budget confirm a project was going ahead. Cabinet member explained that it was based on expected cost of a depot and was not location specific. Needed to allocate a budget to ensure we can complete the works if required.

·       A member asked about communications and graphics to help the public to digest budget figures. Cabinet member explained that the budget was not yet approved by Council, so communications would need to be at that point and Head of Finance was already working towards this. Cabinet member added that it was a legal requirement to consult the public on budget cuts, but this council was not cutting budgets. Another member added that it was important to show the difference in costs for council tax for County vs District (District was a lot less of a proportion). Members asked some questions for future consideration, such as, were people engaging with Oxfordshire County Council’s budget simulator? How do we issue press releases and get to as many people as we can in an understandable format? A member considered that the simulator was a useful tool  - should we go back to consulting before final approval?

Recommendations:

Scrutiny committee considered the report of the Head of Finance and asked Cabinet to consider the following:

1. In future, to include gross amounts in the reporting, to help with understanding the base budget. A fuller explanation of the base budget was requested.
2. Appendix D1 links to corporate plans – committee considered that the council should highlight links between capital expenditure and corporate plan themes, and this should be reflected in communications as well, and be revisited when the new corporate plan was approved.
3. To add sensitivity analysis for the MTFP where possible -  to model the impact of variables.
4. Communications and public consultation on budget – Scrutiny ask that Cabinet members for Finance and Communications work together to decide best methods for communicating and consulting with the public on budget reports.

Thanks were given to all involved in this item.