Agenda item

The Council is asked to consider the Revenue and Capital Budgets for the 2020/2021 financial year for both the General Fund and Housing Revenue Account. 

 

            A report from the Group Head of Corporate Support confirming the recommendations being made to the Council is attached.  Members will also be asked to refer to the recommendations contained within the Minutes of the meeting of Cabinet held on 10 February 2020 with regard to the Budget for 2020/2021, which will have to be circulated separately.

 

The 2020/2021 Budget was considered at the meeting of the Overview Select Committee held on 28 January 2020 and these Minutes can be accessed by clicking on Overview Select Committee - Minutes

 

 

            Details of the associated statutory resolutions in agreeing the Budget, following receipt of the West Sussex County Council and the Sussex Police and Crime Commissioner precepts, will be circulated at the meeting.  

 

            This item will be presented using the order below:

 

 

(i)         Welcome by the Chairman – Councillor Mrs Warr

 

(ii)        Leader of the Council’s Budget Statement – Councillor Dr Walsh will make his Budget Statement and will propose the recommendations, including the associated statutory resolutions required in agreeing the Budget, which will be circulated at the meeting.

 

            To be moved by – Cllr Dr Walsh

 

(iii)        Cllr Oppler to second (may reserve his right to speak)

 

(iv)        Cllr Chapman to respond on behalf of the Conservative Group

 

(v)          Cllr Dixon to respond on behalf of the Independent Group

 

(vi)        Cllr Ms Thurston to respond on behalf of the Green Group

 

(vii)       Open Debate

 

(viii)     Cllr Oppler to respond as seconder

 

(ix)        Cllr Dr Walsh to respond as proposer

 

(x)          VOTE REQUIRED

 

 

 

          The Leader of the Council, Councillor Dr Walsh, presented his Budget Statement, a copy of which is attached to the signed copy of the Minutes. 

 

          An extract from the Minutes from the meeting of Cabinet [Minute 433] held on 10 February 2020; an amendment to those recommendations, an amended Appendix 1, and Appendix 4 setting out the statutory resolutions that the Council was also required to consider, were tabled at the meeting. 

 

          In proposing the recommendations at Minute 433 from the Cabinet meeting held on 10 February 2020, Councillor Dr Walsh confirmed that he needed to propose an amendment to include the additional statutory recommendations listed in the Group Head of Corporate Support’s report as set out on page 26 of the agenda. 

 

          The amendment added further recommendations (8), (9) and (10) which had also been circulated as part of the second bundle of papers.  The additional wording has been set out below in bold:

 

                                    (1)         The General Fund Revenue Budget as set out in Appendix 1 is approved;

 

                                    (2)         Arun’s Band D Council Tax for 2020/21 is set at £186.57, an increase of 2.73%;

 

                                    (3)         Arun’s Council Tax Requirement for 2020/21, based on a Band D Council Tax of £186.57, is set at £11,612,863 plus parish precepts as demanded, to be transferred to the General Fund in accordance with statutory requirements;

 

                                    (4)         The Housing Revenue Account (HRA) Budget as set out in Appendix 2 is approved;

 

                                    (5)         The HRA rents for 2020/21 are increased by 2.7% (CPI plus 1%) in accordance with the provisions of the rent standard;

 

                                    (6)         HRA garage rents are increased by 5% to give a standard charge of £12.31 per week (excluding VAT), and heating and water/sewerage charges increased on a scheme by scheme basis, with a view to balancing costs with income;

 

                                    (7)         The Capital Budget as set out in Appendix 3 is approved;

 

                                    (8)         The statutory resolutions required by the Council in agreeing its budget for 2020/21, as set out in Appendix 4 circulated at the meeting, be approved;

 

                                    (9)         It be noted that the Group Head of Corporate Support, in consultation with the Deputy Leader of the Council and Cabinet Member for Corporate Support, has approved i) a Council Tax base of 62,244 for 2020/21 and ii) the submission of the Council’s NNDR1 return (the estimate of the Council’s Business Rate income for 2020/21) to the Ministry of Housing, Communities and Local Government; and

 

                                (10)         For 2020/21, any expenses incurred by the Authority in performing in part of its area a function performed elsewhere in its area by a Parish/Town Council or the Chairman of a Parish Meeting shall not be treated as special expenses for the purposes of Section 35 of the Local Government Finance Act 1992.

 

          The Leader opened his statement by stating that he firstly wished to thank the Group Head of Corporate Support and the Financial Services Manager for putting together the Budget; presenting this to political groups and to Cabinet in such an easy to understand way.

 

          He confirmed that this was an historic occasion as this was the very first Budget presented to this Council by a non-Conservative administration since Arun had been created some 47 years ago.  As the Liberal Democrat Leader of the Council, this was a poignant moment.          

         

          A very significant emphasis of the Budget was to provide practical help with new truly affordable council housing to address the housing cost crisis amongst younger residents; to take significant steps to the regeneration of Bognor Regis and Littlehampton; to begin to address Climate Emergency locally; and to identify new income generation sources in the face of the ending of virtually all central government funding to local councils.

 

 

 

          This Budget was part of the Council’s medium-term financial plan to give economic security to the residents of the District and to show that despite facing significant funding challenges this Council could deliver effective, accountable and efficient services.  This was to be viewed in the context of several years of austerity and declining financial support from central government.

 

          Although there was still great uncertainty about local government funding for the future, this was an extremely positive budget providing everything at a cost of £186 per annum for a Band D property with the Council’s share of the total bill being less than 10%.  There was a manageable deficit of just over £600k projected for 2020/21 which was broadly in line with the Medium-Term Financial Strategy approved by Cabinet in September 2019.  This demonstrated the value of sound financjal planning and included an ambitious capital programme.

 

          Councillor Dr Walsh provided some background to the ongoing changes in Central Government funding as it had been extensively reported that local government funding was under severe pressure due to this.  He covered the following points:

 

·       The Council had had to contend with erratic information from Central Government with the full detail of the financial settlement not being received until 20 December 2019 – severely compromising the budgetary timetable.

·       One of the Council’s major sources of finance was the New Homes Bonus (NHB) and it had been indicated that this would be significantly reduced to zero in three years.  This dramatic reduction had to be reviewed against a peak of over £4m only four years ago and the fact that there was no funding in place to replace this. 

·       The major funding source from Central Government would be the retention of business rates.  Any increases were dependent upon growth in the District.  Significant growth had been experienced since the inception of this scheme which had partially offset the reduction in other funding sources.  The downside to this was that there had been a significant transfer of risk from central to local government with the Council now being responsible for the appeals against valuations and due to the recent announcement of a reset of Business Rates occurring in 2020/21 meaning that the Council would lose all or some of the growth accumulated. 

·       Given the severe risks, it was vitally important for the Council to mitigate against them so that it could continue to prudently plan.  This was why Cabinet had taken the decision to contribute approximately £850k to the Funding Resilience Reserve which now totalled almost £5m and would mean that the Council would have time to properly and systematically plan for the inevitable reductions in the Council’s net budget within a realistic timeframe.

·       It was therefore important to hold a reasonable level in the Council’s General Fund reserve [in addition to the Funding Resilience Reserve] as mitigation against the severe reductions in funding.  A level of £6m at 31 March 2021 appeared appropriate in the current financial environment.

 

Despite all of these factors, Councillor Dr Walsh, was pleased to be able to confirm that included within this Budget were new strategic targets, as approved by the Council on 13 November 2019, which would be essential to setting the future direction of the Council.  These and other highlights were:

 

·       The creation of a Sustainability Officer to respond to the climate crisis

·       The creation of a Commercial Manager to help the Council become more commercially active

·       The implementation of the digital agenda

·       The extension of ultrafast public connectivity to ensure that the District would be future ready and could accelerate the investment from commercial organisations leading to a roll out of fibre to the premise.

 

Moving onto the Housing Revenue Account (HRA), Councillor Dr Walsh was delighted to refer to the ambitious stock development programme in which the Council had already approved schemes of 89 units which would provide quality accommodation for local people in need of homes.  In addition to this, the Council was actively developing a pipeline of schemes to ensure that the Council would achieve a continuous supply of new housing.  The Council had also completed a condition survey of all its housing stock and had made budgetary provision to support this so that tenants would enjoy a significant improvement in their standard of housing.

 

The final part of the budget concerned the capital programme where Councillor Dr Walsh was able to state that despite the severe financial pressures that the Council was facing, there was a sound capital programme in place.  These included:

 

·       A contribution of £200k for Littlehampton Public Realm

·       Essential repairs to Littlehampton Cemetery (£250k)

·       Fitzleet Car Park (£250k)

·       West Beach Roadway (£150k)

·       Play areas (£100k)

·       Disabled Facility Grants (£1.5m for both 2019/20 and 2020/21)

·       IT Infrastructure and Storage Area Network

 

In conclusion, the Leader commended what he stated was a forward looking and prudent budget, confirming that he was proud of the achievements made in the limited time that his Group had been in power and that he intended to build upon these successes in the future.  He reinforced his comments made earlier that this Budget presented a manageable deficit, in line with the Medium-Term Financial Strategy of the Council; set out a comprehensive capital programme whilst also levering in over £3m from external bodies and partners.  In addition to this, a number of strategic targets had been financed which would be vital for the Council’s future development.  Further proposals would be submitted to Cabinet and Council soon for the Place St Maur and Sunken Gardens, as well as other schemes in the pipeline for Bognor Regis and Littlehampton.  In addition, the funding by developers and the County Council of the Lyminster by-pass and A259 duelling would bring economic benefit to the businesses and residents in the District. 

 

          Councillor Oppler then seconded the recommendations as amended.

 

          Councillor Chapman, as Leader of the Opposition, then responded to the Budget Statement made by thanking the Leader of the Council for his statement and the Group Head of Corporate Support and his team for the ongoing work they did in safeguarding the Council’s financial position. Councillor Chapman stated that there was much to digest from this budget and so he wished to pass comment on each of its phases. 

 

Firstly, part of the Council’s Medium-Term Financial Strategy, was to provide economic security to residents.  This budget did not do this and there were issues that should have been addressed back in May 2019 which had not been.  Reference was made to the funding challenges outlined and it was argued that these were not new and that it had already been accepted for some time that Central Government support was unknown.  For many years the Council had been able to deliver a balanced budget, this was not a balanced budget and Councillor Chapman stated that he refused to believe that a £600k deficit was manageable, instead it represented a threat to the Council’s General Fund.

 

Councillor Chapman expressed concern that Council Tax was set to increase above the rate of inflation which would impact heavily on some vulnerable families, he could see no plan to ameliorate it.  He stated that the Conservatives had always managed the erratic changes in funding from Central Government and that this budget presented no evidence of sound financial planning.  He referred to the NHB, a serious threat, yet there was no confirmed plan to deal with this reduction.  The transfer of risk from Central to Local Government had been developing for years and he asked where was the planning in terms of how the Council would react to this. Councillor Chapman referred to the Cabinet decision to fund the resilience reserve stating that this had been built up by the previous administration.  The decline in the Council’s balances was of serious concern and it could be seen that the CIPFA analysis set out the risks associated with this for the District.  This indicated that the Council was moving to high risk strategies which were all due to a lack of preparedness of this administration.  Looking at the new Strategic Targets agreed by the Council in November, many of them were unquantified and the ability for the Council to deliver them would be limited due to issues with the General Fund.  What could be congratulated was improvement on the levels of affordable accommodation and future schemes.  Looking at the stock maintenance programme it was emphasised that this would be brought to fruition only because of the work achieved by the previous administration.  Reference had been made in the budget on the investment to provide Public Realm for Littlehampton, there was little mention of Bognor Regis and what was happening with regeneration since the decision had been made to stop the Pavilion Park.  Looking at the capital programme, these all looked reasonable, but no mention had been made of staffing levels which appeared to be increasing in line with projects that were in the pipeline, yet nothing had been included in the budget to address areas that had a clear shortage in staffing levels.  The fear was that it would be the District’s council tax payers and tenants that would have to pay more money to cover this and to improve the delivery or value of services across the District.  Based upon all these facts, Councillor Chapman confirmed that he could not support the Budget.

 

The Chairman then invited Councillor Dixon, on behalf of the Independent Group to speak.  He stated that following years of austerity and having become a much smaller Council with limited resources, future funding remained uncertain. Despite this there was a lot to celebrate.  The Littlehampton Wave had been a huge success of the previous administration and was something that the District could be really proud of as it drew many visitors to the area.  However, at the same time investment had depreciated and there were limited resources restricting the current administration’s ability to get things done.  The main example, in his view, had been the unsoundness of the Local Plan, which had added financial pressure moving forward.  The Council’s decision to move from a Cabinet to a Committee structure would provide open and transparent decision making and would involve all Councillors in a more democratic way.  Of concern was rising sea levels and the fact that the Council should be leading the way in achieving carbon neutrality.  He therefore welcomed the appointment of a sustainability manager and a commercial manager to help the Council to achieve its targets. Littlehampton needed Public Realm as Bognor Regis had already received its makeover.  WSCC’s withdrawal of up to £1m in recycling credits had dented the Council’s budget and so the Council needed to consider if it could afford providing the same level of recycling service. 

 

The Chairman then invited Councillor Ms Thurston, on behalf of the Green Group to respond.  She stated that she welcomed what she considered to be a thoughtful and well-balanced budget which had been produced in challenging circumstances.  The budget would allow the Council to maintain its services and also improve strategic investment.  Councillor Ms Thurston outlined that the Budget would allow for the improvement of regeneration and that it was exciting that additional affordable homes would be built and that the new Sustainability Officer would work on an action plan which would provide a good start for the Council to advance its climate change plans.  This had to be the biggest priority for the Council to achieve a carbon neutral status.  Finally, Councillor Ms Thurston thanked the Council’s Officers who had worked hard in producing the budget.

 

The Chairman then invited debate.  This saw many varying views being expressed.  There were Councillors who spoke against the Budget and they stated that they had concern about the proposed increase in Council Tax.  They felt that it was unfair to increase the council tax to a rate that was double the CPI figure of 2.73% and they questioned how this could be justified when the Council was prepared to continue spending whilst at the same time increasing council tax.  Concern was also expressed over the contingencies and special items in the budget which had increased by £1.206 m.  Within this figure were different projects that had no robust business case to support them. It was stated that the new administration was doing less but at the same time spending more.  The need to retain a solid and dependable reserve fund was vital and there was fear that it was heading for a significant deficit moving forward.  Healthy reserves were required to protect the Council in emergency situations.  Presenting a planned overspend was spiralling towards potential insolvency. 

 

Those speaking in support of the Budget pointed out that the proposed increase of 2.73% was less than the 2.96% increase in Council Tax approved for 2019/20.  It was highlighted that the Budgets of the previous Conservative administrations had focused on cutting staffing levels as part of the 2020 Vision.  This Budget proposed a lower increase whilst at the same time was increasing staff levels whilst delivering essential projects.  There were many positives to report, these were ambitious plans for a large number of affordable homes; plans to tackle the climate change emergency; and the appointment of a sustainability officer, showing that the Council was investing in this vital issue.  One of the plans proposed as part of the climate change work was to launch a tree planting strategy across the District. The County Council’s decision to withdraw recycling credits over two financial years at short notice had left a gap in the budget.  The Council has also been severely affected by a growth in homelessness resulting in a supplementary estimate of almost £1m in December 2019.  There were schemes in place to tackle these issues.  It was hoped that a Food Waste and Hygiene Collection Trial would be tested in the District in the future and there were plans to employ a commercial acquisitions manager to put the Council onto a more commercial footing.  These were all ways at looking at ways to mitigate the reductions in central government funding. Others agreed that a lot of work was being undertaken to find efficiencies and economies to achieve underspends that could be applied in the next budget. 

 

          Councillor Oppler, as seconder to the recommendations, referred to the fact that Arun’s share of the total council tax bill was less than 10%, representing a very modest amount and increase.  He hoped that Central Government would bring in a local income tax to replace it.  He also referred to the actions of WSCC in significantly reducing the previously agreed recycling credits and ending its level of housing support which had placed even further pressure on this Council.    

 

Councillor Dr Walsh, as proposer to the recommendations, added to the points made in the debate.  He stated that this had not been the first unbalanced budget presented to this Council.  This budget would ensure that the Council would be able to deliver essential front-line services and a capital programme.  On rents it had been the previous administration, directed by Government, that had reduced rents by 1% each year ending up with the Council being in a deficit budget situation.  The Council was now having to catch up in accordance with the provisions of the rent standard.  The key themes of the sound capital programme in place were also explained. Councillor Dr Walsh commended the Budget.

 

Before moving to the vote, a question was asked about whether it was lawful for the Council to approve an unbalanced budget.  The Group Head of Corporate Support and Section 151 Officer confirmed that the budget being presented was lawful.[LF1] 

 

          The Group Head of Council Advice and Monitoring Officer outlined that in line with the Council’s Constitution a recorded vote was required when voting on the recommendations.

 

          Those voting for the recommendations were Councillors Batley, Bennett, B Blanchard-Cooper, Brooks, Buckland, Mrs Catterson, Coster, Dixon, Goodheart, Mrs Gregory, Mrs Hamilton, Mrs Haywood, Huntley, Jones, Lury, Miss Needs, Oppler, Purchese, Mrs Staniforth, Stanley, Tilbrook, Ms Thurston, Dr Walsh, Mrs Worne and Mrs Yeates (25).  Those voting against the recommendations were Councillors Bicknell, Clayden, Mrs Cooper, Cooper, Dendle, Gunner, Miss Rhodes and Roberts (8).  Councillors Bower, Chapman, Charles, Mrs Daniells, Edwards, Elkins, Hughes, Kelly, Mrs Madeley, Oliver-Redgate, Mrs Pendleton and Mrs Stainton abstained from voting (12).

 

          The Council

 

                     RESOLVED – That

 

                                    (1)            The General Fund Revenue Budget as set out in Appendix 1 is approved;

 

                                    (2)            Arun’s Band D Council Tax for 2020/21 is set at £186.67, an increase of 2.73%;

 

                                    (3)            Arun’s Council Tax Requirement for 2020/21, based on a Band D Council Tax of £186.57, is set at £11,612,863 plus parish precepts as demanded, to be transferred to the General Fund in accordance with statutory requirements;

 

                                    (4)            The Housing Revenue Account (HRA) Budget as set out in Appendix 2 is approved;

 

                                    (5)            The HRA rents for 2020/21 are increased by 2.7% (CPI plus 1%) in accordance with the provisions of the rent standard;

 

                                    (6)            HRA garage rents are increased by 5% to give a standard charge of £12.31 per week (excluding VAT), and heating and water/sewerage charges increased on a scheme by scheme basis, with a view to balancing costs with income;

 

                                    (7)         The Capital Budget as set out in Appendix 3 is approved;

 

                                    (8)            The statutory resolutions required by the Council in agreeing its budget for 2020/21, as set out in Appendix 4 circulated at the meeting, be approved;

 

                                    (9)            It be noted that the Group Head of Corporate Support, in consultation with the Deputy Leader of the Council and Cabinet Member for Corporate Support, has approved i) a Council Tax base of 62,244 for 2020/21 and ii) the submission of the Council’s NNDR1 return (the estimate of the Council’s Business Rate income for 2020/21) to the Ministry of Housing, Communities and Local Government; and

 

                                (10)            For 2020/21, any expenses incurred by the Authority in performing in part of its area a function performed elsewhere in its area by a Parish/Town Council or the Chairman of a Parish Meeting shall not be treated as special expenses for the purposes of Section 35 of the Local Government Finance Act 1992.