Agenda item

The Council’s financial planning impacts all Directorates of the Council. The purpose of this report is to give Members a high-level interim update on the current financial and economic prospects for the Council for the period 2024/25 to 2028/29. The report also asks members to note the financial parameters for the 2024/25 budget preparation.

A more detailed report will be brought back to this Committee for its next meeting on 6 December 2023.

The Committee received a report from the Group Head of Finance and Section 151 Officer. Prior to presenting the detail of his report, he confirmed that he needed to make an amendment to Recommendation 2.3 to read as follows [deletions have been shown using strikethrough with additions shown using bold.

Recommendation 2.3 “the Committee agrees to delegate authority to the Section 151 Officer and the Chief Executive Officers and in consultation with the Chair of the Policy & Finance Committee to decide future participation in any West Sussex Business Rates Pool”.

          Councillor Gunner formally proposed this amendment which was then seconded by Councillor Stanley.  On this amendment being put to the vote it was declared CARRIED.

(At this point, Councillors Greenway, Pendleton and Oppler declared their Personal Interests as Members of West Sussex County Council).  

          The remainder of the report with recommendations was then presented.  It was highlighted that the report provided a 5 year forecast, which was still work in progress, but that a further report would be presented to the Committee at its next meeting on 6 December 2023. There would certainly be changes made to the figures and assumptions made within that report as the economic situation was still extremely volatile making the job of forecasting very difficult.

The Committee’s attention was drawn to Appendix A providing the latest forecast in terms of budget deficits that had to be closed. For 2024/25 this stood at £4.5m representing a change of £1m from the previous year when this Committee received the same report back in December 2022. One of the main reasons for this had been pay and contract inflation and further detail had been provided within the report.

The Group Head of Finance and Section 151 Officer said that there was more work to be done on estimates and further reviews were to be undertaken.  One of these was business rates. For 2025/26, a large increase had been forecasted and this was explained in detail. Further work on this area would be undertaken ahead of the report for the Committee’s next meeting. Certain assumptions had been made on central government grants and further work would be undertaken on capital programming and potential projects.

Looking at Appendix B, it was explained that this showed the impact to the Council’s usable revenue reserves if the funding gap was not closed. It was stressed to Members by the Group Head of Finance and Section 151 Officer that whilst he did not expect the Council to run out of reserves, Members would need to make some difficult decisions going forward.

The Council’s approach to formulating it forecasts was then explained. Much work in producing service planning templates had been undertaken with Group Heads as these would inform the budget process and would be reported back to Members during the budget setting process. 

The Group Head of Finance and Section 151 Officer then drew Members’ attention to Section 4.1 of report which explained the budget process. Turning to the Local Government Finance Settlement, this was normally announced in December each year, and this was not expected to change. Various cost pressures were highlighted with a main feature being inflation and the implications of inflationary increases on contracts. Looking forward to the December meeting, work would be undertaken for inclusion in the next report on borrowing costs and increasing the capital programme. Other issues for Members to be aware of surrounded staffing costs and external audit fees.

          Looking at the West Sussex Business Rates Pool it was highlighted that the Committee had earlier approved an amended recommendation that the Council continue with its participation. Membership enabled the Council to access a pool of money which would have otherwise been returned to central government in the form of a business rates levy. Reference was made to council tax increases and the council tax base which would be announced as part of the Local Government Finance Settlement. Turning to the adequacy of reserves, Members were reassured that the Council was sitting on a good level of revenue reserves and that further detail would be provided in the Committee’s next report.

Finally, the major challenges ahead were explained with Members being reminded that the Council would need to make crucial but painful decisions in the future.

The Chair invited questions from Members. The Committee passed on its thanks for a detailed report and for highlighting the major issues ahead. The need to ‘invest to save’ was important. An observation was made about public consultation, and it was highlighted that it was very important for the Council to be including residents as part of the budget preparation process.  Members were keen to hear how this would be implemented. It was explained that the Council was required by law to do this, and plans were in place to undertake a meaningful consultation exercise via questionnaire that would be posted on the Council’s web site. 

          Reference was made to the West Sussex Business Rates Pool where disappointment was expressed, by some Members, that Arun and its businesses had seen very little return from its membership to date. One Member of the Committee questioned the Council’s ongoing participation due to these concerns and asked for clarity on the criteria surrounding membership.     

Concern was also expressed over the assumed increases in pay inflation as the pay award was still under negotiation. The Group Head of Finance and Section 151 Officer explained that the assumptions in the report did not set Council pay policy and confirmed that he was comfortable with them as they currently stood. Similar concerns were expressed over the projections in the report and at what point could the saving requirements be confirmed.

In response, it was confirmed that looking at the criteria for being a member of the business rates pool, the Council did not lose out financially with the Council having access to the pool pot. Officers would be happy to propose in drawing up criteria surrounding the Council’s future participation in the pool and that in addition to undertaking consultations with the Chair, other Members who were interested would be advised of the criteria. Regarding the pay award, only assumptions could be made until solid confirmation had been announced. On savings, these could not be confirmed until it was known which proposals Members wanted to adopt. 

It was felt that more direction, steer and guidance needed to be provided to Members ahead of them making budgetary decisions and confirming savings. Further comments were made regarding the Council’s membership to the business rate pool in that a positive outcome was urgently needed.

The Interim Chief Executive and Director of Growth provided reassurance confirming that Officers were working diligently on plans for savings for 2024/25. On completion of this work, the Council would be in a better position to provide further guidance and detail to Members. 

The Chair acknowledged and shared the views made regarding the business rate pool and confirmed that the points raised would be investigated, especially at a time of unique economic challenge where such money could be utilised to meet the numerous challenges already identified. 

A request had been made for the voting on some of the recommendations to be undertaken separately. Following discussion, it was agreed that Recommendations 2.1 would be taken separately with Recommendations 2.2 to 2.4 being taken together. 

Councillor Nash then formally proposed Recommendation 2.1 which was seconded by Councillor Birch.

          The Committee

                     RESOLVED

2.1That the financial forecast be noted.

          Councillor Nash then formally proposed recommendations 2.2 to 2.4 which were then seconded by Councillor Birch.

          The Committee

                     RESOLVED – That

2.2      Delegation be granted to the Section 151 Officer to finalise the wording of the budget consultation literature in consultation with the Committee Chair of the Policy & Finance Committee;

2.3      The Committee agrees to delegate authority to the Section 151 Officer and the Chief Executive Officers in cinsultation with the Chair of the Policy & Finance Committee to decide future participation in any West Sussex Business Rates Pool; and

2.4      Officers continue to develop proposals which will enable the Council to maintain and replenish an adequate level of Usable Revenue Reserves as decided by the Section 151 Officer.