Agenda item

To receive a presentation by the Executive Councillor for Finance and Resources on Budget Principles for the 2023/24 Budget.

[Presentation 10 Minutes

Questions 10 Minutes]

With the assistance of a report by the Director of Finance and Corporate Resources, Cllr Brett Mickelburgh, the Executive Councillor for Finance and Resources, set out the council’s Budget Principles ahead of the 2023/24 Budget to be considered by the Council in February 2023. Members noted that details of the final settlement from Central Government was not expected now until the end of December 2022 and Councillor Mickelburgh highlighted the difficulty in publishing a budget based upon assumptions at this stage was likely to be confusing, but had committed to work collaboratively with the opposition to benefit all of the residents.

Members’ attention was drawn to the budget principles that had guided the budget preparation for 2023/24, together with a review of the resident’s opinion survey to ensure that the Council was listening and responding to concerns in shaping policies and priorities. It was noted that the results would be used to inform the budget setting process as the Council worked to develop proposals for 2023/24 and beyond. 

In response to a question from Councillor J Harvey on how the reserves would be built up again for the next administration if used for the duration of the Medium Term Financial Strategy (MTFS), Councillor Mickelburgh explained that it was not the intention to make use of all of the Council’s reserves as it was anticipated that this would be balanced with a steady income and expenditure stream.

Councillor A Jennings drew attention to the support for some of the budget principles, whilst highlighting concern for the principle of increasing fees and charges and the uncertain effect on demand, as well as the Council’s commercial property investment may be impacted with the suggestion that properties outside of the Council’s boundary would be disposed of given the fact that £2.8m had been receipted by the Council in the first six months of 2022/23. He further highlighted his disappointment that the findings of the resident’s survey had not been shared with all Member in advance of the meeting and the difficulty with considering the findings of what residents had indicated were their priorities.

In response, Councillor Mickelburgh acknowledged the late presentation of results and undertook to take these comments on board. In drawing attention to the legal requirement to produce a balanced budget and the proposals for fees and charges, he explained that it was important for Overview and Scrutiny to hold the Administration to account, not just from a pricing perspective but also in terms of all the other services provided by the Council. Members were informed that the Executive Councillor had reviewed the Commercial Investment Portfolio when after he had been appointed and confirmed that it contained a useful mix of property that contributed to the ongoing costs of the Council. Despite this, with interest rates increasing there continued to remain a lot of uncertainty with the market for next year and with that in mind Councillor Mickelburgh explained that this was the reason why the decision to hold back on any further investments for the time being had been put forward.

Arising from a question from Councillor N Wells as Chair of the Corporate Governance Committee with concern for the management of risk and reference to the previous Section 151 Officer’s guidance that the Council may be holding too much property impacted by the recession, loss of rental income and depreciation in property value and how the budget principles would be managing this risk, Councillor Mickelburgh explained that the decision to pause commercial property investment activity had been directly related to managing that risk. He further explained that it was not possible to sell any of the property portfolio to fund budget gaps in the same financial year.

In response to a question from Councillor D Shaw on consideration of funding of the Climate Strategy, Councillor Mickelburgh explained that the impact of any changes required would be funded from within the operational budget of the services and would also explore consideration of potential green commercial investments as part of the Council’s commitment.

Councillor J A Gray raised a question in relation to what the acceptable level of reserves and disputed the statement that was presented that in an inflationary environment it was not good to proceed with commercial investments as income was linked to RPI and rents were rising by RPI of some of the existing portfolio. He further stated that the Administration had been continuing the policy of the previous Administration as there had not been any investment in the Commercial Investment Strategy since 2019. In response, Councillor Mickelburgh reported in an ideal world it was preferred that a surplus was achieved by the end of the MTFS but in reality, it was hoped to be as close to zero as possible. In relation to the Commercial Investment Strategy, he confirmed that it was risky to invest further at this stage and further complicated by the change in rules of the Public Works Loan Board and inability to loan to produce a yield through investment of properties outside of the District.

In response to a question from Councillor P Hodgson-Jones on the budget approach to new areas for income generation and asked the Executive Councillor to be mindful of efficacy in terms of looking at the impact of expenditure and whether it delivered what was required by delivering services well. Councillor Mickelburgh confirmed his agreement of identifying other opportunities, particularly in light of the increase in energy costs and would explore such options moving into the next financial year.  

Whereupon, it was

RESOLVED

  that the Council received the findings of the resident engagement survey and endorsed the budget principles as set out in the report now submitted to be used to shape the budget for 2023/24.