The full Agenda report and appendices associated with this recommendation were circulated to all Members with the agenda for the meeting of Corporate Management Committee and are available on the website.
Members are asked to note that only recommendation (ii) is required to be voted on as recommendations (i) and (iii) have been superceded by the recommendations in item 11 below.
The Committee considered a report on the draft budget for 2022/23 and the Medium Term Financial Strategy (MTFS) 2022/23 to 2024/25. The report contained the Section 25 report and the detailed risk analysis. The process of preparing the detailed 2022/23 budget and MTFS had begun in September 2021. The report contained the Section 25 report and the detailed risk analysis. The Section 25 report was compiled annually by the Section 151 officer (the Chief Financial Officer) and dealt with the robustness of the estimates included in the budget and the adequacy of reserves. The major review of how the Government intended to fund local authorities, known as the Fair Funding Review, had been delayed by the pandemic and was to be implemented in 2023/24. In late 2021 or early 2022 the Council would receive the detail behind the local government settlement, which would be a one year settlement for 2022/23 only.
In the winter of 2021/22, the impacts of Covid were still being felt across the UK and the emergence of the Omicron variant had led to increased numbers of Covid cases. In the early part of 2021, it had been anticipated that the threat from Covid would be receding. In 2021, the UK was not in the Covid recovery phase which was now anticipated to take place later in 2022 continuing into 2023. The MTFS was based on current forecasts and showed a reasonable, risk-based view of the Council’s financial position. The MTFS was highly indicative at this stage. It was not known whether the Council’s income streams would return to pre-pandemic levels in 2022 and 2023. One of the effects of the pandemic was that the variances between the original and the actual budgets were much larger than normal. The report covered the budget and medium term financial plans.
Since Business Rates Retention had been introduced, Runnymede had been in every Surrey business rates pool. The objects of the pool were to maximise the resources retained by each member of the pool and to minimise the collective risk of a significant fall in income collected across the pool. The 2022/23 Surrey business rates pool included those Surrey local authorities who were best placed to make the most financial gain for the pool members. Runnymede would be in the Surrey business rates pool for 2022/23 and the inclusion of the London Borough of Sutton in the 2022/23 pool resulted in Runnymede gaining an additional £900,000.
In 2020/21, the Government had paid the Council a grant of £9.6m to cover all the deficit relating to Covid, with a further £3.3m in 2021/22 to cover any future deficits. The Council would use those funds to repay Collection Fund deficits over three financial years.
When the Council set its final budget for 2022/23 in February 2022 an allowance would be made for inflation for the year. There was some uncertainty on inflation rates, mainly due to supply and demand issues. The original budget assumed an increase in costs of £329,000. Recent developments had meant that a further £429,000 had been added in 2022/23 and all subsequent years.
The projected commercial income that the Council would receive had held firm and Commercial Services had contacted all of the Council’s tenants to arrange payment plans to pay existing rents and any arrears caused during lockdown. The Council was able to reduce its provision for voids and bad debts from £4,180,000 to £3,115,000. The original provision of 15% had been reduced to 11.5%. Monthly budget monitoring meetings would identify any corrective measures required. The interest charge to the revenue account remained lower than budgeted as officers had borrowed internally when interest rates were relatively high. From 31 March 2019 to 31 March 2021, the Council’s commercial assets had appreciated in value by £29m.
The Committee noted that over the next few years, the Council was setting aside prudent sums to cover void periods and bad debts for its commercial income. The Council maintained two earmarked reserves to manage risk around dilapidation costs and to fund any large reductions in income. Some significant tenants had break clauses between 2026 to 2028. These earmarked reserves mitigated the risk of a re-gear of a lease including a rent free or rent reduction agreement. Officers were satisfied that the provision made in these reserves was adequate to cover this risk. In 2027 there was a potential need for more than £7 million to be included in the investment property income equalisation reserve for rent free lease periods. The balance on this reserve was estimated to increase from £3,750,000 at 31 March 2021 to £6,750,000 at 31 March 2025. The reserves would be reviewed every year to check that they were realistic and Commercial Services officers were negotiating with tenants on arrangements for regearing of leases in the future.
The Committee noted a MTFS 2021/22 to 2024/25 General Fund Summary. Adjustments to the 2021/22 base budget were noted. The Committee noted a table summarising the adjustments showing corporate property income or cost reduction/efficiency savings and increased costs. For 2021/22 the main reasons for the additional spending of £1.1million included Covid related income shortfalls and projects planned to start in 2020/21 which could not be completed due to the pandemic where the budgets had been carried forward as a previous year underspend.
The Council had undertaken a senior management restructure and a voluntary redundancy programme would reduce net costs by £380,000 every year from April 2022 onwards. This saving was made after creating new posts including a Bid Officer and a Climate Change Officer. It was noted that there was no extra provision in the budget for spending associated with the Climate Change Officer as it was anticipated that only small amounts of money would be required for environment related events (e.g. a green week) which could be contained within existing provision. It was noted that traveller provision in the budget had not as yet been spent as further work needed to be done before the traveller site which was located in Surrey but was outside Runnymede could be made available for use.
The Committee noted the new cost pressures identified for 2022/23 and potential income generation and revenue reduction ideas. Some of these schemes were included in the draft budgets but had not been approved by Members but as most of these schemes were in an advanced planning stage they had been included in the budget, subject to Member final approval.
The Council would maintain a working balance to fund any unforeseen new costs or reductions in income to the year ending March 2023 when it approved a budget in February 2022. The Committee noted a General Fund Revenue Reserves Calculation Of Minimum Prudent Balance which showed the minimum recommended level of unallocated General Fund reserves based on an assessment of risks and uncertainties. The General Fund Working Balance would remain at no lower than £3 million. The Council had sufficient reserves to continue to provide the same level of service using reserves for several years. The Committee noted a table showing how the reserves were likely to be used until 31 March 2025.
The Committee noted a summary of the capital programme up until 2025/26 and a scheme break down over a five year period. All capital expenditure, unless funded by selling other assets to generate a capital receipt, or by capital grants of contributions, had to be funded from the Council’s annual revenue stream. The main schemes to be funded in the capital programme included a contribution of up to £5m towards the Thames flood relief scheme, a contribution of up to £2m to Surrey County Council for improvement to the A320, Egham regeneration, raising energy efficiency ratings and developing digital services infrastructure. The Committee noted the maturity profile of the Council’s loan portfolio. The Council set aside cash reserves to repay debt which was known as the Minimum Revenue Provision (MRP). The MRP allowed the Council to fully repay debt when it matured and to not refinance loans at higher interest rates.
Runnymede had the lowest Council Tax in Surrey and one of the lowest in England. For several years now, the Government had set referendum limits so that local authorities could not raise the Council Tax beyond a certain level without holding a referendum, at the cost of the authority, to seek the local electorate’s approval to set a higher tax rate. The draft budget assumed that the limit for low Council Tax rate Councils would be set at an increase in the Band D Council tax rate of 3% or £5 a year, whichever was the higher. In Runnymede a £5 a year increase would yield more than a 3% increase. The Committee agreed to recommend that Runnymede should increase its Council Tax in 2022/23 by the maximum amount allowable without holding a referendum. The Committee noted the effect on the Council’s income for 2022/23, 2023/24 and 2024/25 if it did not increase the Council Tax by this amount.
The report centred on the risks faced by the Council and how those risks had been evaluated in financial terms to give the Council the resilience to deal with them. The Council’s current Section 151 officer was retiring in December 2021 and he had gone through the budget with the Council’s new section 151 officer who was content that the budget, reserves and financial position of the Council were robust.
Recommend to Full Council on 10 February 2022 that –
i) the Medium – Term Financial Strategy be approved;
ii) the Band D Council Tax rate be increased by £5 subject to
Government referendum limits; and
iii) the revised budget for 2021/22 and 2022/23 be approved.
Council considered recommendations from the Corporate Management Committee which had met on 16 December 2021 and 20 January 2022 regarding the Budget and Council Tax for 2022/23 and an Addendum circulated on the day of the meeting.
The Leader pointed out that the recommendations i) and iii) from Corporate Management Committee on 16 December had been initially superceded by the recommendations from that Committee on 20 January 2022, but had now been further amended as per the addendum and set out below. Recommendation ii) relating to the Band D Council Tax had also been amended as set out on the Addendum. The amended recommendations had been included into the consolidated Budget paper circulated on the day of the meeting which also included the additional information concerning the precepts to be levied by Surrey County Council and the Police and Crime Commissioner for Surrey, which had not been available when the Corporate Management Committee had met
The report to CMC on 20 January included an updated General Fund Summary for the Council’s Revenue Budget following the announcement of the Provisional Local Government Finance Settlement for 2022/23. The indicative Settlement figures included additional grants to the Council, in respect of the extension of New Homes Bonus, a new Services Grant, and continuation of the Lower Tier Services Grant for a further year. In light of these anticipated additional funds, the Committee had agreed to recommend an increase to the transfer to the Property Repairs and Renewals Reserve of £595,000 in order to protect the significant income stream arising from commercial property holdings. Consequently, the Committee also recommended the amended budget for 2021/22 and 2022/23, and the Medium-Term Financial Strategy, as amended for this change and some other minor adjustments.
On 7th February, the Final Local Government Finance Settlement figures were announced and included a minor reduction in grant funding from that previously reported, of £36,335.
A Revised General Fund Summary for both the 2022/23 Budget and the Medium-Term Financial Strategy were now presented, which reflected this change in funding and a subsequent increase in use of balances in order to maintain a balanced budget. The Summary was further amended to reflect a £4.96 increase in Runnymede’s share of the Council Tax, which was within the permissible limits before triggering a referendum and marginally below the £5 increase recommended by Corporate Management Committee at its meeting of 16 December 2021. This minor change facilitated the calculation of each Council Tax band which were set in proportion to the average band D tax level.
The Leader of the Council summarised the key points in the Budget and the MTFS and commended them to the Council. This was duly seconded.The Band D equivalent increase in the Council tax for 2022/23 would be £4.96. The total bill for a Runnymede tax payer in a Band D property would be £2,101.51 taking into account the increased precepts from Surrey County Council and Police Commissioner. Of the total bill only £179.55 related to the Runnymede element. The Council Tax would still be the lowest in Surrey.
The Leader commented that local government finances continued to be challenged on a number of fronts, but the Council continued to invest in its services without cuts to front line services.
Unlike many Councils, Runnymede continued to invest in its area, with an estimated capital programme for 2022/23 of over £40m, funded by a mix of earmarked reserves, grants and contributions, capital receipts from asset disposals and the prudent use of borrowing.
The Council’s commercial income streams delivered some £7.8m of income to the Council, which allowed the Council to maintain its services at current levels. The Budget also supported extensive partnership arrangements with key local stakeholders and other local Councils, ensuring that the best use was made of our assets and that new models of service delivery were explored and implemented where appropriate. (For example, the budget included the additional expected income of joining the Surrey Business Rates Pool which allowed it to retain an additional proportion of business rates that would otherwise be paid to central government).
The Budget took account of risk, for example to its commercial property income, by ensuring suitable levels of earmarked reserves were maintained to ensure that properties were maintained, and income maximised, and so that temporary reductions in income could be managed. The budget recommended that an additional sum be placed in these specific reserves at this time.
Alongside earmarked reserves that had been set up to manage known risks or future commitments, the Council held a robust general fund reserve, in excess of the minimum amount recommended in the Medium-Term Financial strategy. This was a prudent approach to take given the current economic climate and the uncertainty of future government funding levels.
The budget would support the Council’s new corporate strategy as it comes forward, and detailed action plans would be developed and costed, to ensure that scarce resources were directed towards priorities. The Council fostered a robust project management methodology so that business cases could be developed and monitored where additional resources were required.
In addition to the practical support that the Council had been providing for those affected by the pandemic, such as administration of numerous business grant support schemes, Test and Trace support payments, Household Support grant and support for energy price increases, this budget continued to deliver support to those needing assistance through its many community services, and through Council Tax support and Discretionary Housing Payments, for example.
An Amendment was put forward by Cllr R King to amend the Budget in key areas such as community services, environmental services, Housing and HR. Cllr King read out the various components of his Amendment.
Some Members of the majority group commented that as the Amendment was detailed and produced at short notice it was not possible to fully consider it and that earlier engagement on the Amendment would have assisted its consideration.
Cllr R King stated that all the components of his alternative Budget, except for the Green Bond Officer proposal, had previously been raised by him in Committees or Member Working Parties.
The Amendment was supported by some of the other minority group Members who hoped that some of the suggestions made by Cllr King would be taken forward in the future.
A Member suggested that, in future, detailed amendments and, in particular ,any Amendment proposing an alternative budget should be circulated in advance to assist informed debate thereon and asked that a procedure for advance notice of amendments at Full Council be considered by the Constitution MWP.
Some Members of the minority groups asked that greater engagement be held with them on various corporate issues and that they be given the opportunity to have input thereon at an earlier stage.
Some concern was expressed by a Member that direct debit payers would not receive the £150 rebate under the Government’s Council Tax rebate scheme until month 10 of the next financial year. The Leader of the Council responded that this was a central Government scheme and payments were expected to commence in April, subject to receipt of the detailed guidance from Government.
A named vote was requested by Cllr R King on his Alternative Budget and the voting was as follows:
For (7): Councillors Burton, Gillham, R King, Mullens, D Whyte, S Whyte and Williams
Against (21): Councillors Adams, Balkan, Broadhead, Bromley, Coen, Cotty, Cressey, Furey, Gill, J Gracey, T Gracey, Heath, Hulley, N King, Maddox, Nuti, Prescot, Snow, Walsh, Willingale and Wilson
Abstention (1): Councillor Harnden
The Amendment was declared to be lost.
In accordance with Standing Order 25.2, a named vote was then taken on the Motion
to approve the original Budget and increase the Council Tax, and the voting was as
For (23): Councillors Adams, Balkan, Broadhead, Bromley, Coen, Cotty, Cressey, Furey, Gill, Gillham, J Gracey, T Gracey, Harnden, Heath, Hulley, N King, Maddox, Nuti, Prescot, Snow, Walsh, Willingale and Wilson
Against (6): Councillors Burton, R King, Mullens, D Whyte, S Whyte and Williams
The Motion to increase the Council Tax and approve the Budget was passed and it was
RESOLVED that –
i) the Runnymede Borough Council Tax be increased by £4.96 (Band D equivalent) for 2022/23;
ii) £595,000 of the additional grant money received from the provisional Finance Settlement be transferred to the Property Repairs and Renewals Reserve be approved;
iii) The revised Budget for 2021/22 and the Budget for 2022/23 as amended in light of the final Local Government Finance Settlement be approved;
iv) The amended Medium Term Financial Strategy 2021/22 to 2024/25 be approved; and
v) Proposed Council Tax for 2022-23 be as set out below:
1. The Council Tax Base 2022/23 for the Council has been calculated as 34,524.0 in accordance with Regulation 3 of the Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012;
2. That the following amounts be calculated for the year 2022/23 in accordance with Sections 31 to 36 of the Act:
A £71,855,392.00 being the aggregate of the amount which the Council estimates for the items set out in Section 31A (2) of the Act taking into account all precepts issued to it by major preceptors and parish councils.
B £65,656,607.80 being the aggregate of the amount which the Council estimates for the items set out in Section 31A (3) of the Act.
C £6,198,784.20 being the amount by which the aggregate at 2A above exceeds the aggregate at 2B above, calculated by this Council in accordance with Section 31A (4) of the Act as its Council Tax requirement for the year.
D £179.55 being the amount at 2C above, divided by the Council tax base (item 1 above), calculated by the Council, in accordance with Section 31B (1) of the Act, as the basic amount of its Council Tax for the year (including Parish precepts)
E £0.00 being the aggregate amount of all special items (Parish precepts) referred to in Section 34(1) of the Act
F £179.55 being the amount at 2D above less the result given by dividing the amount at 2E above by the Council Tax base, calculated by the Council in accordance with Section 34(2) of the Act as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no special item (Parish precept) relates.
G That the following amounts be calculated for the year 2022/23 in accordance with Sections 31 to 36 of the Act as amended.
Being the amounts given by multiplying the amount at 2F above by the number which, in the proportion set out in Section 5(1) of the Act, is applicable to dwellings listed in a valuation band ‘D’ calculated by the Council in accordance with Section 36(1) of the Act, as the amounts to be taken into account for the year in respect of categories of dwellings listed in different valuation bands.
3. To note for the year 2022/23 Surrey County Council and the Police and Crime Commissioner for Surrey have stated the following amounts in precepts issued to the Council, in accordance with Section 40 of the Act for each of the categories of dwelling in the Council’s area as shown below:
4. That, having calculated the aggregate in each case of the amounts in 2 G and 3 above, the Council, in accordance with Sections 30 to 36 of the Local Government Finance Act 1992 as amended by the Localism Act 2011, hereby sets the amounts of Council Tax for the year 2022/23 for each of the categories of dwellings:
5. The Council has determined that its relevant basic amount of Council Tax for 2022/23 is not excessive in accordance with the principles approved under Section 52ZB of the Act.
As the billing authority, the Council has not been notified by a major precepting authority that its relevant basic amount of council tax for 2022/23 is excessive and therefore the billing authority is not required to hold a referendum in accordance with Section 52ZK of the Act.
6 The payment dates for the statutory ten monthly instalments scheme be set to run from 1 April 2022 to 1 January 2023 and The Council Tax (Administration and Enforcement) Regulations 1992 allow customers to opt out of the ten monthly instalment scheme and request payment over a 12-month period. Where this is requested the Council authorises that the payment dates are to be on such a day in each month as is most efficient for administrative purposes.
The following narrative provides some additional explanation of the figures contained within the formal resolution at section 2 above.
This represents the gross expenditure of the Council
This represents the total income to the Council, including Government support and share of any Council Tax surplus from prior years
This represents the balance to be raised by Council Tax (including any Parish precepts)
This represents the average Band D Council Tax for the year (including any Parish precepts)
This represents the amount reapportioned to specific areas under special expenses or Parish precepts. There are no such charges for Runnymede Borough Council
This represents the average Band D Council Tax excluding the amounts covered by special expenses or Parish precepts. As there are no such charges in Runnymede, the Band D amount remains the same as in 2(d)