Agenda item

The committee noted the budget update.

David Austin (Acting Chief Finance Officer) introduced the report and the following key points were noted:

1.1      The current circumstances are presenting the council with significant challenges and levels of uncertainty across four primary areas: the impact of Covid-19; continuing service pressures and overspends reflecting rising costs and demand; public finance uncertainty for local government; and broader concerns about the economy and a potential Covid-19 second wave.

1.2      The council is facing an in-year funding shortfall due to both the costs and loss of income related to the Covid-19 response (around £20m) and service overspends (around £17m).

1.3      In terms of service overspends, management action is being taken now to make more than £5m of in-year savings to live within the budget set for the year.

1.4      In the medium term the council needs to find at least £40m of cuts over the next three years, with the majority of these (£24m) coming in the first year, 2021/22.

1.5      Officers are taking a themed approach to finding cuts (not setting targets), looking at the needs and objectives of the council, its strategic priorities towards the community and its businesses, and working back from there to look at how the council is organised and operates to ensure that it does so within a reasonable and available financial budget.

1.6      In relation to housing there’s a theme around council assets looking at buildings and how services are run. There’s also a theme around demand management piece looking at different ways to engage the community that might reduce the pressures on services.

There was a discussion and the following key points were noted:

1.7      One committee member noted that a lot of homelessness work is based on prevention and stressed the point that any cuts to discretionary preventative services should be carefully thought through so that they don’t lead to spending more on a mandatory service at a later point.

1.8      The risk of cost shunts from reducing discretionary preventative services is recognised by the council, but with the current level of financial challenge the council may have to give consideration to the mandatory statutory element first.

1.9      While the council is taking a whole-council, themed approach the council does also have to be mindful of the Housing Revenue Account, which is protected to an extent because of the way its funded and the contract with tenants to ensure that stock condition maintained.

1.10   The responsibility for paying for the council tax reduction scheme was transferred to local government in 2013/14. Funding for the scheme was cut by 15% and rolled into the base grant, which has continued to be cut.

1.11   A consequence of the Covid pandemic is that there are likely more people entitled to Universal Credit and therefore entitled to a reduction so a bigger bill for the council to fund. As things stand this is expected to rise around £2-3m a year.

1.12   One committee member noted the Government’s ban on evictions and queried what the council is doing to prepare for when this comes to an end; what is being done to prevent potential homelessness; and what is being done to prepare for the extra financial pressure.

1.13   The committee member stressed that it is vital that we have a plan in place to meet the challenge.

1.14   An increase in evictions once the ban comes to an end is recognised by the council as a real risk.

1.15   The council supports individuals and landlords as soon as they approach. The council can help mediate and work with tenants around payment plans, among other things.  The council is also organising a meeting with other local housing providers and voluntary sector organisations, including the credit union, to discuss the eviction risk.

1.16   It was also noted that the government has announced an extra £180m for local authorities for discretionary housing payments to support renters having problems.

Resolved: The committee noted the budget update.