Agenda item

To consider draft budget proposals for 2026-2027, as Pre-Scrutiny, and give feedback to Cabinet, if needed, ahead of the Budget setting process.

Cllr Shires introduced the report in which she explained they had achieved a balanced budget which was to be celebrated. It was proposed local members, through a Local Members’ Fund, could apply for grants for their local communities and they would add further detail once it was agreed at Full Council. She suggested a cross-party working group would be formed to determine the purpose and governance around the grants award, and that final control would be exercised through a four person panel consisting of two members, a legal officer and finance officer who would meet monthly.

It was highlighted by Cllr Shires that they did not have a list of savings to consider as efficiency was interwoven into every decision they made and not something they considered just once a year.

Cllr Shires explained, as with all Norfolk Councils, they had to budget as if the council was continuing but asked the Committee to note they had created a reserve for Local Government Reorganisation (LGR). It was also noted that, despite the additional pressures of having to provide food waste collections, no additional grant was received for new burdens funding even though this was a scheme introduced by Government.

It was also brought to the attention of the Committee that the overall share NNDC received from council tax had reduced to 7.4% last year from 8% the year previously. Until everyone sets their budgets, they wouldn’t know how that adjustment was going to look and whether they would continue to see a 7.4% share of the overall council tax bill.

The Chair invited members to ask questions.

It was queried by Cllr Hankins how the draft budget ended up being seen at such short notice at today’s meeting for pre-scrutiny when it was originally in the work programme to be seen in February as a scrutiny item and, if they saw the budget at this meeting, would there be any need to discuss it again in February.

The Chair explained that it had been suggested, by the Chief Executive and Cllr Shires, that it would be prudent to allow the Overview and Scrutiny committee an early sight of the report so the Committee could feedback into the budget setting process before going to Cabinet the following week. Cllr Shires queried whether this was the reason for the report coming to the Committee at short notice, but said it was always her preference to have pre-scrutiny, to get the Committee’s input before it went to Cabinet in case there were any adjustments that needed to be made. Cllr Shires thanked officers for turning the papers around quickly so it could make the meeting. The Chair outlined that the pre-scrutiny would be for information and the Committee would need to see it again in February before it went to Full Council.

Cllr Toye wished, as a cabinet member, to reinforce what Cllr Shires also said, that it was very useful to Cabinet for O&S to look at the budget as a pre-scrutiny item as it helped inform them that they were producing a budget that was acceptable.

The Chair thanked the finance team for doing an excellent job in bringing the report to the Committee when details of funding coming from Government was so late.

Cllr Cushing drew Cllr Shires’ attention to the base budget for next year when compared with this year it had increased by £2million. Cllr Shires said those figures included an assumption that the council tax will go up, even though Cabinet did not like to make an increase and did everything it could not to. Cllr Shires noted Government were now taking a larger share of business rates.

It was explained by Cllr Shires they were receiving less compared to a lot of other councils across the country. The funds were instead being given to metropolitan boroughs and councils with adult social care responsibility, in preference to smaller shire districts.

Cllr Hankins asked about the Planning Policy and Built Heritage Working Party that were faced with a request to update their planning standards and codes. There was a consideration that this would be quite expensive to complete, to the region of approximately £50k, and he didn’t see anything in the budget that considered this requirement. Cllr Shires did reassure him that there was a planning reserve of £325k and this would be used, in part, to meet that requirement. The Chair asked what the rest of that amount of reserve was intended to cover. Cllr Shires explained that in part it was for the Local Plan, and the inspection of that plan, within the next 2 years.

Cllr Hankins asked Cllr Shires to confirm if the cost of, possibly, being required produce the updated planning standards and codes had been calculated as part of that overall reserve when factoring in the costs of delivering the local plan and Cllr Shires confirmed that she believed there would be money left over in the reserve to cover that requirement. Cllr Hankins asked for that to be noted in the minutes.

Cllr Brown wished to make the Committee aware that, when the Local Plan was passed, the Inspector advised they would need to start by June 2026 on a new Local Plan. A substantial part of that £325k would be earmarked for the creation of the next, new Local Plan. The estimated costs for a review of the proposed design guide were £50k, for a basic guide, and up to £160k for a more lavish design guide that completely rewrote the existing guide that was previously published in 2008. As things stood, they were looking to come back to the Working Party to propose a simple, cost-effective, tweak to that existing design guide.

Cllr Housden asked if they could explain the drop off in the capital programme for 2026/27 under meeting their housing needs. Cllr Shires explained that in the capital programme currently they had the Disabled Facility Grant, compulsory purchase of long-term empty properties, the Community Housing Fund which was the grants to housing providers, Council owned temporary accommodation, Housing Section 106 enabling and loans to housing providers. The additional money is on top of that and that’s where it was detailed within the capital bids.

The increase in business rates valuations was cited as a major concern, by Cllr Bayes, for many local firms, and the hospitality industry, and he queried if there was a serious risk of business closures because of that increase. Cllr Shires felt that was a very good question and something the Government could look at, but she had heard that the increase in rateable value was bringing business rates down. Cllr Shires felt that as Members they could promote the reliefs that were available to businesses to help with their bill and the Economic Growth team could further ensure that message was getting out to local businesses.

Cllr Bayes felt that the hospitality industry, which was so important to the local economy, was very worried and making decisions, now, in looking to get out or stay stagnant rather than looking to grow due to their concerns over business rates. Cllr Shires agreed that she would not want local businesses to suffer as a result and at the next Cabinet meeting they would discuss ways they could ensure those businesses are properly informed of reliefs and grants that were available to help.

The point made by Cllr Bayes was supported by Cllr Cushing who had noted two local business closures in the Fakenham area on the back of the concern over increased business rates rateable values. Cllr Toye assured the Committee that Economic Development were already in discussions with local businesses and the hospitality industry to actively find solutions and support businesses to keep running.

Cllr Cushing went on to ask about second home premiums and asked if the County Council had agreed the same terms as currently agreed and what estimates did they have on what that might generate and where that money might be spent. Cllr Shires explained that that the intention for the money remained the same as it was in the current year, and to invest in the purchase of their own temporary housing accommodation. The DRF said they had been actively negotiating with County Council, and leaders from both councils were in regular contact, as to their share with the aim to carry on at the same basis. This year that stood at 25% of what this council had collected. Originally that was forecast to be £1.3million, but their current expectations stood closer to £1.6million. For 2026-2027 that figure could go up or down. If everyone paid for the same second homes that figure would go up but with the increase in business rates rateable value it might encourage people to register their homes as businesses and to claim Small Business Rates Relief.

Cllr Bayes asked if the second homes premium had resulted in many of those homes being sold, but Cllr Shires assured him that the figures for the current number of second homes in the district remained remarkably comparable to the previous year, which she felt showed how invested those owners were in their local community. The revenues team had considered the number of people who would be selling or switching to business rates so the finance team had purposefully under-estimated the revenue the premium might generate, and they had far exceeded that estimate due to their excellent collection rates.

In response to a query by Cllr Bayes, over increase in salaries and if a pay award had been agreed and whether a risk had been added if that award needed to be increased down the line, Cllr Shires said they are not fully in control of pay awards. The NJC (National Joint Council) meet and the overall increase is negotiated from there but they will not know that final figure until September so they estimate as to where they believe they will be based. The DFR explained there was still sufficient reserves to ensure that the budget was balanced and that will go through Committee if those reserves are used, but they felt they had enough collective influence and mitigation in place that they could manage that risk.

The Chair asked why the revenue support grant had increased, but that was due to the losses on everything else for New Homes Bonus, the Funding Guarantee etc. They were no longer given a breakdown as to each component as it was given as one lump sum. Cllr Shires was hopeful with the 3-Year Funding Guarantee they would have consistency going forward.

The £225k in premises cost variance, work to council assets, not in capital bids, was also queried by the Chair. Cllr Shires explained the difference between Capital and Revenue, but the DFR felt it reflected where works they had previously considered they could postpone were now becoming a necessity. As they looked to transition to a new unitary authority, it was the Council’s wish to pass on its assets in the best possible state of repair to that unitary, as there was a considerable risk that the new authority may wish to de-prioritise North Norfolk’s public realm over other areas, especially if it is a single unitary.

In response to why the environmental services growth had increased significantly the DFR explained this was due in part to a grant that was to do with packaging and was awarded a year-by-year basis so no guarantee in funding, but the growth in the cost was due to the new burden of the new food waste service.

Finally, the Chair asked if they could justify why they had put £750k into a reserve for LGR. Cllr Shires advised there would be costs which the councils had to bear and they were being prudent in ensuring they had money to do that. The DFR explained that the figure of £750k was comparable to what the other Norfolk councils were budgeting for in covering those costs of forming the new unitary.

The Chair asked for feedback on the budget report from the Committee in terms of presentation or content.

Cllr Cushing felt the way the presentation of the Capital Programme could be improved, as the summary at the end shows where the money has come from but in the projects where we are asking to borrow money you can’t see where they are when you look at the programme. He would like a breakdown for capital receipts and borrowing. Cllr Shires tried to be clear on the focus so officers knew what the ask was, which was to clarify for each project how that project was going to be funded.

The Chair believed if the narrative could be strengthened they wouldn’t feel the need to ask as many questions, the Chair used the second homes council tax as an example: she felt that if they were explained in a little more depth it would help enormously. Cllr Bayes agreed with that. Cllr Shires felt that when seen in conjunction with the Medium-Term Financial Strategy it would make more sense but admitted they perhaps had a little bit of work to do on explaining the national picture more clearly and on strengthening the LGR aspect.

It was noted by the Chair that some additional information on business rate relief would be useful but believed that had been covered and officers of the Revenues team would consider as a result of the observations made during the meeting.

Cllr Gray reiterated how important it was for Members to really engage with local business and explain business rate relief, or get officers to help them understand it, so they could fully support their local businesses. You wouldn’t want to see people get scared and closing their business down needlessly simply because they didn’t understand the support that was out there or for accidental misinformation to be given.

The Chair outlined the suggestion of expanding the narrative of the report and in providing a business rates pack to help Members but recognised there appeared to be little appetite within the Committee to formalise those suggestions.

The Committee noted the Draft Revenue Budget report to Cabinet.