Agenda item

Contact Officer, telephone number and email: Duncan Ellis (Head of Finance &

Assets), ext 6330, Duncan.ellis@north-norfolk.gov.uk  

The HFAM introduced the report and stated that it highlighted the additional costs and income pressures caused by Covid-19. He noted that in May the forecasted deficit had been approximately £1m, though this had now reduced significantly due to further Government funding as a result of continued lobbying efforts. The HFAM reported that Government support had been received in stages, with an initial payment of £50k, followed by £1m in April,  and £185k in July, to a current total of approximately £1.3m. It was recommended that lobbying continued for a fourth tranche of support funding, as a further funding stream had been announced that would aim to address lost income, for which it was estimated the Council could receive up to approximately £1.1m. A funding stream for Council’s with in-house leisure facilities was also in the process of being established, though it was reported that the Council would not be eligible without a change in the criteria, as NNDC’s leisure facilities were run by an external contractor. The HFAM stated that the current forecasted deficit was approximately £400k, as a result of additional funding, with the caveat that increased cost pressures remained. He added that income loss remained the key area of concern at approximately £1.5m, most of which was lost parking revenue, though parking revenue was showing significant signs of improvement. The HFAM stated that a reserve had been identified to meet the budget gap if required, but the situation would be kept under review. He added that business rates were expected to fall by approximately 5% in the year ahead, though a rollover of funding arrangements caused by ongoing delays to funding reviews, meant that the budget deficit forecasted for the 2021/22 financial year could potentially fall from £1.8m to £1.5m.

Questions and Discussion

      i.     Cllr L Shires sought to follow-up a written question on the forecasted 5% reduction in Council tax and business rates collection, and asked how the District’s demographic might affect this, and whether a comparison could be made elsewhere in the country. The HFAM replied that he accepted that differences in demographics could influence the figure, and stated that he would model the variations when preparing the MTFS. Cllr L shires referred to a second question on whether current Cabinet spending plans would continue as planned in light of Covid-19, and requested further clarification. The HFAM replied that discussion would continue on the Council’s spending priorities, but were no current plans to reduce spending on front-line services and the Council had made some savings as a result of the Pandemic. He added that the focus would remain on reducing the deficit without having to use reserves, and that various proposals were being considered, such as zero base budgeting and a fundamental review of the Council’s fees and charges.

     ii.     Cllr G Mancini-Boyle noted that without Central Government support the Council would be in a far worse position. He then asked if there was a short, medium, and long term strategy for resolving the Council’s forecasted budget deficits. The HFAM replied that in addition to the already mentioned proposals, other ideas had been given consideration such as expanding car parking provision and developing partnerships for services such as public conveniences. He added that improving the Council’s financial position to the point self-sufficiency was an aspiration of the Corporate Plan, and as a result, proposals would continue to be developed in the MTFP.

    iii.     Cllr C Cushing reiterated Cllr Mancini-Boyle’s comments on Central Government support for local authorities, and asked for clarification of the administration’s plans to improve the Council’s financial position. He added that he would also like to see further information on the Council’s free and earmarked reserves. The HFAM replied that there were a number of earmarked reserves in addition to the general reserve, such as those for the delivery plan, business rates and contingencies, and stated that he be happy to provide more details on these if required.

   iv.     Cllr G Mancini-Boyle referred to support received for loss of income revenue, and stated that the Council received 75% support in government grants after paying 5%, which appeared to amount to a 30% loss. He then asked whether the Council might break even or make a profit for the year, to which the HFAM replied that whilst there was a level of recovery possible, with significantly increased car parking revenue in July, he did not expect a full recovery. He added that the current figures were also based on a number of projections, and it had not yet been confirmed whether commercial income would be included in the support grants. Cllr S Butikofer stated that whilst car parking revenue was recovering, significantly increased costs remained elsewhere, as a result of the increased numbers visiting the District. She added that the response to Covid-19 remained a team effort and all parties had to continue to work together for the good of the District. 

     v.     Cllr J Toye referred to the Council’s net operating expenditure in relation to the size of the deficit, and stated that at 1.5%, it had to be kept in context, as under current circumstances, it remained a relatively small amount. The Chairman agreed that the issue was not the in-year deficit, but stated that emphasis must be placed on the MTFP, as the forecasted deficits for the next three years were a much larger concern. He added that were very limited options for reducing those deficits, and these would take considerable time to implement. The Chairman suggested that it would be helpful if the Committee could be involved in the process of identifying solutions to resolve future deficits, and suggested that it may be worthwhile making such a recommendation to Cabinet. Cllr L Shires agreed that working together would be beneficial, but stated that the wellbeing of the District’s residents was also crucial, and had to be taken into account alongside economic recovery.

   vi.     Cllr N Housden stated that he expected far worse economic conditions ahead, and without the ability to rely on continued support from Central Government, it would take the involvement of all Members the remainder of their term to fully resolve the Council’s forecasted deficits. Cllr N Pearce stated that he fully supported a joint approach to resolving forecasted budget deficits by working with Cabinet to pre-scrutinise cost-saving and income generation proposals. Cllr S Butikofer stated that she was supportive of the idea and aim to bring the delivery plan forward each year for pre-scrutiny.

  vii.     The Chairman stated that in order to have an impact on the year ahead, it would be beneficial to undertake the work as soon as possible in either October or November. He summarised that any recommendation to Cabinet must include reference to the MTFS and request that Cabinet shares its delivery plans for the next three years in a wide ranging approach that takes into account resident’s needs, corporate priorities and viable options. He added that the previously mentioned summary of the Councils reserves would also helpful. Cllr L Shires stated that she would also like to include a summary of proposals raised at the brainstorming session on income generation held earlier in the year, and also have this sent to Cabinet. She then proposed to take the recommendations en bloc, alongside the existing officers’ recommendations, and was seconded by Cllr N Pearce. 

RESOLVED

To note and agree:

1.    The  current  package  of  financial  support  being provided to the Council by the government to support its response to COVID-19 and the continued importance of central government lobbying for further additional financial support;

2.    The updated forecast cost  and  income  pressures being faced by the Council and the extent to which they exceed the available government funding and therefore the requirement for any deficit to be funded from alternative Council resources; 

3.    The proposals for revising the budget at the current time (and the one-off costs to be funded from reserves) to ensure that budget monitoring for the remainder of the year is meaningful, including funding any year end deficit from the Property Reserve (£0.4m); 

4.    The  various  caveats  and  risks  associated  with the current forecasts and;

5.    The proposals in respect of updating the Medium Term Financial Strategy (MTFS) and the financial planning framework for the 2021/22 budget.

To recommend to Cabinet:

6.    OSC recognises that the greatest financial risks are in the MTFS and with such uncertainties it’s difficult to gain satisfactory assurances on long term financial stability. OSC therefore recommends that Cabinet shares its proposals for closing the future income/expenditure gaps with the Committee at the earliest opportunity for a pre-scrutiny review that would enable OSC’s own proposals to be considered alongside Cabinet’s, offering a collective approach to the challenge. This pre-scrutiny review should include the wide ranging concerns around people’s needs, corporate priorities and viable options, to be conducted at the Oct/Nov 20 meetings, based on detailed delivery plans for the next 3 years.

To recommend to SLT:

7.    OSC requests a deeper understanding of the Council’s reserves and asks the Head of Finance to produce a supplementary report with a detailed breakdown of amounts, timescales and projects (in the case of earmarked reserves) and any requirements and constraints in relation to the general (un-earmarked) reserves.