Agenda item

The Director of Resources submitted a report asking committee to approve the revised Revenue Budget for 2021/22 and to recommend a revenue budget and council tax requirement for 2022/23 to Council on 8 March 2022.

The revised budget now forecast that instead of having to take £400k from general fund balances to balance the budget, £198k would now be added to balances at the end of the year.

She explained the main reasons for committee expenditure having fallen by £360k.

A significant element of our income was business rate growth and the Director of Resources outlined the latest estimate of Ribble Valley’s share of business rate income for the current year.

When setting the original budget it had been agreed to use £795,549 to fund the revenue budget and £85,200 to fund the capital programme. Based on the latest position we expect to receive £1.469m, use £85,200 to fund the capital programme, use £795,549 to fund the base revenue budget and use £6,675 of further revenue in year expenditure approved by the Emergency committee; therefore the revised difference of £581,719 would be added to the business rate growth reserve.

She informed committee that there were further in year complications due to the late announcement in March 2021 of 100% retail discount for the 3 months to 30 June 2021 followed by a 66% discount for the remaining 9 months. The section 31 grant for the expanded retail discount would be moved into next year by setting aside in an earmarked reserve totalling £1.641m.

The forecast transfers to and from earmarked reserves compared with the original estimate were highlighted, in particular the addition of £1.766m to earmarked reserves largely due to timing differences in receipt of section 31 grants that would need to be carried forward to offset the deficit to be faced next year.

Looking forward to 2022/31, the Director of Resources briefly highlighted the key elements of the final grant settlement; rural services delivery grant; lower tier services grant; 2022/23 services grant; future years government funding and the reforms due to come on Fair Funding Review, Business Rate Retention reform and New Homes Bonus scheme.

The report went on to detail the Council Tax Base and the Council Tax Referendum criteria. The Director of Resources highlighted the fact that the current band D tax of £155.69 meant that Ribble Valley was in the bottom quartile of all district councils at 28^th out of 188 and the lowest across Lancashire districts. The report outlined the potential amount of income that would be generated by increasing the Council Tax by £5 (the maximum allowed for next year). This would generate £122,765 in extra revenue and in addition the increase in the tax base would generate a further £85,007

Reference was made to the New Homes Bonus scheme and the Director of Resources informed members that we currently rely on £1.105m each year to fund the revenue budget. The assumption had been made that 2022/23 was the last year of the scheme and could not, therefore be relied upon to fund the revenue budget going forward.

With regard to the Business Rate Retention Scheme the NNDR1 return had been submitted and based on the share of business rate income from the Lancashire Business Rate Pool it was anticipated that the total business rate income for next year would be £1,879,798 of which £795k would be used to fund the revenue budget and a further £296k to fund the cost of the new pay line. It was also planned to use £512k to fund the capital programme along with £219k agreed elsewhere on the agenda due to changes on schemes.

She drew members attention to the fact that the estimated balance of the volatility reserve stands at £1.682m. This was sufficient to provide a safety net protection which we would have to forgo as a pool member of 92.5% of our business rate growth. Since reaching this level a Business Rate Growth Reserve had been created to support both the revenue and capital programme.

For Ribble Valley the core spending power had been increased by just 0.6% and the report outlined possible transitional arrangements following the outcome of key financial reforms.

The Director of Resources reported that the Collection Fund was likely to produce an overall deficit of £3,112,640 this year, that consisted of a surplus for council tax of £1,260,939 and a deficit for business rates of £4,373,579 mainly due to the awarding in year of £3.988m of retail discount. The council tax surplus would be shared amongst all the major precepting authorities with our share being £115,329 and the business rate deficit would be jointly borne with our share being £1,749,431.

With regard to the revenue budget 2022/23 the Director of Resources outlined the provisional base position as agreed by service committees. Committee expenditure was set to increase by £699k for reasons outlined and reported to the service committees.

She highlighted the capital adjustments, movement of other items, substantial increase in inflation, the pay award and continuing difficulties in recruitment and retention that may need to be addressed. She informed committee that growth items totalling recurring bids of £525,210 and non recuring bids of £67,750 had not been included in the figures at this time.

Given the future uncertainties she gave an indication based on assumptions of the annual budget shortfall for the years up to 2026/27 and the potential call on reserves.

The Director of Resources reminded advised committee that the Budget Working Group had considered the Council’s financial and overall budget position for the next year and had made a number of recommendations in order to achieve an affordable budget:

·         That a contingency be added to next year’s revenue budget of £140,000 for inflation and the budget working group closely monitor the impact of inflation on the Council’s budget throughout the year.

·         That a contingency be added to next year’s budget of £50k for potential further income losses due to the covid pandemic.

·         They recommend that no growth bids be included at this stage in the next year’s budget but asked for due diligence work be undertaken on all revenue bids for further consideration over the summer when the impact of the pending key financial reforms is known.

·         That £795k of business rate growth fund be used to support the 2022/23 revenue budget plus £296k to fund the 2022/23 cost of the new pay line.

·         That £1.105m of New Homes Bonus be used to fund the revenue budget.

·         That a £5 increase be made to the Band D council tax for 2022/23 to £160.69.

·         That £250,000 be used from General Fund balances as per the budget forecast with an additional £162k to fund the budget gap = £412k.

The Director of Resources went on to inform committee of the robustness of the budget and the adequacy of the Council’s balances and reserves.

She outlined the recommended Revenue Budget for 2022/23  was a net budget of £5,415,359. This would still leave £2.319m in general fund balances at the end of March 2023.

The Director of Resources gave committee a summary of the updated 5-year budget forecast for the revenue budget assuming that the 2022/23 budget was agreed and highlighted the budget gap over the next 5 years. She pointed out if these proved correct then £8.363m of our earmarked reserves / general fund balances would be required for the period 2024/25 to 2026/27.

Members discussed various aspects of the proposed budget.

*** RESOLVED THAT COMMITTEE:

1. Approve the revised revenue budget for 2021/22,

2. Approve the Budget Working Group’s recommendations and set a budget and Council Tax requirement for 2022/23 as set out:

3. And recommend the budget and council tax requirement to Council on 8 March 2022.