Agenda item

Purpose of Report:

To seek approval for, and makes recommendations to the County Council regarding:

·          Revenue Budget 2024/25 & Medium Term Financial Strategy to 2026/27

·          North Yorkshire Council Capital Five Year Spending Plan

·          Treasury Management and Capital Strategy

·          Housing Revenue Account Budget 2024/25 & Medium Term Financial Plan

Considered – The joint report of the Chief Executive and the Corporate Director - Strategic Resources setting out the financial issues and risks for the new North Yorkshire Council and asking the Executive to make recommendations to the County Council regarding the Revenue Budget for 2024/25, the Council Tax for 2024/25 and the Medium Term Financial Strategy (MTFS) for 2025/26 to 2026/27.

 

County Councillor Gareth Dadd introduced the report and thanked the Corporate Director for Resources and his team for their work on the budget, and for the production of the detailed report and the set of options detailed therein.  He acknowledged the financial and operational challenges facing the Council and noted the intention to deliver a sustainable Plan that would deliver the administration’s moral case for the advancement of services that would protect and support the most vulnerable.  Finally he also confirmed the Government’s local government financial settlement had not yet been finalised and released and therefore the report had been produced with that in mind allowing for a £7.5m variance.

 

Gary Fielding, Corporate Director for Strategic Resources thanked officers for their work on the savings plan and other components of the Budget, and made the following key points:

 

·         Last year the Council approved an in year deficit of £30m in order to buy time and deliver a plan that would start to enjoy the benefits of unitarisation, to get a sustainable budget position.

·         The budget under consideration delivered that in the short term but in the longer term that was questionable given the financial pressures across the country and the number of councils facing Section 114 notices.

·         There were significant pressures in the system and there was still more work to be done

·         There were a number of areas under significant spending pressure e.g. SEND, Adult Social Care, Children’s Placements, and the supply change in general.

·         There were gross savings proposals of £23.7m in 2024/25 rising to £46.2m by 2026/27

·         £36m of savings had been generated through Local Government Reorganisation to date and some harder to deliver savings proposals had been identified for the next 12/24/36 months

·         There were two proposed investments – a one-off investment of £5m to aid the delivery of the new Local Plan, and an additional £1m for the Local Assistance Fund in recognition of ongoing cost of living pressures

·         A proposed increase in Council Tax in 2024/25 of 4.99% - the second year of Council Tax Harmonisation

 

He went on to draw specific attention to Equality implications shown at section 7 of the Revenue report and to his Section 25 statement set out a paragraph 8.11 of the Revenue report.

 

Councillor Carl Les reiterated the thanks to the Director of Resources and the Management Board and was pleased to note the Section 25 statement.

 

Councillor Bryn Griffiths noted the proposed 50% saving from the Locality Budget as detailed in Appendix B of the Revenue report suggesting it would have a marked adverse effect on local communities and their support groups etc.  He asked that the Executive reconsider this proposal and suggested this could be accommodated through use of some of the £7.5 variance.  In response it was confirmed this issue could be debated alongside the rest of the proposed budget when it was considered by full Council in February 2024.

 

Councillor Eric Broadbent raised the issue of homelessness and temporary accommodation and questioned whether this was being given its due consideration.  In response Councillor Simon Myers confirmed the Council’s commitment to housing the homeless and would invest in its own temporary accommodation in due course. He also acknowledged the lack of a dedicated homeless shelter in Scarborough which needed to be addressed.

 

Nic Harne - Corporate Director for Community Development, confirmed that the Council would also be looking to maximise it use of national homelessness grants and reduce the use of expensive bed and breakfast temporary accommodation and instead optimise the use of home-based accommodation.

 

Councillor Rich Maw raised the issue of additional early years funding and questioned what provisions were in place if the budget allocation did not go far enough and did NYC nurseries had the necessary funding to respond to the changes in rates for 2-year olds.

 

Stuart Carlton – Corporate Director for Children & Young People’s Services confirmed there all early years providers had been consulted on the coming changes.  He confirmed all funding received as part of the early years block was passed on to providers.  It was also confirmed that a Members Seminar would be held in the future to ensure Members were kept fully informed on the coming changes etc.

 

Barry Khan again drew attention to Section 7 of the report and the Council’s duties under section 149 of the Equalities Act 2010 and Appendix 1 – a high level equality impact assessment, both of which the Executive was asked to note when considering the report recommendations.

 

In summing up, Councillor Gareth Dadd acknowledged that if the sustainable Plan was not in place the council would be in danger of heading in to Section 114 territory which would leave the Council without the ability to make choices.  He confirmed the focus would remain on the vulnerable and addressing the cost of living challenges.  This would still require the use of reserves of £6.5m this year, rising to £82m by the end of the 3-year plan.  Finally he noted that LGR had delivered 78% of the savings from the last year and better co-ordination of frontline services.

 

He went on to introduce the Capital Plan and Treasury Management sections of the report.

 

In regard to the Capital plan he confirmed there would be not capital spend pursued unless already pre-planned, and all ongoing projects were being carefully managed to reduce any associated inflationary risks

 

Gary Fielding - Director of Resources confirmed the planned capital spend in 2024/25 would be £274.8m, and £528.2m in total over the four years, a sizeable investment plan. He also noted capital pressures in two areas – spending pressures on ongoing schemes and the sizable number of one-off investments required e.g. homelessness, regeneration schemes, EPH modernisation etc

 

In regard to Treasury Management Gary Fielding reassured members the council’s strategy was one of safety first. He also noted the Council’s reducing external debt.

 

Members went on to consider the Housing Revenue Account report, introduced by Councillor Simon Myers.  He drew attention to the benefits of bringing three relatively small stockholding authorities together but noted the difficulties that had arisen due to the HRAs all being run differently with different policies in place etc.  He acknowledged the work of officers and the external consultants over the last year to bring them all together into one and to identify a different approach for NYC, one of delivering housing for residents as opposed to the previous emphasis of the Districts/Boroughs which had been to pay off debt resulting in a gradual reduction in social housing stock through right to buy, with only a reactive maintenance approach. 

 

It was noted NYC would in the future take a much more pro-active approach to maintenance and upgrades, and the following was also confirmed:

 

·         The plan to deliver 500 additional council homes over the next 5 years and to seek additional government funding for social housing wherever possible.

·         A rent increase of 7.7% in order to keep a healthy HRA and deliver the improvements set out in the Business Plan.

·         A rent increase on shared ownership of 2%

·         A £2m revenue investment to improve performance on repairs and maintenance compliance issues and stock condition information

·         A £588m investment in social housing stock over a 30-year period, equivalent to around £14.5m a year

·         The HRA would be a ring-fenced and appropriate risk management applied to ensure the delivery of the Business Plan

 

Members were pleased to note the Council’s long term planned investment in social housing, only made possible because of LGR

 

The Leader thanked everyone for their work on the budget, and it was

 

Resolved – That:

i)       The delegation arrangements referred to in Section 11 of the Revenue Budget & MTFS report that authorise the Corporate Directors to implement the Budget proposals contained in this report for their respective service areas and for the Chief Executive in those areas where there are cross-Council proposals, be noted and agreed.

 

ii)    Due regard be given to the Public Sector Equality Duty (identified in Section 7 and Appendix I) in approving the Budget proposals contained in the Revenue Budget & MTFS report.

 

iii)    That in regard to the Revenue Budget & MTFS report, the following be recommended to full Council:

a)    The Section 25 assurance statement provided by the Corporate Director, Resources regarding the robustness of the estimates and the adequacy of the reserves (paragraph 8.12) and the risk assessment of the MTFS detailed in Section 9 be noted;

b)    An increase in Council Tax of 4.99% (basic 2.99% and Adult Social Care 2%) resulting in a Band D charge (including special expenses) of £1,847.62 – an increase of £87.80 (paragraph 4.3.8 and Appendix D);

c)    A Council Tax requirement for 2024/25 of £454,532,423.44 be approved, in accordance with Section 31A of the Local Government Finance Act 1992 (as amended by Section 74 of The Localism Act 2011).

d)   A Net Revenue Budget for 2024/25, after use of reserves, of £678,589k (Appendix G) be approved

e)    In the event that the level of overall external funding (including from the final Local Government Settlement) results in a variance of less than £7.5m in 2024/25 then the difference be addressed by a transfer to / from the Strategic Capacity Unallocated Reserve in line with paragraph 4.2.3 with such changes being made to Appendix E as appropriate.

f)     The Corporate Director – Children and Young People’s Service be authorised, in consultation with the Corporate Director, Resources and the Executive Members for Schools and Finance, to take the final decision on the allocation of the Schools Budget including High Needs, Early Years and the Central Schools Services Block (paragraph 3.1.17).

g)    The Medium Term Financial Strategy for 2025/26 to 2026/27, and its caveats, as laid out in Section 3.0 and Appendix G be approved in line with the proposed council tax option.

h)    The Corporate Director – Environment be authorised, in consultation with the Executive Members for Highways & Transportation and Open for Business, to carry out all necessary actions, including consultation where considered appropriate, to implement the range of savings as set out in Appendix B (ENV 1 to 14).

i)     The Corporate Director – Community Development be authorised, in consultation with the Executive Members for Planning for Growth and Culture, Arts and Housing, to carry out all necessary actions, including consultation where considered appropriate, to implement the range of savings as set out in Appendix B (CD 1 to 11).

j)     The Corporate Director – Health and Adult Services be authorised, in consultation with the Executive Members for HAS, to carry out all necessary actions, including consultation where he considers it appropriate, to implement the range of savings as set out in Appendix B (HAS 1 to 7).

k)    The Corporate Director – Children and Young People’s Services be authorised, in consultation with the Executive Members for CYPS, to carry out all necessary actions, including consultation where he considers it appropriate, to implement the range of savings as set out in Appendix B (CYPS 1 to 14).

l)     The Corporate Director – Resources be authorised, in consultation with the Executive Members for Finance & Resources and Corporate Services, to carry out all the necessary actions, including consultation where he considers it appropriate, to implement the range of savings as set out in Appendix B (RD 1 to 7).

m)   The Chief Executive be authorised, in consultation with the Executive Members for Central Services, to carry out all necessary actions, including consultation where he considers it appropriate, to implement the range of savings as set out in Appendix B (CS 1-12 and LGR1).

n)    Any outcomes requiring changes following Recommendations h), i), j), k) and l) above be brought back to the Executive to consider and, where changes are recommended to the existing major policy framework, then such matters to be considered by full Council.

o)    £5,000k be provided for development of the Local Plan and the Corporate Director, Community Development be authorised, in consultation with the Corporate Director, Resources and the Executive Members for Planning and Finance, to approve spending from this sum to progress the Local Plan as set out in paragraphs 4.8.2 to 4.8.3.

p)    The proposed policy target for the minimum level of the General Working Balance be £29m, in line with Appendix F.

 

iv)   The Executive also agreed to recommend the following to full Council:

 

a)   Approval of the refreshed Capital Plan

b)  The Treasury Management Strategy Statement as shown at Annex 1 of the Treasury Management & Capital Strategy Report, consisting of the Annual Treasury Management Strategy (Section 1), Capital Prudential Indicators (Section 2), Borrowing Strategy (Section 3) and Annual Investment Strategy 2024/25 (Section 4), including in particular;

i.   an authorised limit for external debt of £660.9m in 2024/25;

ii. an operational boundary for external debt of £633.3m in 2024/25;

iii. the Prudential and Treasury Indicators based on the Council’s current and indicative spending plans for 2024/25 to 2026/27;

iv. a limit of £60m of the total cash sums available for investment (both in house and externally managed) to be invested in Non-Specified Investments over 365 days;

v. a Minimum Revenue Provision (MRP) policy for debt repayment to be charged to Revenue in 2024/25;

vi. the Corporate Director – Resources to report to the Council if and when necessary during the year on any changes to this Strategy arising from the use of operational leasing, PFI or other innovative methods of funding not previously approved by the Council;

 

c)  The Capital Strategy as shown at Annex 2 of the Treasury Management & Capital Strategy Report;

d)  That the Audit Committee be invited to review Annex 1 and 2 and submit any proposals to the Executive for consideration at the earliest opportunity

e) The HRA budget for 2024/25 as set out in paragraph 6.3, being a net surplus of £1.307m which will be transferred to the HRA working balance;

f)   The HRA Medium term financial plan for 2025/26 and 2026/27 and the 30-year HRA Business Plan, as set out in paragraph 6.3 and Appendix D respectively;

g) An increase of 7.7% to social, affordable and hostel rents from 1 April 2024

h) An increase of 2% to shared ownership rents from 1 April 2024