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ECONOMIC REGENERATION AND LEISURE COMMITTEE |
18 January 2022 |
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Medium Term Financial Strategy and Budget Proposals |
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Final Decision-Maker |
Council |
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Lead Head of Service/Lead Director |
Mark Green, Director of Finance and Business Improvement |
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Lead Officer and Report Author |
Mark Green, Director of Finance and Business Improvement |
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Classification |
Public |
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Wards affected |
All |
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Executive Summary |
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This report forms part of the process of agreeing a budget for 2022/23 and setting next year’s Council Tax. Following consideration by this Committee at its meeting on 7 December 2021 of the draft Medium Term Finance Strategy for 2022/23 – 2026/27, this report sets out budget proposals for services within the remit of the Committee. These proposals will then be considered by Policy and Resources Committee at its meeting on 9 February 2022, with a view to determining a budget for submission to Council.
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This report makes the following recommendations to this Committee: |
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1. That the revenue budget proposals for services within the remit of this Committee, as set out in Appendix A, be agreed for submission to Policy and Resources Committee. 2. That the capital budget
proposals for services within the remit of this Committee, as set out in
Appendix B, be agreed for submission to Policy and Resources Committee. |
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Timetable |
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Meeting |
Date |
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Economic Regeneration and Leisure Committee |
18 January 2022 |
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Policy and Resources Committee |
9 February 2022 |
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Council |
23 February 2022 |
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Medium Term Financial Strategy and Budget Proposals |
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1. CROSS-CUTTING ISSUES AND IMPLICATIONS
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Issue |
Implications |
Sign-off |
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Impact on Corporate Priorities |
The Medium Term Financial Strategy and the budget are a re-statement in financial terms of the priorities set out in the strategic plan. They reflect the Council’s decisions on the allocation of resources to all objectives of the strategic plan. |
Section 151 Officer & Finance Team |
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Cross Cutting Objectives |
The MTFS supports the cross-cutting objectives in the same way that it supports the Council’s other strategic priorities. |
Section 151 Officer & Finance Team |
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Risk Management |
This has been addressed in section 5 of the report. |
Section 151 Officer & Finance Team |
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Financial |
The budget strategy and the MTFS impact upon all activities of the Council. The future availability of resources to address specific issues is planned through this process. It is important that the committee gives consideration to the strategic financial consequences of the recommendations in this report. |
Section 151 Officer & Finance Team |
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Staffing |
The process of developing the budget strategy will identify the level of resources available for staffing over the medium term. |
Section 151 Officer & Finance Team |
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Legal |
Under Section 151 of the Local Government Act 1972 (LGA 1972) the Section 151 Officer has statutory duties in relation to the financial administration and stewardship of the authority, including securing effective arrangements for treasury management. The legal implications are detailed within the body of the report which is compliant with statutory and legal regulations such as the CIPFA Code of Practice on Treasury Management in Local Authorities. The Council is required to set a council tax by the 11 March in any year and has a statutory obligation to set a balanced budget. The budget requirements and basic amount of Council Tax must be calculated in accordance with the requirements of sections 31A and 31B to the Local Government Finance Act 1992 (as amended by sections 73-79 of the Localism Act 2011). The Council is required to determine whether the basic amount of council tax is excessive as prescribed in regulations – section 52ZB of the 1992 Act as inserted under Schedule 5 to the Localism Act 2011. The Council is required to hold a referendum of all registered electors in the borough if the prescribed requirements regarding whether the increase is excessive are met. Approval of the budget is a matter reserved for full Council upon recommendation by Policy and Resources Committee on budget and policy matters. |
Interim Team Leader Contentious and Corporate Governance |
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Privacy and Data Protection |
Privacy and Data Protection is considered as part of the development of new budget proposals. There are no specific implications arising from this report. |
Policy and Information Team |
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Equalities |
The MFTS report scopes the possible impact of the Council’s future financial position on service delivery. When a policy, service or function is developed, changed or reviewed, an evidence-based equalities impact assessment will be undertaken. Should an impact be identified appropriate mitigations with be identified. |
Equalities and Communities Officer |
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Public Health
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The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy. |
Public Health Officer |
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Crime and Disorder |
The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy. |
Section 151 Officer & Finance Team |
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Procurement |
The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy. |
Section 151 Officer & Finance Team |
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Biodiversity and Climate Change |
The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy. |
Section 151 Officer & Finance Team |
2. INTRODUCTION AND BACKGROUND
Medium Term Financial Strategy
2.1 At its meeting on 14 December 2021, this Committee considered a draft Medium Term Financial Strategy (MTFS) for the next five years. No material amendments were proposed to the Strategy by this Committee or the other Committees which considered it in December, so it will now go forward to Council for approval at its meeting on 23 February 2022.
2.2 The MTFS sets out in financial terms how the Strategic Plan will be delivered, given the resources available. The MTFS builds on the previous year’s MTFS, but also reflects new priority initiatives including a Town Centre Strategy and a commitment to invest in 1,000 new affordable homes.
2.3 The financial projections underlying the MTFS were prepared under three different scenarios – adverse, neutral and favourable. All three scenarios assumed that budget proposals for future years which have already been agreed by Council will be delivered, and that Council Tax is increased by 2% in 2022/23. A further scenario will be considered that will incorporate the risk of inflation remaining at its current rate of around 5%.
Local Government Finance Settlement 2022/23
2.4 The Provisional Local Government Finance Settlement for 2022/23 was announced on 16 December 2021. This confirmed several of the key assumptions incorporated in the MTFS.
- The Council Tax referendum limit will be 2%.
- The existing Business Rates regime will remain in place. Whilst the business rates multiplier will be frozen for ratepayers, local authorities will be compensated for the consequent loss of an inflationary increase.
- There will be no negative Revenue Support Grant.
2.5 In addition, of the £1.5 billion increased funding previously announced in the Spending Review for local authorities, £822 million will be distributed directly to local authorities in the form of a new Services Grant. Maidstone will receive £225,000 in Services Grant.
2.6 There will be a new round of New Homes Bonus (NHB) payments in 2022/23, but payments will be made on the basis of two years’ growth in housing numbers rather than three as in 2021/22. In Maidstone’s case, because of the high number of housing completions in the borough last year, New Homes Bonus will nevertheless increase from £3.8 million in 2021/22 to £4.2 million in 2022/23. However, other authorities have seen significant reductions, so to prevent those authorities seeing an overall reduction in their Core Spending Power, the government is using the Lower Tier Services Grant (LTSG) to cushion the impact. Maidstone will receive an LTSG of £146,000.
2.7 The outcome for the Council’s budget surplus / savings requirement of the above measures is to increase the projected budget surplus for 2022/23 previously reported to this Committee. Whilst this gives some scope for growth to accommodate new service priorities, it should be noted that much of this is one-off funding which will reverse out in 2023/24.
Revenue Budget Proposals
2.8 The draft MTFS describes a number of new priorities and budget pressures, as follows:
- The objective of delivering 1,000 new affordable homes may require a level of revenue subsidy, which would represent budget growth.
- Waste collection costs are likely to increase arising from the forthcoming contract relet in October 2023.
- The Serco leisure contract comes to an end in 2024. Depending on the scope of any new contract, budget growth may be required.
- The objective of making Maidstone Town Centre a thriving place may also require budget growth, eg to provide leisure and cultural activities in the town centre.
- In addition to core development management and spatial planning services, there is a requirement for more extensive planning policies and a Town Centre Strategy.
- Additional expenditure is likely to be required to support the new governance structure and to meet the Council’s aspirations for better quality data analysis.
- Measures will be required to enable the Council’s carbon reduction target to be met, including retrofitting and upgrading heating systems in Council buildings and electrifying the vehicle fleet.
The Serco leisure contract and making the Town Centre a thriving place are within the remit of this Committee and the budget implications are described below. Additionally, other potential budget changes have been identified which are described below under the heading ‘Other savings and growth’. All proposed revenue budget savings and growth items are also set out in Appendix A.
2.9 Leisure contract
The Council’s current leisure contract ends in August 2024. The net annual cost, taking account of building maintenance and utilities, less a share of the operator’s profit, is £449,000, which is incorporated in the ongoing revenue budget. A number of future options were considered by this Committee at its meeting on 14 December 2021. At this stage, the working assumption in the Medium Term Financial Strategy is that any future leisure provision is delivered within the existing revenue budget envelope, so no changes to the budget are proposed.
2.10 Town Centre
The Council has been successful over the past year in delivering a well-attended programme of events in Maidstone Town Centre and reducing the visual impact of the empty shop units in the town centre through arts projects to vacant shops frontages. Events in Brenchley Gardens and the Amphitheatre have help communities re-connect with and enjoy some of the town’s under used assets. This work has been enabled through an Arts and Culture Officer, whose funding ends in August 2022, and one-off Covid-related funding.
To enable the continuation of the work carried out by the Officer and to introduce an annual programme of events in the Town Centre, delivered in partnership with the voluntary and private sector, it is proposed in add the post to the base budget and provide the post with an operational budget, leading to budget growth of £99,000. Opportunities to bid for match funding from the Arts Council and other grant making bodies will also be identified.
2.11 Other savings and growth
- Reduce Market income budget - £12,000 growth
Long term trends mean that the Market’s income budget has not been achieved for several years. The budget has been reviewed, taking into account the decrease in income from the Tuesday market, offset by an increase in income from events, and a modest projected increase in Saturday market income. This indicates a net reduction in income compared to the budget (ie budget growth) of £12,000.
- Mote Park café - £30,000 saving (2023/24)
The Mote Park café is due to reopen in 2022. No net income growth has been assumed in 2022/23, but it is anticipated that as the café becomes established there will be additional net income from the operator of £30,000 commencing 2023/24.
- Museum reduction in running costs - £14,000 saving
This Committee agreed a package of budget savings totalling £152,000 at its meeting on 10 November 2020. £138,000 was delivered in 2021/22, leaving a balance of £14,000 to be delivered in 2022/23.
Budget proposals have been developed, following a similar approach, for services within the remit of the other Service Committees. Taken in total, it is projected that the savings proposals will allow the budget to be balanced in 2022/23.
Capital Budget Proposals
2.12 Capital investment helps the Council to deliver its strategic priorities. Capital programme schemes falling within the remit of this Committee are as follows.
- Mote Park Visitor Centre - £1.543 million
The project is nearing completion and the amount shown in the capital programme is the final tranche of spending to be incurred in 2022/23.
- Museum Development Plan - £389,000
The project stems from the work on the Museum’s 20 year plan. In 2019 Innes Architect was appointed to set out how this vision could be realised within the building. After extensive consultation, this formed the basis of a National Lottery Heritage Fund bid, which although unsuccessful, is still accepted by ERL Committee as the preferred long-term aspiration for the Museum. The vision is achievable in discrete phases. The first phase is estimated to cost £1.5m.
A report was taken to Economic Regeneration & Leisure Committee in November 2021 to identify initial proposals to progress this scheme. The preferred option is to improve a gallery space which is supported by the Maidstone Museum Foundation and Kent Archaeological Society. However more work is needed to create proposals which reflect Member ambitions for a dynamic and changing museum with high quality experiences for visitors which will drive up visitor numbers.
- Leisure Provision - £30.0 million
As described above, options are currently being considered for the future of the leisure centre, and some initial options were presented to this committee in December 2021. This is an indicative budget at this stage, allowing for either refurbishment or replacement of the centre.
- Riverside Walk - £500,000
The Economic Regeneration & Leisure Committee has considered proposals for a riverside walk alongside the Medway by the Lockmeadow Millennium Bridge. Better access to the river would be created from the Maidstone road bridge and other areas of interest along the river would be linked, such as the memorial park and Archbishop’s Palace. Improvements to the riverside path would increase safety and reduce antisocial behaviour. Costings and detailed proposals are still to be developed. Third party funding will be sought for the project. Specific proposals will be brought to the Committee in due course but for the purpose of developing the capital programme an indicative budget of £500,000 has been included here.
- Cobtree Golf Course New Clubhouse - £449,000
The clubhouse is in need of major refurbishment or replacement. Responsibility for this lies with the Cobtree Manor Estate Committee, but the Council does have a 2/9ths interest in the golf course, and this indicative budget represents the contribution the Council would make towards the total cost. Again, this is an indicative budget whilst options are being considered.
- Tennis Courts Upgrade - £20,000
This funding is required to bring the courts in the parks back up to an acceptable playing standard.
Details are set out in Appendix B to this report.
3. AVAILABLE OPTIONS
3.1 Agree the budget proposals relating to this Committee as set out in Appendix A and B for onward submission to the Policy and Resources Committee.
3.2 Propose changes to the budget proposals.
3.3 Make no comment on the budget proposals.
4. PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS
4.1 The Policy and Resources Committee must recommend to Council at its meeting on 9 February 2022 a balanced budget and a proposed level of Council Tax for the coming year. The budget proposals included in this report will allow the Policy and Resources Committee to do this. Accordingly, the preferred option is that this Committee agrees the budget proposals at Appendix A.
5. RISK
5.1 The
Council's MTFS is subject to a high degree of risk and uncertainty. In order to
address this in a structured way and to ensure that appropriate mitigations are
developed, the Council has developed a budget risk register. This seeks to
capture all known budget risks and to present them in a readily comprehensible way.
The budget risk register is updated regularly and is reviewed by the Audit,
Governance and Standards Committee at each of its meetings.
6. CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK
6.1 Policy and Resources Committee received an initial report on the MTFS at its meeting on 21 July 2021 and it agreed the approach set out in that report to development of an MTFS for 2022/23 - 2026/27 and a budget for 2022/23.
6.2 Service Committees and Policy and Resources Committee then considered a draft MTFS at their meetings in November and December 2021.
6.3 Public consultation on the budget has been carried out. Details were reported to this Committee at its meeting in December 2021.
7. NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION
7.1 The timetable for developing the budget for 2022/23 is set out below.
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Date |
Meeting |
Action |
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January 2022 |
All Service Committees |
Consider 22/23 budget proposals |
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9 February 2022 |
Policy and Resources Committee |
Agree 22/23 budget proposals for recommendation to Council |
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23 February 2022 |
Council |
Approve 22/23 budget |
8. REPORT APPENDICES
The following documents are to be published with this report and form part of the report:
· Appendix A: Revenue Budget Proposals 2022/23 – 2024/25
· Appendix B: Capital Budget Proposals 2022/23 – 2026/27
9. BACKGROUND PAPERS
There are no background papers.