MAIDSTONE BOROUGH COUNCIL

REPORT OF POLICY & RESOURCES COMMITTEE HELD ON 9th FEBRUARY 2022

MEDIUM TERM FINANCIAL STRATEGY AND BUDGET PROPOSALS 2022/23

Issue for Decision

To consider the proposed Revenue and Capital Estimates for 2022/23, including service savings and growth, in accordance with the agreed budget strategy and in the context of the Medium-Term Financial Strategy and the Strategic Revenue Projection.

To calculate and approve the Council Tax requirement for 2022/23.

To adopt the Treasury Management, Investment and Capital Strategies for 2022/23.

Recommendations Made

1.           That the revised Revenue Estimates for 2021/22 as set out in Appendix A be agreed.                                                                                                          

2.           That the first £1 million of 2022/23 New Homes Bonus be allocated for strategic policy and planmaking, with the balance transferred to a Housing Investment Fund, to be used to subsidise the Council’s Affordable Housing Programme.

         

3.           That the Strategic Revenue Projection as set out in Appendix A be endorsed as the basis for future financial planning.                                           

4.           That the proposed Council Tax of £276.30 at Band D for 2022/23 be agreed.                                                                                                          

5.           That the Revenue Estimates for 2022/23 set out in Appendix A be agreed.    

6.           That the Statement of Earmarked Reserves and General Fund Balances as set out in Appendix A be agreed.                                                             

7.           That the funding of the Capital Programme as set out in Appendix A be agreed.                                                                                                       

8.           That the Capital Programme as set out in Appendix A be agreed.                            

9.           That the Treasury Management, Investment and Capital Strategies as set out in Appendix A be agreed.                                                                       

10.        That the Medium Term Financial Strategy as set out in Appendix A be agreed.                                                                                                         

11.        That it be noted that the Council’s Council Tax base for the year 2022/23 has been calculated as 65,896.22 in accordance with Regulation 3 of the Local Authorities (Calculation of Council Tax Base) regulations 1992.

 

12.        That it be noted that in accordance with Government guidance the yield from business rates has been calculated as £51,455,907.                                         

13.        That it be noted that the individual parish area tax bases set out in Appendix B are calculated in accordance with regulation 6 of the Regulations and are the amounts of the Council Tax Base for the year for dwellings in those parts of the Council’s area to which a special item relates.                                                                                                        

14.        That the Council Tax requirement for the Council’s own purposes for 2022/23 (excluding Parish precepts) is £18,207,126.                                                        

15.        That the following amounts now be calculated by the Council for the year 2022/23 in accordance with Section 32-36 of the Local Government Finance Act 1992 as amended by the Localism Act 2011:-                          

a)   £76,752,996 being the aggregate of the amounts which the Council estimates for the items set out in Section 32(2) of the Act taking into account all precepts issued to it by Parish Councils.                                           

b)   £56,104,497 being the aggregate of the amounts which the Council estimates for the items set out in Section 32(3) of the Act.                         

c)    £20,648,499 being the amount by which the aggregate at 15(a) above exceeds the aggregate at 15(b) above, calculated by the Council in accordance with Section 32(4) of the Act as its Council Tax requirement for the year. (Item R in the formula in Section 32(4) of the Act).                     

d)   £313.35 being the amount at 15(c) above (Item R), all divided by the figure stated at 11 above (Item T in the formula in section 33(1) of the Act), calculated by the Council, in accordance with Section 33 of the Act, as the basic amount of its Council Tax for the year (including parish precepts).                                                                                                                  

e)   £2,441,373 being the aggregate amount of all special items (Parish precepts) referred to in Section 34(1) of the Act (as per the attached Appendix B).                                                                                           

f)    £276.30 being the amount at 15(d) above less the result given by dividing the amount at 15(e) above by the tax base given in 11 above, calculated by the Council, in accordance with Section 34(2) of the Act, as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no Parish precept relates.                                                        

16.        That it be noted that for the year 2022/23 Kent County Council, the Kent Police & Crime Commissioner and the Kent & Medway Fire & Rescue Authority have stated the following amounts in precepts issued to the Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings shown below:-                                      

Valuation Bands

 

KCC

PRECEPT

£

KCC

ADULT SOCIAL CARE

£

KPCC

£

KMFRA

£

A

858.66

115.50

152.10

54.90

B

1001.77

134.75

177.45

64.05

C

1144.88

154.00

202.80

73.20

D

1287.99

173.25

228.15

82.35

E

1574.21

211.75

278.85

100.65

F

1860.43

250.25

329.55

118.95

G

2146.65

288.75

380.25

137.25

H

2575.98

346.50

456.30

164.70

                                                                                               

17.        That, having calculated the aggregate in each case of the amounts at 15 (d), and 16 above, the Council, in accordance with Section 30 (2) of the Local Government Finance Act 1992, hereby sets out in Appendix C, the amounts of Council Tax for the year 2022/23 for each of the categories of dwellings shown.

Reasons for Recommendation

At its meeting on 24th November 2021, Policy and Resources Committee considered an updated Medium Term Financial Strategy (MTFS) for the next five years. The MTFS sets out in financial terms how the Strategic Plan will be delivered, given the resources available, and reflects new priority initiatives including a Town Centre Strategy and the commitment to invest in 1,000 new affordable homes.  Various potential scenarios were presented in the MTFS, representing (a) favourable, (b) neutral and (c) adverse sets of circumstances. Projections were prepared for each of the scenarios and budget proposals sought to address the requirements of the MTFS. A further scenario was also considered to incorporate the risk of inflation remaining at around 5%.  Budget proposals have been considered by Service Committees and the Policy and Resources Committee for their respective areas.  Policy and Resources Committee also considered the capital programme at its meeting on 19th  January 2022. Once each Committee had considered the budget proposals, the Policy and Resources Committee considered the Budget as a whole, assuming the ‘neutral’ scenario and including an additional 2% contingency for inflation, at its meeting on 9th February 2022 and recommended it to Council for adoption.

The recommendations contained in this report allow the Council to set the budget, including the Council Tax rate, for 2022/23 according to the specific provisions contained within the Local Government Finance Act 1992.

Alternatives Considered and Why Not Recommended

The Council could choose not to pass a budget. However, this would be contrary to the Local Government Act 2003.

The Council could choose to amend the budget. Any amendments would be additional to the recommendations already made by the service committees, as well as the recommendation made by the Policy and Resources Committee. It is important that the Council has a balanced budget after taking account of any amendments. The Director of Finance and Business Improvement (section 151 Officer) must provide confirmation to Council that “the budget calculations are based upon robust estimates and that the level of reserves is sufficient for the purposes of the budget exercise”. Care must be taken in amending the budget so that the Director of Finance and Business Improvement is able to make the necessary confirmation.

Guidance from the Monitoring Officer

The Council has a statutory obligation under the Local Government Finance Act 1992  to set a balanced budget by 11, March each year. In compliance with the principles of administrative law, members are required to take into account relevant considerations and disregard irrelevant ones. Any decision made must be one that only a reasonable authority, properly directing itself could have reached.

Members must act prudently taking into account the professional advice of officers, in particular the statutory obligations placed upon the Director of Finance and Business Improvement, the S151 officer. Members can make alternative proposals in achieving a balanced budget but need to demonstrate they have acted reasonably if they disregarded clearly expressed professional advice. Members are required to have regard to the guidance of the S151 officer on the robustness of budget estimates and adequacy of reserves. The wider duties placed on the Council relating to its financial affairs must be taken into account. This includes the distinction between revenue and capital expenditure specified within the Local Government and Housing Act 1989.

Prudential borrowing limits must be set by the Council having regard to the Chartered Institute of Public Finance and Accountancy (CIPFA) Prudential Code. The Code sets a framework for self-regulation of capital spending, enabling Councils to invest in capital projects without any limit, so long as they are affordable, prudent and sustainable taking into account prudential indicators which must be monitored.

Under the Local Government Finance Act 1992, section 106 it is a criminal offence for a member with arrears of Council Tax which have been outstanding for two months or more to attend any meeting of the Council or one of its committees at which a decision affecting the budget is to be made. To avoid criminal liability, any such members must make a declaration at the outset of the meeting that he or she is in arrears and will not be voting on the decision for that reason. The member concerned must then abstain from voting.

The Local Government Finance Act 1988, Section 114 (3) provides that the chief finance officer of a Council (the S151 Officer) shall make a report to Council under this section if it appears to him that the expenditure of the authority incurred (including expenditure it proposes to incur) in a financial year is likely to exceed the resources (including sums borrowed) available to it to meet that expenditure. It means that no new expenditure is permitted, with the exception of that funding statutory services. Existing commitments and contracts will continue to be honoured. Full Council must consider the implications within a period of 21 days from the issue of a Section 114 notice.

Having set a budget for the new municipal year, the Council is under a duty to monitor that budget during the year and to take remedial action if at any time it appears likely that expenditure will exceed available resources.

Background Documents

·         Appendix A: Budget Book

·         Appendix B: Schedule of Council Tax Base and Additional Council Tax in Parts of the Area with Parish Precepts

·         Appendix C: Schedule of Council Tax levels for all Bands and all Parts of the area.