Council and councillors

To receive Cabinet Report No.08/2021 from the Strategic Director for Resources.

·       The above report was presented to Cabinet on 12 January 2021 and the recommendations within the report were approved.

·       Cabinet has requested that Scrutiny review and comment on proposals before the Cabinet meeting on 16 February 2021 so as to inform the decision making process.

·       The report and its proposals may be amended following the outcome of the Scrutiny Committee meeting. Scrutiny is therefore asked to consider the report and provide feedback to the Portfolio Holder and Director.

Report No.08/2021 was received from the Strategic Director for Resources.

Mr Della Rocca, Strategic Director for Resources, introduced the draft budget report which had been agreed by Cabinet for consultation prior to the budget being formally set by Council in February 2021.

During the discussion the following points were noted:

·         Councillors Waller and Powell had submitted questions directly to the section 151 officer before the meeting and it was agreed with the Chair that these questions and their answers would be appended to the minutes.

·         Mr Della Rocca outlined the key points of the report in his presentation (appended to the minutes) and emphasised that using reserves to relieve the funding gap of circa £2.6million was not good financial practice and something he would have preferred not to do. The reserves should be used for unforeseen pressures and not to balance core expenditure.

·         Although the Section 151 Officer understood the financial pressures that residents were facing, his advice to Members was to apply the maximum 3% raise for the Adult Social Care (ASC) precept in the first year as this would maximize yield and have the most impact on the 21/22 proposed deficit.

·         Finding savings of £2.6million would not be an easy task and Mr Della Rocca argued that the financial challenge, alongside work on Covid 19 should be prioritised over all other matters.

·         The amount of savings that needed to be made meant that fundamentally the Council would have to do things less, rather than just find efficiencies and work ‘smarter’.

·         Business rates were projected to go up by £200k because of new businesses such as McDonalds and this would contribute towards plugging the £2.6m gap. However the Council could not rely on this increase continuing because of uncertainties around the future economy.

·         The underspend of c£1million shown in Quarter 3 20/21 was not an underspend on our core budget and arose primarily from additional Government funding.  However, the underspend may be needed in 21/22 to cover additional costs arising from the pandemic.  Any residual underspends should be treated as a “windfall”.

·         Councillor Brown, the Portfolio Holder for Finance and Deputy Leader, together with the Leader of the Council, Cllr Hemsley, and the Rutland MP, Alicia Kearns had met with Luke Hall, Minister of State for Regional Growth and Local Government to highlight the unacceptable funding disparity between Rutland and other councils. 80% of Rutland’s spending came from Council Tax revenue as opposed to Government funding, whereas for most other councils this figure was c60%.

·         Councillor Brown explained that the Minister was surprised how much of an impact the reduction in the New Homes Bonus had on small councils such as Rutland.

·         The additional business rates tariff of £1million that the Council had to pay to the Government had a greater impact on a small authority such as Rutland, as the £1m equated to 20% of business rates whereas in many other areas the £1m equated to, for example, only 10% of rates.

·         Councillor Brown was frustrated by the lack of action on the Fairer Funding Review but RCC had been promised a seat at the table in 2022/23 to discuss this issue.

·         Although he agreed with the Section 151 officer that it would be prudent to increase Council Tax by the full 5%, Councillor Brown had recommended to Cabinet only a 3% increase in recognition of the financial hardships felt by residents and also in support of local businesses, as every pound taken out was a pound less spent in the local economy.

·         Councillor Oxley asked the Section 151 Officer whether this was the first time since working for RCC that he had given advice that Cabinet was not intending to implement. Mr Della Rocca stated that he and Mr Brown both acknowledged that the maximum yield would come from raising Council Tax by 5%. As the Section 151 officer he advised opting for the maximum, however Councillor Brown had taken into consideration the financial hardship for residents and that was why the Cabinet had recommended a lower increase.

·         In response to a question from Councillor Begy, Councillor Brown used the waste contract as an example of where spending money on consultants was a good use of council money and would bring returns. The contract was very large (nearly £40 million over 10 years) and the relatively small amount of money paid up front would enable the Council to access expertise on the best way to procure this service.

·         Rutland’s roads were in a very good condition, especially when compared with neighbouring authorities. Councillor Stephenson, the Portfolio Holder for Highways voiced concern that if the Council stopped using the revenue budget to maintain its roads, the inevitable decline in surface condition would open up the Council to insurance claims.  Councillors could however decide that they would accept a silver standard of maintenance rather than a gold standard. Mrs Sharp, Strategic Director for Places, pointed out at this point that Rutland was a Band 3 authority for roads which meant it was top class and therefore benefited from more Government funding. If our approach to highway management changed this funding could be at risk.

·         Analysis of the revenue gained versus the lost income from disposing of assets had been carried out on the Council’s sites; the Kings Centre made a good return of 20% so it was sensible to retain the site, Oakham Enterprise Park (OEP) made a reasonable return and there was also a project to look at what could be done with the unused side of the plot to increase income, and at the Ashwell site, officers had looked at developing it for housing but as it suffered from flooding issues this was not viable and therefore its value was reduced.

·         Mr Della Rocca confirmed to Councillor MacCartney that the cumulative effect of not opting for the full 5% would be c£4.6 million over the next five years.

·         There was an earmarked ‘Pressure’ reserve which was to cope with unforeseen difficulties and had arisen from underspends in previous years.

·         The Brexit grant held in reserves was a section 31 grant which meant that it was not ring-fenced so, in theory, could be repurposed.

·         The Adult Social Care Reserve was large because the costs in this area could be so variable.  A small increase in demand could cause significant over spends.

·         Reducing earmarked reserves and putting the monies back into general spending did not solve the fundamental funding problem that the Council faced.

·         Mr Della Rocca hoped that by the end of February the initial work on the line by line review of services would have been done, with a view to collating work and submitting a report to Councillors in April.

·         Councillor Brown agreed with Councillor Razell that it should be central government increasing funding through taxation rather than the Council having to increase an already comparatively high council tax, and further penalising residents.

·         There was a legal budget and earmarked reserves which could provide for legal costs should there be any legal challenges to the Local Plan.

·         Councillor Waller commended staff for the work they did in providing excellent services at a very good cost but felt that residents still did not understand why Rutland’s council tax was so high and that communication of the issues could be improved.

·         The Leader, Councillor Hemsley said that residents’ views on the draft budget had been canvassed and as part of this, key points and the very clear and useful infographic had been used to illustrate spending and pressures.

·         The budget this year was a very contentious issue and Councillor Oxley felt that the decisions should not be pre-empted but left to individual members to decide at full Council.