Medium Term Financial Plan
Report of the Head of Finance
Tracy Bingham, Head of Finance, gave a detailed presentation on the changes to assumptions that drive the Medium Term Financial Plans (MTFP) which have resulted in changes to the forecast position to 2024/25. She focussed on the impact on the General Fund before handing over to Matthew D’Oyly-Watkins, who presented the assumptions in relation to the Housing Revenue Account.
The Chairman thanked the officers for their comprehensive presentation and invited questions and comments from Members.
With references to paragraphs 1.9 and 3.3 of the report, Councillor Sheahan asked for justification for the decision to reallocate £.09m of earmarked reserves to the self sufficiency fund and for confirmation if these were committed. He was advised that they were previously allocated for specific purposes but expenditure was not committed and that the earmarked reserves had been reviewed under delegated powers through a ‘COVID lense’ to identify those which could be reallocated by considering how long the reserves had been in existence and how long they had been set aside and for what reason. It was further noted that those earmarked reserves identified had not seen any expenditure in the last financial year. This additional funding would help bridge the gap, not only with the issues arising from COVID, but for any future financial challenges in the forthcoming years.
Councillor Sheahan challenged this as he understood that earmarked reserves were attached to expenditure which had been identified for a purpose so it seemed strange to him to say that it had not been allocated.
He was advised that earmarked reserves could be allocated for a specific purpose, however, if there has been no movement on these funds for a period or there was no clear intent on spending it in the near future, then the reserve can be reallocated.
Councillor Sheahan felt that if the money was uncommitted then it should be in the General Fund and this idea of moving money around which had been originally allocated for a set purpose, did not sit comfortably with him so he may want to address this again at a future meeting.
Councillor Sheahan moved on to the issue of thematic savings targets as referenced in paragraph 2.3 of the report and sought some clarity as to what these were. He was advised that these were the work streams as set out in the February budget reports and MTFP with themes around applying a more commercial approach to income and around contracts with a range of thematic savings. These were identified in the earlier part of the year as part of the Journey to Self Sufficiency Programme.
Councillor Sheahan conveyed his thanks for the report and presentation on business rates which has helped him gain a better understanding, accepting that it is extremely complicated, and he asked the Head of Finance to confirm his understanding of how it works. She was able to do this by confirming that Councillor Sheahan’s summary was correct adding that the reason the Council benefits so greatly from growth is that the amount it has accumulated is way above the base line the Government believes our retained business rates should be at; and above that level the Council is able to retain more of the rates collected which is also why it represents a risk.
Councillor Sheahan then turned his attention to the Housing Revenue Account (HRA) and in particular paragraph 4.2 of the report which spoke about the balances and how this can be used to respond to opportunities such as acquiring new homes. He asked that this money does get spent, particularly on improving existing homes as we are only targeting about 15 new homes a year and yet still losing around 44 homes per year through ‘right to buy’. He therefore believes that the money should be spent on increasing the standards of existing homes. However, he felt that the Council should have a strategy as to how it will tackle the issues of around achieving carbon neutrality, with particular focus on the level of carbon being produced by our homes. Councillor Sheahan also felt that the Council should be looking at other sources of funding as the Council could not be expected to fund it all as it would be a massive hit on the HRA.
Councillor Johnson referenced the contractual issue with regard to Newmarket and asked if the Council could recover any costs. He was reminded that this decision had already been made. Councillor Johnson expressed his disappointment at this decision.
Councillor Wyatt asked whether the Council would be able to tap into the grants being made available by Government to help landlords tackle the issues around achieving carbon neutrality within our housing stock. He also reiterated the comments made by Councillor Johnson in relation to the Newmarket contract and felt that Members should be able to have a say on the matter and, as such, it should be taken to full Council.
He was advised that the issue about the Government funding was currently being explored by the Housing Department and he was reminded that, with regard to the Newmarket contract, this issue had been considered by the Community Scrutiny Committee in July and later by Cabinet where the decision was not called in by Members who may have not been happy with that decision when they had an opportunity to do so.
The recommendation as set out on page 22 of the agenda was moved by Councillor Sheahan, seconded by Councillor Allman and by affirmation of the meeting:-
The report be duly noted and the comments made at this meeting be reported to Cabinet.