Agenda item

In Moving adoption of the Cabinet reports, Councillor Hopgood made a statement on the budget proposals for 2023/24 and the Medium Term Financial Plan forecasts for the period 2023/24 to 2026/27, as follows:

 

The proposals were the culmination of months of work and at each stage scrutiny had been involved in the budget setting process.  The report included details of the feedback from those meetings and from wider engagement through Area Action Partnerships and through engagement with Business Rate Payers and with Trade Unions, plus other partners and stakeholders.

 

The budget had been prepared during a period of unprecedented inflationary pressures, significant market volatility and uncertainty and in the context of rising interest rates, the likes of which had not been seen for decades.

 

The report provided a comprehensive overview of the budget pressures being faced, the announcements made in the Autumn Statement in November last year and the Local Government Finance Settlement which was subsequently published.

 

The 2023/24 budgets needed to make provision for significant uplifts in many Council budgets to meet inflationary pressures.

 

These pressures included the impact of CPI and the National Living Wage increases next year, which had a significant bearing on Adult Social Care contracts in particular.

 

The cost pressures in Adult and Children’s Social Care, which were by far the largest budgets the Council had, were enormous.

 

The cost pressures in these two areas from placements (excluding pay inflation) totalled £30.4 million next year, the additional revenue generated from an Adult Social Care precept and the additional specific grant funding for these areas would fall well short of the cost pressures being faced, in part due to the Council’s low tax raising capacity, a matter which had consistently been raised with Government and most recently in the Councils feedback on the Provisional Local Government Finance Settlement.

 

The Council was also seeing significant and enduring cost pressures in the Home to School Transport Budgets, which would need a budget increase of £8.3 million next year.

 

Whilst the budget pressures faced from gas and electricity price increases had subsided somewhat over recent months, budgets still needed to accommodate an additional £6m of growth next year, building on the c£4m of growth built into the 2022/23 base budget, meaning energy budgets would need to have more than doubled in the space of 12 months.

 

The budget included some additional investment in the Council’s in-house fostering service (£1.7 million); in Children’s Social Care Teams to improve caseload capacity (£0.811 million) and in children’s social care prevention services as part of the LAC sufficiency strategy (£0.808 million).

 

In overall terms, the Council faced spending pressures totalling £78.9 million next year, which included a circa £19.5 million pressure for pay inflation, with £7 million of this relating to the shortfall in the current budget following the local government pay award this year.

 

Despite the challenging financial position the Council has had to contend with, alongside construction price inflation and increased cost of borrowing, the budget included an ambitious capital programme, with £122 million of new additional investments proposed, including further significant investment in schools, including new builds at Belmont and Greenfield, in highways infrastructure, including a major investment on the A690, in new Children’s Homes as part of the Looked After Children Sufficiency Strategy and in Towns and Villages, bringing the total capital programme to £778 million over the next four years.  This was by far the largest level of capital investment the Council had seen.

 

The uncertainty over funding settlements from 2025/26 onwards casted an ominous shadow over medium term financial planningand there could be significant challenges to come in 2025/26 and beyond.

 

The savings proposals included in the budget were largely in line with the proposals that were consulted upon across the back end of last year.

 

The Leader thanked everyone involved in the consultation exercise which had been undertaken and the feedback received had been carefully considered in finalising the savings plans included at Appendix 3.

 

The total identified savings across the MTFP13 planning period were £18.261 million, with £12.383 million (68%) falling into next year.

 

The budget proposals included Council Tax increases in line with Government expectations.  They took into account and adopted the new Council Tax core referendum limits from next year and the Adult Social Care Precepting powers.  The expectation from Government was that these additional flexibilities would be taken and the recommendation from the Council’s s151 officer was that these tax raising powers be taken.

 

While increasing the level of council tax was a decision that should not be taken lightly and the current cost of living squeeze must be recognised, not increasing council tax was simply not a sustainable or prudent strategy to adopt.

 

Every 1% of council tax increase applied generated around £2.55 million of additional funding for the Council to sustain vital local services.  In the absence of additional Government funding being provided there was a binary choice between increasing the Council Tax or increasing the scale of the budget deficit and the savings and efficiencies.

 

Assuming that Council agreed the Council Tax increases factored into the report and the savings proposals were agreed and delivered, then the budget shortfall next year would be £10.028 million, rising to £23.177 million over the four year planning period.

 

The Council would continue to be flexible in its approach in terms of planning for the next four financial years so that it could continue to support residents in County Durham in the best way it could.

 

Work had already started on developing options to address these challenges so that consideration could be given to what further savings would be required in 2024/25 and beyond and Cabinet would need to consider this in the summer alongside any updated forecasts.

 

The proposed increase next year represented an increase of around £1.12 to £1.50 per week for the majority of households across the County, with those on low incomes fully protected through the Local Council Tax Reduction scheme.

 

On 8 February 2023 Cabinet agreed revisions to the Councils Council Tax Discretionary Relief policy, and this provided additional top up support payments to those households, both working age and those of pension age who were in receipt of partial Local Council Tax Reduction Support but were still left with a bill to pay.

 

As at Quarter 2, earmarked and cash limit reserves were forecast to reduce by £45m and the General Reserve was forecast to reduce to £21.3 million, below the minimum threshold agreed by Council in February 2022 and below the reserves strategy.

 

There would therefore need to be a transfer to General Reserves at the year end.

 

It was not sustainable to underpin a budget indefinitely from reserves and as had been done in the past, and the underlying budget position would need to be addressed..

 

Utilising the MTFP reserve next year would allow time to develop proposals that would minimise as far as possible the impact on front line service delivery.

 

The report included details of the various Dedicated Schools block funding allocations, where mainstream schools would benefit from an additional net £8.549m of schools block funding next year, alongside an estimated £13m of Mainstream Schools additional grant.  There was also an additional £9.4m of High Needs SEND funding being provided next year.  The updated school funding formula factors were set out in the report and were in line with the local formula agreed by Cabinet in January.

 

The recommendations for Item 9 were summarised at section 49, and the Leader confirmed that they satisfied statutory requirements with regards to the budget setting, including the declaration of the forecast deficit on the Collection Fund, the adoption of the Pay Policy, the Capital Strategy and the various Treasury Management Policies and Strategies which included the updated Property Investment Strategy and the updated Prudential Indicators, which had been updated and attached to the report at Appendices 12 and 13.

 

Item 10 detailed the various statutory Council Tax setting determinations which the Council was required to formally consider and adopt and included a base council tax increase of 2.99% for 2023/24 and a proposed 2% Adult Social Care Precept.

 

The report included precept information for the County Durham and Darlington Fire and Rescue Authority, the Durham Police, Crime and Victims Commissioner and County Durham’s Parish and Town Councils, which were at Appendix 3.

 

The Leader Moved the recommendations of both reports and in doing so placed on record her thanks to the Corporate Director of Resources and his team and budget managers across the Council for the work undertaken to develop the reports and the budget proposals before Council today.

 

Councillor R Bell, Deputy Leader and Portfolio Holder for Finance Seconded the reports and recommendations under Items 9 and 10 and reserved the right to speak until the end of the debate.

 

Councillor C Martin, Chair of Corporate Overview and Scrutiny Management Board (COSMB) welcomed the opportunity to scrutinise Cabinet’s budget proposals for the MTFP 2023/24 – 2026/27 and the revenue and capital budget for 2023/24.  It was a priority for the COSMB to scrutinise the MTFP and budget, and he was pleased that this had been done diligently and constructively.

 

This year scrutiny had increased its role in scrutinising Cabinet’s MTFP plans and worked differently.  Scrutiny committees who received budgetary information had been asked to consider establishing working groups to take a deeper dive into how the Council resourced key areas, providing recommendations to Cabinet.  The results of the task and finish groups were included in the report to Council.

 

COSMB received four Cabinet reports on the development of the MTFP and budget and had fed back its views to Cabinet.

 

The Board had a robust challenge and debate over the plans, and Councillor Martin thanked the Head of Financial and Commercial Services for the comprehensive way he had responded to questions.

 

Councillor Martin welcomed the decision to continue the free after two parking initiative after this had been raised in scrutiny.

 

All of the points raised by COSMB and the outcomes from the task and finish groups were included in the report to Council starting at paragraph 116 on page 61 of the pack.

 

The budget utilised reserves to deal with the financial problems the Council faced with the expectation that savings would be worked up over the course of the next financial year.

 

It was vital that scrutiny was involved in developing these proposals in the coming year to add value to decision making by completely scrutinising any proposals. 

 

Councillor Crute considered that the Council had set out a clear message in that services would be cut whilst fees and charges would be increased.  He asked why the Council would not support more people instead of failing them.  He had received a number of complaints from people about the proposed increases as people were already angry at the rise in cost of living.  Councillor Crute said that the coalition had referenced unavoidable pressures in the budget report and asked what was “unavoidable”.  He suggested that this was down to decade of savage austerity cuts experienced since 2010.  Mortgage and domestic rises had an impact on everyday lives and he believed it was a deliberate ploy from government and the weak decision making from the leadership at County Hall.  In the past 21 months money had been syphoned-off into a high-end, silver service restaurant in the old DLI Museum, the folly of plans to build three new council HQs, the fiasco of the failed Levelling-Up bids, and now the proposed council tax hike of 5%.  This at a time when households were suffering from the worst cost-of-living crisis in a generation.

 

Councillor Crute invited all members of the Council, Liberal Democrat, Independent or Green to join Labour in rejecting this budget. The choice was to vote through a record 5% Council Tax hike or join Labour in standing up for the residents of County Durham and come up with something better to protect and not punish residents.

 

Councillors Gunn, Hovvels, Andrews, Adams, Surtees, Tinsley, McKeon, Shaw spoke against the budget proposals.

 

Councillors Howey, Duffy, Lines, Hood, Coult, Blakey, Elmer, Scott, Wilkes, Rowlandson, Shuttleworth, Potts, Shield and Sutton-Lloyd spoke in favour of the budget proposals.

 

Councillor Marshall felt that the budget was farcical and showed the non-delivery of a capital programme and the failure to identify savings.  He did not understand why Council Tax was going up when the current leadership had argued against this for a decade.  He believed the leadership had failed to deliver any savings, failed with levelling up bids, failed with the City of Culture bid, failed Aykley Heads and failed to build an economic strategy.

 

When asked why the Labour Group had not put an alternative budget forward Councillor Marshall argued that it was not the job of the Labour Group to do so adding that a rise in Council Tax would put more of a burden on the hard working families in County Durham and he would not support the proposals.

 

Councillor R Bell thanked all of the officers for the comprehensive and thorough report.  The budget was facing inflationary pressures and it was hoped that the Adult Social Care pressures would be paid forward.  He added that there was no choice but to increase Council Tax as the alternative would be cuts to services or unsustainable use of reserves.  While he understood the pressures faced by some residents he stressed that there was additional support available through various schemes.  Councillor Bell supported the recommendations.

 

Councillor Hopgood was disappointed that some information which had been included in a Part B report about the new headquarters had been referred to as this was confidential information.  She was surprised that there was a mention of capital being used to fund revenue, which could not be done.  She was not aware of any member of staff wanting to move into the HQ building in Durham and was surprised that no alternative had been put forward from the Labour Group.  She was aware that when opportunities were presented in scrutiny meetings for members to discuss the budget Labour members had walked out and did not take part.  This was no way to run a Council and Councillor Hopgood supported the budget.

 

Votes were then taken on the main Motions which were the recommendations contained within the reports.

 

Medium Term Financial Plan 2023/24 to 2026/27 and Revenue and Capital Budget 2023/24

 

For the Motion

Councillors M Abley, R Bell, J Blakey, D Brown, L Brown, J Cairns, J Charlton, J Cosslett, B Coult, M Currah, T Duffy, J Elmer, D Freeman, P Heaviside, T Henderson, L Holmes, C Hood, A Hopgood, J Howey, C Hunt, G Hutchinson, A Jackson, N Jones, P Jopling, C Lines, L Maddison, C Martin, E Mavin, L Mavin, B McAloon, S McDonnell, P Molloy, J Nicholson, D Oliver, R Ormerod, E Peeke, R Potts, J Quinn, A Reed, G Richardson, S Robinson, K Robson, K Rooney, J Rowlandson, A Savory, E Scott, A Shield, J Shuttleworth, M Simmons, A Simpson, M Stead, W Stelling, A Sterling, D Stoker, T Stubbs, D Sutton-Lloyd, M Walton, A Watson, M Wilkes and S Zair.

 

Against the Motion

Councillors E Adam, R Adcock-Forster, V Andrews, J Atkinson, P Atkinson, A Batey, K Batey, G Binney, D Boyes, R Charlton-Lainé, I Cochrane, R Crute, S Deinali, K Earley, L Fenwick, C Fletcher, J Griffiths, O Gunn, D Hall, C Hampson, A Hanson, K Hawley, S Henig, J Higgins, L Hovvels, M Johnson, C Kay, B Kellett, L Kennedy, R Manchester, C Marshall, D McKenna, M McKeon, I McLean, S McMahon, J Miller, D Mulholland, D Nicholls, P Pringle, J Purvis, S Quinn, P Sexton, K Shaw, G Smith, T Smith, A Surtees, P Taylor, F Tinsley, S Townsend, C Varty, E Waldock, M Wilson, S Wilson, D Wood and R Yorke.

 

Abstentions

None

 

Resolved:

That the report and its recommendations be adopted in full.

 

 

Council Tax Setting in Order to Meet the County Council's Council Tax Requirement for 2023/24

 

For the Motion

Councillors M Abley, R Bell, J Blakey, D Brown, L Brown, J Cairns, J Charlton, J Cosslett, B Coult, M Currah, T Duffy, J Elmer, D Freeman, P Heaviside, T Henderson, L Holmes, C Hood, A Hopgood, J Howey, C Hunt, G Hutchinson, A Jackson, N Jones, P Jopling, C Lines, L Maddison, C Martin, E Mavin, L Mavin, B McAloon, S McDonnell, P Molloy, J Nicholson, D Oliver, R Ormerod, E Peeke, R Potts, J Quinn, A Reed, G Richardson, S Robinson, K Robson, K Rooney, J Rowlandson, A Savory, E Scott, A Shield, J Shuttleworth, M Simmons, A Simpson, M Stead, W Stelling, A Sterling, D Stoker, T Stubbs, D Sutton-Lloyd, M Walton, A Watson, M Wilkes and S Zair.

 

Against the Motion

Councillors E Adam, R Adcock-Forster, V Andrews, J Atkinson, P Atkinson, A Batey, K Batey, G Binney, D Boyes, R Charlton-Lainé, I Cochrane, R Crute, S Deinali, K Earley, L Fenwick, C Fletcher, J Griffiths, O Gunn, D Hall, C Hampson, A Hanson, K Hawley, S Henig, J Higgins, L Hovvels, M Johnson, C Kay, B Kellett, L Kennedy, R Manchester, C Marshall, D McKenna, M McKeon, I McLean, S McMahon, J Miller, D Mulholland, D Nicholls, P Pringle, J Purvis, S Quinn, P Sexton, K Shaw, G Smith, T Smith, A Surtees, P Taylor, F Tinsley, S Townsend, C Varty, E Waldock, M Wilson, S Wilson, D Wood and R Yorke.

 

Abstentions

None

 

 

Resolved:

That the following be adopted:

 

(a)         It be noted that the council tax base 2023/24 for:

 

(i)     the whole council area is 145,675.9 Band D equivalent properties [Item T in the formula in Section 31B of the Local Government Finance Act 1992 (as amended)] and

 

(ii)   dwellings in those parts of its area to which a parish precept relates is set out in the attached Appendix 3.

 

(b)         The Council Tax Requirement for the Council’s own purposes for 2023/24 (excluding Parish precepts and the Charter Trustees for the City of Durham precept) is £268,371,427.

 

(c)          Agree the following amounts in accordance with Sections 30 to 36 of the Act being the:

 

(i)        aggregate of the gross expenditure which the council estimates for the items set out in Section 31A(2) of the Act taking into account all precepts issued to it by parish councils is £1,436,888,069

 

(ii)      aggregate of the gross income which the council estimates for the items set out in Section 31A(3) of the Act is  £1,153,373,193

 

(iii)     amount by which the aggregate at (c) i) above exceeds the aggregate at (c) ii) above in accordance with Section 31A(4) of the Act as its Council Tax requirement for the year [Item R in the formula in Section 31B of the Act] is £283,514,876

 

(iv)     amount at (c) iii) above (Item R), all divided by Item T ((a) i) above), in accordance with Section 31B of the Act as the basic amount of its council tax at Band D for the year (including parish precepts) is £1,946.20.

 

(v)      aggregate amount of all special items referred to in Section 34 (1) of the Act: (total of all parish precepts including Charter Trustees) is £15,143,449.

 

(vi)     amount at (c) iv) above less the result given by dividing the amount at (c) v) above by Item T ((a) i) above), in accordance with Section 34(2) of the Act, as the basic amount of its Council Tax at Band D for the year for dwellings in those parts of its area to which no Parish precept relates is £1,842.25

 

(d)         It be noted that for 2023/24, the County Durham and Darlington Fire and Rescue Authority has recommended the following amounts be in the precept issued to the County Council, in accordance with Section 40 of the Act, as shown in the table below:

 

COUNTY DURHAM AND DARLINGTON FIRE AND RESCUE AUTHORITY

 

A	B	C	D	E	F	G	H
£	£	£	£	£	£	£	£
76.46	89.20	101.95	114.69	140.18	165.66	191.15	229.38

 

(e)         It be noted that for 2023/24, the Durham Police, Crime and Victims’ Commissioner has recommended that the following amounts be in the precept issued to the County Council, in accordance with Section 40 of the Act, as shown in the following table:

 

DURHAM POLICE, CRIME AND VICTIMS’ COMMISSIONER

 

A	B	C	D	E	F	G	H
£	£	£	£	£	£	£	£
170.16	198.52	226.88	255.24	311.96	368.68	425.40	510.48

 

(f)           That the Council, in accordance with Sections 30 and 36 of the Local Government Finance Act 1992 (as amended) hereby sets the set the aggregate amounts shown in the tables below as the amounts of council tax for 2023/24 for each part of its area and for each of the categories of dwellings:

 

DURHAM COUNTY COUNCIL

 

A	B	C	D	E	F	G	H
£	£	£	£	£	£	£	£
1,062.73	1,239.86	1,416.98	1,594.10	1,948.34	2,302.59	2,656.83	3,188.20

 

DURHAM COUNTY COUNCIL – ADULT SOCIAL CARE

 

A	B	C	D	E	F	G	H
£	£	£	£	£	£	£	£
165.43	193.01	220.58	248.15	303.29	358.44	413.58	496.30

 

 

AGGREGATE OF COUNCIL TAX REQUIREMENTS

(excluding Parish, Town Council and Charter Trustees)

 

A	B	C	D	E	F	G	H
£	£	£	£	£	£	£	£
1,474.78	1,720.59	1,966.39	2,212.18	2,703.77	3,195.37	3,686.96	4,424.36

 

(g)         The Council has determined that its relevant basic amount of council tax for 2023/24 is not excessive in accordance with principles approved under Section 52ZB Local Government Finance Act 1992 (as amended) and that the increase in council tax is not excessive in accordance with the principles approved under Section 52ZC Local Government Finance Act 1992 (as amended).

 

(h)         As a billing authority the Council has not been notified by County Durham and Darlington Fire and Rescue Authority and Durham Police, Crime and Victims’ Commissioner, as major precepting authorities, that their relevant basic amount of council tax for 2023/24 is excessive and that the billing authority is not required to hold a referendum in accordance with Section 52ZK Local Government Finance Act 1992 (as amended).

 

(i)           The Council set a 0% discount for Second and Empty Furnished Homes, in accordance with Section 11A (3) of the Act.

 

(j)           The Council set a 0% discount for dwellings defined in classes C or D, in accordance with Section 11A (4A) of the Act.

 

(k)          The Council set premium charges for long term empty homes, in accordance with Section 11B (1b) of the Act: 100% premium for properties which have been empty between two and five years and 200% premium for properties empty for longer than five years.

 

(l)           The Chief Executive be instructed to publish a notice in accordance with Section 38 (2) of the Act, relating to the amounts of council tax set.

 

(m)        The Chief Executive be instructed to publish a notice in accordance with Section 11A (6) and 11B (6) of the Act, relating to the discount set.