Minutes:
The Corporate Director
Resources and Place Delivery introduced the report and stated that
it provided an update on the financial situation of Thurrock
Council. He explained that two reports had been presented to
Cabinet in July and September that outlined potential savings, and
a draft budget would be presented to Cabinet in January, before
coming to the Corporate Overview and Scrutiny Committee and
returning to Cabinet and Council in February. He stated that the
budget gap had been £34million over the next two years, but
due to actions undertaken, the gap was now £3.9million. He
highlighted section two of the report which outlined the
Council’s financial base, and explained that Thurrock had one
of the lowest council tax bases in the country, as 70% of
properties were within Bands A-C. He mentioned that Southend-on-Sea
Borough Council had a council tax base approximately
£15million higher than Thurrock. He added that business rate
collection had been impacted by COVID-19, and Thurrock could only
keep 3% of business rates collected, the rest being given to
central government for redistribution. The Corporate Director
Resources and Place Delivery moved on and explained the CIPFA
Resilience Index, which he felt was a useful tool to compare local
authorities around the country. He explained that, according to the
CIPFA Resilience Index, currently Thurrock’s Adult Social
Care service were classified as ‘at risk’, due to the
low council tax base and therefore comparatively low percentage
spend on adult social care.
The Corporate Director Resources and Place Delivery highlighted the
government’s comprehensive spending review which had occurred
in October, and had stated that local authorities would receive a
funding increase of 5.4% from central government. He explained that
this increase would be calculated from a re-based position, and
therefore the percentage increase would not take into consideration
funding that had been granted from central government for COVID. He
added that a more detailed announcement from central government was
expected on 15 December 2021, and the team would then work on
identifying the impacts and implications for the Council. He stated
that previously the Department for Levelling Up, Housing and
Communities (DLUHC) had provided a three year funding settlement to
local authorities, but they had recently indicated that the
distribution of this funding would be changing, which created
uncertainty for local councils.
The Corporate Director Resources and Place Delivery explained that
the government had retained the council tax increase cap at 1.99%,
but had granted an additional 1% adult social care precept
increase. He explained that this would be voted on by all Members
at the February Full Council meeting. He added that the government
had also increased National Insurance contributions, which would go
towards funding the NHS and social care. He explained that the
Council’s National Insurance contribution would also increase
by between £900,000 and £1million, but central
government could reimburse this to the Council, although this could
come out of additional funding.
The Corporate Director Resource and Place Delivery highlighted
points 3.1 and 3.2 of the report and stated that the Medium Term
Financial Strategy (MTFS) assumed core funding would increase by
approximately £1.7mn, due to assumed council tax increases
and other savings. He stated that the council’s finances
might be affected by areas such as: a reduction in council tax
collection next year due to the ongoing impacts of COVID-19; a
reduction in government grants, an increased spend on pay awards,
and could be affected by the proposed increase in inflation, for
example regarding contracts and fuel payments, which could all
affect the assumptions outlined the MTFS. He stated that spending
on the treasury would also increase due to the phasing out of
maturing investments, increased interest costs due to increased
borrowing costs and debt, and an increase in Minimum Revenue
Provision (MRP) from set aside debt repayments and funding the
capital programme. He explained that the Council would also have to
deal with other pressures such as social care, the reduction of
COVID grants and the phasing out of reserve usage, as this was not
a sustainable method of managing the MTFS in the long-term. He
stated that in 2023/24 the Council would not use reserves or
capital receipts to balance the MTFS.
The Corporate Director Resources and Place Delivery explained that
the Council had begun the savings process by looking at individual
services, but it had been hard to identify large enough savings
areas. He stated that the team had then started to look at
subjective budgets, which looked at where money was spent within
the Council overall, such as staff and contracts. He explained that
the Council had 16 subjective budgets that were over £1mn,
which were outlined in points 4.6 and 4.7 of the report. He stated
that the largest budget was staffing cost at £100mn, followed
by adult social care placements at £40mn; children’s
social care at £30mn; interest payable at £16mn; and
the MRP at £9mn. He stated that the Council could not alter
spend on the MRP, and spend on interest payable also brought in
£30mn profit through investment. He stated that there were
other budgets over £1mn such as concessionary fares which was
a central government scheme and could not be altered, and home to
school transport which was already under consideration. He added
that the Council were also considering the assets budget which
equated to £3mn and would be discussed during the next
report.
The Corporate Director Resources and Place Delivery explained that
the Council would therefore be targeting employee costs by reducing
posts, and were aiming to reduce employee costs by £20mn
within the next two years. He stated that this would equate to
roughly 500 full time employees (FTEs) with an average salary of
£40,000. He stated that assets had been targeted in July with
a proposed savings target of £1mn, but this savings target
had been reduced to £850,000, which would be met through the
proposed closure of the Thameside Complex and the decision not to
renew the lease on the multi-story car park. He explained that the
detail of this was included at appendix 1 and 2 of the report. He
stated that even with these proposed savings the Council was still
facing a budget gap of £3.3mn next year and £500,000
the following year, so significant staff savings still needed to be
identified. He explained that appendix 1 outlined the decisions
that would need to be agreed by Cabinet, after discussion at the
relevant overview and scrutiny committees, and appendix 2 outlined
decisions that could be made by director delegation. The Corporate
Director Resource and Place Delivery summarised and stated that the
July finance report to Cabinet had considered a new charge for the
collection of green garden waste, but this had not been supported
by the Portfolio Holders so had been removed from this
report.
The Chair highlighted page 23 of the agenda and clarified that the
finance report would be presented to Cabinet in December rather
than September. Councillor Okunade queried the savings proposals on
page 26 of the agenda at appendix 1, and asked if the
£100,000 proposed saving on town centre cleansing would have
an impact for residents. The Chair asked if any town centres had
been identified in terms of these savings. The Corporate Director
Resources and Place Delivery stated that this proposed saving had
been reported to the relevant Overview and Scrutiny Committee, and
explained that although the team would work to ensure the saving
would have a limited impact on residents, this could not be
guaranteed. He stated that Thurrock’s financial pressures
were not unusual, and Council’s around the country were
having to deal with pressures and make savings. He added that the
Portfolio Holder and Director would be making the decision
regarding which town centres would be impacted by this
saving.
Councillor Kent highlighted the savings figure of £20mn over
the course of two years in regards to staffing costs, and asked how
many redundancies this would be. The Corporate Director Resources
and Place Delivery replied that the team estimated it would be
between 200 and 250 redundancies over two years, working on an
average salary of £40,000. He explained that the Council
would work to protect staff as much as possible through re-training
and redeployment. Councillor Kent queried which directorates these
jobs would come from, as well as how senior officers would identify
these posts. The Corporate Director Resources and Place Delivery
replied that the first stage of redundancies would have a minimal
impact on the community as it would be a transformational programme
that would include robotic process automation. He stated that a
digital efficiency review would be carried out and would review up
to 200 posts. He stated that each director would be assessing their
entire directorate to find post savings, which would then be taken
to Directors Board and recommendations would be brought forward.
Councillor Kent stated that £10mn of staff savings had
already been identified, and asked if process notices had been
given to the staff affected by this. The Corporate Director
Resources and Place Delivery replied that the majority of this
saving had been met through vacant posts. He explained that where
people were in post, a three month consultation on redundancies was
being undertaken, that was due to finish at the end of November. He
stated that phase two of redundancies would be begun in the New
Year, and Members would receive the detail of this when completed.
He stated that unions had been briefed on the redundancies and
consultations. Councillor Kent queried how these redundancies would
be funded. The Corporate Director Resource and Place Delivery
replied that pay awards had not been granted in 2021, the monies
from which equated to £1.5mn and would be used to fund
redundancies. Councillor Kent then highlighted point 3.2 on page 19
of the agenda, and the £12.1mn of treasury spend. He felt
that not a lot of detail on this spend was outlined in the report,
and queried how this policy would be taken forward. The Corporate
Director Resources and Place Delivery stated that CIPFA were
currently undertaking a Prudential Code update, which could
potentially affect the Treasury Management Policy. He stated that
no new investments would be undertaken by Thurrock Council as this
was no longer supported by the Public Works Loan Board (PWLB) or
central government. He added that any treasury borrowing would be
used for the capital programme and Thurrock Regeneration
Limited.
The Chair queried how savings could be made on vacant posts. The
Corporate Director Resources and Place Delivery explained that the
all actual posts were included in a directorate’s budget,
even those posts that were vacant. He stated that if those vacant
posts were removed, the directorate would therefore make savings
equivalent to the posts salary. The Chair asked if the £1mn
retraining fund would be enough, and queried how the team had
arrived at this figure. The Corporate Director Resource and Place
Delivery replied that this budget had been derived from the pay
awards of £1.5mn that had not been granted in 2021. He stated
that this money had been kept separate and would be spent on
severance or retraining, and if not enough then could be increased
through reserves.
Councillor Halden thanked the Corporate Director Resources and
Place Delivery, and the finance team, for their hard work on the
report, particularly decreasing the budget gap by approximately
90%. He stated that the Council were unable to change the council
tax base, other than through the Local Plan, and felt that
financial pressures in social care could only be resolved through
local government reform, such as expanding unitary authorities or
devolution. The Corporate Director Resources and Place Delivery
stated that local authority reorganisation decisions would be taken
by Members, and would be resourced by officers. He stated that
capacity in Thurrock would reduce due to a reduction in staffing.
He felt that both adults and children’s social care were
experiencing funding issues around the country, and fundamental
changes in local authority funding would need to be implemented. He
highlighted that all local councils were currently unaware of what
local government reform would look like, but once the detail was
known then officers would begin to implement this for
Thurrock.
Councillor Kent questioned why Members were only being asked to
comment on appendix one in the recommendations, and why appendix
two was not mentioned. The Corporate Director Resources and Place
Delivery stated that the Corporate Overview and Scrutiny Committee
only had the remit to consider the whole budget, rather than
individual responsibilities, but would take this point on board and
update the recommendation. He explained that comments made at
scrutiny would be included within the Cabinet report in
December.
RESOLVED: That the Committee:
1. Noted and commented on the financial forecasts included within
the report.
2. Considered the proposals set out within the report, and provided
comments to Cabinet.
Supporting documents: