Minutes:
Councillor Snell introduced the
report and stated that the Quarter 2 2022/23 that had been
submitted to Cabinet had shown a 2022/23 deficit of approximately
£469mn, and a £180mn deficit in 2023/24, which had led
to a Section 114 Notice being published on 19 December 2022,
alongside a request to central government for exceptional financial
support (EFS). He explained that the budget being presented to
Cabinet assumed that central government would grant the request for
EFS, but this was not guaranteed at this time. He explained that
even if EFS was granted, the Council needed to work to mitigate the
deficit through a 20-year financial strategy, which included
raising council tax, disposing of assets, and revising the Minimum
Revenue Position (MRP) policy, all of which was included in the
report. He added that inflation was also having an impact on the
Medium-Term Financial Strategy (MTFS) as gas and electricity prices
had risen by approximately 10%; petrol prices had risen by 8.9%;
and diesel prices had risen by 22%. He explained that the team
monitored inflation rates carefully.
Councillor Snell moved on and explained that on 6 February 2023 the
Department of Levelling Up, Housing, and Communities (DLUHC) had
granted the Council dispensation to raise council tax rates above
referendum levels, without holding a referendum. He stated that the
finance team had carried out comparative work with other peer
unitary authorities, and had found that Thurrock had a lower
council tax base than its peers, which meant that the Council could
not raise as much income to pay for services to residents. He
confirmed that a hardship fund of approximately £116,000
would be introduced, alongside the Local Council Tax Scheme, to
ensure vulnerable residents received support paying their council
tax. He stated that the budget presented to Cabinet assumed a 9.99%
rise in council tax. He added that non-domestic rates would also be
levied to increase income for the Council by approximately
£7mn in 2023/24. Councillor Snell commented that the team
were also undertaking research into a business rate pool with other
local authorities, but an application needed to be submitted before
this proposal could be progressed. He summarised and stated that
the budget remained challenging, as it could only be balanced for
2023/24 with EFS from central government, but needed to be
sustainable in the long-term.
The Interim Director of Finance explained that the Council needed
to demonstrate to central government that they understood the scale
of the financial challenge and were taking action to resolve these
financial issues. He stated that the budget was being presented to
Cabinet as a point in time report, as the context behind the budget
was continually moving, and presented underlying fragility. He
stated that the team were now reversing one-off measures and
working to deliver savings to work towards a sustainable budget.
The Interim Director of Finance explained that core service
pressures were now outweighing council income, which had led to a
£180m budget gap, which had been compounded by investment
income issues. He added that the council were carefully monitoring
interest rates and working on the divestment of assets and
investments, as well as MRP charges that remained high and
presented additional risks. He stated that the Council had to
demonstrate to government they were working to mitigate financial
issues, and this had to include the proposal to raise council tax.
He described how the Council’s finances were now exposed to
risk and this could present a problem in achieving financial
sustainability through the 20-year model. He stated that
conversations between the Council, central government, and
commissioners remained ongoing to resolve financial issues, and
this included considering all areas of the Council including fees
and charges, to find further solutions and new innovations.
The Interim Director of Finance moved on and explained that the
proposal to raise council tax was important as the Council were
starting from a low council tax base, but a hardship fund would be
introduced to ensure vulnerable residents received support. He
highlighted the S25 Statement at Appendix 8 and explained that it
was unusual as the proposed budget assumed EFS from central
government, and this had not yet been agreed. He stated that the
Council needed to continue to engage positively with the
commissioner and intervention process, as well as key partners, to
take action and resolve the Council’s financial crisis.
The Leader thanked Councillor Snell and officers for the report and
felt that the proposed rise in council tax was important to ensure
the future of Thurrock Council. He stated that the Council had to
take tough decisions and do the right thing for the future
sustainability of Thurrock. He stated that the budget presented a
restart for the Council to undertake a new way of working and
improving the culture, as well as ensuring future proposed
regeneration could take place. He added that as council tax had not
been raised to referendum limits in the past, Thurrock Council had
lost approximately £50mn in compound tax collections.
Councillor Spillman questioned the structural deficit of the
Council if investment issues were removed. The Interim Director of
Finance explained that the Council had a deficit of approximately
£17.7mn of service pressure, which represented the difference
between income, growth and savings; and service costs. He stated
that further savings would need to be delivered within 2023/24 and
the capital programme was being reviewed. The Interim Director of
Finance explained that previous decisions not to raise council tax
also meant that the Council’s budget base was smaller than
other comparable unitary authorities. Councillor Spillman supported
the budget as he felt it would help to ensure the viability of the
Council and would help to close the structural deficits. The Deputy
Leader agreed with the proposals to raise council tax, as it would
help to ensure that frontline care such as staff, equipment, and
residential care continued to be provided to vulnerable residents.
She added that the £1.5mn raised through the Adult Social
Care precept increase would help to provide these services, but
would not fully close the £4mn service pressure. Councillor
Spillman asked which services would be cut if Council only agreed
to raise council tax by 4.99%. The Interim Director of Finance
explained that if council tax was raised by 4.99%, compared to
7.99%, this would increase the Council’s deficit by
approximately £2.3mn. He stated that if this was the case,
the Council would need to undergo further service
transformation.
The Leader highlighted that if council tax was not increased, this
would have a compound affect for the next 20 or 30 years, and
Members needed to ensure the Council was financially sustainable.
Councillor Abbas supported the budget as he felt it would protect
statutory services for residents, but highlighted 3.9 of the report
and asked what further adjustments would be made in future. The
Essex County Council (ECC) Commissioner stated that although the
budget was detailed, further work needed to be undertaken, for
example the Quarter 1 review of fees and charges; and a fuller
review of the capital programme and further potential savings in
this area. She stated that the budget represented a point in time
and further service transformation would be required in 2023/24.
She added that central government would place conditions on the
EFS, if it was granted, for example regarding the disposal
programme. She highlighted that the EFS request for £630mn
over 2022/23 and 23/24 had been submitted to the minister, but was
not yet approved as the Council were waiting for a ‘minded
to’ letter. The Leader stated that all Members needed to work
together on the budget. He thanked the commissioners and the
finance team for their hard work on the budget. Councillor Spillman
echoed the Leader’s comments and thanked the finance team for
their hard work.
The recommendations were moved by the Leader, and seconded by
Councillor Snell. All Cabinet Members agreed the recommendations as
listed below.
RESOLVED: That Cabinet:
1. Commented on the proposed updates to the Medium-Term Financial
Strategy including the deficit positions set out in each
year.
2. Noted on 6 February 2023 Thurrock Council was granted permission
by the levelling up minister to raise council tax by an extra 5% to
10% without the need for a local referendum.
3. Noted the paper assumed as council tax increase of 7.99%, as per
paragraph 9.6.
4. Supported a 2% Adult Social Care precept increase as per
paragraph 9.6, and noted that this will be used to fund increased
demand and provider fees with older people care services.
5. Noted the council tax requirement of £82.355m as per
section 8.
6. Noted the net cost of services requirement is £327.647m as
per paragraph 8.1.
7. Noted the proposed savings as per section 12 and Appendix 4 and
noted that these are insufficient to address the funding gap
without the need to seek exceptional financial support from
government.
8. Noted that exceptional financial support is required to balance
the 2023/24 budget and discussions with central government are
ongoing, as per Appendix 3.
9. Noted the budget had been set based on the assumption that the
request for exceptional financial support in respect of the 2022/23
budget deficit is granted.
10. Noted the changes to the capital programme as set out in the
report and associated appendices.
11. Noted the impact of the new Prudential Borrowing on the debt
levels of the Council as set out in Appendix 5.
12. Noted the capital programme will be subject to a further review
as set out in the report and following the issue of a Section 114
Notice.
13. Noted the projected revenue impact of the Minimum Revenue
Position (MRP) costs as set out in Section 14.25.
14. Commented on the proposed delegation to Cabinet to approve
additions to the programme based on the criteria set out in section
14.24.
15. Noted the Dedicated School’s Budget is set out at
£51.258m as per paragraph 15.13.
16. Commented on the draft budget proposals within this report to
inform the final budget proposals to be presented to Full Council
on 1 March 2023.
17. Noted further reviews have been commissioned into the fees and
charges policy and the pay policy as per paragraph 9.23 and 10.4
respectively.
18. Noted the Council’s position on Reserves, recognising the
unique situation the Council faces and a need to revisit the
adequacy of Reserves as savings and service transformation are
affected during 2023/24.
19. Noted that work on the budget will continue during 2023/24,
with more savings required to Council services.
Reason for decision: as outlined in the
report
This decision is subject to call-in
Supporting documents: