Agenda item

(To receive a report from the Executive Director – Resources which invites the Executive to make proposals to the full County Council on the Council's budget and council tax in light of the provisional local government settlement and consultation comments on its initial proposals)

That the Executive:

1. Consider the effect of the funding available and revenue expenditure position as noted in paragraphs 1.24, 1.25 and Table B of the report, supported by additional information in Appendix A;

2. Consider the Equality Impact Analysis at Appendix B and the consultation comments as shown in Appendix G and presented at the meeting;

2a) Approve for recommendation to full Council that the budget for 2020/21 be amended as follows:

i) a new Support for Businesses Reserve of £12m be created for the purpose of implementing schemes for supporting Lincolnshire Businesses by a transfer of £12m from the Financial Volatility Reserve; and

ii) £0.2m be transferred from the Financial Volatility Reserve to the existing Flood and Water Risk Management reserve for the purpose of providing sandbags across the county.

3. Subject to recommendation 4 below approve for recommendation to full Council:

a) the revenue Budget for 2021/22 proposed in Table B of the report subject to the following changes:-

i. The Financial Volatility Reserve be reduced by £12.2m;

ii. The new Support for Businesses Reserve of £12m be inserted; and

iii. The Flood and Water Risk Management Reserve be increased by £0.2m to £0.418m

b) the capital programme for 2021/22 proposed in Table C and Appendix C of the report subject to the New Developments Capital Contingency Fund being reduced by £10m and the insertion of a new scheme in Highways, "Rural Road Fund" with an allocation of £10m;

c) the levels of council tax proposed in Table D and shown in Appendix D of the report including the increasing of council tax in 2021/22 by 1.99%;

d) the prudential indicators for 2021/22 shown in Appendix E of the report;

e) the Flexible Use of Capital Receipts Strategy for 2021/22 shown in Appendix F of the report; and

f) the Medium Term Financial Strategy attached at Appendix H to the report; and

g) the Capital Strategy 2021/22 attached at Appendix I to the report.

4. Request the Leader to review and amend the Executive's budget recommendations to the County Council, as appropriate, in light of the final Local Government Finance Settlement if received between the Executive meeting and the County Council on 19 February 2021.

5. Request the Leader to review and amend the figures within the Medium Term Financial Strategy to be recommended to the County Council as appropriate, to ensure consistency with final budget recommendations made to the County Council meeting on 19 February 2021.

Consideration was given to a report from the Executive Director – Resources which asked the Executive to propose to full Council the Council's budget and council tax in light of the provisional local government settlement and consultation comments on its initial proposals. The Executive was also asked to consider prudential targets in relation to capital financing and other treasury management matters.

The Assistant Director – Finance introduced the report to the Executive and guided them through a further update to the Council Budget 2021/22, which had been circulated prior to the meeting, which set out a revised Budget position following confirmation from the district councils of the Council Tax bases; Council Tax Collection Fund; Business Rates Collection Fund; and the Business Rates Section 31 grant funding, as well as the implications of the latest information on the Budget position. The update presented a small surplus

An updated Appendix G to the report was also circulated to the meeting, which included budget consultation feedback from scrutiny committees; members of the public; and the notes from the consultation meeting with external stakeholders.

The Assistant Director – Finance advised that there were no proposed changes to the revenue or capital service budgets as presented at the meeting on 5 January 2021 and a council tax increase of 1.99% was proposed, which would be an increase for a Band D property of £26.58 per year. It was reported that all the feedback received to the proposed budget was supportive of the proposals being made.

The Chairman of the Overview and Scrutiny Management Board (OSMB) summarised the comments which had been made by the Board when considering the budget proposals, and the Board had accepted that the cost pressures could be met by the proposed council tax increase of 1.99%. It was acknowledged that Covid-19 was having a significant impact on funding and would continue to do so going forward, particularly in relation to Adult Social Care. Reference was also made to the significant cost pressures in relation to Home to School Transport, however, this was being addressed as part of the Transformation Programme and the outcome of the review would be reported back to the relevant scrutiny committees.

The Leader advised that there had been additional pressures on the Council both from incurring additional costs and from lost income, however, it should be acknowledged that the Government had provided a lot of financial support during the pandemic, and the County Council had received approximately £44m in grants which had allowed the Council to continue delivering services. There was a requirement to report back to government on how this money had been spent.

A one year budget had been proposed, it had been hoped that the authority would receive a multi-year settlement, however, due to Covid-19 the government had only been able to issue a one year settlement. Lincolnshire was one of the lowest county council precepts in the country, and as an authority was in a strong position financially, with a financial volatility reserve.

During debate, a number of issues were highlighted and included:

· The Executive Councillor for Economy and Place highlighted that there were many businesses in Lincolnshire who were now struggling as a result of Covid-19, having not been able to receive government support;

· The Executive Councillor for Highways, Transport and IT highlighted the need for more investment in rural and C roads in the County;

· The Executive Councillor for Commercial and Environmental Management raised the issues of flooding investment and highlighted the current lack of sandbag provision in the County.

In response to the issues raised during the debate, the Leader of the Council tabled an amendment to the budget to recommend the following to the Council:

· An immediate transfer in 2020/21 of £12m from the Financial Volatility Reserve to a new Support for Business reserve.

· An immediate transfer in 2020/21 of £0.2m from the Financial Volatility Reserve to the Flood and Water Risk Management reserve for the purpose of providing 5,000 sandbags across the county, the part refilling of grit bins throughout the winter, and localised sandbags provided for emergency response to Parish Councils.

· The recommended budget for 2021/22 be amended to reflect the above changes

· Move £10m from the Capital Contingency in 2021/22 to a new capital scheme called Rural Road Fund.

The Executive Director – Resources advised that the immediate need for the funds would give rise to a transfer in year which was allowable but required a full Council decision. The amendment would be put to the Council as part of the overall budget decisions and voted on as a whole. Subject to the council vote, the funds would be earmarked for the new purposes immediately.

In terms of the Support to Business, a key decision report outlining the package of measures would be presented to the Environment and Economy Scrutiny Committee on 16 February 2021 and the Leader would be asked to make a decision on those parameters after a successful council vote and no later than 23 February 2021.

The flood funding would also be transferred immediately following a successful council vote, making it available for any flooding issues which may arise before the end of the 2020/21 financial year.

Both of these items were being transferred from the Financial Volatility Reserve, which had been established to manage future funding uncertainty and would serve to reduce the current balance from £52m to £40m. The Section 25 statement to Council would make reference to this and it was the strong professional advice of the Executive Director – Resources that the reserves should be replenished at the earliest opportunity. The Rural Road Fund would be a straightforward switch between headings in the capital programme and had no impact on the revenue budget.

The Executive strongly supported the amendments to the Council budget and commented that they would be of benefit to many businesses and residents and recommended that they be put to the Council on 19 February 2021.

RESOLVED