Agenda and minutes

To follow

Members considered the draft minutes of the Performance and Value for Money Select Committee held on the 27th January 2022.

It was reported that the Select Committee recommended to Council all 52 of the 53 budget reduction proposals. The Committee asked Cabinet to consider Budget proposal BR1-526 Get Oldham Growing.

On further consideration of the proposal, Members agreed that BR1-526 reamin as a budget reduction.

RESOLVED – That the deliberations and comments of the Policy Overview and Scruitny Committee held on the 27^th January 2022 be noted and the budget proposal BR1-526 reamined for cosndieration by Full Council.

To follow

Consdieration was given to the minutes of the Opposition budgets, Liberal Democrat and Conservative. The Policy Overview and Scruitny committee commended all proposals to Cabinet for consideration.

Cabinet considered the proposals and summarised information in relation to the proposals.

RESOLVED – That

1.    The deliberations and comments of the Policy Overview and Scruitny CommitteeCommittee held on 8^th February 2022 be noted.

2.    None of the alternative budget proposals presented by the Liberal Democrats and Conservatives Groups would be accepted.

The Cabinet gave consideration to a report of the Director of Finance which provided them with an update on the Council’s 2021/22 forecast revenue budget position and the financial position of the capital programme as at 30 November 2021 (Month 8), together with the revised capital programme 2021/26.

In relation to the Revenue position, the Cabinet was informed that the current forecast outturn position for 2021/22 was a projected surplus variance of £2.672m after allowing for approved and pending transfers to and from reserves.

The position also included additional costs and pressures that have been identified by the Authority in this financial year as a direct result of COVID-19. The additional pressures included forecasts of both income shortfalls and additional expenditure that have impacted on the Authority’s budgets as a result of the pandemic.

The pandemic had affected nearly all aspects of Council service delivery; however, the most significant areas of concern were the People and Place, Children’s Services and Community Health & Adult Social Care Portfolios. Action was being taken and would continue for the remainder of the financial year to address variances and take mitigating action as detailed in the report.

The Cabinet noted the overall corporate position was, being offset by the application of the £7.737m general COVID Support grant and £0.352m from the Quarter 1 compensation claim for lost income in relation to sales fees and charges (SFC); in total £8.089m, all of which was received from the Department for Levelling Up, Housing and Communities (DLUHC). In Appendix 1 to the report, the un-ringfenced Government support was presented as a single sum so that it highlighted the level of variation across all Council budgets, given that there was insufficient resource to fully offset the adverse COVID related variance. However, this summary report

presented the position after applying the Government grant across Portfolio areas. An update on the major issues driving the revenue projections was detailed within Annex 1, Section 2.

The current projected position, after adjustment for reserves and, as outlined above, receipt of all additional Government funding to support COVID pressures that the Authority was

expecting to receive, continued to show a net underspend, hopefully demonstrating the impact of the service and corporate actions that had been initiated across all service areas

to review and challenge planned expenditure and to maximise income. Action would continue with the aim of, at the very least, maintaining this position to the end of the financial year.

Information on the Quarter 2 position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund was also outlined in the report. There were no significant issues of concern in relation to the HRA. The Collection Fund

position was improving, with a reduced in-year deficit of £12.159m (of which the Councils share was £11.785m) compared to £13.712m at Quarter 2. Government grant compensation of £13.092m would offset this to produce a forecast surplus of £1.307m which would be available to

support the 2022/23 budget. Whilst the DSG continued to be  ...  view the full minutes text for item 7.

Consideration was given to a report of the Director of Finance which provided the Cabinet with the forecast budget reduction requirement and the budget proposals for 2022/23, having regard to the Provisional Local Government Finance Settlement published on 18 December 2021.

This report presented the Council’s Revenue Budget for 2022/23 including the Administration’s revenue budget proposals for 2022/23. The report set out the key policies

and strategies that influenced the budget process, the initial budget reduction requirement for 2022/23, how that had been adjusted to arrive at a revised budget reduction requirement

and then the means by which the budget was balanced.

Section 1 presented an introduction to the report and explained the report format.

Section 2 set out key Council Policies and Strategies including the Oldham Plan, Corporate Plan/COVID-19 Recovery Strategy, Constitution and Rules of Procedure, as the framework

within which the Budget had been prepared.

Section 3 presented Local Government Finance developments which were likely to be taken forward during 2022/23. It also highlighted the Chartered Institute of Public Finance and

Accountancy (CIPFA) Financial Resilience Index, the CIPFA Financial Management Code and a commentary on financial resilience, all of which were of importance when considering

the Council’s financial standing in the context of budget setting for 2022/23.

The starting point for preparing the 2022/23 revenue budget estimates was an underlying base budget of £237.349m and the 2021/22 revenue budget forecast outturn position presented

in the month 8 Financial Monitoring Report. This was summarised in Section 4. It highlighted a current favourable projected variance for 2021/22 of £2.672m. This consisted of net COVID pressures of £3.311m and a favourable business as usual variance of £5.983m.

In considering this position, it was important to note that the Council had received £7.737m of general grant as support for COVID related expenditure from the Government for 2021/22

and an estimated £0.352m of compensation for Sales, Fees and Charges; a total of £8.089m. This was being used to offset an overall pressure of £11.400m caused by the pandemic. As highlighted later, this COVID pressure had to be addressed in 2022/23 as the Government was not providing any additional specific funding to support COVID costs in 2022/23.

Sections 5 to 9 set out how the expenditure pressures that contribute to the budget gap had been determined.

Section 5 summarised the revisions to the estimates since the initial budget gap for 2022/23 was assessed at £31.900m. An updated budget gap was estimated at £24.431m arising from

a range of adjustments to both expenditure pressures/variations and incomeincreases/decreases.

Looking first at expenditure pressures, these were adjustments to the base budget outlined in Section 6, expenditure adjustments (Section 7), use of the Development Fund (Section

8) and the impact of levies (Section 9). In this regard:

• Section 6 presented eight adjustments whichhad to be made to the base budget. These included adjustments to ensure that one off items from 2021/22 (expenditure funded by one-Government grant, the impact of the use of reserves and the flexible

use of  ...  view the full minutes text for item 8.

Consideration was given tot a report of the Director of Finance which provided Cabinet with the forecast budget reduction requirement estimates for the period 2022/23 to 2026/27 having regard to the three-year Indicative Spending Review published on 27 October 2021, key Government Policy Documents (such as the two White Paper on the future of Adult Social Care entitled Building Back Better and People at the Heart of Social Care) and the Provisional Local Government Finance Settlement published on 16 December 2021.

The report set out the Council’s Medium Term Financial Strategy (MTFS) for the period 2022/23 to 2026/27, advised Members of the key financial challenges and issues which would be faced by the Council over the forecast period and set out the estimated budget reduction requirement for this period.

The report presented the purpose and scope of the Medium Term Financial Strategy and how it had a vital role to play in enabling the translation of the Council’s ambition and priorities into action.

It also advised of the national policy landscape and economic context in which the Council was setting both its revenue budget for 2022/23 and Medium Term Financial Strategy to 2026/27.

It was important to note that the Government has only provided certainty in a one-year settlement for the financial year 2022/23 and an indicative settlement as per the Spending

Review for a further two years. The MTFS estimates for 2023/24 to 2026/27 were, therefore, based on a series of assumptions and must be considered indicative at this stage. The notification of detailed allocations of grant funding for one year had caused uncertainty and hindered effective planning by the Council both financially and operationally as futureGovernment funding intentions such as those planned in the Levelling Up Agenda were difficult to assess. This position, together with the transformational and organisational plans for change that the Council would implement to address its best estimate of the present financial challenge were outlined in this report.

The MTFS highlighted the plan to deliver significant savings from the financial year 2023/24 onwards linking into the budget report elsewhere on the Agenda which outlined the proposals for the financial year 2022/23. Whilst it was anticipated that the Council would continue to rely on the use of reserves to support the revenue budget in 2023/24 and 2024/25 at a value of £9.932m, additional budget reductions were expected to be achieved as part of the

Council’s transformation programme. There were budget reductions agreed within the 2021/22 budget that had an impact on 2022/23 and beyond and proposed budget reductions for 2022/23 that had an impact on 2023/24 and beyond.

In total it was anticipated that these budget reductions would impact on 2023/24 at a value of £6.817m, £1.450m in the financial year 2024/25 and further £0.303m in the financial year 2025/26.

The budget reduction requirement for subsequent years after the delivery of approved budget reductions and the use of reserves was forecast to be £16.711m for 2023/24, £8.117m

for 2024/25, £8.384m for 2025/26 and £5.682m for  ...  view the full minutes text for item 9.

Consideration was given to a report of the Director of Finance which set out the proposed Council Tax Reduction Scheme for 2022/23.

Members were informed that there was a requirement to have a Council Tax Reduction (CTR) scheme to support residents who qualified for assistance in paying Council Tax. The Local Government Finance Act 2012 placed a requirement that each year a billing authority must consider whether to revise its Council Tax Reduction scheme or to replace it with another scheme. Any change to the 2022/23 scheme must be agreed by full Council in line with budget setting and no later than 10 March 2022. For Oldham, this required the Council to agree a revised 2020/21 scheme at the 2^nd March 2022 Council meeting. Any proposed change must be subject to prior consultation with the major preceptors and the public.

The Council, in deciding the CTR scheme for 2022/23, needs to consider both the affordability of the scheme for the Council given the financial challenge it currently faced and the impact of retaining the existing scheme (or of revising the scheme) on Oldham’s residents of working age in receipt of low incomes. The scheme for those of pensionable age was set by the Government and cannot be changed.

The furlough scheme (Coronavirus Job Retention Scheme) concluded on 30 September 2021 as did the fifth grant under the Self-Employed Income Support scheme and the Universal Credit £20 uplift. Self-employed recipients of Universal Credit were not subject to the minimum income floor during the pandemic, but this was re-instated (with some exceptions) from 31 July 2021. The effects of the phasing out of these schemes that have provided financial help for residents, along with the on-going impacts of the pandemic in shifting the demand for support under CTR scheme and the ability of residents to pay over the remainder of 2021/22 and into 2022/23 was difficult to estimate, and the full economic impact was uncertain.

Given levels of uncertainty about the impact of the pandemic on the demand for CTR in the coming months, Members were requested to consider the recommendation to maintain the current CTR scheme in 2022/23, being mindful of the aim of ensuring continuity about entitlement to those residents on the lowest incomes.

Options/Alternatives considered:

Option 1: Maintaining the present level of support i.e., limiting the level of support to 85% of Council Tax for a Band A property as the maximum amount available.

Option 2: Limiting the maximum level of support from 2022/23 to 82.5% of Council Tax for a Band A property

Option 3: Limiting the maximum level of support from 2022/23 to 80% of Council Tax for a Band A property

RESOLVED -That Cabinet approves and commends to Council the proposed Council Tax Reduction scheme for 2022/23 which keeps the scheme unchanged from that operating in 2021/22.

Consideration was given to a report of the Director of Finance which set out the Capital Strategy for 2022/23 to 2026/27 and thereby the proposed 2022/23 capital programme, including identified capital investment priorities, together with the indicative capital programme for 2023/24 to 2026/27, having regard to the resources available over the life of the programme.

The Capital Strategy

The Council’s Capital Strategy and capital programme were set over a five year timeframe. The proposed Capital Strategy and programme for 2022/23 to 2026/27 took the essential elements of the 2021/22 to 2025/26 and previous years’ strategies and programmes and moved them forward in the context of the financial and political environment for 2022/23.

The Strategy included a longer-term vision, a forward look at those projects that were likely to run beyond the five year strategy and programme period or be initiated subsequently. This covers a timeframe for the 10 years from 2027/28 to 2036/37.

The format of the Capital Strategy reflected the latest Prudential and Treasury Management Codes issued by the Chartered Institute of Public Finance and Accountancy (CIPFA). The strategy therefore presented

• A high-level long-term overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services.

• An overview of how the associated risk was managed; and

• The implications for future financial sustainability.

The Capital Strategy was presented at Appendix 1. It was prepared in 15 sections to ensure that Members were presented with the overall long-term capital investment policy objectives and resulting Capital Strategy requirements, governance procedures and risk appetite.

The sections were:

1. Aims of the Capital Strategy and its links to the Council’s Corporate Plan / COVID-19 Recovery Strategy, Creating a Better Place programme, Medium Term Property Strategy, Housing Strategy and Budget and Policy Framework

2. The Principles of the Capital Strategy

3. Priority Areas for Investment

4. Supporting Greater Manchester Devolution and Accessing Levelling Up and Shared Prosperity Fund Resources

5. Affordability, Delivery and Risk Associated with the Capital Strategy

6. Knowledge and Skills

7. Treasury Management

8. Long Term Loans

9. Other Non-Treasury Investments

10. Capital Resources to Support Capital Expenditure

11. Capital Investment and Disposal Appraisal

12. The Prioritisation of Capital Requirements

13. The Procurement of Capital Projects

14. The Measurement of the Performance of the Capital Programme

15. The Capital Investment Programme Board

The Strategy was aligned with the Creating a Better Place programme which was focused on building more homes for the borough’s residents, creating new jobs through regeneration and ensuring Oldham was a great place to visit with lots of family friendly and accessible places to go. This also incorporated the Medium-Term Property Strategy and Housing Strategy and aimed to deliver its ambition in ways that contributed to a reduction in carbon emissions in support of the Council’s Green New Deal strategy.

Section 1 of the Capital Strategy highlighted the impact of the COVID-19 pandemic on programme delivery, summarises the recently announced revisions to Prudential and Treasury Management Codes of Practice and describes  ...  view the full minutes text for item 11.

Consideration was given to a report of the Director of Finance which presented to Cabinet, the strategy for 2022/23 Treasury Management activities including the Minimum Revenue Provision Policy Statement, the Annual Investment Strategy and Prudential Indicators together with linkages to the Capital Strategy.

The report outlined the Treasury Management Strategy for 2022/23 including the Minimum Revenue Provision Policy Statement, Annual Investment Strategy and Prudential Indicators together with linkages to the Capital Strategy.

The Council was required through regulations supporting the Local Government Act 2003 to ‘have regard to’ the Prudential Code and to set Prudential Indicators for the next three years to ensure that the Council’s capital investment plans are affordable, prudent and sustainable. It is also required to produce an annual Treasury Strategy for borrowing and to prepare an Annual Investment Strategy setting out the Council’s policies for managing its investments and for giving priority to security and liquidity of those investments.

The Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management 2021 (the Code) also required the receipt by full Council of a Treasury Management Strategy Statement.

The Strategy for 2022/23 covers two main areas.

Capital Issues:

• The Capital expenditure plans and the associated Prudential Indicators

• The Minimum Revenue Provision (MRP) Policy Statement

Treasury Management Issues:

• The Current Treasury Position

• Treasury Indicators which limit the treasury risk and activities of the Council

• Prospects for Interest Rates

• The Borrowing Strategy

• The Policy on Borrowing in Advance of Need

• Debt Rescheduling

• The Investment Strategy

• The Creditworthiness Policy

• The Policy regarding the use of external service providers.

The report therefore outlined the implications and key factors in relation to each of the above Capital and Treasury Management issues and made recommendations with regard to the Treasury Management Strategy for 2022/23.

The report included an economic background commentary which reflected the position at 31 January 2021.

During 2021, there were two consultation exercises on the Prudential Code and Code of Practice on Treasury Management with a range of proposed changes being considered. These mainly related to commercial investments and the requirement for Authorities to adopt a more prudent approach. The second consultation ended on 16 November 2021 and the changes to the Codes were issued on 20 December 2021. The Council’s strategy for 2022/23 had incorporated these recent changes in the Codes where information was readily available.

The Audit Committee, the body charged with the detailed scrutiny of Treasury Management activities considered the proposed 2022/23 Treasury Management Strategy report at its meeting on 17 January 2022. It was also presented to the Policy Overview and Scrutiny Committee on 27 January 2022. Both the Audit Committee and the Policy Overview and Scrutiny Committee were content to commend the report to Cabinet.

Options/alternatives considered

In order to comply with the CIPFA Code of Practice on Treasury Management, Cabinet has no option other than to consider and approve the content of the report. Therefore, no options/alternatives have been presented.  ...  view the full minutes text for item 12.

The Cabinet gave consideration to a report of the Director of Finance which set out for the Housing Revenue Account (HRA), the detailed budget estimates for 2022/23, the strategic estimates for the four years 2023/24 through to 2026/27 and outturn estimate for 2021/22. The report also sets out the recommended dwelling, non-dwelling rents and service and concierge charges to be applied from April 2022.

The report set out the HRA proposed 2022/23 original budget and the forecast outturn for 2021/22. The opportunity was also taken to present the provisional strategic budgets for 2023/24 through to 2026/27.

HRA activities are a key element of the Council’s Housing Strategy (approved by Council on 10 July 2019) which aimed to provide a diverse Oldham housing offer that was attractive and met the needs of different sections of the population at different stages of their lives.

After taking all relevant issues into account, the projected financial position for 2021/22 was estimated to be a £4.828m positive variance when compared to the original budget forecast for 2021/22 approved at the Budget Council meeting, 4 March 2021. Of this variance, £1.756m was attributable to a higher than anticipated brought forward balance from 2020/21 and the remaining £3.072m was as a result of the re-profiling of HRA funded capital schemes into later years due to revisions to planned spending profiles. The estimated balance at the end of 2021/22 was projected to be £22.291m.

The closing financial position for 2022/23 shows an estimated HRA closing balance of £20.483m which was sufficient to meet future operational commitments and the potential financial pressures identified in the risk assessment.

The 2022/23 position has been presented after allowing for an increase in dwelling rents of 2.1%, an increase in non-dwelling rents in line with individual contracts, the freezing of all service charges and the setting of Extra Care Housing concierge charges to fully recover costs.

The current Government policy guidance for the period 2020-2025 was that all rents are calculated based on a maximum of the Consumer Price Index (CPI) rate at September of the preceding year plus 1%.

Oldham’s projections for the 2022/23 budget had been set assuming rental increases of 2.1% which is 2% lower than if it were to follow the maximum uplift (September 2021 CPI rate being 3.1% plus 1%).

The Council has opted to propose this reduced rate given the current healthy levels of HRA balances and the ongoing pressures, including inflation, on household incomes.

The financial projections for the HRA over the period 2021/22 to 2026/27 showed an overall reduction in the level of balances from £22.291m at the end of 2021/22 to £8.123m at the end of 2026/27.

HRA resources were to be used to support several major approved housing capital projects including development within the town centre and on smaller sites around the borough. There was also a commitment to purchase currently empty properties owned by private sector landlords to increase the number of Council owned housing stock.

The HRA detailed budget for 2022/23  ...  view the full minutes text for item 13.

The Cabinet gave consideration to a report of the Director of Finance which recommended that Cabinet agreed the level of balances necessary to support the 2022/23 budget underpinned by the agreed policy on Earmarked Reserves, setting a properly balanced revenue budget which included the financing of capital investments within the present investment proposals.

In order to comply with Section 25 of the Local Government Act 2003; the Authority’s Chief Financial Officer (the Director of Finance) was required to report on the robustness of the estimates made for the purposes of the revenue budget calculations and the adequacy of the proposed reserves.

This information enabled a longer-term view of the overall financial resilience of the Council to be taken. It also reported on the Director of Finance’s consideration of the affordability and prudence of capital investment proposals.

The level of general balances to support the budget and an appropriate level of Earmarked Reserves maintained by the Council in accordance with the agreed Council Policy on Earmarked Reserves, were an integral part of its continued financial resilience supporting the stability of the Council.

Over the last few years there had been a number of Local Authorities which had been subject to the issuing of a Section 114 notice or approaching Government for exceptional financial assistance.

Whilst the Council had prepared a detailed revenue budget within a five-year Medium Term Financial Strategy (MTFS), a five-year Capital Programme and continues the closure of accounts within an appropriate timeframe allowing early focus on the upcoming challenges and a robust financial transformation programme, there continued to be a reliance on the use of reserves to balance the revenue budget.

Since 2016/17, reserves of £74.627m have been used to underpin the Council’s revenue budget alongside other one-off measures. This included £25.182m relating to grant compensation received in 2020/21 and used in 2021/22 to support the Collection Fund deficit arising from the award by Government of Business Rates Relief after the budget for 2020/21 had been set.

For 2022/23, it is proposed to use corporate reserves of £10.101m and specific reserves of £1.805m together with £13.092m to offset the Collection Fund deficit for 2021/22 arising from the awarding of retail, leisure, hospitality and nursery Business Rates Reliefs (£8.888m) and further Business Rates reliefs relating to the COVID-19 Additional Relief Fund (£4.204m) after the budget had been set (this is a technical accounting adjustment), combined with one-off measures totaling £2.500m. The remaining corporate Balancing Budget reserve of £9.932m will be used to support the 2023/24 and 2024/25 budgets.

There was a reliance on the use of reserves to balance the budget over the MTFS period. The continued use of reserves and one-off measures has had the impact of deferring the changes that are required to balance the revenue budget by on-going sustainable means. The implementation of the next phase of the Council’s transformation programme in 2022/23 is expected to address this challenge although this has been impacted by the global pandemic. The expected benefits of the transformation programme will  ...  view the full minutes text for item 14.