Agenda and draft minutes

Apologies for absence were received from Councillor Curley.

There were no public questions received.

Consideration was given to a report of the Director of Finance which provided 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 2021/22 to 2025/26.

The Cabinet Member for Finance and Low Carbon and the Director of Finance presented the report and addressed the enquiries of the Select Committee.

In relation to the Revenue position, Members were 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 had been identified by the Authority in this financial year as a direct result of the COVID-19 pandemic. The additional pressures included forecasts of both income shortfalls and additional expenditure that had impacted on the Authority’s budgets as a result of the pandemic.

The pandemic had continued to affect 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.

Members were informed that the overall corporate position was partly 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 still insufficient resource to fully offset the adverse COVID related variance. However, the summary report presented the position after applying the Government grant across Portfolio areas.

An update detailing the major issues driving the projections was contained within Annex 1, Section 2.

Section 4 of the report advised the Committee of the grants that the Council had received. There had been a number of developments particularly in relation to support for businesses and to provide additional support for the Council. Further grant funding and external contributions were expected, as a result, both the overall financial position and the application of Government grant would change during the remainder of the financial year.

Information on the latest position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund was also outlined in the report. There were currently no significant issues of concern in relation to the HRA, however the Collection Fund was forecasting an overall deficit of £8.074m with the Council’s allocation being £7.741m. Grants received in lieu of Business Rates relating to the provision of Extended Retail Relief would be carried forward into 2022/23 to offset the Business  ...  view the full minutes text for item 5.

Consideration was given to a report of the Director of Finance which provided the Committee with the forecast budget reduction requirement and the Administration’s budget proposals for 2022/23 having regard to the Provisional Local Government Finance Settlement published on 16 December 2021.

The report presented the Council’s Revenue Budget for 2022/23 including the Administration’s revenue budget proposals for 2022/23. The report advised Members of 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 is balanced.

Members were informed that, based on the latest estimates, the budget reduction requirement for 2022/23 has decreased from the previously reported figure of £31.900m to £24.781m, increasing to £33.826m after the technical adjustment for the Collection Fund deficit of £9.045m.

The report detailed the Administration’s budget reduction proposals. There were a total of 53 proposals expected todeliver savings of £6.268m and had an FTE impact of 22.6. The proposals also had an impact on 2023/24 of £1.895m and 2024/25 of £1.150m. Two of the proposals require investment of £0.405m in 2022/23 to deliver savings in 2023/24, these were:

a) ASC-BR1-548: Smarter Ways of Working £0.095m

b) ASC-BR1-552: Review Care and Support Plans - £0.310m

Assuming approval of the 2022/23 budget reduction proposals, and those from 2021/22 with a revised value, the budget reduction requirement for 2022/23 reduced to £22.091m, which would be addressed by the flexible use of capital receipts and the use of reserves.

The Committee examined the budget reduction proposals.

The Leader of the Council and Cabinet Member for Economic and Social Reform and the Head of Executive Services were in attendance to introduce the following proposals:-

CEX-BR1-513 Review of Executive Support Service

CEX-BR1-514 Chief Executive Management

PPL-BR1-501 Creating a Better Place - Income Generation

Members were informed that although presented as savings the proposals were due to cuts in Government funding.

Members asked for and received clarification on the following:-

·         Would there still be capacity in the teams to deliver services with the adjustment to FTE’s – Members were advised that capacity was always an issue however, using different ways of working can enable service standards to be maintained.

The Deputy Leader and Cabinet Member for Neighbourhoods and the Director of Environmental Services were in attendance to introduce the following proposals:-

REF-BR1-519 Electric Cars

REF-BR1-520 Reduction of FTE in Community Safety Services

PPL-BR1-502 Additional Income Generation from new Flexi Parking Permit

PPL-BR1-506 Cemetery and Cremations

PPL-BR1-507 Highways and Highways Unity

PPL-BR1-508 Increase External Customer Base - Trade Waste

PPL-BR1-509 Increase Trade Fees and Charges - Trade Waste

PPL-BR1-510 Public Protection Restructures-Environmental Health & First Response

Members asked for and received clarification on the following:-

·         Would there be any impact of the budget adjustment on the removal of Ash Dieback - Members were informed that the budget reduction would have no impact on the current service. There was also no proposal to change the  ...  view the full minutes text for item 6.

Consideration was given to a report of the Director of Finance which provided the Committee 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.

This report set out the Council’s Medium Term Financial Strategy (MTFS) for the period 2022/23 to 2026/27. The report 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 the period 2022/23 to 2026/27.

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 its revenue budget for 2022/23 and Medium Term Financial Strategy to 2026/27.

Members noted that, as the Government had 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 based on a series of assumptions and therefore must be considered indicative only. This had generated significant uncertainty and hindered effective planning by the Council both financially and operationally, as future Government 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 the financial challenge, were outlined in Section 11 of the report.

The MTFS highlighted the plan to deliver significant savings from 2023/24 onwards. 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. The 2022/23 budget reductions had implications for future financial years, with savings of £6.817m in 2023/24, £41.450m in 2024/25 and a further £0.303m in the financial year 2025/26.

Having allowed for the use of reserves and already assumed budget reductions, the targets to be addressed were £17.427m for 2023/24, £8.087m

for 2024/25, £8.574m for 2025/26 and £6.142m for 2026/27.

The Council’s approach to balancing its budget was the transformation programme based upon the Delivering a Sustainable Future (DaSF) concept. The themes of the DaSF were as followed:

·         Enablers for Transformation

·         Placed Based Integration/ Communities

·         Children’s Transformation Programme

·         Adult Social Care Transformation Programme including Health and Care Integration

·         Economy and Public Realm (including the Creating a Better Place Strategy)

In addition, there were a range of Cross  ...  view the full minutes text for item 7.

Consideration was given to a report of the Director of Finance which presented 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 2022/23 scheme at the 2 March 2022 Council meeting. Any proposed change must be subject to prior consultation with the major preceptors, such as the Greater Manchester Combined Authority, and the public.

The current scheme limited the maximum CTR award to 85% of Council Tax for a Band A property. The scheme was understood and established in Oldham. This scheme required a minimum payment towards Council Tax for all those of working age. Oldham’s scheme required a minimum payment of 15% of a Band A Council Tax charge.

The number of CTR claimants of working age had increased during the COVID-19 pandemic and this impacted on the level of Council Tax that could be collected by reducing the Council Tax Tax Base. The impact of the increase in claimants, taking the April 2020 working age CTR claimant numbers compared with claimant numbers in December 2021, had reduced the 2021/22 Tax Base by an estimated 307 Band D equivalents which equated to approximately £0.626m in foregone Council Tax Income (of which the Councils share was £0.531m). However, by December 2021, the Tax Base had seen some recovery so the full impact in cash terms over the period from April 2020 was much higher.

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 those schemes that had 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.

Having regard to all relevant information, Members were recommended to maintain the current Council Tax Reduction scheme in 2021/22, being mindful of the aim of ensuring continuity about entitlement to those residents on the lowest incomes.

RESOLVED that the Council Tax reduction Scheme be unchanged in 2022/23 and therefore commended to Cabinet.

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 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 covered 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 is managed

·         The implications for future financial sustainability

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

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

The Capital Strategy section (section 1) highlighted the impact of COVID-19 pandemic on programme delivery, summarised the recently announced revisions to Prudential and Treasury Management Codes of Practice and described how the Capital Strategy was shaped by the ethos of being a Co-operative Council, the Corporate Plan and COVID-19 Recovery Strategy. The section of the report also described more fully the Creating a Better Place programme (encompassing the Medium-Term Property Strategy and Housing Strategy) which accounted for around 2/3rds of planned Capital Expenditure over the five-year period 2022/23 to 2026/27.

The National Infrastructure Strategy (NIS) published alongside the Chancellor’s 2020 Spending Review had, in the last year, overseen the launch of the UK Infrastructure Bank. It had confirmed a further 15 Towns Deals worth £335 million (including Oldham’s worth £24.4m) to revitalise towns across England; and provided £1.2 billion up to 2024/25 for gigabit broadband rollout across the UK.

The Council would aim to access the maximum level of NIS resources to support projects in Oldham and the  ...  view the full minutes text for item 9.

Consideration was given to a report of the Director of Finance which presented 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.

Members were informed that 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 were affordable, prudent and sustainable. It was 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) required the receipt by full Council of a Treasury Management Strategy Statement.

The Strategy for 2022/23 covered 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 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 December 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 considered.

The changes 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 the recent changes in the Codes where information was readily available.

The proposed Treasury Management Strategy was presented to the Policy Overview and Scrutiny Committee to enable scrutiny of the report so that any comments could be incorporated into the report before it was considered by Cabinet on 14 February 2022 and Council on 2 March 2022.

RESOLVED that the following be accepted and recommended to Cabinet:

1.    Capital Expenditure Estimates as per paragraph 2.1.2;

2.    MRP policy and method of calculation as per Appendix 1;

3.    Capital Financing Requirement (CFR) Projections as per paragraph 2.2.4;

4.    Projected treasury position as at 31 March 2022 as per paragraph 2.3.3;

5.    Treasury Limit’s as per section 2.4;

6.    Borrowing Strategy for 2022/23 as per section 2.6;

7.    Annual Investment Strategy as per section 2.10 including risk management and the creditworthiness policy at section 2.11; and

8.    Level of investment  ...  view the full minutes text for item 10.

Consideration was given to a report of the Finance Manager which set out the latest 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 set out the recommended

dwelling, non-dwelling rents and service and concierge charges to be applied from April 2022.

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

HRA activities were 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 financial position for 2022/23 showed 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 had 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 policy guidance for the period 2020-2025 was that all rents were calculated based on a maximum of the Consumer Price Index (CPI) rate in 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 was 2% lower than if it were to follow the maximum uplift (September 2021 CPI rate being 3.1% plus 1%). The Council had opted to propose the 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 and strategic estimates for the four  ...  view the full minutes text for item 11.

Consideration was given to a report of the Director of Finance which recommended that the Committee considered 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.

Members were informed that, 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 have been a number of Local Authorities which had been subject to the issuing of a Section 114 notice or approached Government for exceptional financial assistance. During 2021/22, both Slough Borough Council and Wirral Council had been subject to such measures and / or requirements. Those issues were highlighted in Section 5 of the report.

Whilst the Council had prepared a detailed revenue budget within a five-year Medium Term Financial Strategy (MTFS), a five-year Capital Programme and continued 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 had been used to underpin the Council’s revenue budget alongside a number of 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 was proposed to use corporate reserves of £10.101m and specific reserves of £1.805m together with £9.045m to offset the Collection Fund deficit for 2021/22 which arose from the awarding of Business Rates Reliefs in 2021/22 after the budget had been set (this was a technical accounting adjustment) combined with one-off measures totalling £2.500m. The remaining corporate Balancing Budget reserve of £9.932m would be used to support 2023/24 and 2024/25. There was, therefore, a considerable reliance on the use of reserves to balance the budget over the MTFS period. The continued use of reserves and one-off measures had the impact of deferring the changes that were required to balance the revenue budget by on-going sustainable means. The implementation of the next phase of the transformation programme in 2022/23 was expected to begin  ...  view the full minutes text for item 12.