Agenda and draft minutes

There were no apologies for absence received.

Councillor Surjan declared a non-prejudicial pecuniary interest in Item 7, Revenue Budget 2024/25 in relation to the funding of voluntary organisations.

No public questions were submitted.

The Minutes of the Governance, Strategy and Resources Scrutiny Board held on 14^th December 2023 are attached for approval.

In relation to Minute 13 the Assistant Director of Finance (Capital & Transformation) reported that the reason that there had been no Board meetings for Oldham Economic Development Association (OEDA was that OEDA is a dormant Company and has been so for several years.

The OPP shares are nominally owned by Southlink Developments Limited.  However, they are held in trust on behalf of the Council.  Therefore the Council holds all beneficial interest.  Whilst OEDA owns 100% of the shares in Southlink, it does not have any interest in the shares of OPP. This is important in relation to tax liability.  Therefore, it is not proposed that OEDA has any part in the decision to sell the shares and importantly is seen not to have any part in it.

RESOLVED that the information in relation to minute 13 is noted and that the minutes of the meeting held on 14^th December 2023 be approved as a correct record.

Topresent anupdate onthe Council’s 2023/24forecast revenue budgetposition and the financial position of the capital programme as at 30th November 2023 (Month 8), together with the revised capital programme 2023/24 to 2027/28.  This includesthe MinimumRevenue ProvisionPolicy Statement and Prudential Indicators

Introductory Statement

The Cabinet Member for Finance and Corporate Resources made an introductory statement setting out the background and context for pressures faced in the current year and developing the budget for 2024. It had been an extremely challenging year with the Council facing an overspend of £16m. Particular pressures had resulted from Government policies, austerity, cost of living and benefit changes.

2024/25 would be the sixth year that the Government had made a one year final settlement making long term planning challenging. The Government had recently announced that a £500 million fund would be available for children’s’ services and social care but it was unclear what the authorities share would be or when it would be available. The Household Support Grant and Council tax Support Grant would end in March and no announcement had been made as to what funding would then be available.

In order to produce a balanced budget for 2024/2025 it was necessary to achieve savings of £22.8 m.  In putting forward proposals for cuts in services, increases in Council Tax, the uses of Reserves and increases in service charges the Administration was putting forward a balanced and robust budget

Report

Consideration was given to a report of the Director of Finance an update on the Council’s 2023/24 forecast revenue budget position at Annex 1 and the financial position of the capital programme as at 30 November 2023 (Month 8) together with the revised capital programme 2023/24 to 2027/28, as outlined in section two of the report at Annex 2.

The Cabinet Member for Finance and Corporate Resources and the Director of Finance presented the report and addressed enquiries of the Committee.

With regard to the Revenue position, The forecast outturn position for 2023/24 is a projected adverse variance of £16.194m after allowing for approved and pending transfers to and from reserves. There are significant variances contained within the projected net overspend within three areas forecasting pressures: Children’s Services a pressure of £13.386m; Place and Economic Growth a pressure of £5.312m; and Community Health and Adult Social Care a pressure of £0.815m. The report set out action taken to address variances and take mitigating action. Favourable variances across the remaining portfolios totalling £3.318m are offsetting these pressures in these three areas.

The forecast pressure of £16.194m at Month 8 is an increase of £1.605m on the adverse position of £14.589m reported at quarter 2. Management actions that have been approved to review and challenge planned expenditure, control recruitment and to maximise income was hoped to have an impact on the anticipated outturn deficit position.

Information on the Month 8 position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund was also outlined in the report. As previously reported, the position on the DSG continues to improve and as at month 8 it is forecasting an in-year surplus of £2.117m, with an estimate that the year-end position would be a surplus of £3.561m. Action will continue to be taken with the aim of  ...  view the full minutes text for item 6.

To present the Council’s Revenue Budget for 2024/25, the budget reduction requirementand theAdministration’s budgetproposals for 2024/25including Council Tax intentions. The report also provides a forecast of the 2024/25 position and the financial forecasts for the remainder of the MTFS period, 2025/26 through to 2028/29.

Consideration was given to a report of the Director of Finance which provide the Overview and Scrutiny Committee with the budget reduction requirement and the Administration’s budget proposals for 2024/25 and a forecast of the 2025/26 position having regard to the Provisional Local Government Finance Settlement (PLGFS) published on 18 December 2023. The report also presents the financial forecasts for the remainder of the Medium Term Financial Strategy (MTFS) period 2025/26 to 2028/29.

It was reported that the starting point for preparing the 2024/25 revenue budget estimates is the underlying base budget of £275.5m. The 2023/24 revenue budget forecast outturn position highlights a current unfavourable projected variance of £16.2m; which will need to be financed from reserves. This is in addition to the general contribution from reserves of £10.8m towards the 2023/24 budget approved by Council in March 2023, plus contributions from other earmarked reserves for specific projects/initiatives of some £7m. This means the total contribution from reserves in 2023/24 will be some £34m: a situation that is not sustainable and which has significantly reduced the financial resilience of the council.

A range of expenditure pressures had contributed to the budget gap. The main pressures arise from pay, expenditure on Council buildings, increased demand and prices for Children’s Social Care service provision and an increased demand for temporary accommodation.

The report advised that the Council Tax position for 2024/25, was:

-       The Council Tax Base is 59,380, up from 58,500 in 2023/24 and broadly in line with the position assumed in March 2023.

-       A 2.99% increase in general purposes Council Tax increase is proposed together with a 2% increase for the Adult Social Care Precept.

-       An increase of 4.99% would not require a Council Tax referendum as it would be within the referendum criteria issued by the Government in the PLGFS.

-       The Council proposes to continue to provide no Council Tax Empty Property Discount and increase the Empty Property Premium from 1st April 2025.

-       Total Council Tax to be generated for use by the Council based on the Tax Base and the 4.99% increase (including the adult care social precept) is £116.2m in 2024/25.

-       No adjustment has been made to Council Tax levels for precepting Authorities or Parish Councils. Respective Council Tax levels for 2024/25 will be confirmed during January or February 2024.

Having regard to the proposed increase in Council Tax, Section 14 of the report presented the Administration’s approach to balancing the budget for 2024/25 via the budget reduction process. There are a total of 34 proposals presented in accordance with Political Portfolios. These are expected to deliver savings totalling £11.0m and impact approximately 90 FTEs in 2024/25. The proposals would also have an impact on 2025/26 of £4.8m. The proposals were presented in summary at Appendix 4 and in detail at Appendix 5 of the report.

Assuming approval of the 2024/25 budget reduction proposals and taking into account the impact of one-off budget reduction proposals, the budget reduction requirement for 2024/25 reduces  ...  view the full minutes text for item 7.

To set out the Capital Strategy for 2024/25 through to 2028/29 and thereby the proposed 2024/25 capital programme, including identified capital investment priorities, together with the indicative capital programme for 2025/26 through to 2028/29.

Consideration was given to a report of the Director of Finance which sets out the Capital Strategy for 2024/25 to 2028/29 and thereby the proposed 2024/25 capital programme, including identified capital investment priorities, together with the indicative capital programme for 2025/26 to 2028/29, having regard to the resources available over the life of the programme.

The Council’s Capital Strategy and capital programme are set over a five year timeframe. The proposed Capital Strategy and programme for 2024/25 to 2028/29 takes the essential elements of the 2023/24 to 2027/28 and previous years’ strategies and programmes and moves them forward in the context of the financial and political environment for 2024/25. The Strategy look at those projects that are likely to run beyond the five year strategy. This covers a timeframe for the 10 years from 2029/30 to 2038/39.

The Capital Strategy was presented at Appendix 1 of the report. It was noted that The Strategy is aligned with the Creating a Better Place programme. This also incorporates the Medium-Term Property Strategy and Housing Strategy, aiming 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 Council has set out its capital programme for the period 2024/25 to 2028/29 based on the principles of the Capital Strategy. The Capital Programme and Capital Strategy are influenced by the level of resources considered available. As at the month 8 the anticipated capital expenditure over the five year life of the 2023/24 to 2027/28 strategy was £332.173m, taking 2023/24 aside (£78.633m) this leaves £253.540m for the remainder of the approved 2024/25 to 2027/28 capital programme. The capital programme includes proposed expenditure for 2024/25 of £99.683m of which the largest category is £83.226m of expenditure on regeneration, schools, transport and infrastructure projects within Place and Economic Growth Directorate. Total expenditure decreases to £81.076m, £34.838m, £35.640m and £2.000m in 2025/26, 2026/27, 2027/28 and 2028/29 respectively.

The report also set out the main sources of grant funding available to support the Capital Programme. The 2023/24 capital programme relies on £33.506m of ringfenced and £10.145m of un-ringfenced government grants. As in previous years, a major source of financing remains prudential borrowing. The amount required in 2024/25 (£49.638m).

There will be a continued review of capital spending requirements as the Council has further regeneration ambitions, but affordability and deliverability will be a key consideration in this regard. It is, however, possible that the capital position may change prior to the start of 2024/25 and during the year: Therefore, the overall capital programme position will be kept under review and any new information regarding funding allocations will be presented to Members in future reports.

RESOLVED that that the following recommendations be accepted and commended to Cabinet:

1.  The Capital Strategy for 2024/25 to 2028/29 at Appendix 1 of this report and summarised at section 2.1 of the report.

 2. The capital programme for 2024/25 and indicative programmes for 2025/26 to 2028/29 at Annex C of Appendix 1  ...  view the full minutes text for item 8.

To present the Treasury Management Strategy for 2024/25 together with the Annual Investment Strategy and borrowing limits

Consideration was given to a report of the Director of Finance which present to Policy Overview and Scrutiny Committee, the strategy for 2024/25 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 Council was required through regulations supporting the Local Government Act 2003 to ‘have regard to’ the Prudential Code. It is 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 Strategy for 2024/25 covers.

• Economic Update

• Prospects for Interest Rates.

• The Current Balance Sheet and Treasury Position

• Liability Benchmark

• The Borrowing Strategy

• Debt Rescheduling

• The Borrowing Strategy

• The Investment Strategy

• Approved Counterparties, risk management and Investment Limits

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

The report outlined the implications and key factors in relation to each of the above Capital and Treasury Management issues and makes recommendations with regard to the Treasury Management Strategy for 2024/25. The report included the most recently available economic background commentary which reflects the position at December 2023.

RESOLVED that that the following recommendations be accepted and commended to Cabinet:

1. Capital Financing Requirement (CFR) Projections as per paragraph 2.4.1 of the report.

2. Projected Balance Sheet position as at 31 March 2024 and future years as per paragraph 2.4.1 of the report.

3. Liability Benchmark as per section 2.5 of the report.

4. Borrowing Strategy for 2024/25 as per section 2.6 of the report.

5. Annual Investment Strategy as per section 2.7 of the report, including counterparties and treasury limits

6. Treasury Management Prudential Indicators at section 2.8 of the report.

To present the Housing Revenue Account (HRA), the detailed budget estimates for 2023/24, the strategic estimates for the four years 2024/25 through to 2028/29 and outturn estimate for 2023/24.

The Director of Finance submitted a report setting out the HRA 2024/25 proposed original budget and the forecast outturn for 2023/24. The provisional strategic budgets for 2025/26 through to 2028/29 were also presented.

HRA activities are a key element of the Council’s Housing Strategy (approved by Council on 10 July 2019) which aims to provide a diverse Oldham housing offer that is attractive and meets 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 2023/24 is estimated to be a £0.032m favourable variance when compared to the original budget forecast for 2023/24 approved at the Budget Council meeting, 1 March 2023. Of this variance, £0.273m is due to higher utility costs and increased unitary charges. This adverse variance is offset by £0.305m higher than anticipated brought forward balances from 2022/23. The estimated balance at the end of 2023/24 is projected to be £20.884m.

The closing financial position for 2024/25 shows an estimated HRA closing balance of £19.571m which is sufficient to meet future operational commitments and the potential financial pressures identified in the risk assessment.

The 2024/25 position was presented after allowing for a proposed increase in dwelling rents of 7.7%, an increase in non-dwelling rents in line with individual contracts, a nominal increase of 2% on service charges and the setting of Extra Care Housing concierge charges to fully recover costs. The majority of HRA tenants are either the recipient of Housing Benefit or Universal Credit, meaning that part or all of the increase will be covered by tenant’s benefits. Coupled with the recent increase in the Local Housing Allowance, it is assumed that the proposed increase in rents will not represent an unmanageable additional financial burden to tenants. In order for the Council to finance the construction of any new build social housing through the HRA, it is essential that increased costs are covered by rent increases so that the HRA can remain financially sustainable. The financial projections for the HRA over the period 2023/24 to 2028/29 show an overall reduction in the level of balances from £22.584m at the start of 2023/24 to £16.872m at the end of 2028/29.

Resolved:

1. The forecast HRA outturn for 2023/24 (Report Appendix A) be noted

2.  The proposed HRA budget for 2024/25 (Report Appendix B) be recommended to Council.

3. The Strategic estimates for 2024/25 to 2028/29 (Report Appendix D) be noted.

4. The proposed increase to dwelling rents for all properties of 7.7% be recommended to Council.

5. The proposed increase to non-dwelling rents as per individual contracts be recommended to Council.

6. The proposal that service charges are increased by 2% be recommended to Council.

7. The proposal to set Extra Care Housing concierge charges to fully recover actual costs be recommended to Council.