Agenda item

Consideration was given to a report of the Director of Finance which provided the Select Committee with the forecast budget reduction requirement and the Administration’s budget proposals for 2020/21 together with forecast budget reduction requirement estimates for the period 2021/22 to 2024/25, having regard to the Provisional Local Government Finance Settlement published on 20 December 2019.

 

The Cabinet Member for Finance and Corporate Resources, the Director of Finance, the Director of Economy and the Managing Director Community Health and Adults Social Care (DASS) presented the report and addressed the enquiries of the Select Committee.

 

This report set out proposals for the Council’s Revenue Budget for 2020/21 and Medium Term Financial Strategy for 2020/21 to 2024/25. It advised Members of the key financial challenges and issues which would be faced by the Council over the forecast period and set out the Administration’s revenue budget proposals for 2020/21 together with updated budget reduction requirement estimates for the period 2021/22 to 2024/25.

 

Members noted 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. They were advised of the national policy landscape and economic context in which the Council was setting its revenue budget for 2020/21 and Medium Term Financial Strategy to 2024/25.

 

The report highlighted policy announcements and implications which arose from the Government’s 2019 Spending Round presented on 4 September 2019, the Local Government Finance Settlement 2020/21 Technical Consultation and the Provisional Local Government Finance Settlement (LGFS) published on 20 December 2019.The report also detailed key budget adjustments and expenditure pressures which underpinned the forecasts that provided the backdrop for the Council’s Medium-Term Financial Strategy.

 

The Select Committee was informed that, based on the latest estimates, the budget reduction requirement for 2020/21 had decreased from the previously reported figure of £22.871m to £19.740m. Section 10 of the report detailed the Administration’s budget reduction proposals. There were a total of seven proposals expected to deliver savings of £3.011m in 2020/21. If approved in full, these proposals further reduced the budget reduction requirement to £16.729m for 2020/21.

 

Sections 11 and 12 explained the approach to balancing the 2020/21 budget. In order to remove the requirement for further spending reductions, it was proposed to part-finance the 2020/21 budget by using the opportunities provided by the ability to use Capital Receipts to support spending on transformational projects up to a value of £3.750m and from an available Collection Fund Surplus of £1.400m. The following specific and corporate reserves would be used to address the balance:

·       £1.413m from gains anticipated in 2019/20 from the Greater Manchester 100% Business Rates Retention Pilot Scheme;

·         £1.300m of further benefit made available by the GMCA from the Greater Manchester 100% Business Rates Retention Pilot Scheme in 2019/20;

·       £3.113m from reserves relating to a refund of the 2019/20 Waste Levy; and

·       £5.753m from Corporate Reserves.

 

Approval of the proposals set out in this report in full by Budget Council would deliver a balanced revenue budget for 2020/21. The budget reduction requirement for subsequent years was forecast to be £23.366m for 2021/22, £13.103m for 2022/23, £13.656m for 2023/24 and £13.011m for 2024/25.

 

Members sought and received clarification on the following:

·       How much would the proposed savings bring in - £927,000

·       By how much would Council Tax need to be raised to fill the deficit – it would need to be raised by 7% which could not be done without a referendum. The issue was caused by lack of government funding and 42% of the revenue budget was sent on adult social care and children. The Council would seek to reduce Council Tax if possible.

·       GM Mayor’s precept – the mayor’s timeline was different from that of the councils. He had still not received the settlement information in relation to the police grant and was unable to set a budget without this. The precept would be known by the Budget Cabinet meeting on 10^th February.

·       Savings from the biggest-spending departments – the Managing Director Community Health and Adults Social Care (DASS) explained austerity had increased demand and the services were looking to find ways to be more effective and efficient. Demand had increased in both numbers and complexity. The cost of car packages had increased, along with the amount of time needed to assess a person. The approach would now be to focus care intensively when the person first presented and work on a therapeutic approach to improve the situation. Loneliness was a big issue and the starting point now would be connecting people to local social resources rather than sending them to a day centre.

·       Resources for those whose conditions deteriorate eg dementia – demand profiling showed a different approach was needed and this approach would need to be flexible to meet changing needs as the condition progressed. The key was working to support the person and their family from the outset and to establish their wishes and choices while they could still make decisions. It was also essential to support Oldham’s 25,000 carers. Advances in technology meant people could now safely stay in their own homes and residential care would be a last option.    

 

The Select Committee examined each of the budget reduction proposals as follows:

 

CSA-BR1-307 Direct Payment Review

A proposal to review the approach to the administration, management and audit of Direct Payments (DP's) for those people who had eligible adult social care needs.

 

The Cabinet Member for Finance and Corporate Resources and the Managing Director, Community Health and Social Care Services (DASS) were in attendance to address the enquiries of the Select Committee.

 

Members asked for and received further information in relation to whether the system for funding care needs was broken. They were informed that current charging formulas were unfair and discriminatory and the Council could only make the best of what was there. Over 1000 people had direct payments and there was a cost to providing these. This proposal would reduce that cost by £150,000.

 

PPL-BR1-306 Property Savings and Accommodation Review

A proposed fundamental review of the Council's approach to both its property assets and the management of those assets.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Economy were in attendance to address the enquiries of the Select Committee.

 

Members asked for and received further information in relation to:

·       The likelihood of the savings being achieved – this was short-term work to achieve greater savings in 3-5 years. The Council was looking at very different ways of using its assets as part of the Creating Better Place project.

·       Capacity – staff capacity would be used in a different way and the ideas for this were coming from the staff themselves.

 

COM-BR1-301 Financial Services Redesign

A proposal to realign the structure (of the Accountancy Function) to reflect the revised directorate structure and operational management arrangements of the Council. This realignment would reflect efficiencies in operational practice and deliver continuous improvement.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance were in attendance to address the enquiries of the Select Committee.

 

Members asked for and received further information in relation to whether this was the right time to reduce capacity and were informed that the posts had been vacant for some time and were not needed. The team may need to work differently and the saving was achievable.

 

COM-BR1-302 Insurance Review

A proposal to reduce the insurance budget by an additional !0.300m from 2020/21. This could be achieved through a reduction in claims paid using embedded and robust fraud / defence strategies, alongside the benefits from reduced external premia.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance were in attendance to address the enquiries of the Select Committee.

 

COM-BR1-303 Treasury Management

Following a full review of Treasury Management income and expenditure budgets, it was anticipated that previously unbudgeted income of at least £1.000m could be generated in 2020/21.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance were in attendance to address the enquiries of the Select Committee.

 

COM-BR1-304 Housing Benefit - Reduction in provision for loss of subsidy

A proposal to amend the budgetary provision for the loss of Housing Benefit subsidy associated with the occurrence of overpayments, as the roll out of Universal Credit led to fewer claimants receiving Housing Benefit and fewer incidents and lower value of Housing Benefit overpayments.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance were in attendance to address the enquiries of the Select Committee.

 

COM-BR1-305 Pension Prepayment

A proposal to take advantage of potential arrangements to make lump sum payments into the Greater Manchester Pension Fund (GMPF) which should enable the Pension Authority to offer a discount against Employer Superannuation rates.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance were in attendance to address the enquiries of the Select Committee.

 

Fees and Charges

The Select Committee gave consideration to the proposed fees and charges set out in the report.

 

The Cabinet Member for Finance and Corporate Resources, the Deputy Chief Executive, Director of Finance, the Head of Strategic Assets & Facilities Management, the Head of Heritage, Libraries & Arts and the Senior Finance Manager were in attendance to address the enquiries of the Select Committee.

 

Members asked for and received further information in relation to:

·       School meals price increase – the service was currently running at a loss and the proposed increase would being Oldham’s charges broadly in line with other GM councils.

·       Would the increase in price reduce take-up – this was acknowledged as a risk, however take-up had been very constant for the last few years. The charge had to be increased as the Council could not keep absorbing the cost of running at a loss.

·       Dovestones car park – charges had been increased as the previous charge was very low and the Council was responsible for maintaining the car park and toilets. 

·       Removal of library fines – membership had increased though it was too early to fully asses the impact. The services would be undertaking a full review and report back in to a future meeting.

·       Comparison of cemetery charges with the rest of GM – Oldham’s fees were approximately mid-way.

 

The Director of Finance confirmed that these proposals constituted a valid budget that could be delivered.

 

RESOLVED that the Select Committee accepted and commended to Cabinet:

1.     The policy landscape and economic context in which the Council was setting its revenue budget for 2020/21 and Medium Term Financial Strategy to 2024/25;

2.     The impact of Oldham Council Policies and Strategies on the Council’s budget setting process and the development of its Medium Term Financial Strategy;

3.     The financial forecasts for 2020/21 to 2024/25 having regard to the Provisional Local Government Finance Settlement and associated funding announcements;

4.     The key issues to be addressed in continuing to respond to the financial challenges facing the Council;

5.     The 2020/21 Budget Reduction Proposals at a value of £3.011m;

6.     The proposed use of £5.826m of reserves for specific purposes and £5.753m of corporate reserves to balance the 2020/21 budget;

7.     The fees and charges schedule included at Appendix 7;

8.     The pay policy statement included at Appendix 10;

9.     A proposed Council Tax increase of 2.99% for Oldham Council services resulting in the charges set out at paragraph 15.3 and Table 29 of the report;

10. The proposal to draw on the Collection Fund for major preceptors of £112.338m for Borough Wide services and £96.466m for Council services;

11. The proposed budget for 2020/21 for the Council set at £234.907m; and

12.  Revised estimated budget reduction targets of £23.366m for 2021/22, £13.103m for 2022/23, £13.656m for 2023/24 and £13.011m for 2024/25.