Agenda item - Croydon's General Fund Medium Term Financial Strategy (MTFS) Update

Cabinet Member: Leader of the Council, Councillor Hamida Ali, Cabinet Member for Croydon Renewal, Councillor Stuart King and Cabinet Member for Resources & Financial Governance, Councillor Callton Young

Officer: Interim Director of Finance, Investment & Risk and Section 151 Officer, Chris Buss

Key decision: no

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1. Note the unaudited closing reserve balance for 2020/21 being brought forward to 2021/22.

2. Notes that this report now includes a projection for Budget Position in 2024/25 and also notes Budget Gap for Financial Years 2022/23 to 2024/25.

3. Notes that the Council will not receive any confirmation from MHCLG on its £25m request for Capitalisation Direction for 2022/23 until later in this financial year. The budget gap without any capitalisation direction stands at £63.27m for 2022/23 assuming that proposed savings agreed in March 2021 are agreed of £24million

4. Note that the Budget for 2022/23 to 2024/25 is projected based on Council Tax growth being 1.99% for general increase and 2% growth in the Council Tax Base. No increases in Business Rate growth assumed.

5. Note that a further Budget Update report will be brought to Cabinet in November 2021.

The Cabinet Member for Croydon Renewal (Councillor Stuart King) stated the report added 2024/25 to the MTFS which would ensure the council had a three year rolling MTFS. It was highlighted that uncertainty was central as the government only issued government settlements on an annual basis, furthermore the second part of the council’s request for a capitalisation direction had not yet been confirmed.

The Cabinet Member further highlighted the uncertainty in terms of the Adult Social Care levy and the long term impact of covid-19 on the Croydon economy and service demand. In light, of those uncertainties the Cabinet Member stated the council could only make prudent assumptions which were contained in the report. Additionally, it was highlighted that it remained important that the council continued to build its reserves to ensure it was able to face future challenges.

The Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) shared his frustration that the government did not provide details of the settlement in advance which made it challenging to produce an MTFS. It was noted, however, that references had been made during the meeting to increases in the reserves however the Shadow Cabinet Member stated that the money in reserves had been effectively borrowed.

Questions were asked in terms of how planning and identifications of future savings and whether there were any early indications of where those savings would be found. In response, the Cabinet Member confirmed that he, the Cabinet Member for Resources & Financial Governance (Councillor Callton Young) and officers were working on identifying savings at a departmental level. Additionally, activity was ongoing within departments and a root and branch review of corporate savings was ongoing. It was suggested that a report would be taken to Cabinet at the mid-year point which would provide some detail.

Concerns were raised by the Shadow Cabinet Member for Resources & Financial Governance (Councillor Simon Hoar) that more staff would be made redundant as part of the £38.2 million savings in 2022/23. He queried whether any analysis had been undertaken to identify the base minimum number of officers required to ensure the council continued to function.

The Cabinet Member for Resources & Financial Governance informed Members that as well as a top down approach, there had been a horizontal approach to identifying savings. The Cabinet Member highlighted that the council’s contracts had a total value of £375 million and all contracts were being reviewed to identify savings. Furthermore, expert advice was being sought, both externally and from the Assurance and Improvement Panel.

It was noted that at paragraph 5.5 of the report there were references to inflationary increases and the Cabinet Member for Homes (Councillor Patricia Hay-Justice) queried what guidance was being used to identify the figures. In response, the Interim Director of Finance, Investment & Risk (Chris Buss) advices that the Consumer Price Index was used and it was felt that there would be 2% increase over the year. In terms of wage increases, Members were advised that the offer that employers had made to employees was below the figure in the report but it was not known what the final figure would be.