The purpose of this report is to inform the Audit and Governance Committee of the improvements that have been made to this year’s budget setting process.
The Committee reviewed a report set out on pages 111-268 of the agenda pack to seek assurance on the improvements made to the 2023/24 budget setting process.
Jane West, Corporate Director of Resources and Section 151 Officer introduced the report for members and highlighted Section 11. of the Cabinet budget report detailing the robustness of budget estimates and the level of reserves held.
The Committee asked how the Cabinet Member for Finance had been assured the key risks were mitigated and had considered the resilience of the estimates. Cllr Cummings noted the previous year’s inaccuracies and the Committee’s need for assurances. They advised the Committee could explore any budget estimate discrepancies through the monitoring reports received throughout the year to seek justification and assurance.
The Committee asked how the 1% decrease in council tax collection rate had been modelled and whether the potential for the proposed 15% rise to be more difficult to collect had been considered. Officers confirmed the 1% decrease to council tax collection rates (now 97.5%) had taken account of the 15% rise impact. The 1% was based on judgment, other local authority collection levels and the hardship fund support available. The 97.5% was the total expected to be collected across the period which could be up to 3 years. Officers explained the collection fund process for council tax accounting, advising that due to this any shortfall would fall on the following year (2024/25).
In response to questions about whether there had been a £43 million covid funding shortfall from central government, officers confirmed this was not the case. This understanding had stemmed from the inaccurate attribution of Council overspend, to covid related overspend in 2021. The figure comprised £22 million of undelivered savings, expenditure overspend and lost income e.g. parking. These would not have met the conditions for central government covid support. Officers advised Croydon would have received standard covid support grants however the receipt of any sales, fees and charges claim/s had not yet been reconciled. The Committee requested this piece of work to be completed to confirm the Council’s position.
The Committee requested an update on the finalisation of the 2019/20 accounts onwards. Officers noted Croydon Affordable Homes (CAH) and the HRA general fund split were the elements delaying the process. Consensus on both issues had now been agreed with the external auditors. It was likely the £70 million CAH loss would be taken and the expectation was to bring the 2019/20 accounts to the June Committee meeting. The 2020/21 accounts had been completed but required adjustment, with auditors working on these where possible. The 2021/22 accounts would also require adjustment and auditing. This work was ongoing and unlikely to be fully completed within the next year.
Officers confirmed the £36 million of savings within the budget would decrease the Council’s expenditure, with a further £38 million in savings still required and being discussed with central government.
The Committee queried which risks that had been considered during the budget setting process. Officers explained some of the key risks considered were adult social care demand, external economic factors and homelessness.
Cllr Cummings advised the overall approach to balancing the budget included contingences and a level of flexibility to mitigate any individual budget variances.
The Committee raised concerns about the process of completing the equality impact assessment and whether sufficient data had been available. Officers advised the process had been completed and an active equality impact assessment (EQIA) was in place. Those in receipt of council tax support (CTS) would be protected from the increase and hardship fund support would be available for low-income households.
It was agreed that the medium-term financial strategy tracker would be brought to the Committee quarterly to monitor budget variances.
The Committee RESOLVED: to note report on the improvements to the budget setting process.