Agenda item - General Fund and HRA Budget 2020/21

Officer: Lisa Taylor

Key decision: Council Tax recommendations are reserved to Council. Housing rents and charges are Key Executive Decisions

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

RESOLVED: To recommend to full Council

1. A 1.99% increase in the Council Tax for Croydon Services (a level of increase Central Government has assumed in all Councils’ spending power calculation).

2. A 2.00% increase in the Adult Social Care precept (a charge Central Government has assumed all councils’ will levy in its spending power calculations).

3. The GLA increase of 3.6%.

With reference to the principles for 2020/21 determined by the Secretary of State under Section52ZC (1) of the Local Government Finance Act 1992 (as amended) confirm that in accordance with s.52ZB (1) the Council Tax and GLA precept referred to above are not excessive in terms of the most recently issued principles and as such to note that no referendum is required. This is detailed further in section 3.8 of the report.

4. The calculation of budget requirement and council tax as set out in Appendix D and E. Including the GLA increase this will result in a total increase of 3.92% in the overall council tax bill for Croydon.

5. The revenue budget assumptions as detailed in the report and the associated appendices.

6. The programme of revenue savings, income and growth by department for 2020/21 (Appendix A).

7. The Council’s detailed budget book for 2020/21 (Appendix B).

8. The draft Capital Programme as set out in section 11, table 18 and 19 of the report, except where noted for specific programmes are subject to separate Cabinet reports.

9. To increase the Asset Investment Fund by £100 million to £300 million.

10.To note there are no proposed amendments to the Council’s existing Council Tax Support Scheme for the financial year 2020/21.

11.The adoption of the Pay Policy statement at Appendix H.

RESOLVED: To agree

1. A rent increase for all Council tenants for 2020/21, in line with the Government’s social rent policy which has legislated to increase social rents by CPI + 1%, which is equal to 2.7%

2. No increase to Garage and Parking space rents.

3. 2% increase to the service charges for caretaking, grounds maintenance and bulk refuse collection as detailed in section 12 of the report.

RESOLVED: To note

1. That in respect of the Council’s public sector equalities duties where the setting of the capital, revenue and HRA budget result in new policies or policy change the relevant service department will carry out an equality impact assessment to secure delivery of that duty including such consultation as may be required.

2. The progress being made towards balancing the Council’s financial position for 2019/20 as at Quarter 3 and the current projected outturn forecast of £2.371m as set out in the report at item 5b on the agenda.

3. The response to the provisional local government settlement which is attached at Appendix F of the report.

4. That pre-decision scrutiny of the proposed budget 2020/21 took place at the Scrutiny and Overview Committee on the 10^th February 2020. The Scrutiny and Overview Committee agreed to recommend that the Cabinet Member for Finance and Resources be invited to attend a meeting of the Committee and provide an update on the bedding in of the Council’s new financial monitoring systems in September 2020.

5. The statement on reserves and balances and robustness of estimates from the statutory Section 151 Officer.

The Leader thanked the Cabinet Member for Finance & Resources, the Section 151 Officer and her team for their work in producing the budget. It was stated that while increases in council tax were not desired it was prudent to ensure the council had a balanced budget. Ongoing budget pressures continued, however the Leader stated he hoped that the Government budget, which was to be announced on 11 March 2020, would reflect the pressures local government were under.

The Leader commended the budget to Cabinet.

Cabinet was provided with a presentation from the Cabinet Member for Finance & Resources which gave an overview of the financial pressures the council continued to face and the proposed budget. It was recognised that the scale of cuts facing local government were not to the same level as previous years but that there had not been a rebalancing of the central government grant which would address the high levels of demand for adult social care which were being experienced nationally.

The Croydon specific challenges of being historically underfunded were raised by the Cabinet Member, including the borough having the same level of challenges as an inner London borough but being funded as an outer London borough and the continued underfunding of Unaccompanied Asylum Seeker Children (UASC) by the Home Office. Despite these challenges, the Cabinet Member stated the council continued to manage its budget.

The Cabinet Member welcomed the small increase in grant the council would receive in 2020/21; however it was stated that this was against the backdrop of a ¾ decrease in grant in recent years which had placed a huge amount of stress on council resources.

In terms of the 2020/21 budget, the Cabinet Member informed Members that there was a planned contribution of £5m to the reserves as it was recognised that significant risks remained. It was proposed to increase council tax by 1.99%, which was the level that Government assumed council tax would be raised, and which 93% of councils were doing nationally.

Prudent financial management was at the heart of the budget with money being placed in reserves, contingency budgets and detailed plans for proposed savings.

Despite the challenges faced by the council it had continued to deliver manifesto commitments and had protected and invested in frontline services. The Cabinet Member noted that over the six years of the Labour Administration there had been a net growth of £42m in people services, which it was stated was in direct contrast to the previous administration which had cut those services.

The council would continue to be innovative, it was stated, which would enable frontline services to be protected. Additionally, with the council focussing on prevention, there were benefits which could be realised not only for residents but also for the council’s budget. Innovative measures included looking at sustainable solutions to combat the climate emergency and it was noted that there was a specific budget to tackle this.

Three quarters of the budget, the Cabinet Member noted, was allocated to people based services and this was an area of council services which had been growing year on year due to increasing demand. Prevention was key to managing the budget whilst demand continued to grow.

Members noted that the council had received increased income from council tax and this was attributed to improvements in collections. Furthermore, the Cabinet Member informed Members that the dividends from Brick by Brick were due to increase which would further support the budget going forward. The asset investment programme would also be accelerated, Members were informed, which would further support frontline services, and the Growth Zone programme would support further investment in the borough and increased business rates.

The Cabinet Member for Finance & Resources concluded that the recommendation to increase council tax by £1.29 per week was to support the delivery of services and reiterated that the budget had been carefully planned.

The Section 151 Officer presented her comments to Cabinet, which were detailed in the report. Members were informed that the council’s reserves were expected to remain at £10m and that the council, unlike others in the country, had not used reserves to plug holes in the budget.

There had been a reduction in earmarked reserves over the previous three years to be around £12m at the end of 2019/20, however the Section 151 Officer stated that earmarked reserves were due to be replenished in 2021.

Members were informed that £9m had been allocated to fund UASC services and that this had been put in place due to insufficient government funding. The council would continue to lobby the Home Office for appropriate funding however it had been prudent to budget for this expenditure.

The Section 151 Officer informed Members that the savings which were outlined in the report had an associated delivery plan which was understood by each Cabinet Member and Executive Director.

Cabinet was informed that the setting of council tax levels was a political choice, however the proposed increase would lead to an additional £12m being raised which would support the balancing of the budget.

In terms of risk, the Section 151 identified that there were risks in terms of budget delivery and as such a forensic approach would be taken to ensure savings were delivered. Additionally, the increasing demand in adult social care remained a key risk. To mitigate these risks contingency had been included in the budget.

The Section 151 Officer recognised that the general fund reserves were low in terms of the size of the council, however stated that a substantial increase would take place during 2020/21.

Members were informed that the government’s budgeting on a one year basis was a challenge for long-term financing of the council although, despite this challenge, a new Medium Term Financial Plan would be published.

The Section 151 Officer concluded that robust budget management was integral to ensure the long term stability of budgets.

The Cabinet Member for Homes & Gateway Services introduced the Housing Revenue Account budget recommendations. It was noted that over the previous four years there had been an annual decrease in rents of 1%, however, for 2020/21 it was proposed that there was an increase which was in line with government policy.

Members noted that there was no proposed increase in garage or parking space rents within the 2020/21 budget, although there was a proposed increase of 2% in service charges.

The Cabinet Member for Homes & Gateway Services informed Members that the budget included an investment of £27m in improvements to the council stock, ensuring residents had good quality homes.

Members thanked officers for the work which had gone into the formation of the proposed 2020/21 council budget.

In response to Member questions, the Cabinet Member for Finance & Resources stated that conversations had started with the NHS in relation to the funding gap in the One Croydon Alliance and ensuring the council was properly recompensed. The principle of fair funding of the Alliance had been agreed and discussions would continue to ensure appropriate contributions for the current and future financial years.

The Cabinet Member for Finance & Resources stated, in response to questions, that it was too early to definitively say what the impact of £1.6m savings in staff layers would be. The council was looking at staff structures and identifying where it could be more efficient, however any changes in staff would undergo the formal process with trade unions and consultation.

Members welcomed the planned increase in reserves and expressed a desire that this continued in future years. In response, the Cabinet Member for Finance & Resources noted that this would be possible if there was a commitment from government to fund local government properly in future years.

In response to concerns in terms of the deliverability of the budget, the Cabinet Member for Finance & Resources stated that the key areas of the budget would be carefully monitored and actions would be taken where necessary. Additionally, all savings had plans associated with them which would be monitored also. It was felt that a more prudent estimate had been taken.

The Cabinet Member for Finance & Resources noted that earmarked reserves were created for specific purposes and had been used for those purposes. The intention of the council was to replenish those reserves through the council tax collection surplus.

In terms of Q1 monitoring, the Cabinet Member for Finance & Resources clarified that if all the actions towards a saving had not been completed then the saving would not be reported. The Section 151 Officer informed Members that more stringent controls would be put in place, with high risk areas being reviewed on a monthly basis.

Members welcomed the increase in funding in adult social care, however it was noted by the Cabinet Member for Finance & Resources that nationally there continued to be a lack of funding which needed to be addressed as demand continued to outstrip funding. In terms of the Public Health grant, Members noted that there had been no indication of when the details would be published.

In response to Member questions, the Cabinet Member welcomed the New Addington Health & Wellbeing Centre and noted that life expectancy was significantly lower in New Addington than in the neighbouring ward of Sanderstead and as such it was prudent to open the first centre in this location. It was a facility which Members would welcome across the borough however it was not possible with current funding constraints.

The funding for the homelessness hub was welcomed by Members although the Cabinet Member for Finance & Resources noted that the requirement to bid against other boroughs was not ideal and that the grant did not cover all of the costs for this hub.

Cabinet was informed by the Cabinet Member for Finance & Resources that contrary to reports, the New Addington Boxing Club would receive support from the council to ensure the important resource was maintained.

In response to questions, the Cabinet Member for Finance & Resources confirmed that the figures on void properties and the budget implications of the voids would be provided to the Shadow Cabinet Member for Housing & Gateway Services following the meeting.

Officers and Cabinet Members were thanked for their work to ensure that the council’s budget remained balanced whilst enabling significant investment in children’s services. That investment had been integral to the children’s service improvement plans.

Members of the Opposition confirmed their support for fairer funding in terms of UASC and would continue to support the council’s lobbying. The Leader thanked Members for their support and expressed hope that the new Home Officer Minister was open to discussions on UASC funding.

The increase to the dedicated schools grant was welcomed by Members, however it was noted by the Cabinet Member for Finance & Resources that whilst there had been an increase of £20m, the bulk of this money had not been received by councils like Croydon. Additionally, huge pressures continued to be experienced in relation to high needs support and that while there had been an increase in funding this did not match the increased scale of support required.

In response to Member questions, the Cabinet Member for Finance & Resources informed Members that the Parklife project was being reviewed which was why there had not been any expenditure on this project during Q3 of 2019/20. In relation to the number of staff within the parks service, officers committed to provide this detail to the Shadow Cabinet Member for Culture, Leisure & Sport and detail on the variance on Fairfield Halls which was included in the Q3 report.

The Cabinet Member for Finance & Resources, in response to questions, noted that parking and driving fines were only issued when the driver had not driven or parked appropriately. Furthermore, Members were informed that 60% of issued fines were to vehicles coming into Croydon from out of the Borough.

Members noted that tackling climate change was vital and in response the council had committed £0.25m of revenue budget to have a dedicated team to look at this. Additionally, £7.5m was allocated within the capital budget on top of what the council was already doing to combat climate change. The climate emergency was an important area of focus for the council and this strand, it was stated, now ran throughout the budget.

Furthermore, the Cabinet Member for Finance & Resources informed Members that discussions had started to move pension fund investments away from fossil fuel investments as a further commitment to tackling climate change.

Members noted that the proposed increase in council tax was lower than the increase the previous year. Whilst it was recognised that the council tax bill was a significant bill for many households, it was stated that it represented good value for money given the services provided by the council. It was further stated that if the council had not experienced a reduction in government funding then it would not be necessary to have discussions on increasing council tax.