Agenda item

The Director of Corporate Services / Treasurer presented the report which set out the draft revenue budget for 2022/23-2026/27 and the resultant council tax implications.

The budget requirement had been re-assessed taking account of known / anticipated changes, incorporating current year-end forecast projections, and forecast vacancy factors based on anticipated recruitment resulting in a total requirement of £63.0m.  The main points to note in terms of budget requirement were:-

·      the uncertainty surrounding future inflation rates, in terms of the outstanding pay award for green book personnel in 2021/22, uncertainty surrounding next years pay awards for all staff, with a 2% allowance built into the budget, and uncertainty surrounding other inflation, particularly around energy and fuel costs;

·      the increase in national insurance contribution rates;

·      the number of wholetime recruits required next year, and the impact of this on vacancy levels;

·      the investment required in support functions in order to improve capacity and resilience and review existing pay structures;

·      the increase in our contribution to support the capital programme, therefore reducing future borrowing requirements;

·      the increase in vacancy factor for green book posts, reflecting the current challenges in recruitment.

It was noted that the Local Government Settlement was not the anticipated multi-year settlement, as it only covered next year. It did however allow for:-

·         a 1.1% increase in funding, and it had been assumed that this increased by a further 1.0% in subsequent years;

·         established a new ‘Service Grant’ the Authority’s share of which was £1.1m. Whilst this was a one-off grant, it had been assumed the element of this which offset national insurance increases (£0.3m) was provided in some form in future years;

·         a change to the council tax referendum principles for FRAs for 2022/23, allowing those in the bottom quartile to increase council tax by up to £5, whilst all others had a 2% referendum limit set. Lancashire was in the bottom quartile hence able to take advantage of this flexibility. This increase would generate an additional £1.6m of council tax, over and above a 2% increase, for the Authority (£2.2m as opposed to £0.6m). This was a one-off change and only applied to 2022/23 council tax increases.

This potential increase was a one-off opportunity to address some of the longer-term challenges within the Service, such as:

·         Invest in improvements to support our ‘road to outstanding’ ambition;

·         Review capacity/resilience and pay structures within support functions;

·         Outcome of Emergency Cover Review (ECR) mitigating the impact of removing the Day Crewing Plus duty system;

·         Invest in our asset base/reduce future borrowing;

·         Provide re-assurance that we are able to meet some of the uncertainties surrounding the current pension situation, in terms of both pensionability of allowances and Immediate Detriment.

It was therefore propose utilising the flexibility to increase council tax by £5 (10p per week), to £77.27. That level would still be below the anticipated sector average and the Authority would still have the 9^th lowest cumulative increase over the last 10 years.

Looking longer term the key variables remained future funding levels, pay awards, pension costs and the outcome of the Emergency Cover Review.

Members considered the report in detail.

The Treasurer confirmed that one consultation response had been received from the Fire Brigades Union (appendix 5 of the report) which concluded: “…The FBU would support an increase in Council Tax as a way of offsetting and lessening the impact of Central government cuts or drastic changes in the Emergency Cover Review…”. 

In summary, the lack of a multi-year settlement made longer term planning more difficult as there could be no certainty around future funding forecasts. Offsetting this was the opportunity provided by the £5 council tax flexibility allowed this year. The Home Office had clearly stated that this flexibility was only for this year, and it was hard to see a situation where that did not prove to be the case in the medium term. 

Raising council tax by the maximum permissible still only increased the overall council tax bill by £5 but would generate £2.25m of funding for the Authority. This increase provided an opportunity to address some of the capacity and pay issues within support functions, supporting the delivery of further efficiencies, as well as reduce the pressure on the Emergency Cover Review delivering sufficient change to offset the cessation of Day Crewing Plus system and meet future budget pressures. It gave greater long term funding certainty which would form the basis of future investment requirements, which were essential if we were to hit our ‘road to outstanding’ ambition and be the best equipped, best trained and best accommodated Service. 

The proposal based on a council tax band D equivalent of £77.27, an increase of £5.00 (6.9%) was MOVED by County Councillor D O’Toole and SECONDED by County Councillor J Shedwick. 

The Director of People and Development held a recorded vote and Members unanimously voted for the proposal.

The motion was therefore CARRIED and it was:

RESOLVED: - That the Authority: -

1.    noted the Treasurer’s advice on the robustness of the budget;

2.    noted the Treasurer’s advice on the appropriate level of reserves/balances;

3.    agreed the revised budget requirement of £63.017m for 2022/23;

4.    noted the level of Revenue Support Grant Funding £8.832m;

5.    noted the level of Business Rates Retention Top Up Funding £11.295m;

6.    noted the level of Local Business Rates Retention Funding £3.900m;

7.    noted the section 31 grant of £2.590m due in respect of the business rate reliefs;

8.    noted the business rate tax collection fund deficit of £0.894m, after allowing for the 3-year spread from 2021/22;

9.    noted the section 31 grant of £0.948m due in respect of the additional in-year business rate reliefs for 2021/22;

10.noted the Covid Additional Relief Fund grant of £0.153m due in respect of 2021/22;

11.noted the level of Service Grant Funding £1.081m;

12.noted the net council tax collection fund surplus of £0.357m after allowing for the 3-year spread from 2021/22;

13.agreed the council tax requirement, calculated in accordance with Section 42A(4) of the Localism Act of £34.754m;

14.noted the council tax base of 449,778 determined for the purposes of Section 42B of the Local Government Finance Act 1992;

15.agreed a council tax band D equivalent of £77.27, an increase of £5.00 calculated by the Authority under Section 42B of the Local Government Finance Act 1992 agreed, on the basis of the fixed ratios between valuation bands set by the Government, council tax for each band as follows:

16.agreed, based on each district and unitary councils share of the total band D equivalent tax base of 449,778, the share of the total LCFA precept of £34.754m levied on each council as follows: