The Committee is asked to review the Council's 2022-23 Budget Report and Medium-Term Financial Strategy 2022-25

Members are asked to refer to the report included in the Tower Hamlets Council - Agenda for Cabinet on Tuesday, 18th January, 2022, 5.30 p.m.

The Committee received and reviewed the Council's 2022-23 Budget Report and Medium-Term Financial Strategy (MTFS) 2022-25 as part of the 2022-23 budget setting process. The Committee examined the key issues and pressures facing the Council such as the growth pressures and the need for efficiencies to ensure financial sustainability going forward. The main points of the discussion may be summarised as follows:

The Committee:

v  Noted that despite the Chancellor announcing departmental spending limits for Government departments on 27^th October 2021 for three years, 2022-23 to 2024-25, the Local Government Finance Settlement (LGFS) was only announced for a single year covering 2022-23. Accordingly, the funding landscape for Local Government over the medium term remains highly uncertain.

v  Noted that Core Grants such as the Revenue Support Grant, New Homes Bonus and the Improved Better Care Fund have been rolled forward for 2022-23, with additional funding received via the Social Care Grant, with much of this expected to contribute to additional costs arising from Adult Social Care Reforms. In addition, there was also a one-year one-off Services Grant distributed to Local Authorities for 2022-23.

v  Indicated that it want to be provided with modelling on the possible impact of any changes to income in the future will have on the Council’s finances, this would need to include insight of the (i) worst-case, (ii) medium case, and (iii) best case scenarios. Thereby avoiding having poor-quality decisions that are based on poor quality information.

v  Noted that the pandemic continues to have a significant adverse effect on the Council’s cost of services and reductions in income. Whilst with the Omicron Variant, the pandemic shows no sign of abating. Current pandemic pressures are being met by one-off Covid grants. However, the ongoing scale of the impact on society, the economy and public finances resulting from Covid-19 in the medium to long term is at this point unknown.

v  Stated that the Council needs to act prudently in setting aside funding as a reserve to (i) protect the Council against drops in income, or (ii) allow it to take advantage of new opportunities.

v  Agreed that it must (i) not operate in isolation, (ii) be integrated; (iii) reflect on past projections.

v  Agreed that consideration needed to be given to those savings that have had the greatest impact on (i) access frontline services;  and (ii) vulnerable residents with particular reference to Libraries and Ideas Stores; Children with Special Education Needs and Disabilities; Drug and Alcohol Treatment Services; Day Opportunities Centre; Discretionary Housing Payment; Cost of energy; Utilities allowance (on social care charging); Contributions to food banks; Telecare services; and Support for residents to access services to help mitigate the move to digital services.

v  Agreed that the Council should restructure its budget setting process having a greater focus on delivering priorities and asking the Borough’s communities what they think about the Council’s proposed budget spending at the beginning of each municipal year.

v  Stated that it wanted to see an appraisal of modelling  ...  view the full minutes text for item 4

The Committee is asked to review of the Changes to the Medium Term Financial Strategy (MTFS)

The Committee received and commented on the review of the Medium-Term Financial Strategy the Committee (Attached as an appendix to these minutes) has been working on an appraisal of the budget proposals from the from the Executive that were published with the papers for the Committees meeting on the 25^{th of} January 2021. The main points of the discussion on the review of the changes to the MTFS may be summarised as follows:

The Committee:

v  Noted that this meeting had been convened considering the new elements for the Council’s Budget Capital Programme, Housing Revenue Account (HRA) and other changes to proposed savings that were considered at the Cabinet meeting on 27^th January 2021.

v  Commented that more information was needed regarding any overspends in the HRA projects that were referenced to in the papers published as part of the Cabinet agenda for the 27th of January 2021.

v  Noted that in the report to Cabinet on 27^th January 2021 reference had been made about a report by Savills on the borrowing and investment capacity within the HRA, and Members wanted to know when a copy of that report will be circulated as they wished to know if the additional 1,000 new homes could be delivered e.g. to have confirmation which projects would be carried out by which Housing Company.

v  Expressed concerns around the asset transfer of land or buildings which the Authority owns and what that would mean if the Council were to look at different vehicles for delivering this programme and the sustainability implications of such different approaches.

v  Noted that whilst this is a really challenging budget the report identifies what needs to happen to make this a better budget and that decisions made are necessary.

v  Questioned why cutting services (£13.5M savings proposals for 2021-22) to allow for topping up of reserves (e.g. £7M New Homes Bonus) when reserves are sufficient.

v  Noted proposal to: Provide further poverty relief by making up to £100K available (one-off for 2021-22) to foodbanks who are under financial pressures in meeting community needs; and expand the Resident Support Grant to £150K (one-off for 2021-22) for vulnerable people to access – funded from additional £7million New Homes Bonus which is earmarked for reserves.

v  Commented that after a year in which local authority savings plans have been squeezed and income reduced, funding gaps in many areas for councils are considerable.

v  Commented that there is no real certainty over when income streams will start to pick up again and that demand for services will continue to be high with many households hit with reduced income or even unemployment over the past year.

v  Commented that whilst the Government seems to be anticipating councils to put up taxes and the proposal to Council tax recommends an increase of 4.99% the Local government Chronicle reported last week that looking at a percentage of councils across England that 47% have chosen not to impose the maximum increase.  Therefore,  ...  view the full minutes text for item 4