The Committee is to consider the Council’s draft strategic plan 2022-26 and make recommendations on areas for improvement and further consideration.

Members are asked to refer to the report included in the Cabinet - Monday, 1st August 2022 5.30 p.m. as published on the Council’s website.

Tower Hamlets Council - Agenda for Cabinet on Monday, 1st August, 2022, 5.30 p.m.

The Committee considered a report that presented the Strategic Plan 2022 to 2026 which is the Council's main corporate business plan. That embeds the Mayor's vision and the administration's manifesto into a high-level policy framework and demonstrates how they will be delivered alongside the Council’s statutory duties.  A summary of the discussions on this report is outlined below.

The Committee

v  Noted that the Covid-19 pandemic has resulted in very high levels of public spending and LBTH would have been £34 million pounds over budget if it had not received funding from the Government to cover the spending pressures and income losses due to Covid and had enabled LBTH to have a balanced position of for the last financial year.

v  Noted that the Plan sets a framework for performance monitoring and reporting.

v  Noted that it is (i) supported by and aligned with the Medium-Term Financial Strategy and (ii) accompanied by an Annual Delivery Plan that sets out how the Plan priorities will be delivered in 2022/23.

v  Noted that Annual Delivery Plans will be published each year until 2025/26.

v  Noted as mentioned earlier that the plan is based on the Mayor’s election manifesto, the Council’s statutory duties, and the ambition to keep improving customer service and ways of working.

v  Noted that the Councils commitment to equality, diversity, inclusion, and community cohesion also runs through the plan.

v  Agreed that it is important that LBTH is able to offer a support package to care leavers to provide educational and training opportunities that will improve their vocational and educational profile and open up future employment opportunities.  Therefore, Members wanted details on how LBTH children in care and care leavers will be supported and prioritised with access to work opportunities.

v  Agreed that in regard to the control of rent levels housing providers must have robust systems of internal control in place to ensure that rents are being charged appropriately and therefore wanted clarification on socially affordable rents stated at 30-40% of average market rents.

·         Wanted to know if this is the right time to bring housing services back under the direct management of the Council, as other councils have done (e.g., would the insourcing of Tower Hamlets Homes (THH) better align housing management and maintenance services to meet resident needs and place the full range of housing services at the heart of the Council’s efforts to improve outcomes for all our residents).  Accordingly, it was agreed that with regard to the Councils investment in public services they should have the details on the consultation process by bringing outsourced services such as THH back into public hands.

v  Agreed that with the Council now has to brace itself for a long recession as energy prices surge to unprecedented levels, leaving many residents at risk of economic hardship.  Accordingly wanted details on the Council’s communication strategy on the cost-of-living crisis and how residents can feedback.

v  Welcomed the £2.2 million package to support LBTH residents with the cost-of-living  ...  view the full minutes text for item 6

To review the Medium Term Financial Strategy (MTFS) and Budget Scene Setting 2023-26 in line with the Council’s Policy, Service Planning and Performance Management framework

Members are asked to refer to the report included in the Cabinet agenda 11^th  July 2022 as published on the Council’s website on Friday, 1st July 2022.

Tower Hamlets Council - Agenda for Cabinet on Monday, 11th July, 2022, 5.30 p.m.

8.1         Medium Term Financial Strategy (MTFS) and Budget Scene Setting 2023-26

The Committee noted that the Council’s Budget 2022-23 had been approved by Full Council in March 2022. The report before the Committee provided a summary of the review of the MTFS as part of the 2023-24 budget setting process. A summary of the discussions on the report outlined as follows:

The Committee:

v  Noted that despite the Chancellor announcing departmental spending limits for Government departments on 27 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. Therefore, the funding landscape for Local Government over the medium term remains highly uncertain. Core Grants such as the Revenue Support Grant, New Homes Bonus and the Improved Better Care Fund were 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.

v  Was informed that there was also a one-year one-off Services Grant distributed to Local Authorities for 2022-23. One reason Councils were provided with a single year settlement was due to funding reforms that have been delayed, annually, for several years that the Government has signalled its intention to now take forward. The distribution formula used for allocating resources across Local Authorities dates to 2013-14 and the Government propose to take forward a ‘Fair Funding Review’ to ensure a more up to date assessment of need. Business Rate Baselines have not been reset since 2013-14 and, therefore, Councils that have experienced growth in their Business Rates have been able to retain a share of growth since that year.

v  Understood that the Government intends to reset the Baselines to coincide with a review of the funding formula. In early 2021 the Government consulted on ending New Homes Bonus (NHB), a targeted incentive providing funding based on housing growth within the Council area, and the Government has not yet announced the outcome of this consultation.

v  Noted that the impact of these funding reforms is particularly acute for Tower Hamlets. Funding retained from Business Rates Growth and the New Homes Bonus are significant and therefore the impact of resetting the Business Rates baseline or withdrawing New Homes Bonus would result in a substantial funding reduction for the Council. The Government has indicated that transitional relief would be provided to Councils who were impacted by the reforms. At this stage it is not clear when the reforms will be introduced nor what transitional relief would look like. For 2022-23 the Council benefitted from rolled forward funding and new grants provided.

v  Noted that the Council was therefore able to set a balanced budget and to propose a freeze in the Tower Hamlets element of Council Tax, only levying the 1% Adult Social Care precept to meet demographic pressures within that area.

v  Agreed that it was therefore important to continue work to balance the budget over the medium term, ensuring  ...  view the full minutes text for item 8

To review the Budget monitoring report 2021-22 Outturn in line with the Council’s priorities.

Members are asked to refer to the report included in the Cabinet agenda 11^th  July 2022 as published on the Council’s website on Friday, 1st July 2022.

Tower Hamlets Council - Agenda for Cabinet on Monday, 11th July, 2022, 5.30 p.m.

The Committee considered a report that presented the Provisional Outturn compared to the budget report 2021-22 as of 31st March 2022 (Period 12) for the General Fund, Dedicated Schools Budget (DSB), Housing Revenue Account (HRA), progress made against savings targets and the Council’s capital programme. It also provided projections on General Fund earmarked reserves and the forecast impacts of SARS-CoV-2 on the Councils finances in 2021-22.  The Chair stated that (i) this was the first meeting covering the council’s financial position and marks the beginning of the Committee’s review of the Council’s finances; and (ii) he wanted to ensure that budget scrutiny is a priority across all the scrutiny committees.  A summary of the key elements of discussions on this report is outlined below.

The Committee:

v  Noted that monitoring the Councils budget involves performing a regular comparison of projected financial costs and gains against actual performance numbers. The Scrutiny of the variances between budgeted amounts and actual financial performance of Council services therefore allows the Committee to determine how well LBTH is meeting its goals.

v  Noted the production of the budget has been developed through a set of core assumptions which sets out changes to the environment in which LBTH will be delivering its priorities.

v  Agreed that this approach will ensure that revenue budgets, capital investment and transformation plans are all aligned with each directorate’s service plans and the corporate priorities of the organisation.

v  Noted the importance of ensuring each aspect of planning for the longer and medium-term is completely aligned to provide a stable foundation for delivering services to residents.

v  Noted that the Councils guiding principle will be to tackle inequality and to ensure no one is left behind in the Borough.

v  Agreed that the impacts of SARS-CoV-2and lockdown measures have widened social, economic and health inequalities, with different impacts pending on age, race, poverty, and wealth.

v  Questioned the long-term impact of SARS-CoV-2 pandemic on the Council’s finances, how permanent the spending pressures from will be, and requested further clarity on additional pressures not generated by SARS-CoV-2.

v  Agreed that LBTH is in a hugely unpredictable environment and is facing significant challenges over the medium-term thus it is important to maintain reserves at an adequate level to help mitigate and manage these significant risks and ensure the Council remains on a sustainable footing going forward.

v  Noted that LBTH aims to remove barriers and level the playing field to make it easier for people to engage with the Council and access the services they might need. This will enable LBTH to target resources more effectively so that LBTH can support the most disadvantaged and redesign services in a smarter way to ensure they are inclusive and accessible to all.

v  Requested further details on the transfer of £28.6 million to reserves and greater transparency on where this money has come from.

v  Noted that there are significant discrepancies between the period-9 forecast position and the period-12 forecast position and requested  ...  view the full minutes text for item 7

The Committee received a report from Mayor John Biggs, Councillor Candida Ronald and Neville Murton. This provided an overview of the quarter 3 monitoring position against the approved budget, 2019-20.

The following points were discussed.

• That the Cabinet agenda for 29^th July 2020 comprised a number of reports relating to the budget and the impact of COVID-19.
• Details of the budget  outturn position in relation to the General Fund, Dedicated Schools Budget, Housing Revenue Account and earmarked reserves for 2020-21.
• The natures of the challenges due in the main to COVID-19, particularly in relation to the demand for services, income from business rates,  the Council Tax Reduction Scheme, and similar to other Councils, an overspend on the Children’s Social Care budget
• Level of additional government funding received.
• That to help address this, the Council should continue to work with other Councils to lobby the Government to provide assistance.

In response to the presentation, the Committee discussed the following:

·         Members sought further details on the nature of the overspend and the likelihood of further slippages.

·         It was confirmed that, unless the Government provided further assistance, the Council will need to identify additional saving. In addition, it was possible that the savings target may no longer be achievable, due to such factors as unavoidable delays in consultation exercises because of COVID-19. The Council needed to carry out further work to fully identify the implications of this.

·         The Committee also discussed the provision of Government assistance, providing the Council with additional funding and concessions. Neville Murton noted that this amounted to £19.4M.

·         The new measures enabled the Council to spread the deficit over three years and provided relief  in relation to a number of areas. It was noted that this funding should reduce the budget deficit. Further support may be provided.

·         Committee were also advised of governance guidance regarding operating with a deficit and loss of income.

·         The Committee asked questions about the level of overspend due to COVID-19.

·         It was noted that the Capital Outturn report sets out the figures. The report indicated that,  even with the mitigation, funding would need to be drawn down from reserves. Details of which were noted.

·         A further report should be available in Autumn 2020.

·         The Committee also sought further information on the Children’s Service Budget, given the previous overspend on the budget relating to the Children’s Improvement Plan. Some concern was expressed about the misjudgement over the level of funding and the impacts such issues have on budget planning.

·         In response, Members were advised of the reasons for this and the need for the additional resources at that time to support the plan. However, it was noted that the overspend for this year is less than that for other services. Many other Councils have experienced the same issues.  The Council had also put in place a number of measures to reduce the overspend  by for example reducing the number of agency social workers.

·         Members sought assurances on the controls to ensure that spending remained  ...  view the full minutes text for item 5