The Overview and Scrutiny Committee’s response to the draft budget presented at Cabinet on 4 January 2023 was noted.

DECISION

1.      Propose a General Fund Revenue Funding Requirement of £446.205m for 2023-24 subject to remaining changes arising from the final Local Government Finance Settlement and any other necessary adjustments.

2.      Propose to freeze the Tower Hamlets element of Council Tax and to levy a 2% Adult Social Care precept for 2023-24.

3.      Propose that the Interim Corporate Director Resources uses £22.3m from reserves in 2023-24 to support the budget as set out in section 3.9.8 of the report given the shortfall emerging as part of the 2023-24 budget setting process.  

4.      Propose that the Interim Corporate Director Resources be authorised to make any changes required to the budget following receipt of the final Local Government Finance Settlement (LGFS) in consultation with the Mayor and Cabinet Member for Resources and the Cost of Living.

5.      Authorise the Corporate Director Resources to continue the Council’s participation in the 8 Authority Pool for Business Rates with seven other London Local Authorities for 2023-24, subject to due diligence.

6.      Note the latest draft position of the Council’s reserves, subject to final audit of the statements of accounts.

7.      Propose the 2023-24 Housing Revenue Account budget as set out in Appendix 7 to be referred to Full Council for approval.  Additionally this will be reviewed during 2023-24 with a view to reducing in year expenditure where possible and finding further efficiencies.

8.      Propose the HRA housing rent and service charge increases as outlined in section 3.11 of the report.  This includes increasing housing rents for existing tenanted properties and shared-ownership properties by 7% for 2023-24 and for new build properties by CPI +1% for 2023-24 (as per paragraph 3.11.19 of the report).

9.      Propose the 2023-24 Management Fee payable to Tower Hamlets Homes (THH) of £35.530m as set out in paragraph 3.11.38 of the report.  Additionally this will be reviewed during 2023-24 in partnership with THH with a view to reducing in year expenditure where possible and finding further efficiencies.

10.   Note that under the Management Agreement between the Council and THH, THH manages delegated HRA income and expenditure budgets on behalf of the Council.  In 2023-24, THH will manage delegated income budgets totalling £110.216m and delegated expenditure budgets totalling £43.307m.  Additionally this will be reviewed by the Mayor and Cabinet Member during 2023-24 with a view to reducing in year expenditure where possible and finding further efficiencies.

11.   Propose the 2023-24 Schools Budget.

12.   Propose that the National Schools Funding Formula (NSFF) adopted by Tower Hamlets originally in 2019-20 continues for 2023-24. The only changes included are increases to the factor values in line with the NSFF.

13.   Propose that the Minimum Funding Guarantee (the mechanism that guarantees schools a minimum uplift in per-pupil funding) is set as close to 0.5% as affordable, the maximum allowed after consideration for growth and factor changes in School allocations.

14.   Propose that the  ...  view the full decision text for item 6

The item was considered alongside Agenda Item 6.1 (Mayor’s Foreword to the Council’s Budget Report) and the combined minute is presented here.

The Mayor introduced both reports. He stated he was proud of the ambitious budget which he felt would re-direct the Council’s focus, reversing service cuts of the previous administration and reinvesting in public services. He noted the Overview and Scrutiny committee had reviewed the budget proposal at its meeting on the 23 January and the Committee’s response was tabled, which he welcomed.

Councillor Saied Ahmed, Cabinet Member for Resources and the Cost of Living provided detail of the financial context behind the Mayor’s budget, including:

·         An overview of the key elements of the  General Fund and HRA revenue and capital budgets.

·         The key investment in council services including free school meals in both primary and secondary schools, youth services investment, community safety and education initiatives.

·         Rebuilding at St George's Leisure Centre.

·         Funding for new council homes, improving housing stock and fire and building safety works.

Cllr Ahmed noted that once approved, the budget report would be presented to full Council on 1 March 2023.

Caroline Holland, (Interim Corporate Director, Resources) and Kevin Bartle (former Interim Corporate Director, Resources) provided additional information on the challenges ahead. It was noted that there were significant additional revenue implications due to six new key priorities. Caroline and Kevin stressed the importance of a sustainable budget and the need to get back into balance by 2025. They noted these points would be re-emphasised in the Chief Finance Officer’s statement on the budget when it is presented to Council on 1 March 2023.

Cabinet members discussed how the budget proposals reflected manifesto promises and the commitment to deliver them. They commended the significant investment in infrastructure and front line services, as well as the decision to in-source leisure services. They acknowledged the cost of living crisis and the need to invest to support residents, as well as the financial challenges and the necessity of finding savings. They also spoke of the importance of addressing the housing crisis and investing in police officers and other services to improve residents’ lives. Finally, they highlighted the necessity of providing better quality services and facilities for women, girls and hard-to-reach residents.

The Mayor thanked Cabinet members, officers and members of scrutiny for their input and assistance in delivering a budget in a time of exceptional challenge.

RESOLVED

1.      To propose a General Fund Revenue Funding Requirement of £446.205m for 2023-24 subject to remaining changes arising from the final Local Government Finance Settlement and any other necessary adjustments.

2.      To propose to freeze the Tower Hamlets element of Council Tax and to levy a 2% Adult Social Care precept for 2023-24.

3.      To propose that the Interim Corporate Director Resources uses £22.3m from reserves in 2023-24 to support the budget as set out in section 3.9.8 of the report given the shortfall emerging as part of the 2023-24 budget setting process.  

4.      To propose that the Interim Corporate  ...  view the full minutes text for item 6

The Committee is asked to review the Council's 2023-24 Budget Report and Medium-Term Financial Strategy 2023-26

Members are asked to refer to the report included in the Tower Hamlets Council - Agenda for Cabinet on Wednesday 4th January 2023

The committee considered The Council's 2023-24 Budget Medium Term Financial Strategy 2023-26, presented by Cllr Saied Ahmed and Nisar Visram, Director of Finance Audit and Procurement.

The committee made the following comments and questions:

·       Is the council confident that the forecasting is robust, to allow for the council budget to be agreed? Cllr Saied Ahmed reported on the process around creating the budget to ensure it has been created in a robust form.

·       The year-on-year savings that are required to ensure the council is balancing its budget, along with the usage of the council’s reserves, how sustainable is this position? Cllr Saied Ahmed stated that the budget will be put in place to help the residents of this borough as it is going through tough times, with economical help, but also through education, environmental and crime reduction measures as well. However, a budget like the one presented does require usage of the reserves. But this is not something the council can continue to do, so the council will be detailing how the future savings will be found as the financial year continues. The comments of the Chief Financial Officer have been considered and the usage of reserves is not something the council has taken lightly.

·       What plans are the council looking at to increase growth to ensure services are able to grow post 2026? Has the council considered council tax increases? Cllr Saied Ahmed reported on the many revenue sources the council has and the importance of ensuring vital services are continued to be run by the council after 2026. While the council has looked at the modelling around council tax, and the administration decided not to increase council tax.

·       What has the council considered to safeguard the council’s reserves? Cllr Saied Ahmed highlighted what reserves the council will be accessing, some pools of reserves are safe guarded and the council’s constitution does have restrictions on the levels of the reserves as well. Nisar Visram reported on the projections around the usage of the council’s reserves.

·       How will the cost of the secondary school meals be found?

·       The staffing costs of the Mayor’s Office, is this a justifiable cost when the budget is looking for council savings? Cllr Saied Ahmed explained the office has expanded to carry out casework and policy support for the new council executive. · How does the council budget compare to other local authorities? Cllr Saied Ahmed highlighted that the council’s budget is ambitious compared to other authorities, but also services have been brought in house and the council has a higher amount of reserves.

·       Committee members made recommendations, including resident skill growth, to review the Mayor’s Office Staffing and extending the EMA

RESOLVED:

The presentation be noted.

DECISION

The Mayor agreed to submit the budget and policy framework aspects of the report for review by the Overview and Scrutiny Committee.

1.      Propose a draft General Fund Revenue Funding Requirement of £446.257m for 2023-24 subject to remaining changes arising from the final Local Government Finance Settlement and any other necessary adjustments.

2.      Propose to freeze the Tower Hamlets element of Council Tax and to levy a 2% Adult Social Care precept for 2023-24.

3.      Propose that the Interim Corporate Director Resources uses £22.3m from reserves in 2023-24 to support the budget as set out in section 3.9.8 of the report given the shortfall emerging as part of the 2023-24 budget setting process.  

4.      Propose that the Interim Corporate Director Resources be authorised to make any changes required to the budget following receipt of the final Local Government Finance Settlement (LGFS) in consultation with the Mayor and Cabinet Member for Resources and the Cost of Living.

5.      Authorise the Corporate Director Resources to continue the Council’s participation in the 8 Authority Pool for Business Rates with seven other London Local Authorities for 2023-24, subject to due diligence.

6.      Note the latest draft position of the Council’s reserves, subject to final audit of the statements of accounts.

7.      Propose the HRA housing rent and service charge increases as outlined in section 3.11.  This includes increasing housing rents for existing tenanted properties by 7% for 2023-24 and for new build properties by CPI +1% for 2023-24 (as per paragraph 3.11.18 of the report).

8.      Propose that the National Schools Funding Formula (NSFF) adopted by Tower Hamlets originally in 2019-20 continues for 2023-24. The only changes included are increases to the factor values in line with the NSFF.

9.      Propose that the Minimum Funding Guarantee (the mechanism that guarantees schools a minimum uplift in per-pupil funding) is set as close to 0.5% as affordable, the maximum allowed after consideration for growth and factor changes in School allocations.

10.   Propose that the structure of the Early Years Funding Formula remains unchanged except that the two year old hourly rates will increase in line with the Early Years National Funding Formula.

11.   Note that the Local Council Tax Reduction Scheme will remain unchanged for 2023-24.

12.   Note the Equalities Implications as set out in Section 5 of the report.

Action by:

INTERIM CORPORATE DIRECTOR, RESOURCES (K. BARTLE)

(Director of Finance, Procurement and Audit (N. Visram)

The item was considered alongside Agenda Item 6.1 (Mayor’s Foreword to the Council’s Budget Report) and the combined minute is presented here.

The Mayor introduced both reports. He stated he was proud of the ambitious budget which he felt would re-direct the Council’s focus, reversing service cuts of the previous administration and reinvesting in public services, including:

·         Green investment initiatives, including electric waste vehicles and charging points, improvements in flat waste recycling and in low carbon fuel supply.

·         Youth service investment.

·         Universal Free school meals for both primary and secondary school.

·         Education maintenance allowance and university bursary scheme to promote access to education.

·         Investments to directly combat crime, including in providing more police officers, enforcement officers and CCTV cameras.

·         Improved Street cleansing.

·         Plans to deliver 1,000 homes for rent per year to reduce overcrowding and the damage it causes to health and wellbeing of residents.

·         Free home care for the vulnerable in the community.

·         Protecting and re-opening Idea Stores.

Councillor Saied Ahmed, Cabinet Member for Resources and the Cost of Living provided detail of the financial context behind the Mayor’s budget, including:

·         How national government decisions made financial planning acutely difficult for local authorities

·         Significant funding challenges including price rises, increasing interest rates and high fuel costs

·         Increasing pressures in adult social care meant the council has little option but to levy the 2% adult social care precept.

·         That despite the challenges above, the core rate of council tax, excluding the adult social care precept would not be increased

·         A portion of the Council’s reserves would be used to fund expenditure priorities, which would mean that residents would not suffer due to the economic crisis which is out of their control.

Kevin Bartle, Financial Consultant (and formerly Interim Corporate Director – Resources) and Nisar Visram, Director of Finance provided additional detail on the budget process and timetable. The Cabinet noted the budget would be considered by the Overview and Scrutiny Committee and any comments of the Scrutiny Committee would then be considered at the next Cabinet meeting. They noted that there would be additional detail in the budget report for the next Cabinet meeting, including detail of capital and growth and savings proposals. There may need to be further amendments at that second Cabinet meeting. Finally, a meeting of Council would agree the Budget and Council Tax for the authority.

Cabinet members highlighted some of the key investments of the Mayor’s proposed budget from their service areas. All indicated they were very proud of a balanced budget which would deliver manifesto pledges.

The Mayor thanked Cabinet members and officers for their hard work to deliver this budget in an extremely challenging circumstances. He proposed that the draft budget be submitted to Scrutiny. He proposed the recommendations as set out and it was:

RESOLVED to:

1.      Propose a draft General Fund Revenue Funding Requirement of £446.257m for 2023-24 subject to remaining changes arising from the final Local Government Finance Settlement and any other necessary adjustments.

2.      Propose to freeze the  ...  view the full minutes text for item 6