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 for income projections and expenditure assumptions so as to ensure income growth is more accurately reflected.

v  Agreed that the Council should (i) have a more ambitious income generation strategy that cut across all of the Councils departments, not just Assets; and (ii) undertake and publish an assessment of the cumulative impact of proposals using those models tested across Local Government

v  Agreed that given the additional resources available that (a) fees and charges for market traders should be reduced as this will have a significant impact on the market traders  livelihood (e.g. Watney market, Columbia road, Whitechapel market, and Bethnal Green Road); and (b) review the fees and charges for hiring of venues such as community hubs, ideas store, Brady Centre to make them more affordable and accessible for local voluntary and community sector organisations.

Accordingly, as a result of discussions the Council's 2022-23 Budget Report and Medium-Term Financial Strategy (MTFS) 2022-25 report the Overview and Scrutiny Committee agreed that:

v  The Committee should be provided with modelling of what possible impact changes to income in future years will have on the council’s finances, providing  insight of worst-case scenario, medium case, and best case.

v  A funding approach should be established that included a refreshed Reserves’ Policy that doe note operate in isolation and is integrated to maintain and strengthen the Council’s financial position to ensure that it has sufficient contingency sums, reserves and balances to address any future risks and unforeseen events without jeopardising key services and

v  delivery of service outcomes for residents.

v  In light of the additional funding the previously agreed savings should be reviewed alongside an equalities impact assessment and identify where the additional funding can be allocated. In particular savings which have had the greatest impact on access frontline services and vulnerable people must be reviewed. OSC recommends funding the following areas:

·         Libraries & Ideas Stores,

·         Children with Special Education Needs & 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

·         Support for residents to access services to help mitigate the move to digital services.

v  That the Council restructures its budget setting process so that it has a greater focus on delivering priorities and measuring impact.

v  Conduct the Budget Consultation (which gauges public priorities) at the beginning of the municipal year

v  Review modelling for income projections and expenditure assumptions to ensure income growth is more accurately reflected.

v  That the Council restructures its budget setting process so that it has a greater focus on delivering priorities and measuring impact. Conduct the Budget Consultation (which gauges public priorities) at the beginning of the municipal year. Review modelling for income projections and expenditure assumptions to ensure income growth is more accurately reflected. Develop a more ambitious income generation strategy that cuts across all council departments, not just Assets. Undertake and publish an assessment of the cumulative impact of proposals using models tested across Local Government.