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 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.

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

16.   Propose the three-year General Fund Capital Programme 2023-26 as set out in Appendix 8A to the report, totalling £238.637m.

17.   Propose the three-year Housing Revenue Account Capital Programme 2023-26 as set out in Appendix 8D to the report, totalling £389.625m.

18.   Approve the revised 2022-23 General Fund and HRA Capital Programme budgets as set out in Appendix 8A and 8D to the report, totalling £111.867m and £74.458m respectively.

19.   Approve the budget allocation growth and reductions to schemes in the General Fund capital programme as detailed in Appendix 8C to the report, subject to sign off through the capital governance process and agreement to proceed given by the Corporate Director of Place in consultation with the Mayor, Cabinet Member for Resources and the Cost of Living and the Corporate Director of Resources, and agree that schemes funded by future capital receipts, s106 and/or CIL will not go ahead until such funds have been received by the Council.

20.   Approve the increased capital budget provision for St Georges Leisure Centre in the programme, with an additional request of £14m to meet the required total funding requirement of £55.16m for the rebuild.

21.   Approve delegated authority to the Corporate Director of Place in consultation with the Corporate Director of Resources to take any steps required to deliver the capital programme including but not limited to going out to tender, appointing consultants and contractors in accordance with the Procurement Procedures, acquiring land interests and appropriating land from the General Fund to the Housing Revenue Account (HRA) for the delivery of new council homes, subject to approved budget and in consultation with the Mayor and the Cabinet Member.

22.   Note the administration’s six key priority projects, as detailed from paragraph 3.12.34 of the report onwards.

23.   Note the Equalities Implications as set out in Section 4 of the report.

Action by:

CORPORATE DIRECTOR, RESOURCES (C. HOLLAND)

Head 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. 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 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.      To 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.      To note the latest draft position of the Council’s reserves, subject to final audit of the statements of accounts.

7.      To 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.      To 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.      To 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.   To 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.   To propose the 2023-24 Schools Budget.

12.   To 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.   To 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.   To 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.

15.   To note that the Local Council Tax Reduction Scheme will remain unchanged for 2023-24.

16.   To propose the three-year General Fund Capital Programme 2023-26 as set out in Appendix 8A to the report, totalling £238.637m.

17.   To propose the three-year Housing Revenue Account Capital Programme 2023-26 as set out in Appendix 8D to the report, totalling £389.625m.

18.   To approve the revised 2022-23 General Fund and HRA Capital Programme budgets as set out in Appendix 8A and 8D to the report, totalling £111.867m and £74.458m respectively.

19.   To approve the budget allocation growth and reductions to schemes in the General Fund capital programme as detailed in Appendix 8C to the report, subject to sign off through the capital governance process and agreement to proceed given by the Corporate Director of Place in consultation with the Mayor, Cabinet Member for Resources and the Cost of Living and the Corporate Director of Resources, and agree that schemes funded by future capital receipts, s106 and/or CIL will not go ahead until such funds have been received by the Council.

20.   To approve the increased capital budget provision for St Georges Leisure Centre in the programme, with an additional request of £14m to meet the required total funding requirement of £55.16m for the rebuild.

21.   To approve delegated authority to the Corporate Director of Place in consultation with the Corporate Director of Resources to take any steps required to deliver the capital programme including but not limited to going out to tender, appointing consultants and contractors in accordance with the Procurement Procedures, acquiring land interests and appropriating land from the General Fund to the Housing Revenue Account (HRA) for the delivery of new council homes, subject to approved budget and in consultation with the Mayor and the Cabinet Member.

22.   To note the administration’s six key priority projects, as detailed from paragraph 3.12.34 of the report onwards.

23.   To note the Equalities Implications as set out in Section 4 of the report.