Agenda item

2024/25 General Fund and HRA Budget proposals - Budget Scrutiny Working Group response

Objective: Update from the Chair of the Budget Scrutiny Working Group on the group’s response to the 2024/25 General Fund and HRA interim budget proposals.


Chair of Budget Scrutiny Working Group, Councillor Tim Harman


The Chair invited Councillor Harman, who attended the recent Budget Scrutiny Working Group meeting, to share with Members a brief summary of what was discussed.

Councillor Harman said many issues were raised at the meeting, but highlighted the following concerning the HRA budget proposals:

-       with CBH’s imminent return to CBC, Stafford Cruise, Head of Finance at CBH, gave a useful and helpful presentation, and answered Members’ questions.  One concerned the energy sustainability retro-fitting of houses to improve energy consumption, and the investment in a five-year kitchen renewal and upgrade programme, which will influence the budget going forward;

-       the fact that a lot of rents and social rents below market rents influences what is possible was discussed;

-       other impacts of the transfer of CBH to CBC on the overall budget will be discussed later in the meeting.

There were no Member questions.  The Chair thanked the Budget Scrutiny Working Group for their input and commitment.

Moving on to the 2024-25 General Fund budget proposals, Councillor Harman made the following points:

-       his group recognises the challenges all councils are facing at present, but is slightly concerned that general balances are due to fall below £1.5m, which is the figure the council aims to maintain.  This may be pursued further by Members;

-       he would not go into detail about the huge challenge of the cyber park debate, welcoming the £20m government funding which will help deliver the scheme, saying that in principle, he believed there is cross-party support for proposals and  comments are made in the spirit of a critical friend, but recognising that there are challenges to the council regarding finance;

-       he noted some assumptions around revenue and savings, and questioned the confidence that the EV charging scheme will bring £50k income when there are elements out of CBC’s control, such as guaranteed electricity supply;

-       the same applies to bringing CBH back in house – savings are forecast, but there is no guarantee that these will be delivered – and income from profits around the MX project, which has been significantly delayed and may come up against further issues;

-       assumptions around selling assets into the capital programme are also challenging;

-       he suggested that now was the time to raise and scrutinise any concerns anyone may have about budgets and the assumptions on income.

The Chair invited Members to put any questions to the executive directors who were all present at the meeting.

In response to Members’ questions, the Executive Director for Finance, Assets and Regeneration confirmed that:

-       despite the difficult financial climate due to Covid, cost of living and high inflation, and many councils facing 114 notices or government scrutiny of their finances, he anticipates CBC presenting a robust and balanced budget at February Council.  It is clear that with a pay award of 6.5% over two years and a council tax increase of 3% that financial savings and difficult decisions have to be made, particularly as the administration is on record saying that its first priority is not to cut services if a more efficient and streamlined way can be found to deliver those services within the constraints of the financial envelope;

-       when he writes his independent Section 25 report, a key recommendation will be that, in view of the council having to draw on reserves in the last couple of years, leaving them less healthy than he as S151 officer would like, the first call on any fortuitous income or underspends must be to strengthen and replenish reserves;

-       still on the question of how cash reserves may be rebuilt to a safer level, and the assumptions in the budget about additional income, efficiency savings in many areas will be presented in the report, and there are other factors to be taken into account.  Interest rates are probably at their height now and will fall towards the end of the year, delivering incremental savings. The proposed budget is prudent assuming interest rates remain at 5.25%, so any reduction will be good for in-year budget savings;

-       looking at long and medium-term financial planning, when he took on the role of S151 officer, the council’s share of the Local Government Pension Scheme (LGPS) was about 60% funded; at its last revaluation in March 2022, it was 101% funded, and the CBH portion funded by the council is 120% funded.  Since the last valuation an uplift in a number of asset categories, such as government gilts – 2% in 2022, now 5% - has had a huge impact on the assets in the LGPS;

-       in terms of the overall funding of the Gloucestershire LGPS, of which CBC and CBH are two participants, he believes this has risen from 110% to 150% funded in the last 18 months, and is confident that we will see significant reductions in contributions post-2025, leading to a fortuitous windfall to increase reserves.

There were no further contributions, and no decision was needed on this item, but the Chair summarised by saying it had been a challenging year, and recommending that Members read the Budget Scrutiny Working Group minutes to be kept up to date.  She confirmed that the Green Party had no plans to propose an alternative budget this year, in view of the financial crisis and geo-political instability, saying that the most important thing was to get through the year and prioritise everything that we need to. She thanked officers for their difficult work, saying that we are lucky to have a council which is prudently managed, and that it pays to be cautious and continue on course.