Meeting Details

An apology for absence was received from Councillor Plummer.

The Chair invited the Cabinet Member with responsibility for Resources and Value for Money to introduce the report and he explained that, as part of the annual budget setting process, the Council was required to agree a programme of capital expenditure for the coming four years and any revisions to the current financial year.  He outlined the timeline for the report.  Members were also informed that the report set out the General Fund Capital Programme and the Housing Revenue Account Capital Programme separately in Appendix B and G along with a brief description of each project.  The capital programme had been compiled taking account of the following main principles, to:

• maintain an affordable four-year rolling capital programme.
• maximise available resources by actively seeking external funding and disposal of surplus assets.
• not to anticipate receipts from disposals until they are realised; and
• To focus on the deliverability of the current projects within the programme.

The Cabinet Member explained that the General Fund Capital Programme for 24/25 to 28/29 totalled £169.69m financed from Grants and Contributions of £51.26m (30%), £4.86m (3%) Reserves and £113.57m (67%) of borrowing.  The HRA Capital Programme for 24/25 to 28/29 totalled £89.95m financed from £12.95m (14%) of grants and Contributions and the use of £49.86m (55%) of capital reserves & direct revenue financing, £19.39m (22%) of capital receipts and £7.75m (9%) of borrowing £73.20m (89%) of internal resources (reserves, capital receipt and direct revenue contributions).  The updated capital programme had been reviewed by the Strategic Property meeting in November 2024 and at the December meeting of CLT.  The report recommended that the Overview and Scrutiny Committee reviewed and made any recommendations to Cabinet on the general fund programme in Appendix B and the Housing Revenue Account programme in Appendix G.

The Chair thanked the Cabinet Member and the following responses were given to Members' questions:

• The impact of the English Devolution White Paper was unknown at the moment but whatever happened a budget needed to be set and the Council would continue to exist for a number of years so there was a consideration.  Residents expected investment in East Suffolk so that needed to continue.  It was anticipated that the capital projects would be progressed by the successor organisation.
•  The County Council had requested that elections be postponed and a decision should be known by the end of January.  The Council was not incurring any expenditure at the moment and was quite prudent in our preparation.
•  The capital budget for waste collection had been reduced due to the significant purchases and large investment that had taken place over the last few years such as the replacement of fleet, including the light fleet.  The lower budget reflected the spend and would be used to replace old HGV fleet or purchasing for Simpler Recycling and for HVO fuel.
• The Capital Programme budget for the Felixstowe North Garden Neighbourhood leisure centre had been reviewed with project managers and was subject to change but it was their best forecast at the moment and would be reviewed again.  The Capital Programme worked in financial years but actual projects did not and could incur spend in the next year so the total costs needed to be allocated across a number of years but inevitably there was some optimism in this and projects slipped.  The Finance Team did question Officers about when projects would start and if the money was all needed.  The original budget for the leisure centre was £16.5M so there was recognition that there had been some slippage in that project.
• The £3M ESPIL loan had enabled the LATCO to be set up and the Council could buy quickly if necessary but interest would not be paid on the loan.  It had not been possible to give a grant because of regulations so it had to be set up as a loan.  It had been agreed to start with a gradual process perhaps with only 2/3 projects initially to see how it worked.  The ESPIL had been set up so properties would not be subject to Right To Buy, however, this had been slightly superseded by changes which had taken away some of the case for ESPIL, so it was being left in abeyance and no money would be granted  if it was dormant.
• The Capital Programme was a projection and was regularly reviewed.  Expenditure was really stable as a large part was the leisure centres with the rest being accommodation, however, the Council's £16m of debt would have to be refunded over a number of years which would have an impact on how far the Council wanted to go in terms of borrowing, especially looking at interest rates.  Finance was financed from external borrowing and reserves and it was being projected that borrowing would be shifted from internal to external borrowing but that would put more pressure on the General Fund so the Capital Programme would need to be reviewed to see how best to work it.
• A lot of research was being undertaken on possible ways to get to net zero without using Passivhaus and it was hoped to come up with a project later in this year.
• A full review of the current Passivhaus project including achieving net zero, social value, engagement with the community, costs relating to the Council etc, would be held in due course but at the moment the focus was on delivering it on time.

The Chair thanked the Cabinet Members and Officers for their responses.

On the proposition of Councillor Jepson, seconded by Councillor Ninnmey it was 

RESOLVED

That the Overview & Scrutiny Committee endorse the Cabinet recommendations to Full Council in relation to:

• The General Fund Capital Programme for 2024/25 to 2028/29 including revisions as shown in Appendix B.
• The Housing Revenue Account Capital Programme for 2024/25 to 2028/29 including revisions as shown in Appendix G.

The Chair invited the Cabinet Member with responsibility for Housing to introduce the report and it was noted that it brought together the Housing Revenue Account (HRA) Budget for the period 2025/26 to 2028/29, with a projected outturn for 2024/25 and a summary of its reserves and balances.  The HRA budgets for Revenue and Capital made use of all available financing resources, however, additional borrowing of £7.7M was required in 2025/26 to balance the budget.  If any underspends or other financing opportunities arose, this would be reduced where possible.  The budget proposals give a forecasted HRA working balance that remained at the 10% minimum acceptable level over the Medium-Term Financial Strategy. The balance was predicted to be £2.55M as at 31 March 2029. 

The Chair thanked the Cabinet Member and the following responses to Members' queries were noted:

• The Council had received a £17M grant from the Warm Homes Fund but heat pumps could cause a lot of disruption so easier options were being looked at first.  Funding for existing boilers would only be required to keep them going.  The installation of solar panels had seen a lot of delays.  A stock condition survey should be completed by spring which would inform the Warmer Homes Fund programme to see what the stock needs were and what retrofitting was required.  It was acknowledged that there were risks to the programme, including that the Council did not have capacity to deliver and things had gone wrong with properties in the past.
• Fencing had been purchased for the St Peter’s Court demolition so it could be re-used on other sites in future. 
• The projected number of properties lost to Right to Buy depended on the Government's changes to the scheme which was likely to include restrictions on the amount of discount and possibly they would not be able to rent it out afterwards.  It was normally roughly 30 pa and there had been quite a lot this year because of the impending changes but it was predicted to reduce to 9 pa in future, so about a quarter of the number currently being sold and the discount would be about a third so this would reduce the income which would make a big difference.
• Other Registered Providers were selling off stock and buying new ones but that did not help the Council as we had a responsibility to improve our stock and reduce carbon emissions. The Council did, however, have some protection when investing in the stock as we did not have to sell the property for less than the "cost floor" of the property - it was agreed that further details would be provided on this protection at the next meeting.  It was also likely the protection period would be extended as part of the changes.  If the Council purchased or built new properties, tenants still had the same rights to buy those properties as they would existing stock that had been retrofitted.
• The Council had just over 1000 properties that had a low EPC but was aiming for all the stock to be at least an EPC C by 2030.
• Tenants were recharged for deliberate damage and things beside normal R&M but historically it had been difficult to get payments done in efficient manner so the new software would simplify that work and hopefully improve collection rates. 
• The hoarding budget was for a new project because Rent Officers had identified a number of tenants suffered from hoarding so this project would help.  The Housing Team was also working with other agencies eg Social Services and Health to support hoarders.
• The arrears figures should come down by the end of year and be more manageable in future as the rent and service charge refunds were processed and then Officers would look at former tenants eg those from over 6+ years ago if the Council had their contact details to chase them.  
• The Local Housing Allowance (LHA) had been frozen a few years ago and was set over a very broad area so it was a crude instrument.  It was likely there would come a time that social rent overcame the LHA. 

The Chair thanked the Cabinet Member and Officers for their responses.

On the proposition of Councillor Jepson, seconded by Councillor Ninnmey it was

RESOLVED

1. That the Overview and Scrutiny Committee endorse the Cabinet recommendations to Full Council in relation to:

• The draft HRA budget for 2025/26;
• The indicative figures for 2026/27 to 2028/29;
• The movements in HRA Reserves and Balances;

and noted the following:

• The projected outturn position for 2024/25;
• Changes affecting public and private sector housing and welfare;
• Effects of the cost-of-living crisis to the HRA.

2. That responses to the following Members' queries be provided to the next meeting:

• How was the cost floor of a Right to Buy on existing properties that had been invested in calculated?
• What was the budget allocated for dealing with hoarders going to be used for?
• What percentage of the recharge to tenants for repairs was recovered?

The Chair invited the Cabinet Member with responsibility for Resources and Value for Money to introduce his report and he explained that it provided an update to the draft Medium Term Financial Strategy (MTFS), taking account of new and revised risks, and presented an initial draft of the Council’s General Fund Budget for 2025/26. At the end of the 2025/26 budget process, the Council was required to approve a balanced budget for the following financial year and set the Band D rate of Council Tax. The Overview & Scrutiny Committee had an opportunity to review and make recommendations upon Cabinet's recommendations for the proposed Budget and the Band D Council Tax for 2025/26. The recommendations would then be considered by Cabinet at its meeting on 4 February 2025. The report also formed the basis of the Overview & Scrutiny Committee’s review of the Budget as required under the Budget and Policy Framework.

The Cabinet Member stated that the budget process had started much earlier this year following Councillor Byatt's suggestion.  He congratulated the team for getting reports out on time and coping given their huge workload due to a number of issues such as the effect of inflation and rising costs over the last few years; the amount of time that had gone in to managing emergencies such as Covid and flooding; and the additional workload of External Audit, which was unheard of to be almost three years simultaneously; and having to cope with a single year settlement, although it was hoped this would change to a multi-year settlement in future.  He explained that there were a lot of moving parts to the budget such as the Simpler Recycling changes in processes, the purchase of assets and the budgeting and financing for that; the effect of the provisional settlements eg the Council's core spending power increase had been only 0.23%  of 1% whereas other Councils had received 6%; and finally looking at predominantly the rural spend in terms of Government funding and spending power, East Suffolk was well below urban by something like 22.3% below in terms of spending per head.

The Chair thanked the Cabinet Member and the following responses to Members' queries were noted:

• Reserves would need to be used in order to balance the budget but it would be balanced as the planning to date had been smart and realistic. 
• The Council could support businesses in different ways through policies and strategies rather than just financially eg a huge number of SMEs were producing food so the Council were looking at how they could be supported to increase their businesses. 
• Service Areas would be aligned where they delivered under the Strategic Plan.
• The funding formula had been changed so East Suffolk had received 0% in terms of an increase in spending power so it would be challenging, however, the Council had been well run over the past few years so there was some resilience and reserves could be used to buy some time and wait for the spending review which was expected in late spring, although Officers would need to start planning for 2026 and beyond, with some tough decisions to be made as well as the uncertainly of Local Government Reorganisation.
• The economy was having an impact on large towns and Market Towns as evidenced by the number of empty shops, although Sizewell was bringing in money to some of them.  A fair amount of analysis data was available on the Dashboard with a whole range of indicators as part of the Towns Fund programme which was working to try to attract people to the High Street.  A meeting was taking place next week with Lowestoft Town Council to look at the challenges and what could be done, especially with the investment in the old Town Hall.  The Lowestoft Place Board and Economic Development Team were also looking at potential zoning to get office space to the north and retail to the south as well as supporting the night time economy.  
• The Council was also investing in youth employment skills and footfall to look at it all holistically as it was not all about retail.
• It was reported that the need for a referendum if the percentage increase to Council Tax went above 4.5% might be changed in future.

The Chair thanked the Cabinet Member and Officers for their responses.

On the proposition of the Chair, seconded by Councillor Lynch it was

RESOLVED

1. That the Overview and Scrutiny Committee endorse Cabinet’s recommendations to Full Council as follows:

• Approves the draft 2025/26 General Fund Revenue Budget and notes the Medium Term Financial Strategy, as set out in Appendices A to E.
•  Approves a proposed Band D Council Tax for East Suffolk Council of £192.15 for 2025/26, an increase of £5.58 (2.99%).

2. That clarification be provided to the next meeting on the threshold for requiring a Council Tax referendum and the costs to the Council.

The Chair invited Councillor Langdon-Morris, Cabinet Member for Resources and Value for Money to give a brief update on the direction of travel for the services within his portfolio.

The Cabinet Member explained that he met the Chief Finance Officer weekly to discuss a number of issues including:

• The impact of the external audit delays;
• The status of delayed findings, several of which had been caught up with; 
• The risk that auditors might not sign off balances as at end of 2024 which might affect the MTFS;
• The application of the Second Homes premium from 1 April 2025;
• The different moving parts of the budget such as Sizewell, the port, renewable energy, SME’s, erosion and climatic emergency challenges, the LATCO, Simpler Recycling and assets which all had a financial knock on impact.

The Cabinet Member explained that, in relation to the Capital Programme, an £8.9M refund had been received from the Environment Agency for the spend on Lowestoft Tidal Defences which would be reinvested.  The Cabinet Member concluded that not knowing about the multi year funding strategy seriously affected the Council's budget and although he disliked it, it was likely the MTFS would have to look at balancing the budget using reserves.

 The Chair thanked the Cabinet Member and the following responses were given to Members' queries:

• A thorough risk analysis was always undertaken but there were some things the Council had no choice about doing eg Simpler Recycling, although it was hoped financial support from Central Government would help.  The Council ran a lean operation and was realistic about investments which were SMART and SWOT analyses were carried out to mitigate risk.  A business plan and return on investment (ROI) was always considered.  The aim was to be lean, efficient and recovering costs wherever possible, at least to a 0 ROI or positive. 
• Housing was the biggest spending department but it was important to distinguish spend and investment which needed to be justified.
• Second homes were self identified at the moment and if they wanted to escape double Council Tax they needed to be let out for a minimum of 70 days per year and be available for 140 days per year.  Some properties might not have been identified and there were ways the Council could look into it.  BnBs did not get double Council Tax but if it was a company then they did.  The Council and Government were looking at licensing and restrictions on holiday lets.
• The previous administration had agreed that additional Council Tax receipts for second homes would be prioritised to be spent in the area they were from, although they were not ringfenced.  The CEO had asked to meet with the County Council and Police and Crime Commissioner to see if they would do the same but had not yet had a reply. £9M had been collected in East Suffolk last year but East Suffolk Council's portion was only £800K.
• The Committee's previous recommendation to engage an Empty Homes Officer had been a really good move and she had paid for herself.  It was hoped to get an Empty Homes Development Order where the Council could say to the owner that they had to put someone in there.  The Council was also looking at the private rented sector and could issue civil penalty notices to private landlords which would be self financing too.
• The General Fund staffing budget was the biggest budget but was quite conservative, although sometimes the Council carried vacancies.  It would be beneficial to have a multiplier when approving a job that helped solve a problem or provided a financial benefit eg the Resilience Co-ordinator could be a really useful post especially if it had to deal with an emergency in the future.  It was not thought there was any wastage and often staff budgets were not all spent.  The Leadership Team considered a business plan for any growth and looked at whether the post was really needed, could it be changed etc.  The Building Safety Levy would need to be collected and although the Council would get some money for doing it, it would impact on the Finance Team.
• The KPIs on the Council's website specifically related to the Resident's Survey and the district but it was acknowledged that Town and Parish Councils could be asked to encourage more people to respond to the survey. 

The Committee was reminded that, as agreed at the meeting on 21 July 2024, they were due to receive an update report on the impact of Clear Hold Build on the Council and the impact on the Probation Service of the release of prisoners with details of any support being made available to them to encourage them not to reoffend.  The Chair explained that, unfortunately, this update was not yet available, therefore, the item would be postponed to a future meeting.

The Chair confirmed that he had called an Extraordinary Meeting for Thursday, 30 January 2025 following the Call-In by Councillors Jepson and Green of Cabinet Report ES/2213 relating to Car Parking Fees and Charges 2025/26.

He added that the next scheduled meeting was due to be held on 20 February 2025 to consider the Review of the 30 year Housing Business Plan, however, due to unforeseen circumstances, the Business Plan was not yet available, therefore, he suggested the meeting be cancelled and the review take place in the next Municipal Year.

On the proposition of Councillor Hammond, seconded by Councillor Green it was

RESOLVED

That the Committee's Work Programme be updated to include the Extraordinary Meeting on 30 January 2025 and to cancel the meeting scheduled to take place on 20 February 2025.

On the proposition of Councillor Green, seconded by Councillor Ninnmey it was

RESOLVED

That under Section 100A(4) of the Local Government Act 1972 (as amended) the public be excluded from the meeting for the following item of business on the grounds that it involved the likely disclosure of exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the Act.