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Cabinet received report ES/1440 by the Cabinet Member with responsibility for Resources which provided an update on the draft Medium Term Financial Strategy (MTFS) as presented to Cabinet on 3 January 2023 and presented an initial draft of the Council’s General Fund Budget for 2023/24. The MTFS provided a baseline forecast of income and expenditure and looked at the overall financial climate, including public finances and the local government financial environment.
The Cabinet Member with responsibility for Resources reported that the key change to the 2023/24 budget was the update to Government funding following the Provisional Local Government Finance Settlement in December. Due to the new Funding Guarantee Allocation this had increased the Government funding to ESC by £1.1m next year. The updated MTFS also assumed a continuation of this level of funding until 2026/27 and captured the ongoing review of budgets by officers. The budget gaps for the current year and next year had changed as follows since the report to Cabinet on 3 January: 2022/23 budget gap change from £0.786m to £0.904m, an increase of £0.118m; 2023/24 budget gap change from £2.629m to £1.347m, a decrease of £1.282m. The proposal to use the In-Year Savings Reserve to fund these gaps remained the approach, and a balanced budget continued to be presented in the report for both years. Appendix B was an additional item to the report and provided a snapshot of the results from the budget questions in the Residents’ Survey as at December.
Councillor Cook reported that the 2023/24 referendum limit for Council Tax had been increased from 2% to 3%, but the £5 threshold for Shire Districts in two-tier areas remained. The report proposed a Band D Council Tax for East Suffolk of £181.17 for 2023/24, an increase of £4.95 or 2.81%.
Implementation of Business Rates reform continued to be delayed. The financially advantageous position of the Council under the current system had been reported in previous years, and this delay improved the budget position of the Council. Business Rates income for 2023/24 was based on the NNDR1 return which was completed by the due date of 31 January 2023 and the budget would be updated for the report to Full Council on 22 February. This had resulted in a significantly improved position on Business Rates income than previously reported, and the report to Full Council would show the 2023/24 budget balanced without the use of the In-Year Reserve as presented in this report.
Cabinet was advised that the reserves were currently projected at around £29m by the end of the MTFS, but this did not include use of reserves beyond 2023/24 to fund future projected budget gaps or the impact from the revision of Business Rates income to be included in the report to Full Council. In addition to the Covid reserve which will be fully used, there were a number of other reserves that were forecast to be fully or substantially utilised over this period, and not replenished. This included, the In-Year Savings reserve, NHB reserve, Transformation reserve, Capital reserve and the Port Health reserve.
The Final Local Government Finance Settlement for 2023/24 was received on 6 February 2023. Changes between the Provisional and Final Settlement showed a re-allocation of funding from the Funding Guarantee to the Rural Services Delivery Grant and the Services Grant, but with no change to the overall funding to East Suffolk. There had also been no changes to the Band D Council Tax thresholds that were announced in the Provisional Settlement.
It should be noted, Councillor Cook reported, that there were prospective activities not yet factored into the MTFS, which had the potential to make inroads into the budget gap towards the end of the MTFS period. These included Council Tax Premium on second homes and expected efficiencies from East Suffolk Services Limited. However, despite these factors, and the uncertainty due to local government finance reforms, the range and scale of expenditure and income pressures, indicated that a combination of actions would be needed to ensure a longer term sustainable position including a phased use of reserves, maximisation of income, and the achievement of savings.
In conclusion, Councillor Cook reported that this report was considered by the Scrutiny Committee on 19 January 2023. The pre-meeting questions from the Committee and the unconfirmed minutes of the meeting were detailed in Appendices C and D.
The Deputy Leader, after referring to the volatility and, because of that, the adjustments that had to be made to the report, gave thanks for the excellent report; he also referred to the budget consultation exercise and found the responses interesting and welcome.
Councillor Byatt commented that at some point the county of Suffolk may have an elected Leader, he said that it was not anticipated within the next budgetary year but he asked if there would need to be a financial contribution from ESC. The Deputy Leader stated that there would need to be a public consultation, then a vote would be required at a Suffolk County Council meeting and he would not wish to pre-empt the democratic processes that would need to take place. The Cabinet Member with responsibility for Resources added that that situation would be dealt with when it was imminent.
On the proposition of Councillor Cook, seconded by Councillor Kerry, it was by unanimous vote
RESOLVED
That it be recommended to Full Council that it:
1. Approve the 2023/24 General Fund Revenue Budget as set out in report ES/1440 and summarised in Appendix A5 to that report and notes the budget forecast for 2024/25 and beyond
2. Approve the reserves and balances movements as presented in Appendix A7 to report ES/1440 and
3. Approve a proposed Band D Council Tax for East Suffolk Council of £181.17 for 2023/24, an increase of £4.95 or 2.81%.