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Cabinet received report ES/1395 by the Cabinet Member with responsibility for Resources, which sought approval to take the General Fund Budget and Medium Term Financial Strategy to the Scrutiny Committee. Councillor Cook stated that the report provided a further update on the draft MTFS, as at December 2022. 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 report took into account new and revised risks and presented an initial draft of the Council’s General Fund Budget for 2023/24.
It was noted that since the previous MTFS update to Cabinet on 1 November, there had been several announcements from Government, which gradually released more detail on the local government settlement funding for next year. There was the Chancellor’s Autumn Statement on 17 November, followed by DLUHC’s Policy Statement on the Local Government Finance Settlement on 12 December, and more recently, on 19 December, the Provisional Local Government Finance Settlement for 2023/24. Councillor Cook explained that due to the timing of the Provisional Settlement and the publication of this report, the figures presented in Appendix A did not reflect the funding updates from the Provisional Settlement. However, details of the Settlement and the implications for the Council were provided in Appendix B.
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. An increase of £4.95 for 2023/24 would equate to a District Band D Council Tax for East Suffolk of £181.17. This was an increase of 2.81%. Growth in the tax base was currently estimated at 1.33%, slightly higher than the original budget assumption of 0.92%.
Councillor Cook reported that the implementation of Business Rates reform continued to be delayed, and it was now assumed this would not take place until 2025/26. The financially advantageous position of the Council, under the current system, had been reported in previous years, and this delay had improved the budget position of the Council in the region of £5m for each of the next two financial years.
Members noted that key areas of the budget were still to be finalised and this included, Business Rates, use of reserve, Operations, revenue implications of the Capital Programme and the Final Local Government Finance Settlement for 2023/24, which was expected in late January/early February.
Councillor Cook explained that this update of the MTFS did present a balanced budget for the current year and next year, by proposing to use the In-Year Savings Reserve to address the currently projected funding shortfall of £0.786m in this year and £2.629m in 2023/24. The use of reserves for 2023/24 was now expected to change following the Provisional Settlement for East Suffolk, with a reduced need for reserve support.
It was noted that reserves were currently projected to remain healthy at around £40m by the end of the MTFS, but this did not include use of reserves beyond 2023/24 to fund future projected budget gaps. It was also be noted 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 the Council Tax Premium on second homes and expected efficiencies from East Suffolk Services Ltd. 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 significant levels of savings.
Councillor Cook stated that the Scrutiny Committee would receive this report at its meeting on 19 January and the report would be updated for the Provisional Settlement funding changes, as detailed in Appendix B. The Cabinet would then consider the 2023/24 Budget report at its meeting on 7 February, at which point the final key areas of the budget would have been finalised, before Cabinet recommending the budget to Full Council on 22 February.
Councillor Cook took the opportunity to thank the Finance Team for all of their hard work in relation to the budget. The Leader acknowledged their hard work in these challenging circumstances.
Councillor Byatt asked how the Council would manage given that the amount of New Homes Bonus (NHB) funding had been significantly reduced? Councillor Cook invited Brian Mew, Chief Finance Officer, to respond to this query. Mr Mew commented that the national amount of NHB may have been reduced, however, the provisional settlement confirmed another one year NHB allocation for the 2023/24 year. He stated that he would check that this position had not changed and confirm outside of the meeting.
Councillor Cook then moved the recommendations within the report, which were seconded by the Leader and upon being put to the vote it was unanimously
RESOLVED
1. That the updated draft Medium Term Financial Strategy, attached as Appendix A including the draft 2023/24 General Fund Revenue Budget summarised in Appendix A5 for review and consideration by the Scrutiny Committee as part of the Budget process, be approved.
2. That an initial proposed Band D Council Tax for East Suffolk Council of £181.17 for 2023/24, an increase of £4.95 or 2.81% be approved.