Agenda and draft minutes

The Joint Executive Advisory Board (JEAB)

RESOLVED

that Councillor Katie Steel be elected as Chairperson for this meeting.

Apologies for absence were received from Councillors Sallie Barker, Phil Bellamy, Amanda Creese and Matt Furniss.  Councillor Bob Hughes was present as a substitute for Councillor Sallie Barker and Councillor Philip Brooker was present as a substitute for Councillor Matt Furniss.

In accordance with the local Code of Conduct, a councillor is required to disclose at the meeting any Disclosable Pecuniary Interest (DPI) that they may have in respect of any matter for consideration on this agenda. Any councillor with a DPI must not participate in any discussion or vote regarding that matter and they must withdraw from the meeting immediately before consideration of the matter.

If that DPI has not been registered, the councillor must notify the Monitoring Officer of the details of the DPI within 28 days of the date of the meeting.

Councillors are further invited to disclose any non-pecuniary interest which may be relevant to any matter on this agenda, in the interests of transparency, and to confirm that it will not affect their objectivity in relation to that matter

There were no declarations of disclosable pecuniary or non-pecuniary interests.

To confirm the minutes of the meeting of the Joint Executive Advisory Board (EAB) held on 4 December 2023.

The minutes of the meeting of the Joint Executive Advisory Board (JEAB) held on 4 December 2023 were confirmed as a correct record, and would be signed by the Chairman at the earliest opportunity.

A report regarding the General Fund Revenue Budget 2024-25 and Medium Term Financial Plan (MTFP) 2024-25 to 2026-27 was before the Joint Executive Advisory Board (JEAB) for consideration.  The report was introduced by the Lead Councillor for Finance and Property and presented by the Joint Executive Head of Finance and S151 officer, who sought councillors’ views thereon.

The JEAB was advised that in July 2023 the Council considered a report which detailed a MTFP with a funding gap of £18.3 million and highlighted that the Council was at significant risk of potentially having to serve a Section 114 Notice.  Much work was undertaken during the following six months to reduce this gap.  The initial focus had been on short term measures such as ceasing discretionary spend, introducing a vacancy freeze and reviewing all budgets to achieve a balanced in year position.  A mixture of permanent changes and one-off reductions had been introduced.  Some of the latter would need to be addressed on an ongoing basis for the new financial year.

The next factor to address the funding gap was the preparation of a Financial Recovery Plan.  The first iteration of the Plan was submitted to Council in September 2023 and the second edition in October confirmed that the Council would not need to issue a Section 114 Notice as sufficient financial recovery had been achieved to avoid it at that stage.  A further update in December focused on changes to the Capital Programme and the Asset Disposal Programme.  All these measures had culminated in the MTFP gap being reduced by £15.9 million and the Council being able to achieve a balanced budget for 2024/25, which was before the JEAB for consideration.

The key budget headlines were:

·           An assumed Council Tax increase of 2.99% leading to growth in the tax base over the year of 1%.

·           The Finance Settlement showed a reduction in the New Homes Bonus of £600,000 and a cut in the Services Grant of approximately £100,000 which were off set by a rise in the Funding Guarantee Grant giving an overall position of an increase in grant year on year of approximately £147,000.

·           Cost pressures were resulting from the impact of inflation.  Although there was an assumption of a 4% pay award increase, this had not yet been agreed with the Union.

·           The Capital Review had resulted in a Capital Programme reduction of £96 million.

·           The Asset Disposal Programme was aiming to deliver £50 million of capital receipts targeted at years two and three of the MTFP.  This Programme together with the Capital Review would assist with reducing the Council’s future borrowing and the debt previously expected to reach £600 million by the end of the decade would be more likely to peak at £450 million.

·           A number of policy changes were being made including treatment of interest payable in respect of large capital projects involving capitalising costs and paying them at the completion of the project.

·           Adjustments were being made to reduce interest payments relating to the  ...  view the full minutes text for item 10.

The Joint Executive Advisory Board (JEAB) considered a report concerning the Council’s Capital and Investment Strategy 2024-25 to 2028-29.  Bids in respect of the 15 proposed capital schemes outlined within the appendices to the report were a particular focus for the JEAB.

The Lead Specialist for Finance introduced the report and sought comments from the JEAB in respect of the capital bids.  The treasury management activity function fell to the Corporate Governance and Standards Committee for consideration.

The JEAB was advised that the Capital Programme linked into the Council’s treasury management activities which were then fed into the Revenue Account which was the reason for having an Integrated Capital and Treasury Strategy.  Decisions made now in respect of the Capital Programme would have a long term impact on the Council’s finances.  In December 2023, the Council had agreed to delete £96 million from the existing Capital Programme.

The Council was required to satisfy various Codes of Practice, the main one in this case being the CIPFA Prudential Code to ensure the Capital Programme was affordable, sustainable, prudent and proportionate.  As the Council’s internal reserves and capital receipts were limited, external borrowing was necessary and this equated to £202 million over the period.  Officers had put forward bids of £9.8 million which would increase the borrowing total to approximately £212 million.  The main areas of existing expenditure were the two largest schemes in the Programme, namely, Weyside Urban Village and Ash Road Bridge.  The Table in paragraph 8.14 of the report had been amended to delete an item, pavilion refurbishment at Sutherland Memorial Park, from the Capital Vision, which consisted of schemes at an early stage which were not sufficiently developed to progress onto either the provisional or approved Capital Programme.

Although there were no new bids to the Housing Revenue Account (HRA), annual major repairs works needed to be included in the Capital Programme.  Whilst an expanded HRA budget had been agreed in respect of the previous two years, the proposed budget for 2024/25 reduced the amount to approximately £5.5 million reflecting the amount of budgets of previous years.  The existing Capital Programme also contained substantial new build and redevelopment schemes which were the primary reason for the reduction in the Council’s reserves.  The report recommended the deletion of the Bright Hill scheme due to changes in its proposed delivery, which was now unlikely to be undertaken by the Council.

Having regard to Treasury Management in the interests of completeness, it was estimated that there was £3 million of investment income and debt interest approaching £15 million.  The latter consisted of £5.5 million which related to the HRA whilst approximately £8 million was being capitalised to the General Fund Programme, creating a £1.5 million impact on the General Fund.  The Council would be seeking approval of the updated flexible use of the Capital Receipts Policy for 2024/25 to enable expenditure in respect of transformation to be funded from Capital Receipts.

The following points arose from questions, comments and discussion relating  ...  view the full minutes text for item 11.

The Joint Executive Advisory Board (JEAB) was invited to consider a report which provided a position statement in respect of the 2024/25 draft budget and made recommendations to the Council regarding the Housing Revenue Account (HRA) revenue budget.

The report was introduced and presented by the Lead Specialist for Finance who advised that the revenue budget covered the day to day management and maintenance of the Council’s housing stock which consisted of approximately 5,200 homes.  The HRA was a ring-fenced account as its income was derived from its tenants and it was completely separate from the Council Tax element which supported the General Fund.  The budget had been prepared based on the latest Business Plan.  The report highlighted the key components of the Business Plan together with forthcoming risks and pressures and also set out the aims of the budget in terms of providing value for money.  The debt during the year was estimated to be £157 million with an interest charge of £5.4 million.  The Council was continuing with the theme that providing housing was more important than repaying the debt.  The report also outlined how the budget would be spent with 51% being the direct costs of managing and maintaining the housing stock with a further 21% being put aside to cover depreciation for paying for major works.  Thus the majority of expenditure was invested into the stock.

The Government set a direction for Council’s to increase rents by the Consumer Price Index (CPI) plus 1% based on the rate as at the previous September CPI level.  For 2024/25, this equated to a rent increase of 7.7% which was the maximum amount by which rents could be increased and the figure recommended.  It was also proposed to increase garage rents by 5% which was in line with the remainder of the Council’s fees and charges.

A £7.8 million surplus was being budgeted against the HRA as a whole which would be transferred to reserves.  It was budgeted to have reserves at the end of the financial year of £97 million which were decreasing in line with the new developments in which the Council was investing.  The Section 151 Chief Finance Officer’s statement in respect of the robustness and adequacy of the reserves was included in the report.

The Leader of the Council and Lead Councillor for Housing sought to reassure the JEAB that the recommended rent increase of 7.7% for 2024/2025 was in line with the rent standard for social housing set by the Regulator of Social Housing.  92% of the Council’s tenants paid a social rent, with approximately 60% of those being in receipt of Housing Benefit or Universal Credit.  The level of rent arrears was low, indicating that for most families, their rent remained affordable.

The following points arose from the related discussion, comments and questions for forwarding to the Executive:

1.          With regard to the proposed rent increase, it was noted that the Council’s costs associated with the operation of the Housing service were  ...  view the full minutes text for item 12.