Agenda item

General Fund Budget update

Decision:

To recommend to full Council on 25 July 2023:

(1) To approve the restated 2023-24 General Fund Revenue budget, including the business case for additional planning resources.

(2) To approve the repurposing of earmarked reserves as detailed in the report.

(3) To endorse the findings in the report.

(4) To note the response by the Chief Finance (Section 151) Officer to the S114(3) duty and his recommended immediate actions including a range of expenditure controls, which will be managed through a Financial Control Panel consisting of Senior Officers and chaired by the Section 151 Officer.

(5) To note that a financial recovery plan is being developed by the Chief Finance Officer in liaison with the Joint Management Team, together with milestones and delivery targets, to be reported to October Full Council for approval.

(6) To endorse the management action of establishing a task force to deliver the financial recovery plan at pace, to provide the capacity, skills, and capability to support recovery.

(7) To note that the Executive will set up an executive working group for the following purposes:

a) to receive and comment on regular updates on the Council’s preparations for the Medium-Term Financial Plan restatement in October and its implementation;

b) to provide a sounding board for the Executive and officers on the options that are coming forward to close the projected financial gap; and

c) to guide wider communication with councillors and beyond

(8) To note that expenditure controls as a feature of how the Council conducts its business will remain in place until such time that the MTFP is balanced, and that such controls shall be determined by the Chief Finance Officer and the Chief Executive, in consultation with the Lead Councillor for Finance and Property.

(9) To authorise the Chief Finance Officer and Chief Executive to draw down earmarked funding to provide capacity to address and deliver the financial recovery plan and note that the Chief Finance Officer will continue to engage with expert external assistance and advice.

(10) To endorse the proposal to develop an asset disposal strategy to optimise the revenue impact from the divestment (via sale or otherwise) of the Council’s assets and address the need to pay off debt, utilising external advice and support to ensure that best value returns are achieved.

(11) To agree that a revised Medium-Term Financial Plan be brought to the Executive and Council in October 2023 and then reported quarterly to the Corporate Governance and Standards Committee.

Reason:

To enable the Council to set a balanced budget, which is a statutory requirement and a robust Medium-Term Financial Plan.

Other options considered and rejected by the Executive:

None.

Details of any conflict of interest declared by the Leader or lead councillors and any dispensation granted:

None.

Minutes:

The Executive considered a full Council report written by the Chief Executive and Chief Finance Officer that set out a revised General Fund budget statement for 2023/24. The annual budget had been submitted to full Council in February, at which point a deficit was identified and it was agreed that the Joint Management Team would undertake a comprehensive financial review to identify a set of measures to address this deficit and to present a restated budget in July 2023. A number of factors were identified in the report as having influenced the council’s financial position and these were presently common to many other councils. Those factors included increasing demand for services, the state of the UK economy over the last year (with high inflation and rising interest rates), and a succession of government funding reductions over many years. For Guildford, a significant factor was the effect of rising interest rates in regard to borrowing in support of various infrastructure and regeneration projects that had increased the Council’s overall debt.

The report set out the findings of the comprehensive financial review and recommended actions to mitigate and reduce the risk of the Council reaching a declaration of a Section 114 notice and a financial recovery plan. A S114 Notice would require the Council to cease all non-essential expenditure and reduce operational and service delivery costs immediately. The report included recommendations to establish a task force to deliver the financial recovery plan.

The report had been considered by the Corporate Governance and Standards Committee (CGSC) at a specially convened meeting earlier in the week. The comments arising from that meeting including suggested amendments to the various recommendations were set out in the Supplementary Information Sheet and proposed that the restated budget for 2023/24 include a budget for Planning resources and that a cross-party Executive working group be created to operate in a support and councillor communication role. The CGSC also proposed the Executive note the findings in the report rather than to endorse them.

The report was introduced to the Executive by the Lead Councillor for Finance and Property.

It was observed that the report was comprehensive, robust, and honest. The public and press had been informed of the content of the report as the council proceeded to address the financial issues with openness and transparency.

The CGSC recommendations were accepted in full with the exception of the recommendation to ‘note’ the findings of the report, the Executive preferred to revert to the original wording of the report and ‘endorse’ the findings.

Executive comments included the importance of the inclusion for the business case for additional planning resources as it was a priority for the Council to improve performance and would result in savings in the longer term.

The creation a cross-party working group was acceptable.

RESOLVED: