Agenda item

This report sets out proposals for the 2023 Medium Term Financial Strategy for the Policy and Oversight Board to consider.

Cabinet Member Overview

Councillor Rowan Ree (Cabinet Member for Finance and Reform) introduced the Medium Term Financial Strategy 2023 (MTFS) presentation by thanking member colleagues for their collective input, and commended officers for all their hard work and commitment to preparing the council’s budget proposals. This was a remarkable piece of work as final figures from the Local Government Financial Settlement were released two days before the parliamentary Christmas recess. This was also the fifth consecutive year of having a single year financial settlement and many assumptions had informed the MTFS.

This was a balanced budget, in response to the difficult financial future predicted by the Bank of England, a 10.5% inflationary rate, and interest rates of 3.5%, all of which were expected to have a significant impact on council finances. Despite this, high quality services had continued with free home care, free breakfasts for primary school children, maintaining weekly refuse collection and the introduction of Law Enforcement Team (LET). These were significant achievements and continued to be part of a package of proposals designed to protect frontline services for residents. Approximately £1 million in ring fenced funding had been provided as part of the council’s cost of living response to support residents.

Head of Strategic Planning and Investment - Corporate Finance Overview

Andre Mark provided a corporate overview of the 2023/24 MTFS strategic operating environment. The annual local government settlement had made it difficult to develop budget proposals, particularly given the demographic changes and an older population. Key principles underpinning the budget and shaping priorities against planned borrowing were explained. Demand led services such as school transport and social care had added further pressure and the strategy would protect frontline services and create resilience. H&F had one of the lowest council tax payments of £832 for a Band D property, meaning that a 1% rise for example, represented an increase of £8.30 per household. Savings of 2.9m had been proposed, and to place this in context, £40 million in efficiencies had been identified in the past of five years through better management of hospital discharges, and children’s services commissioning. A new waste management contract had been implemented, and in addition £1 million was to be invested in homelessness services.

In terms of financial resilience, reserves were on par with the London average and in line with Chartered Institute of Public Finance and Accountancy recommendations. Earmarked reserves were ring fenced to protect business contingency planning and to fund a planned IT upgrade to ensure greater service resilience. Particular risk factors included demographic changes such as an aging population and the increased numbers of cases with complex needs. Additional pressures also included major regeneration projects such as the Civic Campus and free home care services, which could be impacted by the current financial climate.

About 53% of households paid full council tax, with the remainder benefiting from the council’s generous council tax relief scheme. The local government financial settlement expected local authorities in England to increase council tax by 3%, and to levy 2% social care precept.

Strategic Director of Environment – Department Overview

Bram Kainth provided the committee with departmental highlights of the revenue budget for 2023/24 and described the range of services provided which included 5 million waste and recycling collections, dealing with 12,000 noise nuisance complaints, the provision of libraries, parks and leisure services and keeping clean over 18k miles of streets. The department had also led the council’s response to address climate change by producing a net zero plan, independently commended as one of the best in London, by installing 2500 electric car charging points. Other key highlights included £4.7 million of investment in the LET to tackle gang crime and anti-social behaviour at no additional cost to residents with £2.2 million secured through developer contributions.

As part of the council’s response to the cost-of-living crisis, £9 million in energy related grants had been paid, and £13 million in retail relief support. Improvements had also been made to the way in which residents access key council services. The department had received a significant commercial income of £12 million, for which a 10% inflationary uplift for 2023/24 was planned for non-statutory fees and charges. The Good Parks for London 2021 guide recognised that the borough parks had significantly improved, moving from 27^th place in the previous year to 5^th place. Future strategic budget issues included the repair work to Hammersmith Bridge, which was awaiting confirmation of funding contributions from the Department of Transport and Transport for London and there were significant national inflationary pressures such as the cost of energy and current service contracts linked to the cost-of-living crisis.

Councillor Andrew Dinsmore sought a breakdown of the £4.7 million investment in the LET and the proportion that was allocated to the Gangs Violence Unit (GVU), and also the breakdown of expenditure for equipment, vehicles and uniforms. through developer contributions. Kellie Gooch explained that of the £4.7 million, £1 million was for the GVU and assured the committee that a more detailed response could be provided as an action. Focusing on the LET salaries, Councillor Dinsmore asked why these were as high as police officer salaries. Neil Thurlow responded that the salary scale was commensurate with the role and job descriptions, and as approved by Human Resources. It was also explained that police on costs were higher. Councillor Nikos Souslous reminded colleagues that this was not dissimilar to a point raised at the July 2022 meeting of the committee and a response to this had been recorded in the minutes.

Councillor Dinsmore enquired about the proportion of the £4.7 million that was attributable to developer contributions and it was noted that this was £2.2 million. Enquiring about the impact of cancelled planning meetings, Councillor Dinsmore asked whether this would lead to decreased developer funding contributions. Bram Kainth explained that cancelled planning meetings were attributed to a decline in business which was not unusual at this time of year. Section 106 planning contributions that were currently being applied were historic and had accumulated during the previous five years.

Referencing Councillor Dinsmore’s question about LET developer contributions of £2.2 million, Councillor Omid Miri sought clarification about whether this was funding that was anticipated or had already been secured. Bram Kainth explained that this was an annual cost and had already been secured for future provision. Contributions were negotiated as part of a continuous and on-going process and would depend on future funding agreements. Councillor Miri commented that a noted limitation of the LET was that the team could not be larger. He sought financial, strategic and operational perspectives from officers as to how this could be addressed. Kellie Gooch responded that it was not possible to increase the LET as the budget did not include an allowance for growth investment, although the council continually sought to improve contributions, applied in accordance with council priorities. From a strategic and operational perspective, Neil Thurlow explained that active resident engagement was strongly encouraged, and the work of the LET was widely promoted.

Focusing on the wider community safety context, Councillor Ree commented that the administration had invested £5.4 million in comprehensive CCTV coverage, requiring £765k in annual support costs, in addition to regular borough wide LET patrols. A Violence Against Women and Girls (VAWG) lead officer post was funded by the Greater London Authority and was included in the base budget, permanently going forward as part of a four-year strategy.

As chair of the Planning and Development Committee, Councillor Miri acknowledged that a decline in planning applications could lead to a downturn in developer contributions particularly given the cost-of-living crisis and asked what mitigation plans were in place to address this, particularly in the context of LET funding. Bram Kainth explained that the council was committed to supporting the LET service and if developer contributions declined, the department would identify alternative sources of funding to continue the service.

ACTIONS

1.     For the Head of Finance (Environment) to provide details of the £3.7 million allocation to the LET and the breakdown of expenditure on service support costs such as equipment, uniforms and vehicles.

RESOLVED

That the proposals for the Medium Term Financial Strategy were noted.