Agenda item

This report provides an update on the overall preparation and proposals for the 2024/25 revenue budget, risks, financial resilience, and the impact of those proposals. It also sets out the budget proposals for the services covered by this Policy and Accountability Committee. An update is also provided on any proposed changes in fees and charges in the budget.

Councillor Rowan Ree (Cabinet Member for Finance and Reform) gave an overview of the 2024 Medium Term Financial Strategy. He remarked that despite the financial and economic constraints faced by local government, this Council was able to put together a balanced budget that not only protected core services that residents valued and relied on but also protected those extra services that only Hammersmith and Fulham (H&F) delivered like free breakfast for primary school children, free home care services, council tax support scheme and the local Law Enforcement team.  This was made possible because of its ruthlessly financially efficient approach adopted for budget management and a continuous process of reform. Councillor Ree took the opportunity to thank officers in the finance team who had helped put together this budget and those across the service departments like the Environment who, together with the Cabinet colleagues like Councillor Rebecca Harvey, Cabinet Member for Social Inclusion and Community Safety had done an excellent job in managing their budgets throughout the year and identified savings.

Councillor Ree remarked that the LGA estimated that this year, one in five local authorities might issue a section 114 notice, which essentially meant that they were not able to meet their financial obligations. He reassured those who relied on council services that this Council had managed its finances well, having run a budget surplus last year and adding this to the reserves when most councils were taking money out of theirs. H&F had been able to offer the same services despite the funding from central government had been cut by 56% in real terms since 2010/11. The budget setting this year had started with a budget gap of £23m from which savings had to be found. In terms of reforms, Councillor Ree highlighted the technology reform which used artificial intelligence (AI) for the adult social care service and the revenue and benefits team. Under organisational reform, more savings across the council would continue to be identified through the four large corporate savings programmes. The Council was also funding new policy reforms to improve service delivery, notably the commissioning of the family hubs where residents might access childcare, housing, social care services and so on under one roof.

Andre Mark (Head of Finance – Strategic Planning and Investment) presented the Corporate Budget Strategy 2024/25. He outlined the strategic operating environment, objectives of the Council’s financial plans, the strategy to deliver the financial plans, plus the proposed budget for 2024/25, including a summary of proposed revenue budget 2024/25, savings and investment proposals a summary of the reserve position and a medium-term forward look. The budget would be considered by the Cabinet on 12 February and approved by Full Council on 28 February this year.

Bram Kainth (Strategic Director of Environment) presented the Environment Department revenue budget 2024/25.  He outlined a wide range of universal services delivered to residents, the recent achievements relevant to social inclusion and community security, the budget breakdown under the three service directorates of Climate Change and Transport, Public Realm and Public Protection, key budget changes and future strategic budget issues.

The Chair sought elaboration about core spending power (page 16) and its impact on budget. Councillor Ree noted that core spending power was  central government’s assumption of the Council’s funding as part of the local government financial settlement. He said that the Chancellor’s Autumn Statement in November 2023 had provided an increase in core spending power of 6.7% (the level of CPI inflation in September) which was made based on the assumptions that the Council Tax and social care precept would be increased by the maximum amount. As the Council was acting far from the assumptions, there was a shortfall in terms of core spending power.  Separately, Councillor Ree expressed his grave concern about central government’s ways of allocating the financial settlement.  First, it only allocated one-year settlement for the past six years instead of multiple settlements. Also, the final figure only arrived as late as 18 December last year. The late arrival plus just an one-year settlement had made the setting of a budget incredibly difficult.

Councillor Omid Miri sought examples of using AI and asked if it was aimed at delivering better service or saving staff costs. Councillor Ree noted that it was proposed to deploy £0.25m for Adult Social Care to use AI in processing the return of equipment on loan and in strengthening the system interface and hence communications between the Council and those residents receiving home care services.  The revenue and benefits team also used automated processing to make things easier for residents such that they only needed to update their details once and for all by the system. He said that the Council was always looking out for opportunities to utilise new technology. Councillor Miri was pleased to note that there were both front line and back-room applications of AI.

Councillor Miri enquired whether the anticipated growth in properties could be implied as growth in the population.  Andre Mark clarified that while major capital projects would contribute to the growth in property households, such growth could also be seen in the context of the council tax system. For example, a resident no longer eligible for the single person discount or other exemption cases would be counted as growth in terms of number of households.

Noting that income under the Public Protection directorate amounted to £9.4m, Councillor Andrew Dinsmore asked what constituted the income.  Kellie Gooch (Head of Finance – Environment) noted that the sum included environmental health income in respect of food safety inspections, pest control, and a small amount of fine income. She said that these incomes would be re-invested in enforcement functions, such as the Law Enforcement Team (LET) and Gangs Unit.

Councillor Dinsmore was concerned whether the provision of equipment, vehicles and unforms for LET was a one-off start-up cost or an ongoing investment. Councillor Ree advised that while the equipment and vehicles were broadly in place, the Council was constantly investing in new equipment to ensure the LET had updated equipment to keep the streets safe.

Given the use of AI could possibly reduce crimes, Councillor Dinsmore was concerned whether the increased deployment of AI and CCTV would lead to the reduction of LET officers such that the generated savings could be spent on policing. For example, camera possessing the technology could automatically call the police if it recognised weapons obviating the need for a patrol officer to make the call.

Councillor Ree noted it was fundamental for the Council to keep people safe and invest as appropriate. He considered it was worth investing on both AI/CCTV and LET, which had worked well together to make the borough safer and cleaner.  He was pleased to note that according to a recent report, the borough had the biggest decrease of 33% in fly tipping across London.  That was partly achieved through the investment in CCTV and partly due to the LET’s work. While agreeing to the continual investment in CCTV camera to keep the streets safe and clean, Councillor Ree considered the use of AI camera for the entire borough might lead to other problems.

The Chair expressed concern about the withdrawal of funding for Prevent which was an important service and asked about the implications.  Bram Kainth clarified that despite the withdrawal of central government funding from 2024/25 (£150k), the Council had reprioritised the budget to maintain the existing Prevent service. 

Councillor Miri asked whether the Prevent programme would be implemented in the same way after the withdrawal of government funding. Matthew Hooper (Director of Public Protection) noted that the government had stopped funding Prevent service for certain boroughs/parts of the country. The Council had found alternative sources to continue funding the programme which would be maintained at the current level.  Councillor Ree considered it bizarre that the government had cut the funding based on an assessment that there was no risk of extremism in H&F.  The Council would continue this valuable service.

Replying to the Chair’s enquiry about green bond, Councillor Ree said he was proud of this green investment which aimed at raising £1m and was by far the largest local government climate investment scheme.  It was an all-win scenario where residents could participate in a long-term and low-risk investment with return pitched at 4.85%, the Council could borrow at a more competitive rate while the environment be protected. The aim was to raise £1m by 13 February but the target was hit on 7 February.

In response to Councillor Miri for more information about family hubs, Councillor Ree

noted that in addition to providing good quality services, the Council also aimed at making them more accessible to residents.  The family hubs would enable the residents to obtain the services they needed under one roof, from childcare, housing, benefits to the full range of services expanding over time. 

RESOLVED

1.    That the Committee noted the budget proposals and recommended them to Cabinet as appropriate.

2.    That the Committee noted the proposed changes to fees and charges and recommended them as appropriate.