Agenda item

Tim Willis, Deputy Chief Executive & S151 Officer introduced the report and made the following points:

·  The proposed budget was drafted in the context of significant changes on local government financing;

·  Covid-19 had forced local authorities to focus on short term issues. This had drained the council reserves, council finances and council staff reserves;

·  The budget gap in the proposals was largely due to factors internal to the council like pay and contractual inflation an increase in cost of waste disposal;

·  There were some projected reductions in government grants;

·  Any Panel recommendations to amend the budget that have a cost or reduced income would need to be matched with an identified funding source;

·  A correction to paragraph 13.6.1 to the cabinet report – the increase in average rent between this year and next year is £1.98 not £1.89 as reported.

Members made comments and asked questions as follows:

• Members thanked Mr Willis and his finance team for the work done particularly the hosting of briefing sessions for Members;
• 57% of the residents surveyed were surprised at the amount of money that went to the council of the council tax;
• At paragraph 13.7 there were adjustments made for the HRA between the accounting basis and funding basis there is a difference of nearly half a million. What was the basis for that and was there material impact from it?
• At paragraph 11.7 (HRA – Major Repairs Reserve); the table indicates that it was £15.5 million as at 31 March 2020, but will be drawn down to leave £384k by 31 March 2022. Was it a prudent decision to reduce the reserves and was it also prudent to leave such a small amount in the reserves?
• In the same table there was also a movement in 2021/22 of £7.676million, but at Annex 3 it was suggested that £11.986million will be used from the Major Repairs Reserve. Could this be clarified?
• S151 Officer’s view is reported as taking the middle position regarding the budget position to take. What would have the budget looked like had the S151 Officer taken a pessimistic view?
• Why was it that in paragraph 16 Table 9, one bedroom social rent average was indicated as being higher than affordable rent?
• Can the council not use the £3million in the reserves to offset loss in income for not increasing the rent?

Mr Willis responded as follows:

• This adjustment of £479K was required in order to show the complete picture within the HRA. This was to reflect different valuations of assets within the HRA;
• This adjustment did not have a material impact on the overall bottom line as to what rent income required;
• A more comprehensive explanation would be provided after the meeting;
• The council was using a substantial amount of the Major Repairs Reserve to fund the significant investment plan for the HRA stock, in particular the refurbishment of the tower blocks. There will be also be slippages of the capital works as well to consider;
• A combination of bringing East Kent Housing in house, the condition of the housing stock and discovery of a number of aspects of the single system had necessitated the use of HRA reserves;
• The discrepancy question would be responded to after the meeting as more time was required to check the breakdown figures;
• The pessimistic view would have been a view that uptake of the covid vaccine would be slow, and maybe some people decide not to take it up, which would mean further local outbreaks of covid. The wider macro economic impact of covid is really significant. There would be a big impact on unemployment and business failures in Thanet. This would have a consequential impact on the business rates collection;
• The impact would also increase the council tax support payments and reduce income generated from business rates, council tax and fees and charges;

• The other pessimistic view would be that there wasn’t an increase in visitor numbers to Thanet in the summer season of 2021/22 and that the figures would be as low as they were in 2020;
• If all of those factors came true, there would be an expectation of more government funding to support mitigate the impact of covid;
• However government had already announced the level of support to local councils and there was no indication that this level could be increased;
• Some of the £3million reserves set aside this year for the covid impact that would have been used for the budget gap could be used next year;
• This might also call for an emergency budget to find additional funding if those reserves were diminishing during 2021/22;
• This was the pessimistic view. However S151 was more optimistic because the covid vaccination programme was being rolled out and the level of infection was falling. The situation was likely to improve in 2021/22. This was the indication coming from government;
• Thanet has not been hit as hard as some local authorities that rely on huge town centre car parks income;
• Thanet chose not to invest in commercial ventures and did not incur any income loss as a result of covid;
• S151 Officer was hopeful that as travel restrictions were eased during the course of the year domestic tourism would increase. This would lead to an increase in visitor numbers to Thanet;

• Thanet economy would benefit from a significant uptake in staycations;
• Officers would check the difference in rent averages between social rented properties and affordable renting as reported in paragraph 16 Table 9 and give an update to Members after the meeting;
• The reserves are held as a protection in case the financial situation got worse. The £3million reserves were in the General Reserves not HRA and rents fall under HRA. Not increasing rents would have a long term impact on the HRA.

Members noted the report.