Minutes:
The Council received the recommendations of the Executive in respect of the updated Medium Term Financial Strategy (the MTFS) for the period 2024/25 to 2028/29. The document set out the strategic financial approach that the Council would need to take to deliver the Improvement and Recovery Plan (IRP) and respond to the Section 114 Notice, whilst continuing to meet its statutory duties. The paper included feedback from the recent resident engagement exercise, alongside next steps for a six week public consultation on proposed changes to Council services beginning Monday, 2 October 2023.
In addition, following the proposal by the Leader of the Council at the meeting of the Executive on 14 September 2023, an addendum had been included which noted that the Council’s Investment Programme would accommodate investment which had received full Government funding and support to facilitate the completion of assets that were partially complete and to deliver best value for the public purse. The addendum stated that investment in ThamesWey and Victoria Square would continue whereby it fell in accordance with Principle C as set out in the MTFS which referred to items where, following support from Government and Commissioners, resources were provided for specific schemes that were already in delivery when the Section 114 Notice had been issued. Noting that a further report would be brought back to the Executive setting out the actions being taken by Officers to implement those decisions, the addendum included a request for the Council to consider an additional recommendation drawn up by the Interim Director of Finance / Section 151 Officer:
(v) the Council notes the action to be taken by the s151 officer to accommodate Government supported funding for the Victoria Square and Thameswey Regeneration projects and requires a further report to be presented to the Executive setting out the detail of actions taken and the impact on the Council’s finances.
The Portfolio Holder for Finance, Councillor Roberts, set out a historical timeline of events since July 2022 through to the proposals being presented at the current meeting for the purpose of the public consultation. The Council had agreed a savings target of £12m of which £8.5m had been identified, against a total service spend of £45m. Despite additional cost pressures of £8.3m arising in September 2023, the savings target had been maintained at the same level of £12m as further reductions at this stage could not be reasonably identified, following consultation with the Commissioners.
Councillor Roberts emphasised the importance of restoring the confidence in the Council with Commissioners, the Department of Levelling Up, Housing and Communities, and the Treasury as it had been unable in hindsight to set a balanced budget since at least 2018; the reserves held had therefore been illusory; past claims of financial strength in light of high borrowing levels had been incorrect; past borrowing for revenue purposes was not permitted; and the Council had borrowed funds from the Public Works Loan Board to fund loss making Council owned companies, taking a margin and treating as income. The ambition was to become an enabling Council in the future, working with partners to meet the needs of the community and to be a smaller, focused organisation.
Councillor Roberts highlighted that, to date, services that would be delivered in the future by partners included social prescribing, hospital discharge support and family centres. The intention was to move from the Civic Offices to smaller premises and spend less on facilities and corporate resources, whilst incorporating savings from shared services and transformational efficiencies. It was noted that there was much concern amongst local residents over the proposed phased closure of Pool in the Park, alongside other discretionary service reductions affecting the arts and grants to external bodies, and staffing reductions across the Council.
Members were requested to support the proposal to undertake the public consultation on the savings identified, whilst work took place to further understand their impact and explore mitigations and alternatives, ahead of decision making at the Council meeting in February 2024. In addition, Councillor Roberts referred to an amendment to the resolution proposed by Councillor Kirby which he stated had received the support of the Members of the Executive.
The matter moved to the debate and the importance of the Council’s legal obligation to prepare an annual balanced budget. Councillor Kirby moved and Councillor Forster seconded an amendment which sought to provide a framework to deliver such a budget. It was stated that the Council paid £68m of annual interest on its borrowing and the current financial situation was beyond the capacity of the Council to deal with, even if only statutory services were being provided. Councillor Kirby expressed grave concern that the current budget deficit of £19.3m could increase further and there were no past examples of other local authorities being in the same financial position. The Council was urged to support the amendment to present Council with full details of all operating costs prior to decision making, with the exception of delegated authority in the current resolution, and to seek a debt restructuring programme from the Government. The amendment was to add part (vi) and part (vii) to the resolution:
“(vi) With the exception of the delegated authority agreed in (iv) and (v) above, before any decision on the proposed savings contained within the MTFS as set out in Annex 6, the Council be presented with full details of all operating costs, including following a rigorous process of further scrutiny.
(vii) Within ongoing discussions with central government, the Council is asking government to consider options to deal with the debt position in a way that supports a fully balanced budget. Council is determined to contribute via difficult spending decisions and the sale of assets at best value, as part of a fuller solution. This fuller solution requires a debt restructuring programme, including but not limited to:
a. Lower interest rates (‘interest rate restructure’)
b. Longer repayment periods (‘term restructure’)
c. Options linked to the benefits of business and economic growth”
The amendment was debated, with Members arguing for and against the proposed change. Members broadly supported the proposed (vi) as more detailed financial information would enable Members to view how the savings components had been calculated, for example the Pool in the Park would still incur expenses such as depreciation, interest payments and business rates if the proposed closure took place. However, some members expressed concern over the proposed (vii) and stated that the Council should be seeking assistance from the Government, instead of being prescriptive, without receipt of legal or financial advice or consideration by the Overview and Scrutiny Committee.
Following the debate, Councillor Roberts was provided with the opportunity to respond to the points raised, summarising the points made and noting that the amendment would work towards ensuring the Council would live within its means, before the Mayor referred the Members to the amendment proposed by Councillor Kirby.
Councillor Davis requested that the items (vi) and (vii) should be voted on separately.
In accordance with Standing Order 10.8 the names of Members voting for and against part (vi) of the amendment were recorded as follows:
In favour: Councillors H Akberali, T Aziz, A-M Barker, A Boote, J Brown, G Cosnahan, K Davis, S Dorsett, W Forster, P Graves, S Greentree, S Hussain, I Johnson, A Javaid, A Kirby, R Leach, L Lyons, C Martin, L Morales, J Morley, S Mukherjee, E Nicholson, S Oades, L Rice, D Roberts, and M Sullivan.
Total in favour: 26
Against: None.
Total against: 0
Present not voting: The Mayor.
Total present not voting: 1
Item (vi) of the amendment was therefore carried by 26 votes in favour and 0 votes against.
In accordance with Standing Order 10.8 the names of Members voting for and against part (vii) of the amendment were recorded as follows:
In favour: Councillors H Akberali, T Aziz, A-M Barker, A Boote, G Cosnahan, W Forster, P Graves, S Greentree, I Johnson, A Javaid, A Kirby, R Leach, L Lyons, C Martin, L Morales, J Morley, S Mukherjee, E Nicholson, S Oades, L Rice, D Roberts and M Sullivan.
Total in favour: 22
Against: None.
Total against: 0
Present not voting: The Mayor and Councillors J Brown, K Davis, S Dorsett and S Hussain.
Total present not voting: 5
Item (vii) of the amendment was therefore by 22 votes in favour and 0 votes against.
The Mayor referred the Council back to the recommendations from the Executive as amended by Council.
The Leader of the Council advised that the Council was required to set a balanced budget each year, however for 2024/25 this could only be achieved through staffing redundancies and reductions to discretionary services such as leisure. It was noted that the Eastwood Centre operated on a breakeven basis as it was a modern, energy efficient building. Investigations were underway to establish whether local community groups could for example assist with the maintenance of public toilets, or whether some businesses could enable the public to use their toilet facilities, and whether sports clubs could take on the upkeep of pavilions. It was noted that there would be difficult decisions for the Council in the setting of next year’s budget in February.
Members expressed concerns such as there having been insufficient information to base decision making on in the past, and requested further detail in the report for the Council meeting in February. Points made during the debate included the effect of any liability on the Council of any of the subsidiary companies becoming insolvent; assurances that any new borrowing for the current phases of the Sheerwater Regeneration Scheme and Victoria Square would not be used for operating expenses; how the Council was working on the assumption that a further Section 114 Notice would not be required in light of the current deficit of £19.3m; the Council was being hampered by historic poor record keeping and advised that zero-based bottom-up expenses information should be developed to ensure that the Council could maximise the funds to spend on the most vulnerable in the community; meeting dates for the Overview and Scrutiny Committee, Executive and Council should be recalibrated as necessary in the current financial situation.
Further points included that the current situation placed a strain on all individuals involved and affected by the current proposals; the Council had passed the running of the Women’s Support Centre to Catalyst which was now operating well; the External Audit of the 2019/20 accounts was still not complete; conflicting advice from past and current External Auditors over whether the Council was complying with the CIPFA regulations; and that the consultation should be delayed until further detail was available. Some Members felt that the consultation could not be postponed in light of the need to agree a budget in February.
Councillor Roberts was offered the opportunity to respond to the points raised during the debate, noting the concerns raised by Members over the decisions that the Council had no option but to consider and thanking staff for their continuing commitment to the Council in difficult times, before the Mayor directed the Council to the recommendations. Following a request by Councillor Davis, it was agreed that a named vote would be required for items (iii) and (vii) of the recommendation before Council.
In accordance with Standing Order 10.8 the names of Members voting for and against part (iii) of the recommendation were recorded as follows:
In favour: Councillors H Akberali, T Aziz, A-M Barker, A Boote, G Cosnahan, W Forster, P Graves, S Greentree, I Johnson, A Javaid, A Kirby, R Leach, L Lyons, C Martin, L Morales, J Morley, S Mukherjee, E Nicholson, L Rice, D Roberts and M Sullivan.
Total in favour: 21
Against: None.
Total against: 0
Present not voting: The Mayor and Councillors J Brown, K Davis, S Dorsett, S Hussain, and S Oades.
Total present not voting: 5
Item (iii) of the recommendation was therefore carried by 21 votes in favour and 0 votes against.
In accordance with Standing Order 10.8 the names of Members voting for and against part (vii) of the recommendation were recorded as follows:
In favour: Councillors H Akberali, T Aziz, A-M Barker, A Boote, G Cosnahan, W Forster, P Graves, S Greentree, I Johnson, A Javaid, A Kirby, R Leach, L Lyons, C Martin, L Morales, J Morley, S Mukherjee, E Nicholson, S Oades, L Rice, D Roberts and M Sullivan.
Total in favour: 22
Against: None.
Total against: 0
Present not voting: The Mayor and Councillors J Brown, K Davis, S Dorsett and S Hussain.
Total present not voting: 5
Item (vii) of the recommendation was therefore carried by 22 votes in favour and 0 votes against.
RESOLVED
That (i) the MTFS and embedded MTFP are an estimate of the Council’s current financial position at Q2, noting that the figures will change as further updating takes place;
(ii) it be noted that the Section 114 Deficit continues to be reviewed but is able to be used for conversations with Government to attain financial support and for other sundry purposes as referred in the report;
(iii) the Council consults on a number of the proposed savings contained within the MTFS, as set out in Annex 6 to the report;
(iv) the Chief Executive, as Head of Paid Service, has the delegated authority to now proceed with the full implementation of changes to Council staffing structures following consultation on those structures. These changes are contained in the MTFS Fit For The Future savings 3(A) Table of Annex 6 to the report;
(v) the Council notes the action to be taken by the s151 officer to accommodate Government supported funding for the Victoria Square and Thameswey Regeneration projects and requires a further report to be presented to the Executive setting out the detail of actions taken and the impact on the Council’s finances;
(vi) with the exception of the delegated authority agreed in (iv) and (v) above, before any decision on the proposed savings contained within the MTFS as set out in Annex 6, the Council be presented with full details of all operating costs, including following a rigorous process of further scrutiny;
(vii) within ongoing discussions with central government, the Council is asking government to consider options to deal with the debt position in a way that supports a fully balanced budget. Council is determined to contribute via difficult spending decisions and the sale of assets at best value, as part of a fuller solution. This fuller solution requires a debt restructuring programme, including but not limited to:
a. Lower interest rates (‘interest rate restructure’)
b. Longer repayment periods (‘term restructure’)
c. Options linked to the benefits of business and economic growth.