Agenda item

Report of the Chamberlain.

The Committee considered a Report of the Chamberlain concerning the 2021/22 City Fund Budget.

 

The Chamberlain opened the discussion by stressing that, despite significant external and internal challenges (not least concerning rental income and the Barbican Centre’s finances), good progress was being made in out efforts to balance the books - both over the short and medium term. He commended Members for their constructive and collegiate approach in ensuring that the 12% savings targets were baked into the 2021/22 Budget; adding that the recent Member-officer bilateral meetings displayed a very encouraging sense of collaboration and collective endeavour which bode well for the Corporation’s efforts in sticking to the medium-term “flight path”. In short, we were in good place, but a great deal of hard work was still required.

 

The Chairman thanked the Chamberlain and his team for their hard work in delivering the Budgets. He emphasised that whilst he was instinctively a low tax politician, this year, in particular, was a bad one to increase tax; given the damage to livelihoods and economic activity over the past 12 months, it would extremely hard to tell residents and businesses that we were raising the level of the core Council Tax and Business Rates.

 

However, he pointed out that, given the huge challenges facing the most vulnerable, and by extension, the Corporation’s Department for Communities and Children’s Services, a 3.00% increase to the Adult Social Care Precept was justified, and would be a prudent and sensible intervention which took into account the pressures on the most vulnerable.

 

Several Members expressed their firm support for these proposals.

 

In response to a query the Chairman confirmed that, when it came to the Core Council Tax bills, the City would remain the third lowest of all local authorities across Greater London (Wandsworth and Westminster had lower average Council Tax bills)

 

Turning to the Treasury Management Statement, a Member expressed their concern about the proposal to widen the list of institutions in which the Corporation could place funds; namely, to those with a long term credit rating of A- (the previous policy was A and above). Given the likelihood of significant economic turbulence over the next 18 months, we needed to tread carefully and exercise caution when it came to exposure. The Chamberlain responded that, whilst the list of institutions had broadened to include A- so as to assist with diversification of our holdings, officers took on board completely the concerns around risk and exposure

 

The Chairman suggested that, going forward, the respective Chairmen and Deputy Chairman of the Finance Committee and Financial Investment Board are forewarned before we place funds with any A- institutions and/or institutions we have funds with are downgraded from A to A- (or A- to BBB+). Several Members cautioned that, whilst scrutiny was to be welcomed, we should not over elaborate the process. The Chairman stressed that whilst he didn’t want to slow things down, any potential risks of this nature should be monitored, and he asked the Chamberlain to come back with a proposal for Members to consider.

 

RESOLVED – that the Committee:

 

·         Noted the overall budget envelopes incorporate the 12% savings (or 6% in the case of social care and children’s services), as agreed by Resource Allocation Sub Committee, and are consistent with the approved savings flight path.

 

·         Agreed to continue to monitor COVID income risk during 2021/22, and maintain a COVID contingency fund, not releasing £30m of general fund reserves for major project spend.

 

·         Approved the overall financial framework and the revised Medium-Term

Financial Strategy (paragraph 18 in the Report)

 

·         Approved the Treasury Management Strategy Statement and Annual Investment Strategy for 2021/22, including the treasury indicators.

 

·         Approved the City Fund Net Budget Requirement of £153.6m (paragraph 40 in the Report)

 

Council Tax

·         Approved an increase in the Adult Social Care Precept of 3.00% (paragraph

25).

 

·         Considered whether to freeze council tax (paragraph 27)

 

·         Determined the amounts of Council Tax for the three areas of the City (the City, the Middle Temple, and the Inner Temple), to which are added the precept of the Greater London Authority (GLA) – (appendix A of the Report).

 

·         Determined that the relevant (net of local precepts and levies) basic amount of Council Tax for 2021/22 will not be excessive in relation to the requirements for referendum.

 

·         Determined the current 100% discount awarded to unoccupied and unfurnished and uninhabitable dwellings is continued at zero (0%) for the financial year 2021/22.

 

·         Determined that the premium levied on long-term empty property for 2021/22 of 100% and 200% is continued and that for properties that have been empty for over ten years, a premium of 300% is levied.

 

·         Having given regard to the government guidance issued, agreed that the Chamberlain be given the discretion, delegated to the Head of Revenues, to reduce or waive the long-term empty premium charge in exceptional

circumstances.

 

·         Approved that the cost of highways, street cleansing, waste collection and

disposal, drains and sewers, and road safety functions for 2021/22 be treated

as special expenses to be borne by the City’s residents outside the Temples

(appendix A of the Report).

 

Business Rates

 

·         Set a Non-Domestic Rate multiplier of 52p and a Small Business Non-Domestic Rate Multiplier Rate of 50.7p for 2021/22.

 

·         Noted that, in addition, the GLA is levying a Business Rate Supplement in

2021/22 of 2.0p in the £ on properties with a rateable value of £70,000 and

above (paragraph 47).

 

·         Delegated to the Chamberlain the award of discretionary rate reliefs under

Section 47 of the Local Government Finance Act 1988 (paragraphs 48-52).

 

Capital Expenditure

·         Approved the Capital Strategy (appendix E).

 

·         Approved the funding of the court element of the Salisbury Square project from City’s Cash, rather than City Fund - to better equalise the call on the Corporation’s investment assets and to protect the local authority fund. (paragraph 22)

 

·         Approved the Capital Budgets for City Fund and the allocation of central funding from the appropriate reserves to meet the cost of the 2021/22 new bids. Release of funding being subject to approval at the relevant gateway and specific agreement of the Resource Allocation Sub Committee at gateway 4(a) (paragraph 53)

 

·         Approved the allocation of central funding in 2021/22 to provide internal loan

facilities for the police and the HRA, currently estimated at £4.9m and £19.2m

respectively.

 

·         Approved the Prudential Code indicators (appendix C).

 

·         Approved the authorised limit for external debt (which is the maximum the City Fund may have outstanding by way of external borrowing) at £237.5m for 2021/22; and the Minimum Revenue Provision (MRP) for 2021/22 at £1.1m (MRP policy was included within appendix D – Treasury Management Strategy Statement and Investment Strategy Statement 2021/22 - appendix 2).

 

Treasury Management Strategy Statement and Investment Strategy Statement

2021/22 (Appendix D)

·         Approve the following changes to the creditworthiness policy to ensure the

Corporation can continue to access a wide enough range of counterparties of

suitable credit standing when investing cash balances under the Treasury

Management Strategy (appendix D, paragraphs 8.2 to 8.6):

 

o Change the minimum acceptable Long Term credit rating for banks and other financial institutions from “A” to “A-” (appendix D, paragraph 8.2);

 

o Change the minimum acceptable sovereign credit rating for approved counterparties from “AAA” to “AA+” (appendix D, paragraph 8.5);

 

o Add an overall limit of £250m for outstanding lending to local authorities as a whole at any given time (appendix D, paragraph 8.6).

 

Chamberlain’s Assessment

·         Took account of the Chamberlain’s assessment of the robustness of estimates and the adequacy of reserves and contingencies (paragraphs 64-67 and appendices B and G respectively).