Agenda item

Gemma McNamara, Finance Manager, presented the information in the report. Key points highlighted included:

·         This was the first of two opportunities within the planning cycle for the Policy Overview Committee to consider issues relating to budget planning for 2021/22 and beyond;

·         The budget gap and savings requirement for the two years to 2022/23 stood at £19,987k after allowing for an assumed 3.8% per annum increase in Council Tax. This comprised a core Council Tax increase of 1.8% alongside a 2% increase relating to an Adult Social Care Precept to fund ongoing pressures within Adult Social Care;

·         The inflation requirement was driven by workforce inflation through anticipated annual 2% pay awards and a further 0.5% increase in employers’ pensions contributions, with £4.829k increases on the cost of care provision where annual pay inflation of around 4% was expected to keep pace with growth in the London Living Wage;

·         Corporate items represented the second largest contributor to the budget gap with £7,589k growth required over the Medium Term Financial Forecasting (MTFF) period;

·         Increasing demand for services linked to a growing and changing population accounted for £6,886k of the projected savings requirement, linked to Waste disposal, Adult Social Care, SEN Transport and Children’s Social Care;

·         In relation to Covid-19, General Fund pressures of £25m were projected in relation to the impact of the pandemic and the Council’s response during the 2020/21 financial year. Grants towards this of £15,617k had been confirmed and a further £8,500k was expected. It was anticipated that these funding allocations, together with the use of earmarked reserves, would contain this exceptional pressure in the current financial year;

·         Unallocated General Balances totalling £28,266k at 31 March 2021 were projected;

·         Within the MTFF there was inevitably a higher level of uncertainty than usual and both the Spending Review 2020 and the Business Rates Retention policy had been delayed;

·         The pandemic had left Councils facing huge pressures; however, Hillingdon Council was well placed to respond to the ongoing financial challenge with a solid track record of delivering balanced budgets and retaining £34,239k of unallocated General Balances at 31 March 2020;

·         In terms of next steps, the MTFF would be considered by Cabinet in December 2020 and would be consulted on during December 2020 and January 2021. This would include detailed consideration by each of the Policy Overview Committees of the proposals relating to their respective services.

Members requested clarification as to how the actual pay award for Council staff of 2.75% - higher than the 2% budgeted for – would affect these figures. It was confirmed that this had been allowed for in the budget for the coming year and, in the current year, was being contained within existing resources.

Members enquired whether the projected savings could be achieved in the next two years without the need for frontline service cuts. It was noted that this was a matter for Cabinet to determine rather than the Policy Overview Committee.

RESOLVED: That the Committee noted the financial context in which the 2021/22 budget setting process would take place in advance of detailed proposals being developed and approved at Cabinet in December 2020.