To agree the minutes of the meeting of the Committee held on 24 October 2024, as a correct record.

Resolved: That the Minutes of the Finance & Investment Advisory Committee held on 24 October 2024, be approved and signed by the Chairman as a correct record.

Any interests not already registered.

There were none.

Members noted the actions had been shared by email with the Committee via email.

The Portfolio Holder started his update by stating that he wanted to focus on the budget gap which the Council faced. It was unfortunate that the budget gap had widened as the Government would not be fully contributing to offset the increase in Employers National Insurance contributions, as Officers had been led to believe. The Provisional Local Government Financial Settlement had also not been very favourable.

The savings Member had provided through the Advisory Committees and via individual members, unfortunately had a limited impact on closing the budget gap.  Further to the work of the Advisory Committees the Cabinet has been exploring additional ways of closing the gap through Portfolio Holders. As agreed with the Leader, Portfolio Holders had been asked to discuss specific areas of their budgets with their Chief Officers and identify further areas to be addressed.

He advised that the unknowns around Devolution would undoubtedly have an influence on the financial outturn for 2025/26, including timings and the possibility of any financial restrictions that may come forward, but these were all unknown at this stage and so work on the budget would continue as previously agreed.

There were none.

The Head of Revenues and Benefits presented the report, seeking Members’ approval of proposals for discretionary relief from business rates. It was noted that the Council required potential recipients of discretionary rate relief to submit a formal application every two years. The year 2025/26 was the start of a new two year cycle. Appendix B to the report set out the recommendations for awarding discretionary rate relief for 2025/26 to ratepayers who had submitted, or were expected to submit an application by 1 March 2025.

There were two categories eligible for rate relief, including not for profit organisations and top-up relief of 20% for charities and community amateur sports clubs as they already received 80% mandatory relief.   If all recommendations were approved the total relief would be £228,865

Resolved: That it be recommended to Cabinet that the proposals for granting relief from business rates for 2025/26, as set out in Appendix B, be approved.

The Head of Legal and Democratic Services presented the report which provided an update on the Council’s approach to procurement and the implementation of the Procurement Act 2023. The actions set out in the report would ensure a smooth transition to the new regime. After the new processes from the Act were embedded, a Procurement Strategy would be in place as soon as practicable.

In response to questions raised, the Head of Legal and Democratic Services advised that the additional burden brought about by new requirements to serve notices would be absorbed into existing roles. He also explained that the number of waivers granted represented only a small proportion of procurement exercises, both by volume and value. The introduction of a contract management framework had helped improve manager awareness and increased timely market engagement. He advised that contract values were relatively lower in the council by comparison to some other organisations and there had been many procurement successes under the existing arrangements, including the leisure procurement. 

Members discussed the report and considered the process for the new strategy. Thorough consideration was also given to a procurement officer and whether this position was required, as well as discussion on a central hub for procurement. The use of frameworks was also considered.

Resolved: That it be recommended to Cabinet that the Council’s approach to procurement and to the implementation of the Procurement Act 2023 be approved.

Cllr. Jim Morgan requested his vote of abstention be recorded.

The Head of Finance presented the report which provided Members with the current financial position of the Council as at 30 November 2024 and the forecast to March 2025. The current forecast position to the end of March 2025 was an unfavourable variance of £124,000 which was an improvement from £288,000 in August’s monitoring. The changes included improvement in the interest receipts and cash balances being in a better position. The forecasted contribution from vacancies had also been revised to reflect the current level.

Members were advised that in regards to the capital programme, the budget was £33.6million but the forecast for the year end was only £7.5million. This was due to delays on Bevan Place, the Quercus 7 Affordable housing facility not being utilised, and a delay in the White Oak Residential scheme, as a new contractor was awaited.

Members considered the report and asked questions of clarification. The Committee was advised that Building Control and Development Management were demand led services, and this year there had been a reduced demand for these services which had affected forecasts. In response to a question regarding the capital schemes, Members were advised that grant funding had been used to deliver the houses for Quercus Housing rather than needing to borrow the money from the Council.

Resolved: That it be recommended to Cabinet that the report be noted.

The Head of Finance presented the report which outlined the Financial Performance Indicators to the  end of November 2024. He highlighted to the Committee that there were no significant changes, and the two indicators still performing below target were internal audit recommendations and housing benefit. It was reported to Members that the under-performance in processing housing benefit claims was due to staff sickness, staff vacancies and IT systems but work was continuing to improve performance.

Resolved: That the report be noted.

The Senior Principal Accountant presented the report which formed part of the budget strategy for 2025/26 and deals with the proposed treasury strategy for the forthcoming year.

The Local Government Act 2003 required the Council to prepare an Annual Treasury Management Strategy which sets out the Council’s policies for borrowing and managing its investments and for giving priority to the security and liquidity of those investments. In making borrowing and investment decisions the Council must have regard to the Prudential Code and the Prudential Indicators that it sets.

The first part of the treasury management report proposes various prudential indicators and a Minimum Revenue Provision policy to ensure that any capital expenditure plans are affordable. It was highlighted to Members that the capital plans tie in with the updated Capital Programme as per the budget report which was being considered later in the meeting.

The report also detailed the borrowing and repayment strategy. No major changes had been made to the investment strategy for 2025/26.

In response to questions, Members were advised that the White Oak residential scheme included both building the houses and then selling the houses, which made up a large proportion of the capital receipts figure. This was similar for Farmstead Drive.

Resolved: That the report be noted.

The Head of Finance presented the report which provided an update on the progress of the Property Investment Strategy and the future direction of the strategy. The property investment strategy was approved by Council on 22 July 2014 to support the aim of the Council becoming more finally self-sufficient as Government Support continued to reduce. The acquisitions to date have helped the Council achieve this aim. Due to Government changes in the way councils could access Public Works Loan Board (PWLB) borrowing and the changes to CIPFA’s Prudential Code, the Property Investment Strategy was no longer included in the Capital programme therefore the Council could not currently borrow to make any more property investments purely for yield.

The Property Investment Strategy income was made up of income from the investment properties owned by SDC, interest on loans to Quercus 7, a dividend from Quercus 7, less an annual contribution to the Investment Property Maintenance Reserve. Appendix A set out the Property Investment Strategy criteria.

A question was raised regarding MRP charges in relation to internal borrowing. The Head of Finance advised that he would report back.

Action: For Head of Finance to update the Committee on MRP charges.

Resolved: That the report be noted.  

The Head of Finance presented the report which set out the proposed Capital and Asset maintenance programmes for 2025 to 2028 together with proposed funding as detailed in Appendix B. It also set out the schemes that had already been approved as well as new capital bids. The report provided a summary of the disposal programme which showed the total capital receipts that were expected to be received each year, as well as those receipts that had already been allocated.  It was proposed in the report, that £691,000 be set aside for asset maintenance for 2025/26. Members were advised that in compliance with the CIPFA code of practice, appendix C was the capital strategy for 2025/26.

Members considered the report.

Resolved: That the

a)      Capital Programme 2025/28 and funding as set out in Appendix B, be noted;

b)      Proposed Asset Maintenance budget of £691,000 for 2025/26, be noted; and

c)      The Capital strategy for 2025/26, appendix C of the report, be noted.

The Head of Finance set out the review on Fees and Charges for 2025/26, following the introduction of the annual fees and charges review in 2024 which was now an integrated part of the budget process. The budget assumption was for income to increase by 2.5% and the proposals in the paper would deliver an additional £13,000. He advised that it had been a full and extensive review of all fees and charges with the focus on ensuring that all future fees were set at the appropriate level for the service being provided. If the fees and charges were not approved then alternative budget solutions would be needed to replace the lost income.

Members considered whether an increase of 2.5% was sufficient and whether some charges should be increased further. Discussion took place on Building Control fees and Members were advised that they were set on a cost recovery basis. A question was also raised on enforcement actions for breaches of planning permission.

Action: For Members to be advised whether administration fees could be charged on legal proceedings for planning breaches.

Resolved: That the report be noted.

The Head of Finance set out the review on Fees and Charges for 2025/26, following the introduction of the annual fees and charges review in 2024 which was now an integrated part of the budget process. The budget assumption was for income to increase by 2.5% and the proposals in the paper would deliver an additional £13,000. He advised that it had been a full and extensive review of all fees and charges with the focus on ensuring that all future fees were set at the appropriate level for the service being provided. If the fees and charges were not approved then alternative budget solutions would be needed to replace the lost income.

Members considered whether an increase of 2.5% was sufficient and whether some charges should be increased further. Discussion took place on Building Control fees and Members were advised that they were set on a cost recovery basis. A question was also raised on enforcement actions for breaches of planning permission.

Action: For Members to be advised whether administration fees could be charged on legal proceedings for planning breaches.

Resolved: That the report be noted.

The Chief Officer – Finance and Trading presented the report which updated the Committee on the progress in setting the 2025/26 budget. The Committee had so far received two budget reports prior to this meeting and a number of more specific reports at this meeting,  the Committee having requested a further opportunity to comment on the budget later in the process.

The report to Cabinet in December indicated an annual budget gap of £437,000. Since then, the Provisional Local Government Finance Settlement had been received and work completed on the Council Tax Base and review of fees and charges. These changes result in the annual budget gap having increased to £509,000, which was included in the January Cabinet report.

In common with the majority of district councils, the Local Government Finance Settlement was not beneficial, and the amount of government funding received by this council had been reduced by the same amount as the maximum allowable council tax increase. Also, it was not now expected that the employers NI increase announced in the Government’s budget would be fully funded, despite assurances to that effect having been announced at the time.

The financial savings resulting from Member ideas following the Advisory Committees and Cabinet had now been incorporated into the budget but were relatively small. Cabinet had asked the Chief Executive to make £200,000 of additional savings from the management structure, and had also asked for the budget assumptions to be reviewed.

The January Cabinet report included SCIAs for all potential savings including changing assumptions on Council Tax increases for 2025/26 and 2026/27, Business Rates Retention for 2026/27 and 2027/28, and Interest receipts.

If these changes were supported they would reduce the budget gap but increase the level of risk going forward.

Members considered the report and the update from the Chief Officer. Consideration was given to whether there was support for making assumptions in the underlying budget to be more favourable but whilst noting this could increase the risk of those assumptions. Discussions took place on a council tax increase to 3% rather than 2%, Business Rates Retention and investment returns. Following discussions the Committee expressed its support for an increase in the budget assumption on the level of council tax, and for an increased assumption on  investment returns, but with so much uncertainty around business rates there was less support for amending the assumption on business rates retention.

Resolved: That

a)     the current budget position, be noted; and

b)     the Committee’s support for an increase in the assumptions for the level of Council tax and investment returns be noted., as well as concern over any increased assumption for Business Rates Retention.

The work plan was noted.

In closing, it was brought to Members’ attention that this would be the last meeting attended by Alan Mitchell, the Head of Finance, as he would be leaving the Council to take up the position of Finance Director at Folkestone and Hythe. Members’ expressed their thanks and best wishes for the future.