Agenda item

The Executive RECOMMENDED to Council that the 2021/22 General Fund Revenue Budget of £14,069,625 as set out in Annex A to the agenda report be approved.

The Executive RESOLVED to note:

1.    That a minimum revenue provision of £2,274,000 is required to repay debt;

2.    That the budget includes provision for an earmarked reserve of £800,000 to offset any further deterioration in income arising from the pandemic and associated economic downturn;

3.    That the budget includes the utilisation of £300,000 from the General Fund Reserve;

4.    The provisional NNDR baseline of £1,568,000 and the final settlement on will be reported to Council at its meeting on 24th February 2021;

5.    That a full report, setting out Council Tax proposals for 2021/22 will be presented to Council on 24th February 2021, but that for the purposes of this report it has been assumed that Council Tax will increase by £5.00 (from £223.66 to £228.66) at Band D.          

The Executive was reminded there was a legal requirement that the Council could only approve a balanced budget.   Members received a report which set out proposals for the budget and Council Tax for 2021/22.  The report detailed expected funding including Business Rates and grants for 2021/22 subject to confirmation. It also included a commentary on the financial challenges the Council faced in the future. It indicated that a net budget of £14,069,625 would be required.

The 2021/22 budget had been built up from individual service budgets that were shown in detail in the budget book. Where possible inflationary pressures had been absorbed and no allowance had been made for pay or pension increases.

A number of fees and charges had been increased and had been approved in accordance with the Financial Regulations and were reflected within the budget.

Government funding in the form of Business Rates and New Homes Bonus had been based on the provisional settlement announced in November/December 2020. This was subject to confirmation in February 2021.

The Council would be part of a Surrey-wide Business Rates pool in 2021/22 but expected gains from this exercise were not included in the budget.

The Council maintained a number of earmarked reserves and provisions and all were considered appropriate and supportive of future expenditure requirements. Revenue reserves (including earmarked reserves) were projected to be approximately £33 million at 31st March 2021. These reserves were not only needed for future committed expenditure, such as SANGS, but also to manage the significant financial risks around commercial property and interest rates. They could also be used to balance the budget until new income streams or savings were available.

The shortfall in the Collection Fund arising from financial year 2019/20 of £1,278k had been met from a call on the Council’s Business Rates Equalisation Fund.

Surrey Heath had acquired significant property holdings over the last five years, which was contributing to support Council services. The pandemic and associated economic downturn had had a significant impact on expected income for 2021/22 and it was proposed to set aside an earmarked reserve of £800k (re-purposed from existing reserves) to be drawn down on in the event of any further deterioration in economic conditions.

The Council only had limited capital receipts and so needed to borrow to fund its capital aspirations. If these projects were not in themselves self-financing then the interest and Minimum Revenue Provision must be covered from the overall revenue budget. For every £1m borrowed about £39k revenue was required per year, assuming the asset had a life of 50 years, and so more income generating investments, or reductions in costs, would be required to cover this cost.

The General Fund Reserve, which was the Council’s contingency fund, needed to be sufficient to deal with any unexpected expenditure. The draft budget for 2021/22 required a call-down on the Reserve of £300k. Provided Council Tax was increased as recommended and the budget delivered then the General Fund should be at least £2.0m at the 31st March 2022, and this figure was confirmed as achievable by the Council’s Section 151 Officer.

RECOMMENDED to Council that the 2021/22 General Fund Revenue Budget of £14,069,625 as set out in Annex A be approved.

RESOLVED to note that

                           (i)             a minimum revenue provision of £2,274,000 is required to repay debt;

                         (ii)             the budget includes provision for an earmarked reserve of £800,000 to offset any further deterioration in income arising from the pandemic and associated economic downturn;

                        (iii)             the budget includes the utilisation of £300,000 from the General Fund Reserve;

                        (iv)             the provisional NNDR baseline of £1,568,000 and the final settlement will be reported to Council at its meeting on 24th February 2021;

                         (v)             a full report, setting out Council Tax proposals for 2021/22 will be presented to Council on 24th February 2021, but that for the purposes of this report it has been assumed that Council Tax will increase by £5.00 (from £223.66 to £228.66) at Band D.