27.1 The Head of Finance and Revenues gave a presentation on the Council’s Budget Proposals for 2020/21 onwards. The key points from the presentation were:
- Three rules had been used to guide the Council’s budgetary plans, which were: reserves should be available to cover a fifth year, taking into account the minimum balance required; the budget gap in the fourth year of the forecast should be less than £1m in total; the amount of unidentified savings to be less than set out in the previous year’s MTFP.
- The Local Government Funding Settlement had been largely in line with expectations and the arrangements which had been in place since 2015, although the Council would lose money as a result of the reduction in New Homes Bonus funding.
- That only a one year settlement had been agreed by Government which meant that it was harder for Councils to plan for the future.
- The Council Tax Referendum Limit was to be set at 2% for 2020/21.
- The increase in the borrowing rate from the Public Works Loan Board would mean that the Council’s Capital Programme would cost more to deliver.
- The budget gap, if cost pressures were absorbed and no action was taken to improve the position, would be £22.835m by the end of 2023/24.
- The ‘Big Ticket’ savings programme would continue, with a combination of this and reserves being used to balance the budget.
27.2 Councillor Pope commented that the Council had not achieved its ‘Big Ticket’ savings targets and asked whether these were likely to be met in the future. The Chief Executive explained that whilst in 2019/20 the target had not yet been achieved, and might not be achieved in full, over its lifetime the ‘Big-Ticket’ savings programme had delivered £4.7 million in savings which exceeded the original target. The Chief Executive also noted that the budget proposals had included provision for the 2019/20 ‘Big-Ticket’ savings target not being met.
27.3 Councillor M Cook commented that it was prudent to include ‘Big-Ticket’ savings in the budget proposals as over many years they had exceeded their targets. Councillor Cook said that the Council’s financial planning was effective, noting that when the present administration had come into power there had been sufficient reserves left to balance the budget for 4 years and that now, 9 years later, there were still more than 4 years’ worth of reserves left.
27.4 Councillor T Lockington asked whether planned future borrowing would be affected by the increase in the interest rate on loans from the Public Works Loans Board. Councillor M Cook noted that the increased cost would need to be mitigated, although it was possible that loans from the Municipal Bonds Agency might be available at better rates than could be obtained from the Public Works Loans Board.
27.5 Councillor Gage asked how the Council’s financial position compared to other District and Borough Councils. Councillor M Cook explained that Ipswich Borough Council had a more diverse income stream than most similar Councils, partly as a result of the direct provision of a wide range of services and the fees and charges income which resulted from this, and partly because of the income provided by the Council’s companies. The Head of Finance and Revenues noted that all Councils were having to use reserves to balance their budgets.
27.6 Councillor Gage asked what the financial impact of the Council’s investment strategy was. Councillor M Cook explained that the Council had £2-3 million more funds annually than it would if it had not set up the companies.
27.7 Councillor C Smart asked whether the increase in the Public Works Loan Board rate would have a ripple effect on other loan rates. The Head of Finance and Revenues explained that this was unlikely and that it was hoped that the Municipal Bonds Agency would actually be able to lend at a lower rate than the Public Works Loan Board.
27.8 Councillor Allen asked whether there would be a point at which the Council would not be able to reduce its expenditure any further without impacting on front line services. Councillor M Cook explained that the administration would do everything it could to protect front line services but that with the size of cuts which the Council had faced, and continued to face, this would not be possible for ever.
27.9 Councillor Harsant asked whether the Local Government Association had lobbied for a better settlement on behalf of Councils. The Chief Executive explained that the Government had chosen to protect the budgets of County Councils and Unitary Authorities, which provided Social Care services, and that District and Borough Councils were therefore affected significantly.
27.10 Councillor T Lockington asked whether Ipswich Borough Council would follow Suffolk County Council’s approach of cutting discretionary services. Councillor M Cook explained that the administration aimed to protect all front line services as far as possible and commented that Ipswich Borough Council now ran and paid for many services which Suffolk County Council had cut. Councillor Cook noted however that the increased budgetary pressure meant that it would be much harder to mitigate Suffolk County Council’s cuts in the future. The Chief Executive noted that providing statutory services in alternative ways could save significant amounts of money and that Ipswich Borough Council provided many discretionary services, but with fees and charges covering the costs of these services.
27.11 Councillor C Smart noted that the referendum limit for Council Tax rises had been reduced to 2% and asked if the Portfolio Holder for Resources had any comment to make on this. Councillor M Cook noted that most Councils were proposing to raise their Council Tax by the maximum which showed that they were facing significant financial pressure and would probably choose to raise Council Tax by more if they were able to do so.
27.12 Councillor Pope asked what level the Portfolio Holder for Resources would like to raise Council tax by. Councillor M Cook explained that he wanted to keep any Council Tax increase to the minimum possible whilst protecting front line services.
27.13 The Chair asked whether there would be any financial benefit in outsourcing some of the Council’s services. Councillor M Cook explained that this had been looked into in the past but that outsourcing didn’t deliver best value for the Council and was typically inflexible to residents’ needs.
27.14 The Chair thanked the Portfolio Holder for Resources and the Head of Finance and Revenues for their attendance and engagement with the Committee.