Agenda item

Purpose of report: Scrutiny of the Draft Budget and Medium-Term Financial Strategy.

Witnesses:

 

David Lewis, Cabinet Member for Finance and Resources

Denise Turner-Stewart, Cabinet Member for Communities and Community Safety

Kevin Deanus, Cabinet Member for Highways and Community Resilience

Natalie Bramhall, Cabinet Member for Property and Waste

Dan Quinn, Chief Fire Officer

Marie Snelling, Executive Director of Customer and Communities

Katie Stewart, Executive Director for Environment, Transport and Infrastructure

Lucy Monie, Director of Highways and Transport

Carolyn McKenzie, Director of Environment

Rachel Wigley, Director of Finance- Insight and Performance

Nicola O’Connor, Strategic Finance Business Partner

Tony Orzieri, Strategic Finance Business Partner

Nicola Kilvington, Director of Corporate Strategy and Policy

Louise Lawson, Strategic Finance Business Partner

Steve Ruddy, Head of Trading Standards

Sarah Bogunovic, Head of Customer Strategy

 

Key points raised during the discussion:

 

1.    A Member asked where interest and depreciation costs were located in the budget. A Strategic Finance Business Partner explained that interest payable costs sat within the central income and expenditure budget which is treated as a separate Directorate budget and that capital borrowing costs form part of the calculation of the budget envelopes.

 

2.    A Member, in referencing outcomes from the 2021 research noted in paragraph 8, asked what changes had taken place to facilitate resident’s requests for a more active role around what happens in their localities. The Director of Corporate Strategy and Policy said that involving and informing residents to address the findings from the research included the ‘Make it Happen’ campaign where opportunities to get involved locally were shared, online engagement tools to allow residents to find out what was happening in their area in addition to efforts to look at priority neighbourhoods and locality working.

 

3.    A Member asked if the research completed in 2021 would be compared against the research conducted in November 2022 so that the effects of the work undertaken could be evidenced. The Director of Corporate Strategy and Policy explained that there was not a direct comparison available as the qualitative element of the research conducted in 2021 had not been repeated in November 2022 due to the costs involved. However, the quantitative element of the research was currently taking place and would be compared to the 2021 data.

 

4.    A Member queried Surrey County Councils current intention on increasing Council Tax through the Adults Social Care precept. The Cabinet Member for Finance and Resources said that the draft budget had been set against assumptions made regarding the possible funding formula and levels of efficiencies required. Final decisions would be made following the Local Government Finance Settlement, expected on 21 December 2022; however the Leader of the Council had been clear that the Council did not anticipate taking the full amount of Council tax and Adults Social Care precept permissible without a referendum.

 

5.    A Member asked what lobbying could take place to encourage more of the business rates paid in Surrey to stay in Surrey. A Strategic Finance Business Partner said the review of business rate retention formed part of the fair funding reforms which had seen delays in terms of implementation. The Member asked that income from business rates to the County be included in recommendations suggested by the CEHSC.

 

6.    A Vice Chairman, in reference to the four options to close the draft budget gap noted on page 48, asked for the options to be ranked in order of most to least likely. The Cabinet Member for Finance and Resources said that implementation of a small increase in Council Tax or Adult Social Care precept would be most likely to close the £14.4 million gap, followed by the identification of additional efficiencies and lastly the use of reserves, however this was not an appropriate method for funding ongoing expenditure pressures within the budget.

 

7.    A Member asked if uncollected Council Tax had been considered to close the £14.4 million budget gap. The Director of Finance - Insight and Performance confirmed that while this might not be a method of closing the remaining gap for the 2023/24 budget, the County Treasurers Group had undertaken to draw together revenue and benefit managers from across the county to learn from each other and look at improving overall collection rates and outstanding debt.

 

8.    A Vice Chairman asked if a robust impact analysis was being developed to consider the effect on residents of the difficulties around maintaining existing services and increased demand. The Cabinet Member for Finance and Resources said that the draft budget had been set on basis that services remain unchanged. A Strategic Finance Business Partner explained that equality impact assessments were conducted annually between the draft budget and final budget and would be set out as part of the Final Budget papers to Cabinet and Full Council. The Director of Corporate Strategy and Policy added that proposals were also subject to a cumulative Equality Impact Assessment with service users involved which were also used to identify mitigations for those with protected characteristics, the cumulative impact assessments would be published with the final budget papers.

 

Environment, Transport and Infrastructure

 

9.    The Chairman suggested there was a strong case for the Members allocation to be increased by the full rate of highways inflation or a set sum. The Executive Director for Environment, Transport and Infrastructure explained that the Ringway Highways maintenance contract was linked to the Building Construction Information Service Index which considered specific activity and estimated the inflation appropriate to that activity. Work was continuing with the contractor to try to continue to deliver as much and as efficiently as possible. The Cabinet Member for Highways and Community Resilience added that discussions with the Portfolio Holder for Finance regarding the sources of any additional money would have to take place. The Chairman said that Members would expect acknowledgement of this element of the capital budget when the final budget was presented to Council.

 

10.A Member was concerned at the 27 per cent increase on resurfacing costs from Ringway and asked if a ceiling to the maximum amount had been negotiated. The Director of Highways and Transport explained that the percentage increase was linked to the Building Construction Information Service Index and not set by Ringway. The price of bitumen and oil had increased due to inflation and access; however work was consistent to ensure accurate payments against the framework in addition to revisiting prices directly with Ringway each month.

 

11.A Member noted that the highways maintenance capital fund of £71.3 million for 2023/24 drops to £29.5 million in subsequent years with the local highway scheme drops from £11.8 million to £1 million in subsequent years and asked for the reason of these reductions. The Executive Director for Environment, Transport and Infrastructure said that the figures included time limited projects and reflected agreed acceleration of capital spending into 2022/23 and 2023/24 from future years and did not represent an overall reduction in capital investment.

 

12.A Member queried if roads would go back to deteriorating following use of the catch-up amount which was implemented to repair their slow deterioration. The Director of Highways and Transport confirmed that this was not the intention. Asset models were run to determine road condition with the previous level of investment based on several factors to maintain a steady state to which the recent acceleration and money over the last two years had contributed. The modelling and level of investment would be revisited to determine the future condition of roads.

 

13.A Member queried the real scope for making efficiencies to the services provided given the unknowns. The Executive Director for Environment, Transport and Infrastructure agreed that delivering efficiencies became more challenging each year however work continued to develop and improve assets and to drive efficiencies in specific areas, such as energy savings, working practices and particularly around the new highways contract and the current and new waste contracts.

 

14.A Vice Chairman queried how the Council planned to fund the future of a sustainable bus network in Surrey and was this plan included in the budget. The Executive Director for Environment, Transport and Infrastructure explained that this was subject to a current consultation with lobbying planned for further funding and work currently underway to consider the current market and a new enhanced partnership with bus operators. The Director of Highways and Transport confirmed that there were no efficiencies set against the bus network and the bus budget included an increase of £2.1 million in response to the pandemic to help support transport ambitions.

 

15.A Vice Chairman queried if there was another round of government funding expected imminently. The Director of Highways and Transport said that the government had been considering several options including lower fares for a temporary period, however it was not known when the next bidding round would be available.

 

16.A Member said that specific figures would be useful regarding the bus network and questioned how much SCC was spending on supporting bus services in total and how was that figure expected to compare to next year. A Strategic Finance Business Partner confirmed the bus budget for 2022/23 was £9.6 million which included an additional £2.1 million added during the pandemic in response to changes to passenger numbers. The 2023/24 draft budget included an inflationary uplift for the current year and next year of approximately £1.65 million in addition to an uplift for a young persons travel scheme of approximately £0.45 million to take the total to approximately £11.7 million. Once adjusted for government grants the 2023/34 draft budget is £12.7 million. A Member asked if the figures related to supporting bus services and exclude the approximately £10 million SCC pays the bus companies to accept free or concessionary bus passes. A Strategic Finance Business Partner confirmed that the figures exclude concessionary fares.

 

17.A Member, in reference to the current bus consultation asked if the routes proposed as on demand services were commercial services supported by SCC subsidy or entirely owned and run by SCC. The Director of Highways and Transport explained that the Mole Valley on demand pilot had been funded by a Rural Mobility Fund government grant. All future funding options were being investigated and included commercial and full or part subsidy.

 

18.A Member questioned if sufficient emphasis was being given to greener future activity given that only ten per cent? of SCC’s capital budget was being spent on anything climate related. The Executive Director for Environment, Transport and Infrastructure said that greener future elements were included in most capital schemes across the ETI capital programme, and that all capital spend business cases were considered in respect of their carbon or environment impact. Slide 23 of the report pack showed that, except for two, most of the capital pipeline included greener futures elements contributing to carbon reduction. A Strategic Finance Business Partner added that the budget and the budget pipeline both included schemes in response to or contributed to carbon reduction over the five-year period totalling approximately £480 million.

 

19.A Member asked if there was any intention to invest in the laboratory at Merrow. The Executive Director for Environment, Transport and Infrastructure confirmed that improvement to the depot were intended. The Director Transport and Highways explained that a business case was planned to identify ways to improve the Merrow depot.

 

20.A Member queried how, when looking to the medium term, it was expected that Electric Vehicle (EV) on street chargepoints would contribute to the budget. The Executive Director for Environment, Transport and Infrastructure explained there was a current procurement of a provider for EV changepoints across the county, the award for which would be recommended to Cabinet in December, and transition to the use of EV chargepoints contributed to the expectation that the Council would develop its own asset base around the new ways of residents being able to travel. An income was expected however additional impact on roads and network would have to be considered.

 

Jan Mason left the meeting at 12.02pm

 

Surrey Fire & Rescue Service

 

21.A Member asked how staff retention was being managed, particularly those staff that wanted to stay within the service but were not able to continue with the physical aspects required of the role. The Chief Fire Officer said that capability processes were being used to identify opportunities of redeployment for staff who reach a point where they are unable to maintain a high level of operational fitness.

 

22.A Member asked how the Council could improve the retention of firefighters attracted to higher salaries in London. The Chief Fire Officer explained that exit and pre exit interviews were being conducted alongside a significant cultural review to provide baseline information within the service to better understand the drivers around people choosing to leave and consider career pathways and options to transfer to positions within the organisation. In addition, discussions were taking place with trade union partners around steps to assist staff retention.

 

Carbon budget

 

23.A Member was concerned that the Carbon budget was only now being put together given the climate emergency.

 

Resolved:

 

The Communities, Environment and Highways Select Committee:

 

1.    Broadly supports, based on the information provided, the budget proposals for those areas that fall within its remit, noting the assurance that all the savings/efficiencies identified will not lead to deterioration in the services provided to residents (subject to the Local Government Finance Settlement anticipated on 21 December 2022).

 

2.    Recommends an uplift in the Highways Capital Programme to reflect the very high inflation specifically facing the service and its contractors – specifically in the Members’ Highways allocation.

 

3.    Will continue to closely monitor performance throughout the year to be satisfied that expectations derived from the budget will be met in practice.

 

4.    Asks the relevant Cabinet Members/Services that a briefing note highlighting any impact on the Council’s budget, which could impact the areas under this Select Committee’s remit, be circulated to the Committee Members following the Local Government Finance Settlement.

 

5.    Notes that the Surrey County Council currently receives only ten per cent of Business Rates paid by Surrey Business. The Committee asks Cabinet to re-lobby the Government and all Surrey Members of Parliament (MPs) to increase the amount of Business Rates that come to the County Council.