Budget and Financial Strategy 2021-22

Budget Setting and Associated Financial Strategies 2021/22 - 2025/26

Contents

Introduction and Executive Summary
Budget Assumptions
Financial Resources
2021/22 Spending Plans
Budget Requirement
Reserves
The Transformation Strategy and Efficiency Plan
Risk and Sensitivity
Capital Programme
Treasury Management
Options
Appendices

1. Introduction and Executive Summary

1.1 Introduction

2020/21 has had unprecedented challenges therefore the 2021/22 budget seeks firstly, to ensure that the Council remains financially resilient and able to deliver the services it must by law; secondly to initiate the process of redressing the imbalances created by the Covid-19 pandemic, by appropriately focussing on economic recovery and growth and prosperity within the Borough and supporting the most vulnerable in our community; thirdly to ensure that health and wellbeing remains a high priority; and finally to remain committed to carbon reduction and supporting the environment. Thus, ensuring the Council continues to deliver its Corporate Strategy objectives.

The Council welcomes additional financial support from central government in relation to Covid-19 (around £0.8m) in relation to loss of fees and charges income, additional expenditure costs and support for homelessness and rough sleeping. This has mitigated some of the anticipated pressures although in terms of longer term Covid-19 legacy, the sooner the socio-economic environment returns to something like normality then the full financial impact of Covid-19 will be evident.

2021/22 is the year in which we were anticipating the now delayed comprehensive spending review and Business Rates and Fair Funding reviews would come into play, however this is not the case. We have for 2021/22 assumed a ‘cliff edge’ for a reduction in business rates linked to the impact of Covid-19 on businesses (currently at least partially insulated by business rates relief in the retail, hospitality and leisure sectors). Whilst we have budgeted for Business Rates at a ‘safety net’ position at £2.8m it is entirely possible the ‘central case’ materialises with business rates received being £4.3m or more (Section 3.3 - Business Rates). This would therefore negate the need for the use of the Organisation Stabilisation Reserve as currently projected. A more localised business rates risk concerns the Ratcliffe-on-Soar Power Station, due to close in 2025.

Fundamentally there remains much risk with the budget going forward in terms of both Covid-19, Business Rates and Fairer Funding (reviews possibly to take effect from 2022/23). Being prudent remains the most sensible course of action with reserves (excluding New Homes Bonus) to remain at £6m to £7m over the term of the Medium Term Financial Strategy (MTFS) at a period when the potential for adverse financial risk has never been greater. Any scope to increase reserves for both opportunities to deliver the Council’s corporate priorities, and to mitigate against adverse future financial risk, will be taken.

Estimates for 2021/22 have made assumptions about both loss of income and any increase in expenditure as a result of Covid-19. The net deficit position is £1.5m over the next 2 years, this is a manageable risk and business rates uplift may well ensure there is no recourse to use reserves. The Council continues to invest significant capital within the Borough (£38.8m to 2025/26) with projects such as the Bingham Leisure Hub and the crematorium demonstrating the Council’s commitment to economic growth, meeting challenging housing targets, improving leisure facilities and the environment. Such projects are major components of the Council’s Transformation Programme to ensure there are sufficient resources to deliver core services.

Whilst we understand our financial challenges the budget looks to the future. The Climate Change Action reserve focuses on improving the environment. The Development Corporation reserve demonstrates the Council’s commitment to regenerating the Ratcliffe-on-Soar power station site with the creation of employment, improvement in transport connectivity and maximising carbon neutral ambitions.

In line with the Government’s referendum principles, the budget for 2021/22 proposes an increase in Council Tax of 3.24% to £147.36 (the Council has the option of increasing Council Tax by up to £5, or 2%, whichever is the higher, with the recommended increase being £4.62). This will give an average band D Council Tax increase of less than 9p per week, ensuring Rushcliffe’s Council Tax remains amongst the lowest in the country (and the lowest in Nottinghamshire). This enables the best possible services to continue to be delivered to Rushcliffe residents, that resources remain sufficient to meet both current and future needs and importantly projected funding levels and reserves are sufficient to protect the Council. This is essential given the risks and uncertainty that prevails in the current financial environment, with the full impact of Covid-19 yet to be determined and the impact on both businesses and the community.

This budget and its uncertainty remains challenging. The associated financial strategies continue the progress made in recent years to ensure that the Council’s financial plans are robust, affordable and deliverable despite Covid-19 and the pressures it has created. This budget is designed to ensure we maintain high quality services for current and future generations, a budget that is both financially and environmentally sustainable.

1.2 Executive Summary

This report outlines the Council’s Medium Term Financial Strategy (MTFS) through to 2025/26 including the revenue and capital budgets, supported by a number of key associated financial policies alongside details of changes to fees and charges. Some of the key figures are as follows:

Medium Term Financial Strategy - key figures
Category	2020/21	2021/22
RBC Precept	£6.279m	£6.522m
Council Tax Band D	£142.74	£147.36
Council Tax Increase	3.59%	3.24%
Retained Business Rates	£3.984m	£2.820m
New Homes Bonus	£2.311m	£1.633m
Reserves (at 31 March)	£14.510m	£15.175m
Capital Programme	£18.936m	£28.158m

Medium Term Financial Strategy - Special Expenses
Special Expenses	2020/21	2021/22	Increase /(Decrease) £	Increase /(Decrease) %
Total Special Expenses	£711,900	£732,900	21,000	2.95
West Bridgford	£48.51	£49.65	1.14	2.35
Keyworth	£3.76	£3.41	(0.35)	(9.31)
Ruddington	£4.12	£4.00	(0.12)	(2.91)

The Local Government Act 2003 introduced a requirement that the Chief Financial Officer reports on the robustness of the budget. The estimates have been prepared in a prudent manner, although it should be recognised that there are a number of elements outside of the Council’s control. A number of risks have been identified in Section 8 of this report and these will be mitigated through the budget monitoring and risk management processes of the Council.

2. Budget Assumptions

Statistical assumptions which influence the five-year financial strategy.

Statistical assumptions which influence the five-year financial strategy
Service Area	Note	2020/21	2021/22	2022/23	2023/24	2024/25	2025/26
Budgeted inflation	a	0%	0%	0%	0%	0%	0%
Pay costs increase	-	2%	0%	0%	1%	1%	1%
Employer's pension contribution rate	b	17.6%	17.6%	17.6%	17.6%	17.6%	17.6%
Return on cash investments	c	1.87%	0.10%	0.25%	0.50%	0.50%	0.50%
Tax base increase	d	1.87%	0.62%	2.00%	2.00%	2.00%	2.00%

Notes to Assumptions

Whilst inflation does impact on services, the Council’s managers are expected to deliver services within cash limited budgets which require them to absorb the cost of inflation. As such, the net effect of inflation is reduced to zero within the estimates which is the equivalent of an estimated £105k saving in the 2021/22 budget. Adjustments are made for contract inflation and areas of higher risk such as utilities.

The next triennial valuation of the pension fund is due in 2022 and will cover the period 2023/24 to 2025/26. For the budget, we have assumed the same employer’s contribution rate of 17.6% and annual deficit payment of £918k. The Council pre-paid the deficit in both 2017/18 and 2020/21 and will consider this option again at the next valuation subject to an assessment of potential savings.

Cash investment returns are based on projections consistent with the Council’s Capital and Investment Strategy and much reduced due to expectations on low base rates of interest and other rates for investment likely to be available.

Tax base increases have been reset for 2021/22 to reflect the delay in housing developments as a result of Covid-19. Later years reflect normal anticipated growth in housing within the Borough.

3. Financial Resources

3.1 The proposals for Local Government funding (Fairer Funding and Business Rates) have now been further delayed by the impact of Covid-19. It is anticipated that the review will now take place in 2021/22 with implementation in 2022/23. It has not been confirmed by Government that the reforms will take place next year. Government however did confirm that consultation on the future of New Homes Bonus will take place in 2021, following an announcement that an additional year of funding will be included in 2021/22 only. The delays to the reforms will add further uncertainty over funding within the period of this MTFS with only one year of funding currently certain.

3.2 This section of the report outlines the resources available to the Council: Business Rates, Council Tax (RBC and Special Expenses), Revenue Support Grant, New Homes Bonus, Fees, Charges and Rents, and Other Income.

3.3 Business Rates

The legacy of Covid-19 on Business Rates for 2021/22 has provided much uncertainty over the expected receipts. The Council would ordinarily make assumptions reflecting experience to date with regard to the award of additional reliefs, successful ratings appeals and government policy changes. The Government’s proposals for 75% Business Rates retention and a new funding system have now been postponed for a second time due to Covid-19. The Council has taken a prudent approach and for 2021/22 has budgeted at safety net (the minimum that the Council would receive in Business Rates receipts) plus retained receipts from Renewable Energy properties. The forecasts for 2022/23 onwards allow for a full reset of Business Rates and the loss of receipts from Ratcliffe-on-Soar Power Station which is expected to cease production in 2025. The power station makes up a reasonable proportion of the tax base at 7.8% (£5.74m) with the Council’s exposure around £3m.

In March 2020 the Government announced that the retail discount relief would be extended to include most customer facing businesses and childcare providers due to the impact of Covid-19. As has been in the past with previous changes, the Council has been fully compensated by S31 grant payment (specific grant from central government). However, the payments made out of the collection fund to the preceptors (including Rushcliffe) are set at 31 January in the preceding year and cannot be changed. This causes a timing difference as grant received to compensate for the additional reliefs have been received in the current year but the deficit created as a result of payments out of the collection fund will not materialise in the budget until 2021/22. The surplus cash from the S31 grants is therefore to be appropriated to the Organisation Stabilisation reserve and released in 2021/22 to mitigate the budgeted deficit, this amounts to £4.0m.

A further risk is that UK businesses could receive a rebate of £481m from appeals under a Material Change of Circumstances (MCC) due to Covid-19. As yet, no decisions have been taken on reductions to rateable values as a result of the pandemic. Losses incurred under the potential appeals may be covered by the Government’s 75% reimbursement scheme (see below).

Government have announced that there will be a freeze on the Business Rates multiplier in 2021/22 (remaining at 49.9p) however CPI (normally used to set the multiplier) was 0.55% in September 2020. The Council will be compensated for the lost yield in relation to this freeze which will be paid in the form of S31 Grant. This is included in the 2021/22 Retained Business Rates budget of £2.8m.

It has also been announced that 75% of business rate losses will be reimbursed and this will be measured by comparing the NNDR1 with the NNDR3 outturn. Compensation will be paid based on the reduction in non-domestic rating income in 2020/21. At the time of budgeting, it is not anticipated that there will be a deficit on Business Rates (excluding the deficit caused by the additional reliefs referred to above as this has been compensated by S31 grant) and as such there is no reimbursement anticipated.

The Business Rates tax base is volatile given the impact of a small number of businesses on the tax base overall e.g. the power station as mentioned above and risks regarding outstanding appeals still remain. The changes that the Government is making (now delayed to 2022/23 at the earliest) regarding resetting the system means that the amount of Business Rates the Council can retain after 2022/23 is assumed to change significantly. The Organisation Stabilisation Reserve helps mitigate against risks including Business Rates uncertainty.

The impact in 2021/22 from the pooling of Business Rates within Nottinghamshire will be calculated once forecasts from the relevant authorities have been produced and assimilated into the pooling model. From 2022/23 onwards, if a new system of Business Rates is in place, a new pooling agreement is likely to be required to determine, for example, the relevant tier split between districts and Nottinghamshire County Council. We currently show no surplus from the Nottinghamshire Business Rates Pool as a prudent assumption.

The forecast position on Business Rates is shown below.

Forecast position on business rates
Category £'000	2020/21	2021/22	2022/23	2023/24	2024/25	2025/26
Retained Business Rates	3,984	2,820	2,928	2,978	2,836	2,893
Increase / (Reduction) £	217	(1,164)	108	50	(142)	57
Increase / (Reduction) %	6%	(29%)	4%	2%	(5%)	2%
Forecast Business Rates (surplus) / deficit and central pool surplus	(542)	4,000	0	0	0	0

Sensitivity Analysis

There is uncertainty surrounding Business Rates from 2022/23 and the budget assumes the minimum the Council can expect to receive in 2021/22 (safety net plus Renewable Energy receipts) and that there will be a full reset removing Business Rates growth from 2022/23. However there is an upside risk that receipts will continue at similar levels to 2020/21 and the Council will continue to benefit from existing growth with the amount we can budget for ranging from £2.7m to £4.6m. From 2023/24 there is uncertainty surrounding reforms coupled with the closure of Ratcliffe-on-Soar Power Station and the Council has therefore assumed for all scenarios that a full reset is likely for the remainder of the MTFS. Potential variations in receipts over the MTFS with the uncertainty from 2023/24 to 2025/26 reflected in budgeted assumptions remaining equal for all scenarios are shown below.

It is possible that Government may extend the current retail, hospitality and leisure relief scheme for 2021/22 or that business rates retains more resilience, which would mean the Council is unlikely to go into safety net position. If this materialises the Council is unlikely to have recourse to use the Organisation Stabilisation Reserve to support the budget (for 2021/22 £0.8m).

Business Rates Sensitivity

Business Rates Sensitivity Analytics
Category	2021/22 Forecast £	2022/23 Forecast £	2023/24 Forecast £	2024/25 Forecast £	2025/26 Forecast £
MTFS	2,695,571	2,927,504	2,978,010	2,835,946	2,892,665
Central £350,00 surplus	4,275,608	3,292,810	2,993,347	2,835,946	2,892,665
Best £700,000 surplus	4,625,608	3,642,810	2,993,347	2,835,946	2,892,665

3.4 Council Tax

The Council no longer receives any Revenue Support Grant and is anticipating other income streams such as New Homes Bonus to reduce to zero by 2023/24. The Government has assumed in future funding projections that Councils will take up the offer of increasing their Council Tax by the higher of 2% or £5 for a Council Tax Band D. The overriding Rushcliffe principle is that the Council aims to stay in the lower quartile for Council Tax. The Council has assumed an increase in Council Tax of £4.62 (3.24%) and thereafter £4.95 each year for the duration of this MTFS. Setting Council Tax at a 2% increase rather than £4.95 would reduce Council Tax income by £78,100 in 2021/22. A Council Tax freeze would result in a reduction of £204,500. The Council’s referendum limit calculation also includes Special Expenses, the combination of Rushcliffe’s Band D Council Tax and Special Expense equates to £5.

The 2021/22 tax base has been set at 44,259.6 (an increase of 0.62%). The projections for 2021/22 have been based upon the current Council Tax base, including both additional Local Council Tax Support claims resulting from Covid-19 (as these reduce the overall tax base) and reduced growth in 2020/21 against original expectations. Anticipated growth during 2021/22 has been calculated and included in the projections and thereafter we have assumed a 2% increase per annum. This will be reviewed as the Council looks to deliver its housing growth targets.

The Government has announced that due to potentially significant deficits in collection funds across the Country as a result of Covid-related reduced receipts, Billing Authorities will be required (by legislation) to ‘spread’ any deficits occurring in 2020/21. This is a departure from the normal process of collecting deficits in the following year and is intended to help smooth the cash flow for the precepting bodies. Only the deficit occurring in the current financial year is required to be spread in this way with prior year surpluses or deficits adjusted in the year following as normal. The anticipated deficit for Council Tax (occurring in the year) is approximately £1.4m with the County Council taking the majority share. The Council’s exposure is approximately £0.15m which will be spread over the three years 2021/22 to 2023/24 (£51k per annum). There is a small surplus relating to previous years which is adjusted in 2021/22 reducing the deficit to £45k.

As with Business Rates above, 75% of Council Tax losses in 2020/21 will also be compensated for by way of S31 grant. Council tax losses will be calculated by comparing the budgeted Council Tax requirement (CTR1) with the outturn position. This will be accrued into the reserves in 2020/21 to be released to offset the budgeted deficit of £51k in each of the following 3 years. For budgeting purposes this figure has been estimated at £70k and therefore £23k per annum (net impact £28k per annum).

In 2020/21 the Council is due a share of a £670m new grant and its purpose is to compensate authorities for the expected additional cost of Local Council Tax Support (LCTS) schemes in 2021/22. The Council’s allocation is £0.1m. The grant is un-ringfenced and is in recognition of the increased costs of providing local Council Tax support following the pandemic and wider support for reduced Council Tax income to the Council.

The movement in Council Tax, the tax base, precept and the Council Tax Collection Fund deficit are shown in the table below.

Movement in Council Tax, the tax base, precept and the Council Tax Collection Fund deficit
Category	2020/21	2021/22	2022/23	2023/24	2024/25	2025/26
Council Tax Base (a)	43,987.70	44,259.60	45,144.79	46,047.69	46,968.64	47,908.01
Council Tax £ (b)	£142.74	£147.36	£152.31	£157.26	£162.21	£167.16
£ Annual Increase	£4.95	£4.62	£4.95	£4.95	£4.95	£4.95
% Increase	3.59%	3.24%	3.36%	3.25%	3.15%	3.05%
Gross Council Tax collected (a multiplied by b)	£6,278,801	£6,522,095	£6,876,033	£7,241,459	£7,618,783	£8,008,304
Increase in Precept	£329,236	£243,294	£353,909	£365,456	£377,324	£389,520
Council Tax (surplus) / deficit	£97,000	£45,000	£51,000	£51,000	0	0

3.5 Special Expenses

The Council sets a special expense to cover any expenditure it incurs in a part of the Borough which elsewhere is undertaken by a town or parish council. These costs are then levied on the taxpayers of that area. As with 2020/21, special expenses will be levied in West Bridgford, Ruddington and Keyworth.

Appendix 1, summarised in the table below, details the Band D element of the precepts for the special expense areas. Special expense Band D tax amounts have decreased in Ruddington and Keyworth due to an increase in tax base whilst costs have remained broadly the same. The Band D amount for Keyworth has decreased by £0.35 (-9.31%) and Ruddington £0.12 (-2.91%). Expenditure in West Bridgford has increased due to events and activities held in West Bridgford. This is partially offset by a reduction in costs associated with Lutterell Hall (now run by a management company), resulting in an overall net increase to West Bridgford of £22k and an increase in the Band D charge of £1.14 (2.35%).

The budget for the Special Expenses areas have been discussed at the West Bridgford and Special Expenses and Community Infrastructure Levy group.

Special Expenses
Special Expenses	2020/21 Cost	2020/21 Band D	2021/22 Cost	2021/22 Band D	2021/22 % change
West Bridgford	£690,500	£48.51	£712,600	£49.65	2.35
Keyworth	£10,100	£3.76	£9,200	£3.41	-9.31
Ruddington	£11,300	£4.12	£11,100	£4.00	-2.91
Total	£711,900	-	£732,900	-	-

3.6 Revenue Support Grant (RSG)

The Council no longer receives any RSG and this equates to £3.25m in lost income. The Council has mitigated the impact of this loss largely through its Transformation Strategy and Efficiency plan.

3.7 New Homes Bonus

The New Homes Bonus (NHB) scheme was intended to give clear incentive to local authorities to encourage housing growth in their areas. The Government intends to cease the New Homes Bonus (NHB) scheme in 2023/24. It was announced during the settlement that due to Covid-19 pressures there would be an additional one-off payment made to Local Authorities in 2021/22 due to delays in consulting on the closure of the existing scheme. This will not form part of any remaining legacy payments. Government also confirmed that it would be consulting on the potential future replacement of the NHB scheme in 2021. The table below depicts both the reduced funding and cessation of the scheme by 2023/24.

New Homes Bonus
Description	2020/21 £'000	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000
New Homes Bonus Received in Year	(2,311)	(1,633)	(653)	0	0	0

3.8 Fees, Charges and Rental Income

The Council is dependent on direct payment for many of its services. The income, from various fees, charges and rents, is a key element in recovering the costs of providing services which, in turn, assists in keeping the Council Tax at its current low level. Covid-19 has had a significant impact on the fees and charges receipts during 2020/21 and it is anticipated that the effects of the virus will continue into 2021/22 and 2022/23 as the rollout of the vaccines will take time to take effect therefore extending the period of social distancing. The budget assumes anticipated reductions in fees and charges of approximately 20% in 2021/22 and 10% in 2022/23. The Government has announced that Local Authorities will be reimbursed for 75% of lost Sales Fees and Charges income for the first quarter of 2021/22 only. The methodology of the reimbursement calculation has not yet been agreed and therefore we have currently assumed £0.17m based expected reductions in receipts for the first quarter of 2021/22. This is included in the Other Grant Income line in 3.10.

The Fees, Charges and Rental Income budget is shown below.

Fees, Charges and Rental Income budget
Category	2020/21 £'000	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000
Car Parks	(858)	(683)	(771)	(858)	(858)	(858)
Licences	(303)	(308)	(308)	(308)	(308)	(308)
Non Sporting Facility Hire	(188)	(138)	(140)	(142)	(142)	(142)
Other Fees & Charges	(605)	(529)	(810)	(894)	(954)	(1,016)
Planning Fees	(1,138)	(958)	(1,063)	(1,167)	(1,167)	(1,167)
Rents	(1,724)	(1,796)	(1,913)	(2,017)	(2,037)	(2,037)
Green Waste Income	(1,324)	(1,400)	(1,400)	(1,587)	(1,587)	(1,587)
Service Charges	(301)	(302)	(303)	(305)	(305)	(305)
Total	(6,441)	(6,114)	(6,708)	(7,278)	(7,358)	(7,420)

Income assumptions are determined by a number of factors including current performance, decisions already taken and known risks and opportunities.

The budget for Other Fees and Charges sees an increase from 2022/23 onwards due to the Crematorium which is expected to open in 2022. Garden Waste is increased on a cyclical basis every three years. The charge was last increased in 2020/21 and the next planned increase is due in 2023/24. This takes account of future inflation and potential pressures linked to the environmental agenda which is likely to further increase costs such as vehicle purchases. Future increases will need to be considered and agreed by Members.

There has been no increase assumed for car parking charges due to the expected position in the economy with only a gradual recovery expected and highly dependent on the success of the vaccine. Encouraging consumers back into the high streets will be a key part in the recovery of the economy.

Except where current or previous decisions will affect future income yields, the MTFS does not make any provision for future inflationary increases in fees and charges which is consistent with the treatment of expenditure. Anticipated income from commercial property investment forms part of the Council’s Transformation Strategy and Efficiency Plan.

3.9 Other Income

In addition to fees and charges the Council also receives a range of other forms of income, the majority of which relates to Housing Benefit Subsidy (£11.6m) which is used to meet the costs of the national housing benefit scheme. Other Income is shown below. Interest on investments reflect assumptions based on balances available to invest and expected interest rates (see Appendix 5).

Other Income line shows an increase year on year which reflects the planned receipts from the Leisure Contract to include Bingham Hub which is scheduled to open in June 2022. The Homelessness funding was expected to cease in 2021/22 reflected in a reduction in the Other Government Grants line on the table below. It has recently been announced that there will be an additional grant for Homelessness paid in 2021/22 and this is shown on the Other Grant Income line in 3.10. Costs recovered relate mostly to Council Tax Court Costs.

Other Income
Category	2020/21 £'000	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000
Costs Recovered*	(188)	(156)	(172)	(188)	(188)	(188)
Council Tax / Housing Benefit Admin Grants	(230)	(214)	(200)	(200)	(200)	(200)
Interest on Investments	(377)	(462)	(504)	(557)	(552)	(546)
OLAs Contribution	(95)	(86)	(86)	(86)	(86)	(86)
Other Income	(368)	(337)	(530)	(732)	(800)	(850)
Recycling Credits	(160)	(180)	(180)	(180)	(180)	(180)
Other Government Grants	(245)	(120)	(120)	(120)	(120)	(120)
Sub Total	(1,663)	(1,555)	(1,792)	(2,063)	(2,126)	(2,170)
Housing Benefit Subsidy	(14,264)	(11,788)	(11,788)	(11,788)	(11,788)	(11,788)
Total Other Income	(15,927)	(13,343)	(13,580)	(13,851)	(13,914)	(13,958)

3.10 Summary

All Sources of Income
Category	2020/21 £'000	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000
Retained Business Rates	(3,984)	(2,820)	(2,928)	(2,978)	(2,836)	(2,893)
Other Grant Income*	(18)	(1,130)	0	0	0	0
New Homes Bonus	(2,311)	(1,633)	(653)	0	0	0
Council Tax (RBC)	(6,279)	(6,522)	(6,876)	(7,242)	(7,619)	(8,008)
Council Tax (Special Expenses)	(712)	(733)	(733)	(733)	(733)	(733)
Collection Fund (surplus) / deficit	(445)	0	0	0	0	0
Fees, Charges and Rental Income	(6,441)	(6,114)	(6,708)	(7,278)	(7,358)	(7,420)
Other Income	(15,927)	(13,343)	(13,580)	(13,851)	(13,914)	(13,958)
Transfers from Reserves	0	(3,034)	(197)	(1,111)	(530)	(355)
Total Income	(36,117)	(35,329)	(31,675)	(33,193)	(32,990)	(33,367)

*The table below summarises the grants allocated to the Council in 2021/22. Covid-19 Support Tranche 5 is expected to be paid in April 2021 and follows four earlier tranches of grant paid during 2020/21. As referred to in section 3.8 above the Government will be reimbursing Local Government for lost sales, fees and charges for the first quarter of 2021/22 and it is anticipated that this will be based on losses against the 2020/21 budget. The Lower Tier Grant is a new grant with the purpose of supporting services such as homelessness, planning, recycling and refuse collection and leisure services and looks to partially rebalance the impact of the loss of New Homes Bonus (the other grants are Covid-19 linked). Government have extended the Homelessness and Rough Sleeping funding for a further year and the Council’s allocation is £163k. Section 4 details the expenditure that this grant will be used to fund. The Council will also be receiving £100k under the Local Council Tax Support funding to mitigate the impact of a reduced tax base.

Grants Allocated to the Council in 2021/22
Description	Grant Awarded
Covid-19 Support (Tranche 5)	£397,000
Fees and Charges Reimbursement (estimated)	£170,000
Lower Tier Grant	£300,000
Homelessness and Rough Sleeping	£163,000
Local Council Tax Support	£100,000
Total	£1,130,000

** The transfer from reserves in 2021/22 includes the mitigation of the budgeted deficit in Business Rates referred to in section 3.3 above. The net transfer from reserves in 2023/24 increases as there are no NHB receipts being transferred to reserves. This line also incorporates the £1m per annum payment for the Arena. The net transfer from reserve decreases from 2024/25 as contributions are made from investment property income to the sinking fund reserve. The position on reserves is shown in Section 6.

4. 2021/22 Spending Plans

4.1 The Council’s spending plans for the next five years are shown below and take into account the assumptions in Section 2. As Transformation Programme Savings/Growth projects are delivered (for example, Bingham Hub and the Crematorium) the spending profile will change.

Spending Plans
Category	2020/21 £'000	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000
Employees	10,586	10,637	10,566	10,732	10,748	10,842
Premises	1,072	1,008	1,026	1,010	1,010	1,010
Transport	864	926	932	941	938	938
Supplies and Services	3,580	3,763	3,852	3,994	3,910	3,934
Transfer Payments	14,297	11,773	11,783	11,793	11,793	11,793
Third Party	2,636	2,811	2,874	2,937	3,003	3,070
Depreciation / Impairment	2,131	1,768	1,768	1,768	1,768	1,768
Capital Financing	76	45	111	132	129	127
Gross Service Expenditure	35,242	32,731	32,912	33,307	33,299	33,482
Reversal of Capital Charges	(2,131)	(1,768)	(1,768)	(1,768)	(1,768)	(1,768)
Collection Fund Deficit	0	4,045	51	51	0	0
Net Contribution to Reserves	1,859	0	0	0	0	0
Minimum Revenue Provision	1,000	1,074	1,274	1,274	1,000	1,250
Revenue Contribution to Capital	147	0	0	0	0	0
Overall Expenditure	36,117	36,082	32,469	32,864	32,531	32,964

4.2 Explanations for some of the main variances above are:

Employee costs reflect a zero-pay award in 2021/22 and 2022/23 and 1% thereafter. 2023/24 also reflects pay costs associated with the upcoming Borough elections (£76k);
Supplies and services increase due to Streetwise costs of £35k, Tanker Services up by £34k due to increased disposal costs and contingency by £32.5k to cover potential increases to National Living Wage. The cost of Borough Elections included in 2023/24 is £116k and there is a contribution from reserves to mitigate the impact.
Transfer Payments are expected to reduce. Estimates are based on current caseload and the DWP handling working age claims under Universal Credits.
Capital Financing costs increase reflecting the borrowing costs arising from the estimated £7.5m borrowing in relation to the capital programme (referred to in paragraph 9.4);
There is no longer a net contribution to reserves due to the reduction in NHB receipts being transferred to reserves; and
The revenue contribution to capital is now included within the net transfer from reserves shown in 3.10.
The £4m Collection Fund deficit relates to the deficit arising in 2020/21 as a result of additional reliefs granted to retail and childcare.

4.3 The Council will receive £163k in 2021/22 in Homeless and Rough Sleeping funding. This grant will continue to fund two posts supporting housing options and homelessness prevention and provides a prevention fund to assist with rent deposits or advances to secure private rented accommodation for those at risk. It also includes provision for Street Outreach initiative to assist rough sleepers and grants to support homelessness provision, education and advice.

5. Budget Requirement

5.1 The budget requirement is formed by combining the resource prediction and spending plans. Appendix 2 gives further detail on the Council’s five-year Medium Term Financial Strategy.

Budget Requirement
Category	2020/21 Estimate £'000	2021/22 Estimate £'000	2022/23 Estimate £'000	2023/24 Estimate £'000	2024/25 Estimate £'000	2025/26 Estimate £'000
Total Income	(36,117)	(35,329)	(31,675)	(33,193)	(32,990)	(33,367)
Gross Expenditure	36,117	36,082	32,469	32,864	32,531	32,964
Net Budget Position (surplus) / deficit	0	753	794	(329)	(459)	(403)
Revised Transfer From Reserves	0	(3,787)	(991)	(782)	(71)	48

5.2 The above shows a deficit position of £753k in 2021/22 and £794k in 2022/23 mostly relating to the anticipated impact of Covid-19 on income streams and additional expenditure. It is anticipated that from 2023/24 the budget will move into a surplus position which will then be used to replenish the reserve, the total for the period being deficit £357k. Due to the current uncertainty surrounding Business Rates the budget does not include any surplus from the Nottinghamshire Pool. Any surplus arising will be transferred to the Organisation Stabilisation Reserve to further mitigate the risks going forward on Business Rates from reforms and the loss of the Power Station.

5.3 Section 7 covers the Transformation Programme - including the use of reserves, balancing the budget for 2021/22 and future financial pressures.

6. Reserves

6.1 In order to comply with the requirements of the Local Government Act 2003, a review has been undertaken of the Council’s reserves, taking into account current and future risks. This has included an assessment of risk registers, pressures upon services, inflation and interest rates. In previous budgets, the Council has supported the controlled release of reserves to support service delivery. It is anticipated that at the end of 2020/21 £5.165m will be transferred to the Organisation Stabilisation reserve. Of this sum, £3.769m arises from the Business Rates S31 grants allocated in 2020/21 to compensate for additional reliefs given to the retail sector. This will be required to be released back to revenue in 2021/22 to meet the Collection Fund deficit arising from these additional reliefs. £673k arises as a result of additional grant funding received in the year. This will be used to support the budget and uncertainty of the impact of Covid-19 on future years. The balance of £523k comprises £723k surplus from the Nottinghamshire Business Rates Pool less £200k which has been moved to the Development Corporation (DevCo) Reserve. It is expected around £0.17m of the DevCo Reserve will be utilised in 2021/22. Reserves will continue to be used to help manage the impact of Covid-19, reduced government funding, future changes to the Business Rates Retention scheme and ensuring ongoing service stability.

6.2 In 2020/21 the balance on the Organisation Stabilisation reserve (OSR) is expected to be £7.176m. This is a higher level than previously estimated because it contains the temporary transfer of S31 grants surplus (£4.0m needs to be released in 2021/22). Future projections indicate the reserve will have a balance of £2.748m by 2025/26 subject to the ongoing impact of Covid-19. Covid-19 has clearly demonstrated the benefit of having this reserve to support Council services at a time of significant crisis. Going forward not only due to Covid-19 but also the prevailing uncertainty in relation to both large Council projects and future funding means that this reserve is necessary.

6.3 Table in 6.5 details the estimated balances on each of the Council’s specific reserves over the 5 year MTFS. This also shows the General Fund Balance. Total Specific Reserves reduce from £22m to £14.5m (20/21 – 25/26). Appendix 6 details the movement in reserves for 2021/22 which also includes capital commitments. This shows a reduction from £19.5m to 15.175m primarily reflecting the aforementioned release of £4.0m to meet S31 grant commitments in 2021/22. In addition, the sum of £0.753m is required to be released to support the revenue budget deficit. It is important that the level of reserves is regularly reviewed to manage future risks. The projections are based on current understanding regarding New Homes Bonus receipts. All of the reserves have specifically identified uses including some of which are held primarily for capital purposes namely the Council Assets and Service Delivery, Invest to Save, and Regeneration and Community Projects Reserve (to meet special expense capital commitments). The release of reserves will be constantly reviewed in order to balance funding requirements and the potential need to externally borrow to support the Capital Programme.

6.4 Whilst part of the annual allocations of New Homes Bonus (NHB) will be used to offset the MRP requirements arising from internal borrowing, the remaining NHB reserve may still be called upon in future years as major infrastructure projects come to bear and the potential for investment in economic development through arrangements such as the ‘Growth Deal’. The projections reflect the allocation of at least £1m per annum from the NHB reserve to offset the Minimum Revenue Provision (MRP) charge to the revenue budget comprising of a statutory and a voluntary amount arising from internal borrowing (primarily for the Arena). As there is more spend on capital the requirement to fund MRP and utilise reserves will increase, or funding will be required from the revenue budget. Year-on-year additions to the NHB reserve increase are predicated on the assumptions made on NHB in Section 3.7.

The MTFS presented to Council last year supported the creation of the Climate Change Action Reserve and despite the pressures of Covid this reserve remains. The reserve will support projects that contribute to the Council’s ambitions to protect and enhance the environment including reduction of its carbon footprint. A balance of £0.8m is available and will be allocated as projects get approved with £30k provisionally earmarked for a contribution to an electric car charging canopy at Gamston (note from the £1m reserve £0.2m has been transferred to the Development Corporation Reserve). As presented to Full Council in December 2020 the East Midlands Development Corporation will support partnership working to deliver transformational infrastructure and economic development projects, with the reserve to be utilised over the next 3 years. A further £0.2m is being transferred from the Nottinghamshire Business Rates Pool surplus for 2020/21 and combined with the existing £0.1m in the revenue budget this will support expenditure of up to £0.5m.

6.5 It should be noted that in the professional opinion of the Council’s Section 151 Officer, the General Fund Reserve position of £2.6m is adequate given the financial and operational challenges (and opportunities) the Council faces.

All Sources of Income
Category	Balance 31.03.20 £'000	Balance 31.03.21 £'000	Balance 31.03.22 £'000	Balance 31.03.23 £'000	Balance 31.03.24 £'000	Balance 31.03.25 £'000	Balance 31.03.26 £'000
Investment Reserves	-	-	-	-	-	-	-
Regeneration and Community Projects	1,794	1,721	1,859	2,016	2,176	2,343	2,515
Sinking Fund	166	179	0	0	50	100	150
Corporate Reserves	-	-	-	-	-	-	-
Organisation Stabilisation	2,402	7,176	2,399	1,581	1,886	2,345	2,748
Climate Change Action	1,000	800	800	800	800	800	800
Development Corporation	100	400	400	400	400	400	400
Risk and Insurance	100	100	100	100	100	100	100
Planning Appeals	350	350	350	350	350	350	350
Elections	50	100	150	200	50	100	150
Operating Reserves	-	-	-	-	-	-	-
Planning	209	209	131	45	45	45	45
Leisure Centre Maintenance	116	7	7	7	7	7	7
Total Excluding NHB Reserve	6,287	11,042	6,196	5,499	5,864	6,590	7,265
New Homes Bonus	7,186	8,420	8,979	8,385	7,138	5,891	4,644
Total Earmarked Reserves	13,473	19,462	15,175	13,884	13,002	12,481	11,909
General Fund Balance	2,604	2,604	2,604	2,604	2,604	2,604	2,604
Total	16,077	22,066	17,779	16,488	15,606	15,085	14,513

7. The Transformation Strategy and Efficiency Strategy

7.1 For the past 6 years the Council has successfully implemented a Transformation Strategy and supporting Transformation Programme (this is also the Council’s efficiency strategy). This drives change and efficiency activity and is a vehicle to deal with the scale of the financial challenges the Council faces. An updated Transformation Strategy and Programme are provided in Appendix 3, this also includes an Appendix on the Council’s approach to commercialism. Alongside this work the Executive Management Team has undertaken a review of all Council budgets resulting in savings which have been fed into the MTFS. The Transformation Strategy focuses on the following themes:

Service efficiencies and management challenge as an on-going quality assurance process;
Areas of review arising from Member challenge; and
Longer term reviews with further work being required and particularly impacting upon the Council’s asset base.

7.2 This Programme will form the basis of how the Council meets the financial challenge summarised below.

Savings Targets

Savings Targets
Category	2020/21 £'000	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000
Gross Budget Deficit excluding Transformation Plan	3,932	5,191	5,946	5,345	5,008	5,140
Cumulative Savings in Transformation Plan	(3,932)	4,185	4,668	5,171	5,319	5,431
Gross Budget Deficit / (Surplus)	0	1,006	1,278	174	(311)	(291)
Additional Transformation Plan Savings	(192)	(253)	(483)	(503)	(148)	(112)
Net Budget Deficit / (Surplus)	0	753	795	(329)	(459)	(403)
Cumulative Transformation Target (Appendix 5)	(192)	(445)	(928)	(1,431)	(1,579)	(1,691)

7.3 In order to deliver a balanced budget for 2021/22 amidst increasing funding pressures from the legacy of Covid-19, the Council has looked to constrain Council spend and increase income. The Council continues to review how it delivers its services, to identify innovative ways of delivering its services more economically, efficiently and effectively, however the impact of Covid-19 has made this a challenging year and as such this budget proposes a substantial use of reserves in 2021/22 and 2022/23. There are several significant asset investment projects, particularly the development of a Crematorium and the Bingham Leisure Hub which will deliver both socio-economic and financial benefits. These are also subject to their own project risks.

7.4 Moving forward, this momentum must continue, and the Council’s key transformation projects need to be reviewed on an on-going annual basis. While the Council has identified a range of projects that can be used to deliver the anticipated savings required, this will still be a challenging exercise. As can be seen at Table 12 over the five-year period £1.691m of expected efficiencies have been identified. The current transformation projects which will be worked upon for delivery from 2021/22 are given at Appendix 3.

7.5 The Council has added to their asset portfolio with two brand new units at Edwalton Business Park. The income generated from these assets contribute approximately £0.25m per annum to the Transformation Programme.

7.6 Included in the programme for 2021/22 are staffing efficiencies arising from natural wastage (not replacing staff when they leave). In total this contributes £0.135m per annum to the Transformation Plan savings.

8. Risk and Sensitivity

8.1 The following table shows the key risks and how we intend to treat them through our risk management practices. Further commentary on the higher-level risks is given below the table.

Key risks
Risk	Likelihood	Impact	Action
The Council is unable to balance its budget and the budget is not sustainable in the longer term as a result of Covid-19.	Low	High	Going concern report presented to Governance Group to confirm that the Council has sufficient reserves to withstand the short-term financial shock as a result of Covid-19.
Fluctuation in Business Rates linked to the impact of Covid-19, business appeals and in particular the power station and decline in retail sector	High	Medium	Growth plans and accurate monitoring, lobbying central government, potential alternative use of the power station site, increase in S31 grants to offset additional Business Rate reliefs. Playing an active role supporting the Development Corporation with a £0.5m reserve created and the development of a Freeport. Growth Boards will also help support the business community. Budget at safety net position and we achieve our central case predictions this will reduce the need to utilise reserves.
Central Government policy changes e.g. Fairer Funding, changes to NHB and 75% Business Rates transfer to local government leading to reduced revenue. Environmental policy changes with regards to waste will create future financial pressures	High	Medium	Engagement in consultation in policy creation and communicating to senior management and members the financial impact of changes via the MTFS. Budget at safety net position.
The Council does not achieve Council Tax income levels as projected in the MTFS and linked to Government referendum limits. Covid-19 impacts upon levels of Council tax collected	Medium	High	Continue to monitor government policy and lobbying. Budget workshops for members so they are clearly informed regarding the impact of alternative decisions. Spread Council Tax losses over 3 years as per statutory instrument.
Inadequate capital resource	Medium	Medium	Proportionate spending and sale of surplus assets and ongoing review of assets, maximising pooled funding opportunities eg DFGs, external funding such as LEP funding, managing the impact of reducing NHB and reporting of new schemes that may come to fruition. The need to revisit the Council Tax strategy to meet the cost of capital, along with cost efficiencies and raising income. Borrowing when necessary.
Fee income volatility linked to Covid-19, for example number and size of planning applications, the impact on leisure provision.	High	Medium	Engagement in consultation in policy creation. Ensure future changes are built into the MTFS. Additional grant funding from Government for quarter 1 in 2021/22.
Inflationary pressures, particularly pay and utility costs. Pay rises are linked to the outcome of national negotiations and whether they are adopted locally	Medium	Low	Budget reporting processes and use of budget efficiencies and reserves.
Pensions triennial revaluation and the potential increase to pension contributions	High	Medium	To be aware of actuary’s report and implications. Risks affected by local demographics and the impact on interest rates and share prices of international economic conditions. The Covid-19 impact to be assessed at the next valuation. Also the ability to influence central government policy on the Local Government scheme. Budget impact reflected in the MTFS.
Variable demand for services given the potential impact of Covid-19 on housing and businesses in the Borough	Medium	Medium	A robust performance management framework
Failure to deliver the required Transformation Strategy and in particular projected savings/costs from larger projects such as the Crematorium and Bingham Leisure Hub	Low	High	Effective programme and project management
The impact of wider economic conditions (particularly Covid-19 and BREXIT) on interest rates, the property market, impacting on investments and any future borrowing	High	Medium	Advice from the Council’s treasury advisors, and more investment diversification with a wider range of institutions and property investment diversification. Monitoring borrowing rates. Prudent assumptions in the MTFS.
The impact of changes to accounting standards upon leases	High	Low	Monitor the impact of IFRS16 (new accounting standard) on Council budgets and CFR based on the reclassification of Leases. Implementation deferred to 1 April 2022. Assess and monitor.
Environmental Agenda Impact on both revenue and capital budgets	High	Medium	Creation of Climate Change Action Reserve (£1m less £0.2m transferred to Development Corporation Reserve), ongoing review of significant projects and outcome of scrutiny review.

8.2 The Covid-19 pandemic has resulted in an unprecedented impact on health, wellbeing and the economy both nationally and locally. This is highlighted in the risks above and the resultant impact on the Council’s budget from anticipated reductions in income, impact on leisure costs and use of the Council’s Organisation Stabilisation Reserve.

8.3 The changing environment of local authority finance means that the Council is facing increasing risks and uncertainty in respect of available resources. While predicting and controlling the level of external funding resources remains a challenge, wherever possible the Council uses its budget management processes, reserves and general balances to mitigate these risks. Such pressures will also be mitigated through changes in service delivery and the use of assets. For example, our commercial property acquisitions not only deliver a rental income in excess of that available to the Council through treasury management investments, but also we aim for appreciating asset values and generating economic growth. The Council has increased the number of property investments by diversifying, in terms of geographical location and asset use. A combination of capital demands and risks surrounding the property market means the Council’s direction has changed with a focus on projects in the Borough. Due to recent changes in Public Works Loan Board (PWLB) loan criteria, the Council’s capital programme does not include any investments that are purely for financial return.

8.4 The MTFS presents a deficit position for 2021/22 and 2022/23 funded by the use of Organisation Stabilisation Reserve. The budget then moves into a surplus position when the reserves will be replenished. Reserves are necessary to protect the Council from risks in relation to uncertainty concerning government funding and the Business Rates system and delivering the Council’s Transformation Programme. There is a current climate of an unprecedented level of funding uncertainty (notwithstanding those related to Covid-19). In this regard it should be noted that particular risks exist with regards to:

Benefits from Business Rates repatriation to local government (75% to local government) is unknown. For example, we do not know what the tier split is between the County and district councils and whether the Nottinghamshire Pool will continue.
Business Rates - has a number of significant risks and is a highly volatile tax base. The planned de-commissioning of the power station in 2025, given it accounts for around a tenth of Business Rate income, potentially undermines any benefits the Council may gain in Business Rates from business growth. Furthermore, the Government remains committed to supporting the retail sector and in the future, this is likely to lead to changes to the whole Business Rates system
Businesses were revalued in 2017 with a further revaluation now planned for 2022. There may also be further reliefs announced in 2021/22 for the retail, hospitality and leisure sectors as the impact of Covid-19 is expected to continue
There is also upside Business Rates risk dependent on the resilience of local businesses and if business rates income achieves the central case then this will significantly reduce the need for the use of reserves
New Homes Bonus - as identified at 3.7, the Government intends to cease the New Homes Bonus (NHB) scheme in 2023/24. There may be a replacement scheme which gives an opportunity for further funding. The Council will continue to lobby Government to ensure it is rewarded for growth and that there is funding in relation to the consequences of growth.

9. Capital Programme

9.1 Officers submit schemes to be included in a draft Capital Programme, which also includes on-going provisions to support Disabled Facilities Grants, investment in Social Housing, and Partnership Grants. This draft programme is discussed by EMT along with supporting information and business cases where appropriate with the big projects and the overall financial impact reported to Councillors in Budget update sessions. The draft Capital Programme continues to be further refined and supported by detailed appraisals as set out in the Council’s Financial Regulations. These detailed appraisals are included at Appendix 4 along with the proposed five-year capital programme which is summarised below. This is an ambitious programme totalling £38.9m for 5 years (slippage of £18.4m has been approved from the 2020/21 programme and is included in this figure).

Capital Programme
Category	2020/21 Current Estimate £'000	2021/22 Current Estimate £'000	2022/23 Current Estimate £'000	2023/24 Current Estimate £'000	2024/25 Current Estimate £'000	2025/26 Current Estimate £'000	5 Year Total
Expenditure Summary	-	-	-	-	-	-	-
Transformation	6,471	23,730	250	105	400	820	25,305
Neighbourhoods	2,281	2,828	1,988	1,918	1,868	993	9,595
Communities	2,087	1,020	75	125	115	100	1,435
Finance and Corporate	5,239	580	480	480	530	480	2,550
Total	16,078	28,158	2,793	2,628	2,913	2,393	38,885
Funded By	-	-	-	-	-	-	-
Usual Capital Receipts	(7,829)	(15,199)	(1,880)	(1,915)	(1,850)	(1,160)	(22,004)
Government Grants	(726)	(613)	(613)	(613)	(613)	(613)	(3,065)
Use of Reserves	(452)	(500)	(300)	(100)	(450)	(620)	(1,970)
Grants and Contributions	(586)	(2,572)	0	0	0	0	(2,572)
Section 106 Monies	(1,258)	(2,818)	0	0	0	0	(2,818)
Internal Borrowing and Borrowing	(5,227)	(6,456)	0	0	0	0	(6,456)
Total	(16,078)	(28,158)	(2,793)	(2,628)	(2,913)	(2,393)	(38,885)
Resources Movement	-	-	-	-	-	-	-
Opening Balances	5,834	2,155	2,125	4,228	5,098	5,930	-
Projected Receipts	7,172	21,672	4,896	3,498	3,745	1,574	-
Use of Resources	(10,851)	(21,702)	(2,793)	(2,628)	(2,913)	(2,393)	-
Balance Carried Forward	2,155	2,125	4,228	5,098	5,930	5,111	-

9.2 The Council’s five-year capital programme shows the Council’s commitment to deliver more efficient services, improve its leisure facilities and enable economic development. Against a background of financial challenge as a result of Covid-19, the strength of the Council’s financial position is such that it continues to support economic growth and recovery in the Borough. The Programme is approved for the five-year period and allows flexibility of investment to enhance service delivery, provide widened economic development to maximise business and employment opportunities and for investment to go between years as long as the value of the five-year programme is not exceeded for each scheme. The programme is reviewed by Full Council as part of the budget setting process. A major focus of the Capital Programme is to improve services, be transformative and generate revenue income streams in order to help balance the Council’s MTFS. Significant projects in the Capital Programme include:

A provision of £16m for the continued development of Bingham Hub for 2021/22 (this figure includes £11m approved brought forward from 2020/21). This will ensure there are new leisure facilities (including a Community Hall) to replace the existing Bingham Leisure Centre and new office units to expand business and employment opportunities. A contractor has been appointed and it is planned that the centre will open in 2022. The overall investment total is estimated to be no more than £20m.
£6.5m to provide a new Crematorium in the Borough. Of this, £4.5m has been brought forward from 2020/21 plus £2m to meet revised expected costs. This gives a total provision for the scheme of £8.5m.
£1.745m over the 5 years for investment in the upgrade of facilities at leisure centres. There are: planned refurbishments to changing villages; roof enhancements; and upgrades for plant and lighting. Schemes are considered in the light of the Leisure Strategy and are aimed at maintaining excellent standards of leisure provision.
£0.29m in 2021/22 for development of facilities at Rushcliffe Country Park for an enhanced Visitor Centre.
Information Systems Strategy (£0.33m plus a four-year rolling programme to give a total of £1.3m) will ensure that the Council keeps pace with new technologies and maintains digital integrity;
On-going vehicle replacement programme (£3.61m over the next five years).
Support for Registered Housing Providers £1m to continue to facilitate the provision of affordable homes across the Borough.
Disabled Facilities Grants (DFGs) provision of £0.515m has been provided each year but there has been further funding announced and this is subject to change when the formal Better Care Funding (BCF) allocations are approved. Other schemes in the programme supported by BCF include discretionary DFGs, Assistive Technology (Home Alarms), and Warmer Homes on Prescription.
Ongoing provisions of £0.15m per annum to provide market loan facilities for Streetwise Environmental Ltd to support their vehicle replacement programme.
Smaller sums have been included to enhance our land and buildings and investment property portfolios.
A Contingency sum of £0.1m has been included each year to give flexibility to the delivery of the programme and to cover unforeseen circumstances.
Expected total borrowing, including 2020/21, totals £11.7m. It is anticipated that up to £7.5m of this may need to be externally borrowed rather than the utilisation of Council cash balances (internally borrowed). The timing and incidence of actual external borrowing will be affected by any slippage in the capital programme or unexpected capital funding (e.g. capital receipts) and this is reflected in the capital financing requirement shown at table 2 of the Capital and Investment Strategy (Appendix 5).

9.3 The Council has previously allocated £20m to the Asset Investment Strategy within its Capital Programme. Just over £16m of this has been utilised for investment opportunities, asset acquisitions, and development of office/industrial/retail units which will secure strong future income streams to support the revenue budget. The remaining balance of £3.8m is to be taken out of the programme.

9.4 The Council’s capital resources are slowly being replenished as potential receipts from the Sharphill Overage Agreement are recognised. Sums have been received in the current year and are expected each year until 2024/25. It is predicted that capital resources will be in the region of £4.9m at the end of the five-year life of the Programme. This comprises: £2.5m Capital Receipts; £2.3m Earmarked Capital Reserves; and £0.1m minor capital contributions. It is likely that all of the Council’s Usable Capital Receipts will be exhausted by the end of 2021/22 to support the Capital Programme but will slowly build back up from 2022/23 to 2024/25 as income from Sharphill is received. The balance dips again in 2025/26 to £2.5m.

9.5 Projected capital receipts over the course of the MTFS include:

A further £11m from the Sharphill Overage Agreement (£8.1m already received);
Over £0.988m in repaid loan principal from Nottinghamshire County Cricket Club and Streetwise;
Disposal of the old Depot Site, approximately £4.8m; and
Sale of land in Cotgrave: approximately £7m.

9.6 The capital resources position should be viewed in the context of funding the completed redevelopment of the Arena. This scheme was part funded by use of the Council’s reserves and the remainder through internal borrowing. It is planned to repay this ‘internal debt’ from the future income stream provided by New Homes Bonus, subject to the risks highlighted in Section 3.7 and Section 8.4.

9.7 The projected borrowing of £7.5m is likely to be achieved through loans from the Public Works Loan Board benefitting from a certainty rate of interest. Consideration will also be given to borrowing over shorter terms from other Local Authorities to mitigate any long-term indebtedness and give flexibility to required financing. In addition to external borrowing, the Council anticipates up to £3m internal borrowing for the Crematorium. Formal funding decisions are taken at the end of each financial year when the level of capital expenditure is assessed in line with the capital resources and usable reserves available.

9.8 The following significant capital grants and contributions will be used to support the funding of the proposed capital programme:

£0.75m of Growth Development Fund grant from the Local Enterprise Partnership (LEP) and £1.65m Sustainable Urban Development (SUD) funding to support the development of new offices in Bingham. £0.174m has also been approved from the LEP to support the Community Hall element of Bingham Leisure Hub;
The potential to release up to £2.8m from developer contributions to support works associated with the Bingham Leisure Hub and the activation of the Leisure Strategy; and
An estimated £0.613m per annum from the Better Care Fund to deliver Disabled Facilities Grants, Discretionary Top-up Grants, and Assistive Technology (Home Alarms).

10. Treasury Management

10.1 Attached at Appendix 5 is the Capital and Investment Strategy (CIS) which integrates capital investment decisions with cash flow information and revenue budgets. The key assumptions in the CIS are summarised in the following table:

Treasury Assumptions
Category	2021/22 Estimate	2022/23 Estimate	2023/24 Estimate	2024/25 Estimate	2025/26 Estimate
Anticipated Interest Rate (%)	0.1	0.25	0.5	0.5	0.5
Expected Interest from Investments (£)	(373,000)	(422,500)	(484,900)	(488,400)	(486,700)
Other Interest (£)	(89,000)	(81,000)	(72,000)	(64,000)	(59,000)
Total Interest (£)	(462,000)	(503,500)	(556,900)	(552,400)	(545,700)

10.2 The CIPFA Treasury Code has been updated to include assets held for financial returns. The CIS covers the Council’s approach and risk management with regards to such assets. It documents the spreading of risk across the size of individual investments and diversification in totality across different sectors. The Council’s Asset Investment Strategy (which governs the Council’s approach to Asset Investment) is also appended to the CIS and is reviewed by the Governance Scrutiny Group.

10.3 Government recently undertook a consultation into Local Authority borrowing as a result of a small number of Local Authorities borrowing disproportionate amounts to fund commercial investments. Following the outcome of this it has been announced that borrowing from PWLB will not be permitted if there is any investment included in the Capital Programme that is primarily for commercial gain. The Council does not currently have any investments in the Capital Programme that meet this definition and therefore should not be restricted in future borrowing from the PWLB.

11. Options

11.1 As part of its consideration of the budget, the Council is encouraged to consider the strategic aims contained within the Corporate Strategy and, in this context, to what extent they wish to maintain existing services, how services will be prioritised, and how future budget shortfalls will be addressed.

11.2 Instead of increasing its Council Tax by the higher of 2% or up to £5 the Council could freeze its Council Tax. Shown below are the details of the impact on budgets of the recommended option of a £4.62 increase in 2021/22 and thereafter a £4.95 increase against the 2 scenarios of a tax freeze or a 2% increase. If the Council chose to freeze its Council Tax, the income foregone in 2025/26 is £1.17m and over the 5-year period £3.389m.

Alternate Council Tax Levels
Option	2020/21 £'000	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000
Band D £147.36 in 2021/22 Increase at £4.62 in 2021/22 and £4.95 each year thereafter - the recommended option Total Council Tax Income	(6,279)	(6,522)	(6,876)	(7,241)	(7,619)	(8,008)
Total for Freeze (Band D £142.74)	-	(6,318)	(6,444)	(6,573)	(6,704)	(6,838)
Total for 2% each year (Band D £145.59)	-	(6,444)	(6,704)	(6,975)	(7,257)	(7,550)

Council Tax Difference - Based on Options
Difference (£'000)	2021/22	2022/23	2023/24	2024/25	2025/26	Total
Freeze vs £4.95	(204)	(432)	(669)	(914)	(1,170)	(3,389)
2% vs £4.95	(78)	(172)	(266)	(362)	(458)	(1,336)

11.3 Other than the above options for Council Tax increases there are no alternate proposals concerning the Budget, Medium Term Financial Strategy or Transformation Strategy.

Accessible Documents