Budget and Financial Strategy 2022-23

Budget Setting and Associated Financial Strategies 2022/23 - 2026/27

Contents

Introduction and Executive Summary
Budget Assumptions
Financial Resources
2022/23 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

Last year we thought we were facing unprecedented financial challenges as a result of Covid. Many of those challenges still remain as we move into 2022/23 and beyond although we remain optimistic that the pandemic is coming to an end. The Council’s Medium Term Financial Strategy (MTFS) firstly seeks 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. Uncertainty still remains for the longer term (not just as a result of Covid). For 2022/23 we received another one-year settlement. The Council looks forward to understanding the impact of future Business Rates, New Homes Bonus and Fairer Funding Reviews. We hope for multi-year financial settlements which will give greater financial certainty. Along with anticipated Environmental and Planning legislation changes, these are risks that could quite easily de-stabilise a relatively positive medium term financial position for Rushcliffe. The Council’s healthy level of reserves will help mitigate against such risks.

The budget in comparison to last year has less Covid support and a more positive outlook with regards to levels of income. For 2021/22 assumptions were made of 20% reductions for key areas of income such as Planning fees. Based on current data for 2022/23 we move towards pre-Covid levels. As a consequence of the improved position fewer grants are required from central government (reducing from £1.1m to £0.27m). The other key issue we have had to adjust for is inflation in relation to both pay and other supplies and services (particularly utility and fuel costs). Given such risks the Council’s contingency budget has increased to £0.3m.

Business Rates assumptions have been impacted by two factors the further delay in business rates reforms (and the long-awaited business rates reset) and a recent successful business rate appeal in relation to the power station (the business rates paid to the Council reducing from £2.9m to £1.6m). There is an impact specifically in 2022/23 in relation to the power station (largely due to the appeal being backdated to 2017). The Council’s prudence in making a provision for this risk means a liability of over £6m is largely absorbed. There is a residual deficit (£1.18m) on the Collection Fund that is funded from the Collection Fund Reserve (£0.253m) and the Organisation Stabilisation Reserve (£0.935m). The overall business rates risk in relation to both the business rates reset and the impending closure of the power station is mitigated by prudent assumptions linking business rates to either ‘baseline’ or ‘safety net’ positions, far lower than current levels of business rates received (around £3m as opposed to £4m), Commendably the Council has retained its financial stability whilst dealing with business rate volatility over the past 10 years. The Council is sustainable due to its range of income streams, including Council Tax, commercial property income and fees and charges, with a proportionate approach to generating income.

Given the significant risks going forward being prudent remains the most sensible course of action with reserves (excluding New Homes Bonus with 2022/23 expected to be the last year of this scheme) to remain at £7.6m to £8.6m over the term of the MTFS at a period when the potential for adverse financial risk remains significant. Many of the reserves are to support ongoing maintenance of council assets. 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. The 2021/22 reserves position at £11.9m is higher due to the additional Covid business grants received which are used in the following years to offset Business Rates Collection Fund deficits (given the substantial business rates reliefs provided to the retail, hospitality, and leisure sectors). Whilst we understand our financial challenges the budget looks to the future. The Climate Change Action reserve focuses on improving the environment, a further £0.2m is provided. The Development Corporation and Freeport are exciting challenges and the 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. Again, a further £0.2m has been appropriated to this reserve. A new £1m reserve has also been created to assist in vehicle replacement, given the need to ensure frontline services such as refuse continue to be efficient and to mitigate against the risk of the rising purchase costs of vehicles, due to new and more environmentally friendly technology, such as electric vehicles.

The Council continues to invest significant capital within the Borough (£28.2m to 2026/27). This year will see the completion of two major projects fulfilling corporate ambitions - the Bingham Leisure Hub and the Rushcliffe Oaks Crematorium. These and other capital schemes in the programme demonstrate the Council’s commitment to economic growth, meeting challenging housing targets, improving leisure facilities and the environment. The Council is also going to bring Streetwise back in-house and ensure excellent grounds maintenance and street cleansing services continue to be delivered to its residents. Such projects become major components of the Council’s Transformation Programme to ensure there are sufficient resources to deliver core services. A new capital scheme is to provide a travellers site (£1m). The Council has a requirement through the local plan to provide a site or a number of pitches. Any further developments on this will be reported via Cabinet. In line with the Government’s referendum principles, the budget for 2022/23 proposes an increase in Council Tax of 2.42% to £150.93 (the Council has the option of increasing Council Tax by up to £5, with the recommended increase being £3.57). This will give an average band D Council Tax increase of less than 7p per week, ensuring Rushcliffe’s Council Tax remains amongst the lowest in the country (and the lowest in Nottinghamshire) and an increase well below inflation. 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 and as we come through the pandemic, continue to understand the full impact on both businesses and the community.

This budget and future uncertainty is 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 its resulting challenges. 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 2026/27 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	2021/22	2022/23
RBC Precept	£6.522m	£6.850m
Council Tax Band D	£147.36	£150.93
Council Tax Increase	3.24%	2.42%
Retained Business Rates	£2.820m	£3.958m
New Homes Bonus	£1.633m	£1.587m
Reserves (at 31 March)	£15.175m	£15.8m
Capital Programme	£28.158m	£14.611m

Medium Term Financial Strategy - Special Expenses
Special Expenses	2021/22	2022/23	Increase / (Decrease) £	Increase / (Decrease) %
Total Special Expenses	£732,900	£816,700	83,800	11.43
West Bridgford	£49.65	£53.91	4.26	8.58
Keyworth	£3.41	£3.30	(0.11)	-3.23
Ruddington	£4.00	£3.82	(0.18)	-4.50

1.3 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

2.1 Statistical assumptions which influence the five-year financial strategy.

Statistical assumptions which influence the five-year financial strategy
Service Area	Note	2021/22	2022/23	2023/24	2024/25	2025/26	2026/27
Budgeted inflation	a	0%	0%	0%	0%	0%	0%
Pay costs increase	b	0%	3.75%	3.25%	3.25%	3.25%	3.25%
Employer's pension contribution rate	c	17.6%	17.6%	17.6%	17.6%	17.6%	17.6%
Return on cash investments	d	0.10%	0.50%	0.75%	1.00%	1.25%	1.25%
Tax base increase	e	0.62%	2.55%	2.00%	2.00%	2.00%	2.00%

Notes to Assumptions

a. 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 £152k saving in the 2022/23 budget. We have also increased the contingency allocation which for 2022/23 is £0.3m linked to both pay and inflation risks.

b. Payroll projections have increased due to upward pressure on both national insurance contributions and employee pay and the 2022/23 figure includes 1.75% from 2021/22.

c. 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.

d. Cash investment returns are based on projections consistent with the Council’s Capital and Investment Strategy and are reduced at the start of the MTFS period due to expectations on low base rates of interest but anticipates a slight improvement by 2026/27.

e. Tax base increases have been recalculated for 2022/23. The projections for 2021/22 reflected the impact of Covid such as increased Council Tax discounts and to reflect the delay in housing developments and current estimates suggest that the actual tax base was not as badly affected as was estimated. As a result, the increase in tax base for 2022/23 is 2.55%. Later years reflect normal anticipated growth in housing within the Borough at 2%.

3. Financial Resources

3.1 The proposals for Local Government funding (Fairer Funding and Business Rates) have again been delayed by the impact of Covid. It has not yet been announced when the Fairer Funding review will now take place, but it is assumed this will be at least 2023/24. It has also not been confirmed by Government when the reforms to Business Rates will take place, but it is assumed that the earliest a reset would take place is from 2023/24. Consultation on the future of New Homes Bonus took place earlier in 2021 and it was announced in the settlement that for 2022/23 only the Council would receive an additional £0.934m. It has not yet been confirmed if there will be any replacement for NHB from 2023/24 onwards. Delays to the reforms continue to add further uncertainty over funding within the period of this MTFS with only one year of funding currently certain and makes planning for the medium term even more difficult.

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 Business Rates receipts for 2021/22 were difficult to estimate due to uncertainty surrounding the impact of Covid. 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. However additional Covid related reliefs were announced by Government which had a significant impact on the Business Rates receipts, albeit compensated by grants. Similar proposals have been announced for 2022/23 which will again be compensated by additional grants.

Covid has impacted the progress on the Government’s proposals for structural financial reform. There are now further delays in implementing a new funding system and the proposals for 75% Business Rates retention now look unlikely to go ahead due to the Government’s levelling up agenda.

Ratcliffe-on-Soar Power Station has been a potential risk to the Council due to the proportion of Business Rates attributable to it and the likelihood of business rates appeals. Despite the fact that the proportion has reduced over the last few years the Power Station still makes up a reasonable proportion of the tax base at 8.34% (£2.94m) with the Council’s exposure around £1.18m. In January the Council was notified that an appeal by the Power Station to the Valuation Office had been settled with an effective date of 01 April 2017. Whilst the Collection Fund has sufficient provision for appeals in relation to the Power Station for previous years, the appeal will have an impact on the Business Rates retained from the Power Station in the current year (2021/22) and going forward. The estimated annual loss to the collection fund is £1.32m (Council share £0.528m) and this reduction in income has been factored into the 2022/23 estimates. With other in-year adjustment there is a £0.3m reduction on the anticipated budget for Business Rates.

The Power Station is expected to cease production in 2024 and the Council had budgeted for the significant drop in income from 2024/25 therefore some of the impact of the loss has effectively been accelerated to 2022/23 and 2023/24 – 2 years sooner than originally planned.

The forecast for 2023/24 allows for a full reset of Business Rates (by central government) with the budget set at an estimated Baseline Funding level (the amount that the Council is expected to retain) plus 100% retained receipts from Renewable Energy properties. For 2024/25 and due to the anticipated closure of the Power Station in 2024, the Council has been prudent and budgeted at safety net (the minimum that the Council would receive in Business Rates receipts) plus 100% retained receipts from Renewable Energy properties.

Further to the uncertainties above there is an added complication in relation to the plans for a Freeport, the boundaries of which include part of the Power Station. Effectively the whole of the power station site will transfer to the Freeport for the purpose of business rates that are collected. The expectation is that there will be a ‘no detriment’ agreement meaning that the Council will be compensated for any lost Business Rates that may accrue in the future and subsequently the budget has therefore not changed as a result of the Freeport proposals.

Due to the changes announced in business rates reliefs in response to Covid in 2020/21 and 2021/22 and the power station appeal, the collection fund is currently in a deficit position (£4.317m). The recovery of the deficit is included in the 2022/23 net budget position and is offset by a release from the Collection Fund Reserve which was created during 2020/21 and further increased in 2021/22 from S31 grants received to compensate for the additional reliefs and further reliefs due in 2022/23. In essence this is a timing issue where the grants for business rates have been received in the General Fund in advance of being appropriated to the Collection Fund the following year which is when the deficit arises.

Government have announced a business rates relief scheme for 2022/23 to support local high street businesses as they recover from the pandemic. The scheme will provide eligible, occupied, retail, hospitality, and leisure properties with a 50% relief, up to a cash cap limit of £110,000 per business.

Government have also announced that there will again be a freeze on the Business Rates multiplier in 2022/23 (remaining at 49.9p) however CPI (normally used to set the multiplier) was higher and would have resulted in the multiplier being greater by 5.1p. 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 2022/23 Retained Business Rates budget of £3.958m.

The impact in 2022/23 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 which will again change as a result of the Power Station appeal. From 2023/24 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 and any surplus is treated as a ‘windfall’ and helps support corporate priorities going forward or if the Organisation Stabilisation Reserve is used, can help replenish this.

The forecast position on Business Rates is shown below.

Forecast position on business rates
Category £'000	2021/22	2022/23	2023/24	2024/25	2025/26	2026/27
Retained Business Rates	2,820	3,958	3,078	2,994	3,098	3,206
Increase / (Reduction) £	(1,164)	1,138	(880)	(84)	104	108
Increase / (Reduction) %	(29%)	40%	(22%)	(3%)	3%	3%
Forecast Business Rates (surplus) / deficit and central pool surplus	4,000	4,317	0	0	0	0

Sensitivity Analysis

There is uncertainty surrounding Business Rates from 2023/24 and therefore the budget assumes full reset removing Business Rates growth resulting in a significant drop in income (baseline plus Renewable Energy receipts). However, there is an upside risk that the reset will see the baseline set at lower levels than expected meaning there would be the benefit of higher growth, the amount we could budget for ranging from £3.9m to £4.6m. From 2023/24 onwards there is also uncertainty surrounding the plans for the Freeport coupled with the closure of Ratcliffe-on-Soar Power Station (expected 2024) however as explained in section 3.3 it is not expected that the Freeport arrangements will have any effect on the Business Rates income due to ‘no-detriment’ arrangements. Subsequently we have therefore assumed for the MTFS that the Council will receive the minimum income (safety net plus renewable energy) for the remainder of the MTFS as a result of the Power Station closure. The Central and Best-case scenarios allow for a small amount of retained growth dependent upon the level of baseline at a reset. The graph below shows the potential variations in receipts (dependent upon estimated receipts from the Nottinghamshire pool surplus in 2022/23) over the MTFS with the uncertainty in later years reflected in budgeted assumptions remaining equal for all scenarios.

Business Rates Sensitivity

Business Rates Sensitivity Analytics
Category	2022/23 Forecast £	2023/24 Forecast £	2024/25 Forecast £	2025/26 Forecast £	2026/27 Forecast £
MTFS	3,917,806	3,048,048	2,954,100	3,058,250	3,119,415
Central £350,00 surplus	4,267,806	3,361,821	3,274,126	3,058,250	3,119,415
Best £700,000 surplus	4,617,806	3,511,821	3,427,126	3,058,250	3,119,415

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 and aside from the additional one-year funding for 2022/23 (see section 3.7 below), there has not yet been any announcement on the results of the recent consultation regarding any future ongoing funding. 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. Due to increases in Special Expenses limiting the amount of increases the Council can apply, we have assumed an increase in Council Tax of £3.57 (2.42%) in 2022/23, £4.96 and £4.80 for 2023/24 and 2024/25 respectively, and thereafter £5 each year. A Council Tax freeze would result in a reduction of £162k in revenue. The Council’s referendum limit calculation also includes Special Expenses and the combination of Rushcliffe’s Council Tax and Special Expense together equates to a £5 increase on a Band D. The 2022/23 increase of 2.42% is below 2021/22 inflation levels.

The 2022/23 tax base has been set at 45,387.6 (an increase of 2.55%). The projections for 2022/23 have been based upon the current Council Tax base. Anticipated growth during 2022/23 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 announced last year that Billing Authorities would be required (by legislation) to ‘spread’ any deficits occurring in 2020/21 (as a result of reduced receipts from Covid). The anticipated deficit for Council Tax (occurring in the year) was approximately £1.4m (the Council’s exposure is approximately £0.15m) which was subsequently spread over the three years 2021/22 to 2023/24 (£51k per annum). In-year variances (actual against anticipated surpluses or deficits) also affect the overall surplus/deficit to be recovered (reduced to £45k in 2021/22) For 2022/23 the overall net deficit is expected to be £48k.

The Government is not intending to reimburse Councils for losses incurred through Council Tax collections as was the case for 2020/21. However, the budget includes £24k grant income in both 2022/23 and 2023/24 to offset 2020/21 losses which were subject to spreading over 3 years.

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	2021/22	2022/23	2023/24	2024/25	2025/26	2026/27
Council Tax Base (a)	44,259.60	45,387.60	46,295.35	47,221.26	48,165.68	49,129.00
Council Tax £ (b)	£147.36	£150.93	£155.89	£160.68	£165.68	£170.68
£ Annual Increase	£4.62	£3.57	£4.96	£4.79	£5.00	£5.00
% Increase	3.24%	2.42%	3.29%	3.07%	3.11%	3.02%
Gross Council Tax collected (a multiplied by b)	£6,522,095	£6,850,173	£7,216,888	£7,587,728	£7,980,311	£8,385,562
Increase in Precept	£243,294	£328,078	£366,715	£370,840	£392,583	£405,251
Council Tax (surplus) / deficit	£45,000	£47,600	£51,000	£0	£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 2021/22, 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 £0.11 (-3.23%) and Ruddington £0.18 (-4.5%). Expenditure in West Bridgford has increased due mainly to annuity charges for historical works in West Bridgford. There is an overall net increase to West Bridgford of £84k and an increase in the Band D charge of £4.26 (8.58%).

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	£712,600	£49.65	£796,400	£53.91	8.58
Keyworth	£9,200	£3.41	£9,200	£3.30	-3.23
Ruddington	£11,100	£4.00	£11,100	£3.82	-4.50
Total	£732,900	-	£816,700	-	-

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 will cease the New Homes Bonus (NHB) scheme in 2023/24 and consulted during 2021 on the potential future replacement of the NHB scheme. Whilst the outcome of this consultation and any potential replacement for the scheme has not yet been announced, the Council will receive £0.934m in addition to the legacy payment of £0.653m originally expected in 2022/23. The table below depicts the funding and cessation of the scheme by 2023/24.

New Homes Bonus
Description	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000	2026/27 £'000
New Homes Bonus Received in Year	(1,633)	(1,587)	0	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 had a significant impact on the fees and charges receipts during 2020/21 and it was anticipated that the effects of the virus would continue into 2021/22 and 2022/23 and the budget assumed anticipated reductions in fees and charges of approximately 20% in 2021/22 and 10% in 2022/23. The majority of the losses budgeted related to Planning and Car Parking both of which have not experienced the losses that had been anticipated and subsequently the 10% reduction in budget in 2022/23 has been removed.

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

Fees, Charges and Rental Income budget
Category	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000	2026/27 £'000
Car Parks	(683)	(852)	(852)	(852)	(852)	(852)
Licences	(308)	(275)	(277)	(277)	(277)	(277)
Non-Sporting Facility Hire	(138)	(123)	(147)	(147)	(147)	(147)
Other Fees & Charges	(529)	(924)	(901)	(963)	(1,027)	(1,029)
Planning Fees	(957)	(1,317)	(1,317)	(1,317)	(1,317)	(1,317)
Rents	(1,797)	(1,922)	(2,027)	(2,047)	(2,047)	(2,047)
Green Waste Income	(1,400)	(1,400)	(1,400)	(1,587)	(1,587)	(1,587)
Service Charges	(302)	(353)	(354)	(354)	(354)	(354)
Total	(6,114)	(7,166)	(7,275)	(7,544)	(7,608)	(7,610)

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 a slight reduction in 2023/24 due to the loss of Land Charges income for which responsibility will transfer to the HM Land Registry. From 2024/25 onwards, estimated income increases due to the new Crematorium which is expected to open in autumn 2022. Garden Waste is normally increased on a cyclical basis every 3 years (last increased in 2020/21) and the next planned increase is 2024/25. 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.

As explained in section 3.8 above, the car parking income budget was reduced for 2021/22 and 2022/23 due to reductions in usage caused by COVID. Usage of the council car parks has seen a faster recovery than anticipated leading to the 2022/23 budget being reinstated to pre-Covid levels. There have been no further increases assumed for car parking charges as the Council continues to support local businesses and their recovery in a post Covid world.

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 (£13.254m) which is used to meet the costs of the national housing benefit scheme. Other Income is shown in the table below, the majority of which is the Leisure Services contract. Interest on investments reflect assumptions based on balances available to invest and expected interest rates (see Appendix 5).

‘Other Income’ below, 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 summer 2022. Homelessness Prevention funding received in 2021/22 is now expected to continue for the foreseeable future and makes up a large proportion of the Other Government Grants line below.

Other Income
Category	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000	2026/27 £'000
Costs Recovered*	(156)	(163)	(179)	(179)	(179)	(179)
Council Tax / Housing Benefit Admin Grants	(215)	(233)	(228)	(224)	(219)	(215)
Interest on Investments	(462)	(673)	(626)	(610)	(602)	(599)
Income from other Local Authorities	(86)	(5)	(5)	(5)	(5)	(5)
Other Income	(396)	(678)	(875)	(942)	(993)	(1,025)
Recycling Credits	(180)	(200)	(200)	(200)	(200)	(200)
Other Government Grants	(120)	(302)	(300)	(300)	(300)	(300)
Sub Total	(1,615)	(2,254)	(2,413)	(2,460)	(2,498)	(2,523)
Housing Benefit Subsidy	(11,788)	(13,254)	(13,254)	(13,279)	(13,279)	(13,279)
Total Other Income	(13,403)	(15,508)	(15,667)	(15,739)	(15,777)	(15,802)

3.10 Summary

All Sources of Income
Category	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000	2026/27 £'000
Retained Business Rates	(2,820)	(3,958)	(3,078)	(2,994)	(3,098)	(3,206)
Other Grant Income*	(1,130)	(273)	(164)	(164)	(164)	(164)
New Homes Bonus	(1,633)	(1,587)	0	0	0	0
Council Tax (RBC)	(6,522)	(6,850)	(7,217)	(7,588)	(7,980)	(8,385)
Council Tax (Special Expenses)	(733)	(816)	(835)	(861)	(864)	(875)
Fees, Charges and Rental Income	(6,114)	(7,166)	(7,275)	(7,544)	(7,608)	(7,610)
Other Income	(13,403)	(15,508)	(15,667)	(15,739)	(15,777)	(15,802)
Transfers from Reserves**	(3,034)	(2,619)	(1,108)	(753)	(661)	(216)
Total Income	(35,389)	(38,777)	(35,344)	(35,643)	(36,152)	(36,258)

*The Lower Tier Grant (£109k) is the second year of a new grant with the purpose of supporting services such as leisure services and looks to partially rebalance the impact of the loss of New Homes Bonus (the other grants are Covid linked). For 2022/23 the Council has been allocated £164k Services Grant. This will contribute towards the increase in employer National Insurance Contributions and pay pressures.

**The transfer from reserves in 2022/23 includes the mitigation of the budgeted deficit in Business Rates referred to in section 3.3 above and from 2023/24 the net transfer from reserves reduces as it is not anticipated that further large deficits will be funded by grants in this way. The net transfer from reserves also incorporates the £1.3m per annum payment for the Arena, Bingham Hub, and the Crematorium in relation to Minimum Revenue Provision (MRP). The position on reserves is shown in Section 6.

4. 2022/23 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	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000	2026/27 £'000
Employees	10,697	11,437	11,824	12,031	12,339	12,558
Premises	1,008	1,144	1,103	1,106	1,109	1,112
Transport	926	1,030	1,046	1,048	1,053	1,058
Supplies and Services	3,763	4,220	4,206	3,993	3,883	3,773
Transfer Payments	11,773	13,219	13,229	13,254	13,254	13,254
Third Party	2,811	2,915	2,954	3,018	3,084	3,098
Depreciation / Impairment	1,768	1,895	1,895	1,895	1,895	1,895
Capital Financing	45	0	0	0	0	0
Gross Service Expenditure	32,791	35,860	36,257	36,345	36,617	36,748
Reversal of Capital Charges	(1,768)	(1,895)	(1,895)	(1,895)	(1,895)	(1,895)
Collection Fund Deficit	4,045	4,365	51	0	0	0
Minimum Revenue Provision	1,074	1,293	1,293	1,293	1,293	858
Overall Expenditure	36,142	39,623	35,706	35,743	36,015	35,711

4.2 Explanations for some of the main variances above are:

Employee costs reflect a 3.75% award (the cumulative impact of 1.75 % in 2021/22 and 2% 2022/23) and 2% thereafter and 1.25% in National Insurance Contributions.
Premises include an assumption of inflation of 35% in 2022/23 reducing by 15% in 2023/24, in relation to utilities and rising fuel prices.
Transport costs include an increase of £75k for fuel due to general price increases and pressures in the current environment and an increase in vehicle repairs due to ageing waste collection vehicles of £25k.
Supplies and services most significant increases in 2022/23 are due to; increased budget provision relating to the redevelopment of the power station site / Freeport £165k (funded from reserves) and an increase in general contingencies £168k to £300k.
Transfer Payments were expected to reduce in 2021/22 due to expectations of reduced housing benefit claims as a result of the move to Universal Credits (handled by the Department for Work and Pensions (DWP)). This reduction was not as significant as expected and therefore estimates have been based on current caseload and the DWP handling working age claims under Universal Credits.
Capital Financing costs (interest on borrowing) have been removed from the budget from 2022/23 onwards as there is currently no expectation that the Council will need to externally borrow during this MTFS periods.
The £4.365m Collection Fund deficit relates to Business Rates (£4.317m in the Business Rates forecast table); the deficit arising at outturn in 2020/21 and 2021/22 as a result of additional reliefs granted to leisure, hospitality, retail, and childcare; and the deficit arising in 2021/22 as a result of a successful appeal from the power station and a small Council tax deficit of £48k (Council Tax Collection Fund table). Additional business support grants have been received during the year which will be appropriated to reserves to cover this deficit. The release of this grant is included in the net transfer from reserves in Table 8 above.
Minimum revenue Provision (MRP) increases in 2022/23 to reflect the internal borrowing requirement for The Crematorium, Bingham Hub and Cotgrave Masterplan.

4.3 As with 2021/22 the Council will again receive £163k in Homelessness and Rough Sleeping funding from the Government. 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 a 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	2021/22 Estimate £'000	2022/23 Estimate £'000	2023/24 Estimate £'000	2024/25 Estimate £'000	2025/26 Estimate £'000	2026/27 Estimate £'000
Total Income	(35,389)	(38,777)	(35,344)	(35,643)	(36,152)	(36,258)
Gross Expenditure	36,142	39,623	35,706	35,743	36,015	35,711
Net Budget Position (surplus) / deficit	753	846	362	100	(137)	(547)
Revised Transfer (From)/to Reserves	(3,787)	(3,465)	(1,470)	(853)	(524)	331

5.2 The above shows a budget deficit in 2022/23 of £0.846m, deficits of £0.362m and £0.100m in 2023/24 and 2024/25 respectively. The £0.846m deficit is a result of the power station appeal and will be funded from the Organisation Stabilisation Reserve. It is anticipated that from 2025/26 the budget will move into a surplus position as a result of the Crematorium and Bingham Hub which will then be used to replenish the reserve, the total for the period being a deficit of £0.624m. In-year budget efficiencies will be appropriated to the Organisation Stabilisation Reserve to reduce this residual deficit and restore the reserve to original levels. 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 reduce the use of reserves for the 2022/23 deficit and mitigate the risks going forward on Business Rates, from reforms and the loss of the Power Station, or to support any other priorities arising during 2022/23.

5.3 Section 7 covers the Transformation Programme - including the use of reserves, balancing the budget for 2022/23 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.

6.2 The 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 £20.9m to £12.1m (21/22 – 26/27). Appendix 6 details the movement in reserves for 2022/23 which also includes capital commitments. This shows a reduction from £20.9m to £15.8m (2021/22 to 2022/23) primarily reflecting the release of £3.7m to offset the Collection Fund deficit in 2022/23 (from the recently created Collection Fund Reserve and £0.846m from the Organisation Stabilisation Reserve to fund the remaining impact of the power station business rates appeal (mentioned in Section 3.3). In addition, the sum of £2.293m is required to be released from the NHB Reserve. Of this, £1.293m will offset the impact of the MRP charged in the year. A further £1m from New Homes Bonus is earmarked to be used to support the acquisition of a Traveller Site. The latter is necessary given a requirement of the Local Plan and if a site is not provided means the Council is susceptible to random traveller planning applications across the Borough. 2021/22 in-year revenue budget efficiencies will be utilised to fund the transition costs associated with moving Streetwise to an in-house delivery model, as agreed by Cabinet 9 February 2022.

6.3 The Climate Change Action Reserve remains despite the pressures of Covid. The reserve will be topped up in 2022/23 by £0.2m and will support projects that contribute to the Council’s ambitions to protect and enhance the environment including the reduction of its carbon footprint. A balance of £0.970m will be available and will be allocated as projects get approved. £30k has been earmarked for enhancement works at Rushcliffe Country Park (Photovoltaic Panels and a new heat pump). From the original £1m reserve established, £0.2m was transferred to the Freeport Reserve. The East Midlands Development Corporation will support partnership working to deliver transformational infrastructure and economic development projects. Rushcliffe’s Freeport Reserve will be utilised over 3 years to support the work with a contribution of £0.165m each year. This will leave a balance of £0.2m, appropriated to the reserve in 2022/23. Cabinet have also taken the opportunity, given the favourable 2021/22 revenue position, to propose a new £1m reserve towards vehicle replacement, to help future proof key frontline services such as refuse collection; and that they use the latest carbon reduction technology

6.4 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 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.

6.5 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 31.03.21 £'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	Balance 31.03.27 £'000
Investment Reserves	-	-	-	-	-	-	-
Regeneration and Community Projects	1,887	1,887	2,035	2,198	2,375	2,557	2,749
Sinking Fund	212	376	201	451	641	896	611
Corporate Reserves	-	-	-	-	-	-	-
Organisation Stabilisation	3,786	2,963	2,117	1,755	1,655	1,792	2,339
Collection Fund S31	5,990	3,731	24	0	0	0	0
Climate Change Action	800	800	970	970	970	970	970
Freeport Reserve	400	330	365	200	200	200	200
Vehicle Replacement	0	1,000	1,000	1,000	1,000	1,000	1,000
Risk and Insurance	100	100	100	100	100	100	100
Planning Appeals	350	350	350	350	350	350	350
Elections	100	150	200	50	100	150	200
Operating Reserves	-	-	-	-	-	-	-
Planning	209	209	170	131	44	44	44
Leisure Centre Maintenance	111	7	7	7	7	7	7
Total Excluding NHB Reserve	13,945	11,903	7,539	7,212	7,442	8,066	8,570
New Homes Bonus	8,420	8,979	8,273	6,980	5,687	4,394	3,536
Total Earmarked Reserves	22,365	20,882	15,812	14,192	13,129	12,460	12,106
General Fund Balance	2,604	2,604	2,604	2,604	2,604	2,604	2,604
Total	24,969	23,486	18,416	16,796	15,733	15,064	14,710

7. The Transformation Strategy and Efficiency Strategy

7.1 For the past seven 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, scrutiny etc; 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	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000	2026/27 £'000
Gross Budget Deficit excluding Transformation Plan	5,191	5,685	5,637	5,744	5,406	4,947
Cumulative Savings in Transformation Plan	4,185	4,512	4,902	5,237	5,349	5,381
Gross Budget Deficit / (Surplus)	1,006	1,173	752	435	(25)	(515)
Additional Transformation Plan Savings	(253)	(327)	(390)	(335)	(112)	(32)
Net Budget Deficit / (Surplus)	753	846	362	100	(137)	(547)
Cumulative Transformation Target (Appendix 5)	(445)	(772)	(1,162)	(1,497)	(1,609)	(1,641)

7.3 For a second year the Council’s financial position has been impacted by the legacy of Covid. In addition to this the Government have implemented tighter restrictions on how Councils can generate additional income, limiting borrowing for wider projects dependent upon capital spending proposals and excluding borrowing from the PWLB where capital spend is solely for commercial gain. The Council will continue to look at alternative ways for commercialism to reduce the funding gap. The Council has continued to constrain spending and increase income where possible and continues to review how it delivers its services for potential efficiency savings. The negative impact of Covid means that the Council has a need to draw on reserves in 2023/24 and 2024/25 however projections currently show that the reserves can be replenished by the end of this MTFS. Significant asset investment projects, particularly the development of a Crematorium and the Bingham Leisure Hub make a significant financial contribution to these projections in addition to delivering both socio-economic benefits, but they are not without their own project risks. Both of which are expected to complete during 2022/23 and together are expected to generate over £1m of budget efficiencies, per annum, by the end of this MTFS period.

7.4 The Council must continue to review its existing transformation projects on an on-going annual basis. The current Transformation plan focuses mainly on the two large projects identified above and the challenge moving forward will be to keep momentum and identify projects that will contribute to savings in the future. Officers continue to seek efficiencies wherever possible and look for wider projects to improve value for money. As can be seen at Table 12 over the five-year period £1.196m of expected efficiencies have been identified. The current transformation projects which will be worked upon for delivery from 2022/23 are given at Appendix 3.

7.5 The Council has during 2021/22 looked to cease its investments in commercial property and as such the income receipts are not expected to significantly increase from 2022/23 onwards.

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 potential for a Freeport. Growth Boards will also help support the business community. Budget at safety net position for future years and we achieve our central case predictions this will reduce the need to utilise reserves. No evidence that Covid has affected business rates collection rates but continue to monitor. Use of reserves as necessary to mitigate ‘one-off shocks'.
Central Government policy changes eg Fairer Funding, changes to NHB and Business Rates reset 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 in years of uncertainty.
The Council does not achieve Council Tax income levels as projected in the MTFS and linked to Government referendum limits and Special Expenses. Covid-19 impacts upon levels of Council tax collected	Medium	Medium	Continue to monitor government policy and lobbying. Budget workshops for members so they are clearly informed regarding the impact of alternative decisions. Monitor and report on Special Expenses. Continue to monitor Council Tax collection.
Inadequate capital resource	Medium	Medium	Proportionate spending and sale of surplus assets and ongoing review of assets (last reported to Cabinet in 2021), maximising pooled funding opportunities, for example, 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. Review of potential increases to fees and charges on an annual basis. Ensure future changes are built into the MTFS.
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. Budget set to include latest assumptions on inflationary increases. Additional contingency for pay and inflationary pressures.
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 impact of Covid and current international tensions with Russia should be reflected in 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) 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 and monitor impact on new leases.
Environmental Agenda Impact on both revenue and capital budgets	High	Medium	Creation of Climate Change Action Reserve £1m ongoing review of significant projects and outcome of scrutiny review. A new vehicle replacement reserve which will help fund, for example, electric vehicles
Streetwise transfer in-house with performance to be maintained and improved and revenue and capital risks and opportunities	High	High	Potential transfer of Streetwise service back inhouse. Risk of requirement for additional resources but also potential for transformational efficiencies. Monitor and project manage. Update reports to Cabinet through usual financial reporting arrangements. Updated MTFS for 2023/24.
Traveller’s site located to accord with the Local Plan and avoid unplanned traveller pitches throughout the Borough	Medium	High	Site identification, financial implications to be determined and reported in further Cabinet reports, £1m in Capital Programme

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 particularly as recent settlement announcements have been limited to one year only. 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 diversified its property portfolio, 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 PWLB loan criteria, the Council’s capital programme does not include any investments that are purely for financial return. The Council continues to maximise its returns from its existing investments by regularly reviewing the performance of its commercial property and a report was scrutinised at Governance Scrutiny Group and Cabinet in November 2021.

8.4 The MTFS presents deficits from 2022/23 to 2024/25 which are funded using the Organisation Stabilisation Reserve. The budget then moves into a surplus position when the reserves will be partially 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. Covid highlighted the importance of holding adequate reserves as the Council was able to continue delivering services to its residents throughout the pandemic. There is a current climate of an unprecedented level of funding uncertainty (notwithstanding those related to Covid). In this regard it should be noted that particular risks exist with regards to:

Benefits from Business Rates Baseline – this could result in most or all of the growth being removed and result in a significant drop in retained income from Business Rates.
The Power Station is due to be de-commissioned in 2024. Whilst the proportion of Business Rates applicable to the Power Station has reduced in recent years (and impact accelerated by the recent successful appeal) the closure will ultimately impact upon the Business Rates income potentially undermining 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 although any reforms are now unlikely to occur before 2023/24.
Businesses were revalued in 2017 with a further revaluation now planned for 2023. There may also be further reliefs announced in 2022/23 for the retail, hospitality and leisure sectors as the impact of Covid-19 continues.
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. This is mostly dependant on growth and surplus from the Business Rates Pool.
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 however there has not, at the time of writing, been any announcement following the consultation last Spring.
Special Expenses – as highlighted in section 3.5 the Council’s ability to raise Council Tax without referendum is affected by the charges for Special Expenses as both are included for the purposes of calculating the referendum trigger. Potential future increases in annuity charges in the Special Expense may put pressure on the ability to raise sufficient Council Tax if the projected tax base increases do not materialise or increase at a rate lower than required increases in budget.

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 and investment in Social Housing. 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 at Table 14. This remains an ambitious programme totalling £28.2m for 5 years.

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, 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 to help balance the Council’s MTFS. Significant projects in the Capital Programme include:

a) A total provision of £20m has been included in this and previously published Capital Programmes for the continued development of Bingham Hub. There is a £2m balance in 2022/23 to meet final costs. 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. The build is well underway and it is planned that the centre will open in late summer 2022.
b) £8.5m has been included in total to provide a new Crematorium in the Borough. Of this, £3m has been brought forward from 2021/22 to 2022/23 to meet final build and fit out costs.
c) The provision for Support to Registered Housing Providers has benefitted significantly from Planning Agreements monies arising from Land North of Bingham. RBC is due up to £3.8m (£2.3m has already been received and the balance is due May 2022). This sum, together with the balances of other Planning Agreement monies and capital receipts set aside for Affordable Housing gives a total sum available of £5.240m split 50:50 between 2022/23 and 2023/24. Options for commitment of these sums are being assessed.
d) £1.710m over the 5 years for investment in the upgrade of facilities at leisure centres. There are: planned refurbishments to changing villages; floor replacement; 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.
e) £1m has been included in 2022/23 for the acquisition of a Traveller Site in the Borough. This is to meet requirements of the Local Plan (as mentioned in the Reserves Section). 32
f) Information Systems Strategy (£0.23m plus a four-year rolling programme to give a total of £1.22m) will ensure that the Council keeps pace with new technologies, protects itself against cyber-attacks and continues to modernise services and deliver ‘channel shift’ in an increasingly virtual world.
g) On-going vehicle replacement programme (£3.751m over the next five years).
h) Disabled Facilities Grants (DFGs) provision of £0.530m has been provided each year but there may be 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.
i) Ongoing provisions of £0.15m per annum to provide market loan facilities for Streetwise Environmental Ltd to support their vehicle replacement programme.
j) To facilitate the provision of a Community Facility in Edwalton, £0.5m has been included. Options are being explored for funding with any balance being subject to Special Expense annuity charges.
k) Some smaller sums have been included to enhance our land and buildings and investment property portfolios. In particular, £0.320m for enhancement work to West Park Buildings and these will be subject to annuity charges repayable through the West Bridgford Special Expense.
l) A Contingency sum of £0.15m has been included in 2022/23 dropping to £0.1m for future years, to give flexibility to the delivery of the programme and to cover unforeseen circumstances.
m) Expected total ‘internal’ borrowing, including 2021/22, totals £11m. Given the projected level of the Council’s cash balances at March 2022, it is anticipated external borrowing is not required (in the medium term). The timing and incidence of actual external borrowing will be affected by any slippage in the capital programme, unexpected capital funding (for example capital receipts), and cash balances and this is reflected in the capital financing requirement shown in the Capital and Investment Strategy (Appendix 5).
n) £770k included for Home Upgrade Grants (HUG) and Local Authority Delivery phase 3 (LAD 3) to support energy efficiency measures and low carbon heating. This is fully funded by Government Grant

Capital Programme 2022/23 to 2026/27
Category	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	2026/27 Current Estimate £'000	5 Year Total
Expenditure Summary	-	-	-	-	-	-	-
Development and Economic Growth	21,078	7,085	360	225	130	610	8,410
Neighbourhoods	5,306	6,996	5,615	2,090	1,340	1,225	17,266
Finance and Corporate	838	530	480	530	480	500	2,520
Total	27,222	14,611	6,455	2,845	1,950	2,335	28,196
Funded By	-	-	-	-	-	-	-
Usual Capital Receipts	(8,092)	(8,921)	(4,127)	(1,940)	(1,110)	(955)	(17,053)
Government Grants	(3,360)	(1,465)	(695)	(695)	(695)	(695)	(4,245)
Use of Reserves	(399)	(1,605)	(150)	(210)	(145)	(685)	(2,795)
Grants and Contributions	(530)	0	0	0	0	0	0
Section 106 Monies	(3,841)	(2,620)	(1,483)	0	0	0	(4,103)
Internal Borrowing and Borrowing	(11,000)	0	0	0	0	0	0
Total	(27,222)	(14,611)	(6,455)	(2,845)	(1,950)	(2,335)	(28,196)
Resources Movement	-	-	-	-	-	-	-
Opening Balances	7,362	7,595	7,528	5,031	6,085	5,731	-
Projected Receipts	16,455	14,544	3,958	3,899	1,596	1,610	-
Use of Resources	(16,222)	(14,611)	(6,455)	(2,845)	(1,950)	(2,335)	-
Balance Carried Forward	7,595	7,528	5,031	6,085	5,731	5,006	-

9.3 The Council 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 was taken out of the programme in direct response to the changes in access for PWLB borrowing whereby it is no longer allowable to borrow for yield (or financial return).

9.4 The Council’s capital resources are slowly being depleted to fund the Capital Programme. It is projected that capital resources will be in the region of £5m at the end of the five-year life of the Programme. This comprises: £4.367m Earmarked Capital Reserves; £0.390m Capital Receipts and £0.250m minor capital grants and contributions. The level of Capital Receipts will slowly be replenished but will only significantly increase if major assets are identified for disposal in the future, given the extent of future capital commitments.

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

A further £7m from the Sharphill Overage Agreement (£12m already received);
Sale of land in Cotgrave: approximately £7m;
Disposal of the old Depot Site, approximately £4.8m; and
Over £1.4m in repaid loan principal from Nottinghamshire County Cricket Club and Streetwise.

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

£4m from Planning Agreements for off-site affordable housing. £3.8m of this comes from a new S106 for Land North of Bingham;
£1.65m Sustainable Urban Development (SUD) funding to support the development of new offices in Bingham part of which will be applied to meet 2021/22 expenditure (£0.75m of Growth Development Fund grant from the Local Enterprise Partnership (LEP) has been previously applied for the offices plus £0.174m from LEP to support the Community Hall element of Bingham Leisure Hub); and
An estimated £0.695m per annum from the Better Care Fund to deliver Disabled Facilities Grants, Discretionary Top-up Grants, and Assistive Technology (Home Alarms).
£0.77m funding towards HUG and LAD3.

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	2022/23 Estimate	2023/24 Estimate	2024/25 Estimate	2025/26 Estimate	2026/27 Estimate
Anticipated Interest Rate (%)	0.5	0.75	1.0	1.25	1.25
Expected Interest from Investments (£)	(592,300)	(544,000)	(545,900)	(542,700)	(539,800)
Other Interest (£)	(81,000)	(72,000)	(64,000)	(59,000)	(59,000)
Total Interest (£)	(673,300)	(626,000)	(609,000)	(601,700)	(598,800)

10.2 CIPFA have just released new editions of the Treasury Management Code and Prudential Code (20 December 2021). Some changes in the Prudential Code come into immediate effect, namely an authority must not borrow to invest primarily for financial return. Authorities may, however, defer introducing revised reporting requirements until 2023/24 (these include changes in capital strategy, prudential indicators, and investment reporting). There is no effective date stipulated for the Treasury Management Code but where possible these changes are reflected in the strategy. 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.

10.3 The CIS covers the Council’s approach and risk management with regards to commercial assets. It documents the spreading of risk across the size of individual investments and diversification in totality across different sectors. As a result of recent changes to the code as detailed above, the Council has recently shifted its focus from acquisitions of commercial assets to maximising the returns from its existing portfolio. The Council undertakes regular performance reviews on the assets with the most recent review reported to Cabinet and Governance Scrutiny Group in November 2021.

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. A review was undertaken in 2021/22 to assess the performance of the Council’s existing commercial assets and their continued contribution to the Councils strategic aims. This will continue to be monitored and reported to scrutiny on a regular basis.

11.2 Instead of increasing its Council Tax by the higher of 2% or up to £5 the Council could freeze its Council Tax. Table 16 provides details of the impact on budgets of the recommended option of a £3.57 increase in 2022/23, £4.96 in 2023/24, £4.79 in 2024/25 and thereafter £5 increase against the two scenarios of a tax freeze or a 2% increase. If the Council chose to freeze its Council Tax, the income foregone in 2026/27 is £1.15m and over the 5-year period £3.213m.

Alternate Council Tax Levels
Option	2021/22 £'000	2022/23 £'000	2023/24 £'000	2024/25 £'000	2025/26 £'000	2026/27 £'000
Band D £150.93 in 2022/23 Increase at £4.96 in 2023/24, £4.79 in 2024/25 and £5 each year thereafter - the recommended option Total Council Tax Income	(6,522)	(6,850)	(7,217)	(7,588)	(7,890)	(8,385)
Total for Freeze (Band D £147.36)	-	(6,688)	(6,822)	(6,959)	(7,098)	(7,240)
Total for 2% each year (Band D £150.31)	-	(6,822)	(7,098)	(7,384)	(7,683)	(7,993)

Council Tax Difference - Based on Options
Difference (£'000)	2022/23	2023/24	2024/25	2025/26	2026/27	Total
Freeze vs £5.00	(162)	(395)	(629)	(882)	(1,145)	(3,213)
2% vs £5.00	(28)	(119)	(204)	(297)	(392)	(1,040)

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