To consider elements of the draft budget proposals determined by the Committee at its meeting on 10 January 2022 and questions that followed the meeting.
The Chief Financial Officer updated Members on questions raised at the previous meeting and submitted prior to the meeting. Responses to the questions had been circulated prior to the meeting.
Was there the ability to present an up to date version of the Capital Programme?
In the response, it was noted that the information provided to members was the most up to date information at the time and the team were working to keep information up to date.
Regarding the sensitivity modelling and modelling for inflation, were there models to consider for the increase in inflation scenarios?
The Chief Financial Officer said that there was no one inflation rate applied to the budget. However, metrics had been taken into account throughout to account for inflation including pay awards and costs from care providers. There were general contingencies of £3.95m and a specific inflation contingency of over £2.4m to cover potential inflation increases including for Adult Social Care.
Regarding the amount of debt the Council carried, what was the impact of this?
Regarding debt, the Chief Financial Officer stated that borrowing was kept to a minimum by the use of internal funds where possible and that no debt related to any investments made outside of the borough purely for commercial return. The investments undertaken by the Council previously had resulted in significant benefits for the Borough but that did result in an associated debt.
With the current debt, when was it likely to be an area of concern?
At the time of the meeting, it was said that the level of debt was not of concern given the overall financial position of the authority. The Chief Financial Officer explained that, from a survey regarding Unitary Authorities Financing Costs to Net Revenue – 2021/22, with a 57 out of 60 respondent rate, the Council was at 8.2% while the average was 10.4%. Members heard that there was no legislation or rules that set a limit on the amount of external debt that an authority can incur. This allowed for more flexibility in terms of Members taking decisions based on local priorities and circumstances Telford & Wrekin Council had more investment in assets which, as well as delivering a benefit to the authority, generated an income and had more investment return than some other authorities. Much of the debt accumulated by the Authority had longer fixed terms, with some of them having a term in excess of 50 years which made budgeting for debt repayment more certain and therefore more manageable.
With regards to non-investment debt, if that were to increase, what was the threshold where the Authority would reach an uncomfortable level of debt?
The debt outlined in the budget was at a comfortable level. The budget assumptions did not leave the Authority overexposed at the time. The Council were in a financial position to fund their priorities and, with total uncommitted reserves being reasonably high, the track record of out-turning on budget, the planned level of capital expenditure and the current interest rate assumed for all new borrowing of 2.5% the Authority had the ability to make the choices set out in the MTFS as to where to place resources.
After the questions from members to the Chief Financial Officer and the Cabinet Member for Finance, Governance and Customer Services, the Committee discussed the budget proposals. Members asked about whether an alternative had been proposed, which none had been proposed. After the deliberation, the Chair moved to the next item to vote on whether to accept the budget proposals.