To receive apologies for absence.

None

To receive details of members nominated to attend the meeting in place of a member of the board.

None

To receive declarations of interests in respect of items on the agenda.

No declarations of interest were received.

To receive the minutes of the meeting held on 28 November 2022; consideration was deferred at the previous meeting (9 January 2023).

The Minutes from the 9 January SMB meeting are in preparation and will be reviewed and agreed at the next scheduled meeting, 14 March. 

The Chair noted that the committee was unable to agree the Workforce Strategy report as a result of corrections needing to be made.   The workforce strategy report was deferred for agreement at the 17 January SMB committee. 

To receive any written questions from members of the public.

Questions received and responses given are attached.

To receive any written questions from members of the council.

The were no questions from Members of the Council

To seek the views of Scrutiny Management Board on the capital investment budget proposals for 2023/24 onwards.

The chair introduced this item noting that it is open to scrutiny management board to recommend alternative spending proposals or strategic priorities.  It is a legal requirement to set a balanced budget, should additional expenditure be proposed compensatory savings proposals must also be identified.  It was explained that the committee will consider this item at ‘whole budget’ as opposed to examining directorate by directorate.

Cabinet members – opening remarks - confirmed that the investment budget sets out financially and legally compliant proposals.  A budget that is balanced and achievable, within the context of:

• Continuing investment in council priority spend and making savings in other areas of council business; 
• A better local government settlement than expected, but real term deficits compared to previous years, and
• Unknown variability within the economy, as will be the case will for all other LAs, resulting from increasing inflationary pressures.

The committees principal lines of enquiry centred upon:

Borrowing – is this prudent and affordable. 

• Cabinet proposals for borrowing are designed to enable some projects to get started earlier – bringing borrowing forward into 2023/24 from 2024/25 provides smoother running of delivery plan priorities. 

• Borrowing is set within the context of the council being able to demonstrate the ability to service its debt with increased revenue

Use of reserves:

• Committee referred to Appendix A where details were provided details of the proposed additions to the existing capital programme that have been identified and the impact of approving these additions.
• A significant use of reserves was noted and questioned as to whether this was sustainable and whether the reserve budget would be replenished.
• It was explained that the reserves are to cover urgent matters this year (such as the shortfall in children’s services) – to not have added monies from reserves was not an option. 
• Longer term – the ambition is to build up the reserves.

Resolved:

With the significant drop in reserves in 22/23 of some 32%, the committee recommends greater transparency on the cabinet approach to the use of reserves and the level to be kept and what this means for the future sustainability and credibility of the MTFS

A more robust reserves policy supporting the budget is developed for future years.

Contingency planning:   Have contingencies, financial health warnings have been built in to the deliverability of the capital programme given the aforementioned inflationary pressures.

• It was explained that contingency measures have been built in the business cases.  The reality being, however that contingency planning can only ever be founded on the best information available at the time of drafting. 
• The budget has been predicate around the best view possible from the best expert advice. 
• However, we must expect that some projects/initiatives will come in at different prices, with the prospect of double digit inflation remaining a factor.
• Business cases have been underpinned by ‘live market’ knowledge and this will be kept under review.
• Where certain projects demonstrate a lack of viability they are unlikely to be progressed unless they can demonstrate additional and favourable  ...  view the full minutes text for item 59.

To seek the views of the Scrutiny Management Board on the budget proposals for 2023/24 following the announcement of the provisional financial settlement.

The Chair introduced the item and noted that the key lines of enquiry for consideration of the revenue budget were;

• Robustness of information
• Questions around the Medium Financial Terms Strategy
• Robustness of the estimates
• Questions around base budget

To assist public understanding of the papers the committee sought clarification to the term ‘Central’ that appeared on page 266 of the papers.

The s151 officer confirmed that the term ‘Central’ related to the cost of borrowing in relation to employee pension costs. It is held centrally rather than trying to allocate the costs across the council.

The committee raised questions about the rates of inflation that had been used in the medium term financial strategy. They asked whether there was a narrative on which the assumptions had been made. There was concern that there was a danger of over inflating the figures in the MTFS. There would be no objection to the use of the figures provided there is an explanation on how the figures had been created.

The Cabinet member responded, advising that national inflation and CPI do not necessarily reflect where inflation hits the council in terms of the kind of services the council deliver and those that we procure through others.

The s151 officer advised that they (Cabinet) have to take a view going forward and that the council has to set a balanced budget. In terms of assumptions around inflation they are prudent. At the moment no one knows in which direction inflation will go. He confirmed he was comfortable with the assumptions as they are reasonable and fair.

There followed a discussion about the rates of inflation that had been used in setting the budget, whether other indices had been considered such as construction industry bodies and what sensitivity analysis had been done. The committee concluded that there needs to be a narrative provided to justify the inflation figures used for the budget in the MTFS.

Resolved:

That a narrative be provided, in preparation for the cabinet meeting, to justify the inflation figures used for the budget and the MTFS

The committee sought confirmation around figures that has been used for the Social Care Support Grant, the Market Sustainability and Cost of Care and the New Homes Bonus.

The committee were advised that the figures have come from the Directorate understanding of what the government likely grant schemes will be. The government has changed the calculation for the New Homes Bonus to net off empty homes. The Market Sustainability and Cost of Care only runs for a further year so it is being incorporated into the social care funding pressure.

The committee enquired about the Economy and Environment budget which has been flat for the last 3 years and whether it could respond to the climate change pressures.

The Director for Economy and Environment advised that there was a new Economic Plan being developed in partnership with other organisations. The department seeks external grant funding for projects rather than requesting increases to base budgets. The  ...  view the full minutes text for item 60.

To agree a scrutiny report and recommendations on the committee's review of the Human Resources and Workforce Strategy.  Report to follow.

On 28 November 2022, the Scrutiny Management Board (SMB) considered Herefordshire Council’s Human Resources and Workforce Strategy. The committee were presented with a report and two supporting appendices presenting key human resources (HR) indicators and feedback from the recent staff survey.

Resolved:

The committee agree the report and recommendations on the committee's review of the Human Resources and Workforce Strategy.

The next scheduled meeting: Tuesday 14 March 2023, 10.00 am

The date of the next meeting of the Scrutiny Management Board was agreed to be held on 14 March 2023 at 10:00pm.