Agenda item

The Executive Director of Environment and Community Services and the Executive Member for Environment will be in attendance to present the Environment and Community Services budget to the Panel.

 

Presentation To Follow

G Field, Director of Environment and Community Services, accompanied by Councillor P Gavigan, Executive Member for Environment, was in attendance at the meeting to provide the Panel with budget proposals relating to the Environment and Community Services Directorate.

 

Each of the Council’s Scrutiny Panels had been asked to consider the budget proposals in relation to its relevant service area/remit as part of consultation with Members.  Comments and feedback provided by the Panel would be fed into a briefing note to be submitted to the Overview and Scrutiny Board on 18 January 2024.

 

Members were reminded of the legal requirement for the Council to set a balanced budget for 2024/25 by 11 March 2024 and the best value requirement to secure financial recovery and stability through setting a balanced three-year Medium-Term Financial Plan (MTFP) over the period to 2026/27. 

 

Due to the Council’s critical financial position it was necessary to identify, approve, and implement a range of budgetary control measures at significant scale to return to a financially sustainable position where the annual expenditure of the Council remained within its annual income over the medium term.  

 

On 17 January 2024, the Executive would be asked to consider approving an application to Government for Exceptional Financial Support in order to balance the budget.  The money borrowed would be repaid at a slightly higher rate but it would allow the Council to navigate through the period required and to implement transformation of services to regain a financially sustainable position.

 

If approved by the Executive, once an application had been made for exceptional financial support, Full Council would ultimately decide on setting a balanced budget.  There still remained a risk of the Section 151 Officer being required to issue a S114 Notice under s114(3) of the Local Government Finance Act 1988, in the event that the Council was unable to set a legally balanced budget for 2024/25. The adverse consequences of issuing a section 114 notice were significant.

 

The Director made a presentation to the Panel providing details on:-

 

·        The remaining budget gap.

·        Post settlement update/exceptional financial support

·        Budget savings proposals for Environment and Communities.

 

Remaining Budget Gap

 

The remaining budget gap for 2024/25 after all current budget proposals and Council Tax assumptions was £6.279.

 

Further gaps of £1.596m for 2025/26 and £0.305m for 2026/27, equivalent to a cumulative budget gap of £8.180m had also been identified. The draft savings and income growth proposals that were subject to consultation totalled £14.038m in 2024/25.  For 2025/26 the figure was £5.083m and £1.967m in 2026/27, presenting a cumulative savings plan of £21.088m by the end of 2026/27.

 

Post Settlement Update

 

The Provisional Local Government Finance Settlement (LGFS) was announced on 18 December 2023 and was broadly inline with the Council’s MTFP and initial assessment and, therefore, did not close the £6.3 million funding gap.

 

CIPFA guidance to S151 Officers who were considering issuing a s114 Notice was to engage with DLUHC and make an application for Exceptional Financial Support (EFS) in order to agree a financial recovery plan that would avoid the requirement for a s114 Notice.

 

Exceptional Financial Support would provide a temporary funding solution that would buy time for the Council to achieve financial sustainability and avoid a s114 Notice.

 

Prior to issuing a s114 Notice, the s151 Officer and Chief Executive, with the support of the Mayor and Executive, would make an application for EFS around mid-January.

 

It was expected that a response would be received from DLUHC at the latest prior to Council meeting on 28 February.

 

Environment and Communities Context

 

In the context of Environment and Communities, the key messages in terms of the budget were:-

 

·        Significant increase in the cost of waste disposal.

·        Need to increase the rate of recycling towards national targets.

·        Reducing levels of crime and antisocial behaviour but still a significant problem within Middlesbrough.

·        Move towards neighbourhood working to increase both responsiveness to the needs of residents alongside increasing community resilience and social capital.

·        Increased dissatisfaction derived from community survey in respect of condition of place.

·        Green agenda requiring focus on environment sustainability.

·        Requirement to ensure that bridges and structures and other assets or maintained to acceptable standards.

 

Waste Disposal

 

The costs associated with waste disposal had risen and continued to rise, placing significant budget pressures on the Council. 

 

The Council currently operated a weekly waste collection service.  The current 2023/24 net budget for waste collection was £2.854m.  Waste disposal was a significant cost to the Council with a 2023/24 budget of £3.969m. 

 

As well as contributing to the Council’s environmental objectives, the cost of disposing of recycled waste was much lower (average disposal rate - £53.01 per tonne) than the cost of residual waste (disposal rate - £72.56 per tonne).   In addition, it was important to note that there was a significant cost to disposing of waste incorrectly.  Residual waste placed in the recycling bin caused contamination to the recycled waste stream and was rejected by waste operators and diverted to the residual waste stream for which the Council had to pay to process twice (average residual waste disposal rate of £173.78 per tonne).

 

The annual forecast waste disposal costs, as at October 2023, totalled £4.9 million.  This included the cost of disposing of residual, recylcled and contaminated waste for 2023/24 based on an estimated tonnage total of 71,251.  These figures also included green waste disposal, road sweepings and miscellaneous costs such as staffing.

 

Based on 2021/22 available comparative data, Middlesbrough had one of the lowest recycling rates of all single tier authorities at 29.8% compared to an average of 42.3%. The amount of residual waste was higher than most single tier authorities at 701kg per household compared to 554kg, and the level of contaminated waste was also higher than most single tier authorities.

 

It was noted that residual waste disposal costs were set to almost double from current rates for 2025/26, making increasing recycling rates critical.

 

Environment and Communities – Financial Context 2023/24

 

The Panel was advised that the key drivers of the adverse variance in the Environment and Communities budget was due to:-

 

·        an increase in waste disposal costs - £1.017m largely due to increases in tonnage price, increased Management Fees and higher than anticipated Shutdown costs. 

·        Bereavement Services – with an adverse variance of £0.699m due to a shortfall in income and increased operational costs.  This was partially offset by additional grant income, £(0.857)m across Environment Services and Supported Communities.

 

Members were informed that at October 2023 (Period 7), the forecast outturn was £133.792m (before Financial Recovery Plans), an adverse variance of £7.438m (+5.9%).  This was a decrease of (£1.118m) from the £8.556m reported at Quarter 2.

 

Financial Recovery Plans totalling £1.584m had been proposed which, if assured and fully implemented, would reduce the adverse variance to £5.854m.

 

Environment and Communities, with a current net budget of £17.369m, forecast outturn was £18.228m, an adverse variance of £0.859m, however, with financial recovery plans the outturn may reduce by £0.078m to an adverse £0.781m.

 

Proposed Savings

 

A summary of proposed budget savings within Environment and Communities that were considered to potentially affect front line service delivery levels were outlined to the Panel, together with savings for each year and proposed reduction in staffing from 2024-2026, where applicable.  In summary, they comprised:-

 

·        Fortnightly Residual Waste Collections.  (£0.374m – 12.0 FTE)

·        Green Waste Collection Charge.  (£0.406m)

·        ‘Junk’ Job Collection Charge.  (£0.092m)

·        Replacement Wheeled Bins Charge.  (£0.033m)

·        Cease Council financial support for Environment City.  (£0.105m – 2.0 FTE)

·        Resident Parking Permits Charge.  (£0.250m)

·        Car Parking Charge at Stewart Park.  (£0.060m)

·        Review of Community Facilities.  (£0.300m)

 

A summary of further proposed budget savings that were considered to have minimal or no effect on front line service delivery levels were also outlined:-

 

·        Integrate Environment Services and Supporting Communities functions to create a Neighbourhood Management approach.  (£0.400m – 12.0 FTE)

·        Increase in Education and Enforcement around Recycling.  (£0.219m)

·        Review contribution to Community Hubs running costs.  (£0.040m)

·        Charge for Waste Bins on New Developments.  (£0.030m)

 

Each of the proposals was explained in detail and Panel Members raised the following issues:-

 

·        Green Waste collection charge – Reference had been made to provision of new green waste bins for residents subscribing to the collection service and it was queried what the cost would be of providing the new bins.  The Director explained that all existing green waste bins would be collected in March and taken away.  For those wishing to keep a green waste collection service, a charge of £40 would be made for a new green waste bin.  This would also cover the cost of the first year of green waste collection.  Subsequent bins would be charged for at £20 each.  It was expected that the introduction of green waste charging would save approximately £400,000 in revenue and there would be a capital expenditure of around £1 million on the provision of new bins.

 

·        In response to a query, the Director stated it was anticipated that around 25% of those currently using the green waste collection service would continue to do so once charges were introduced.  When asked how this figure had been arrived at and whether any comparison had been made with other local authorities, the Panel was advised that comparisons had been made with Hartlepool, whose take up of the green waste collection service had risen to approximately 30%.  It was considered that it was a sensible approach to allow for 25% take up in the first year and any additional take up would put the Council in a better financial position.  It was also confirmed that should take up be greater than the estimated 25% there would be sufficient bins available for those that wanted them.

 

·        It was queried why new green bins needed to be provided.  It was explained that the current green waste bins and vehicles operated on a different lifting system to the recycling and residual waste bins.  A move to bring all bins on to the same lifting system would provide greater flexibility with the use of all the collection vehicles. 

 

·        In response to a question, the Panel heard that those who currently used the green recycling service but did not wish to pay to continue with collections, would need to make their own arrangements.  For example, a resident with a small garden might not require a fortnightly green waste collection so it may not be worthwhile to pay for the service, however, it may be that two or more neighbours might wish to share a green bin and share the costs.

 

·        Car Parking Charge at Stewart Park - Members commented that the forecasted income generated from introducing a change would be relatively small in the scheme of things and whether charging would be legal as the park was bequeathed to the people of Middlesbrough.  The Director advised that this would be examined in greater detail as part of the consultation and was a proposal for the following year (2025/26).

 

·        Review of Community Facilities/ Review contribution to Community Hubs running costs – It was acknowledged that hubs would be encouraged to generate income by increasing chargeable activities, room hire, etc and also noted proposals for locality working and queried whether staff would be located in the hubs and whether this would conflict in terms of whether there would be enough space for staff as this might possibly hinder plans to increase chargeable activities from the hub.  The Director stated that some of the hubs would have sufficient space for both but it would need to be distinguished between the community facility part and the locality working space.  In some cases locality teams may not necessarily be based in the actual community hub but in a nearby building.

 

·        Waste Management – disposal costs. Clarification was provided in relation to disposal costs.  The slide stated that the cost of recycling waste disposal was £53.01 per tonne and residual waste disposal was £72.56 per tonne and a Panel Member queried why contaminated recycling waste cost £173.78 to dispose of.  It was explained that when recycling waste was contaminated it was rejected by the disposal contractor and redirected back into the residual waste stream which the Council then had to pay for again to be disposed of through the incinerator, effectively paying twice for the process plus additional transport costs.

 

·        Neighbourhood Management approach – in response to a query it was clarified that the proposed £400,000 savings was in relation to 12 FTE posts.

 

·        Resident parking permit charges – A Member raised a query as to how the scheme would operate for residents who did not have cars but may need a permit for visitors or for tradespeople attending their property.  It was highlighted that temporary permits could be applied for and that trades would need to take the cost on board as part of the cost of the work being undertaken.  The Director advised he would look into this proposal further in relation to the visitor permit issue and advise the councillor.

Each individual Scrutiny Panel’s views/comments would be compiled in a “consolidation briefing note” to be discussed at the Overview and Scrutiny Board meeting on 18 January.  Once agreed by OSB, the briefing note would be submitted to the Mayor and Executive by the Chair of OSB.

 

The Chair thanked the Director and Executive Member for their attendance and the information provided.

 

AGREED that the information be noted and that the Panel’s views and comments in relation to the budget proposals for Environment and Communities be comprised within a consolidation briefing note to be presented to the Overview and Scrutiny Board on 18 January 2024.