Conservative Group Budget Amendments February 2024

The Conservative Group tabled the following fully-costed budget amendments at the Council Meeting on 21st February. The Lib-Dem and Labour Groups failed to support these sensible amendments.

Our first amendment proposes changes to the capital budget and cancels the proposal from the Lib-Dems to cut frontline services such as road sweeping and grass cutting throughout the City.

That the capital budget at Attachment 1B be amended to exclude expenditure of £7.7m on Colchester Northern Gateway Enabling and that the consequent savings in interest and MRP be spent as shown on the table below:

Explanation

A. Savings

The Council has already spent a large amount of money and several years attempting to bring the Northern Gateway development to fruition. Since the Pandemic the office market has changed and the large area of commercial office space envisaged in the planning permission is unlikely to be viable. The original planning permission required extensive highways works due to the anticipated large increase in traffic, primarily generated by the commercial office space.

A new planning permission is expected to be sought, focusing more on 4 residential housing which is known to generate less traffic and will require less extensive highway infrastructure. Furthermore, it has been agreed by Cabinet that the Council’s appetite for financial risk is now lower and that the site will most likely be developed by a third party, possibly following a sale.

The inclusion of the £7.7 CNGS Enabling Works in the Capital Budget represents poor value for CCC and is not necessary as:

1. The eventual scheme will require less extensive highway works, so carrying out works designed for a scheme which by common agreement will not be built makes little sense.

2. It should be for the eventual developer to bear the infrastructure costs together with interest and MRP costs as with any other similar development, not Colchester City Council.

B. Additional Spending

The Greening and Street Care Service is considered a core service of the Council’s and one highly visible to residents. It is also frequently identified by residents as one they most value and one of the most complained about if performance falls below standards. The monetary reductions for this service in the draft budget amount to a cut of £1m per annum by 2026/27, which will have a noticeably detrimental effect on the service. This amendment restores much of the departmental budget. The amendment also restores the 1 x driver and 1.4x (FTE) operative to Neighbourhood Services or other 2.4x FTE roles as needed detailed as a salary saving in Appendix D. This will be welcomed by Ward Councillors.

As a commitment to the Environment and the Council’s declared a Climate Emergency, this amendment restores the 1 Full Time Equivalent role to the Countryside Team (Appendix D) increasing our capacity to delivery sustainability and biodiversity projects.

Finally, it is recognised by many that Colchester faces an infrastructure deficit, having experienced rapid housing and population growth in recent years with little corresponding infrastructure. This amendment restores a budget for an Infrastructure Audit originally placed in the 22/23 budget and subsequently removed. This will allow an evidence base to be established for required infrastructure in Colchester leading to better planning.

C. Budget Impact

This amendment results in a deficit of £29,000 in 24/25 which will require use of reserves but delivers an improved surplus compared to that in the draft budget of £288,000 in 25/26, £135,000 in 26/27, £132,000 in 27/28 and £128,000 in 28/29 leading to an overall nett positive financial position of £654,000 over the MTFF period.

Our second amendment proposes that it is time to exit Colchester's Northern Gateway South project. This has racked up over £30m of debt and delivered nothing but holes in a field. Colchester City Council has not got the cash to deliver it and has been trying, but failing, for years. This could free-up extra £2.5m to revenue budget next year. This would be enough to cancel the highly unpopular garden waste charges and even cut Council Tax or bolster frontline services.

That the capital budget in Attachment 1B be amended to include £35m sale proceeds for the Mill Road development land and that attachments 1A and 1C be amended with the consequential savings in Capital Financing Costs incorporated in to the MTFF Also that attachments 1A and 1C be amended to reverse the garden waste collection charges, as indicated in the table below. Such reversal to take place from 2025/6 and to be dependent i) upon the satisfactory sale of Mill Road and ii) no material cost over-runs in the 2024/5 operating budget. 

Explanation

The Council owns a valuable development site at Mill Road which already has planning permission and was to have been developed by Colchester Amphora Homes Limited which is now in hibernation. The rugby club which previously used the land has been relocated to the new sports park to the North of the A12. The development of the land has long been envisaged as a way to repay the high cost of the new rugby club and sports centre.

Amendment II proposes that now is the time to sell to a developer who will deal with the remaining issues and build it out more quickly than we could ever do. The developer will have to pay for the s278 works at Junction 28 and for the potentially high cost of a connection to the electricity grid, and the price we receive will be discounted accordingly.

The site covers 54 acres (21.8 hectares) of former sports fields, now cleared and improved with some ground source heat infrastructure and a paved walkway. The Rugby Club moved in 2020 and in 2022 the Council granted itself planning permission 190665. The sales price will be determined by the market, but £35m is a reasonable figure for budgetary purposes based on four sources of comparable information i) the TCBGC housebuilder appraisal ii) the TCBGC master developer appraisal iii) the VOA guidelines and iv) comparable evidence of land sales with full permission. The £35m budget price includes a substantial allowance for further infrastructure improvements including S278, S106 and 30% affordable housing. The present permission allows for a mix of uses including a village green, 350 houses, a health campus and 45,100sqm of B1a office accommodation.

That scale of office development (accommodating approximately 3000 desks) is unrealistic post Covid, and to get the best price the Council should indicate (as part of the sales process) that an application to change the use of that piece of land will be positively considered. The more freedom the Council can offer the developer the higher the price it will receive.

A Savings

The savings come from reduced financing charges – interest at 4.8% and minimum revenue payments. The Council has £31m of debt linked to the Northern Gateway and the proceeds should be sufficient to repay all of this plus £4m linked to Rowan House. In practice the debt wouldn’t be repaid, but repurposed to reduce the need for new borrowing at 4.8% current interest rates.

B Extra spending

Garden waste charges are unpopular and widely regarded as an extra tax. We assume that the £1.3m income stream disclosed in the recent scrutiny panel paper stops from 2025/6, conditional upon the Council’s success in delivering the full “fit for the future” savings and selling Mill Road.

C Budget impact

As well as allowing us to cancel the garden waste charges there will be sufficient savings to add c. £1m a year to reserves or reduce Council tax by 6.9%

Our third amendment proposes changes to the Housing Revenue Account to bring stability to the Council finances and certainty to our Council House tenants.

That Housing Revenue Account borrowing plans for 2024-2029 be cut by £43m, to be achieved by cutting back its intended purchases of market housing. The HRA operating budget in Attachment 1b table 5.2 to be amended as below and consequential changes to be made to the other tables.

Explanation

The budget includes £205m HRA capital programme which is widely acknowledged to be unsustainable2 and will probably have to be cut back sharply in the forthcoming HRA review. This amendment proposes that an immediate start be made on the most obvious measure: we need to stop buying market housing to use as social or affordable now. Such purchases do nothing to increase overall housing supply and make no economic sense. Borrowing at 4.5% to buy housing that yields 1.5% at best is clearly unsustainable. Every property it buys will decrease in value by 30-50%, and the deficit financing will prejudice the Council’s ability to build new homes and maintain its existing portfolio.

This amendment leaves the £100m investment programme in the existing 5900 homes untouched. The £13m Sheltered Accommodation investment remains, as does the £44m available for new build. The HRA debt will still increase by £92m, and the HRA review will probably have to make further cuts. The amendment is a modest but significant step towards balancing the HRA over the long term. The longer we leave it the more painful it will be.

B - Benefits

We believe the Council can reduce new HRA borrowing by £43m AND increase the availability of social housing by i) accelerating the development of Mill Road and ii) some management initiatives in relation to the existing portfolio.

C - Budget impact -

Debt Colchester’s long term debt has more than doubled since 2010 and will double again over the next five years if this budget is adopted. Under this amendment it will still increase by 62% but at least we will have made a start to controlling its growth.  

2024-02-22