Agenda item

To enable Cabinet to:

•        Consider the updated financial baseline for 2017/18; and

•        Consider for approval the detailed budget proposals for a revised budget 2016/17 and original budget for 2017/18.

(a)  Cabinet agrees the updated Financial Baseline 2017/18 and the detailed budget proposals (including fees and charges and special expenses), as set out in the Appendices to item A.7 of the Report of the Finance, Revenues and Benefits Portfolio Holder;

(b)  Cabinet requests the Corporate Management Committee’s comments on the Updated Financial Baseline 2017/18 and detailed budget proposals (including special expenses); and

(c)  all future expenditure in 2016/17 be in line with the proposed revised budget 2016/17 set out in the aforementioned Appendices, subject to final approval by Council at its meeting to be held on 7 February 2017, and that the corporate financial system be amended accordingly to reflect those changes along with any amendments arising from revisions to the code of practice relating to the presentation of the Council’s annual Statement of Accounts

Councillor Broderick had earlier declared a non-pecuniary interest in this item insofar as she was a member of the Citizens Advice Bureau.

There was submitted a report by the Portfolio Holder for Finance, Revenues and Benefits, which sought to enable Cabinet to:

·                Consider the updated Financial Baseline for 2017/18; and 

·                Consider for approval the detailed Budget proposals for a revised budget 2016/17 and original budget for 2017/18, including special expenses.

Cabinet was informed that the updated financial baseline set out how the financial and budget position of the Council for 2017/18 had progressed since Cabinet had considered the Initial Financial Baseline for 2017/18 at its meeting held on 5 August 2016.

Members were reminded that, during the year the Council had accepted the Government’s minimum Revenue Support Grant (RSG) offer which meant that unless the Government made any further changes, the minimum level of funding receivable over the next three years was as follows:

2017/18 - £1.650m (reduction over prior year = 36%)

2018/19 - £1.070m (reduction over prior year = 36%)

2019/20 - £0.422m (deduction over prior year = 60%)

Members were aware that since 2011/12 the Council had found savings totalling £12.000m. However, given the significant reductions in RSG set out above, further savings of potentially £5.000m were required over the next three years, with £1.565m required in 2017/18 alone.

It was reported that a number of actions had been taken with the aim of delivering a balanced budget for 2017/18. To date, a budget ‘gap’ of £0.603m remained. Work remained on-going to minimise that ‘gap’ before final recommendations were made to full Council in February 2017.

A summary of the budget adjustments made along with other changes that had emerged during the budget setting process was set out in the report. Although additional costs and other adjustments had emerged, net savings /budget reductions totalling £0.962m had been identified to date.

Cabinet was asked to note that the savings identified to date represented only the initial steps to close the forecasted funding gap in the longer term. Further uncertainties also remained against this overall backdrop which might not yet have been reflected in the forecasted budget ‘gaps’ in future years that might require additional savings to be identified in order to deliver a balanced and sustainable budget in the future.

Cabinet was made aware that the medium term forecast covering the period 2018/19 and 2019/20 was in the process of being updated with the outcome planned to be presented to Cabinet in January 2017 when the final budget position would be presented. It was difficult to forecast any further ahead at this stage given the huge level of uncertainty that the 100% retention of business rate model would introduce from 2020. The longer term forecast would remain a ‘live’ activity and updates would be provided to Members as the forecast evolved over 2017/18.

The Interim Finance, Revenues & Benefits Portfolio Holder made the following statement on the Budget:

“The budget presented in the report brings together the savings strands emerging from the Portfolio Working Parties that were considered at our last Cabinet meeting along with other items emerging via the budget process such as cost pressures and responses to items identified as part of the corporate budget monitoring process.

The budget ‘gap’ presented as part of the Initial Financial Strategy in August this year was £1.565m. This has now been reduced to £603k after taking into account the various budget reductions and adjustments identified.

As mentioned at the last Cabinet meeting, savings options are becoming increasing difficult to identify whilst trying to protect service provision, and the current position set out within the report clearly demonstrates the challenge we are facing, a challenge that will not go away any time soon - including the £603k budget ‘gap’ for 2017/18, we need to find further savings of £3.8m by 2019/20. 

Although repetitive, when the various budget reports are presented during the year, we need to make sure that our residents understand why we have to make significant savings. This is not because the Council has been inefficient or could have managed its finances better; it is because the Government continue to make significant and unprecedented cuts to our grant funding. By 2019/20 the Council will not be receiving any Revenue Support Grant from the Government at all.

We are therefore in the transition phase of moving to a self-sufficiency approach. It would have been nice if the Government had recognised that trying to ‘grow’ our own income takes time and therefore cut the grant at broadly the same pace as we are growing our own locally raised income. Disappointingly there have been no such measures taken by the Government.

In terms of highlighting areas of the report, it is worth mentioning the following:

o      The budget is based on a Council Tax increase of 1.99% which takes the band D tax to £155.68 per year. Our residents get a huge range of services for what is a relatively low annual amount.

o      As part of the Government’s Finance Settlement announcement yesterday, it was confirmed that this Council falls within the category of authorities that has the option to increase its Council Tax by £5 as was the case last year. This option will now be considered as part of the final budget recommendations that Cabinet will consider at its 20 January meeting.

o      The complex area of business rates is still being worked on with the outcome expected in January. There has been a national revaluation of business premises in 2016 which could have an impact on both the income we collect and the amount we pay on our own properties. The finance settlement announcement yesterday also included further guidance on this issue which is currently being reviewed to feed into the final calculations that will be undertaken early in the New Year.

o      We continue to seek to strike a balance between investing whilst having to find savings. A number of budgets are included which support priorities such as tourism, health, leisure and regeneration.

o      A number of cost pressures have been included following an annual review, with the budget reflecting items where there is very little choice in terms of whether to fund or not.

o      The Capital Programme includes money to deliver the Office Transformation Project and reduction in public conveniences that formed part of the outcomes from the Portfolio Working Parties. £350k has also been included in the capital programme to support the delivery of savings via various channel shift projects which will be crucial to help balance the budget in future years.

o      The Council can also secure additional savings from paying the full 3 year pension deficit payment upfront. Although this will require a significant draw down from reserves in 2017/18, this will be repaid over the following two years so will still be available to meet any commitments the Council may wish to make against its reserves position. 

A number of further adjustments are set out within the report, including those impacting on the revised budget for 2016/17. Cabinet members continue to work with Officers with the aim of reducing the budget ‘gap’ further and any emerging adjustments will be included in the report to Cabinet on 20 January before final budget recommendations are made to Full Council.”

Having considered the Budget proposals and in order to allow the Corporate Management Committee to be consulted in accordance with the requirements of the Constitution:

It was moved by Councillor G V Guglielmi, seconded by Councillor Stock and RESOLVED that

(a)       Cabinet agrees the updated Financial Baseline 2017/18 and the detailed budget proposals (including fees and charges and special expenses), as set out in the Appendices to item A.7 of the Report of the Finance, Revenues and Benefits Portfolio Holder;

(b)       Cabinet requests the Corporate Management Committee’s comments on the Updated Financial Baseline 2017/18 and detailed budget proposals (including special expenses); and

(c)       all future expenditure in 2016/17 be in line with the proposed revised budget 2016/17 set out in the aforementioned Appendices, subject to final approval by Council at its meeting to be held on 7 February 2017, and that the corporate financial system be amended accordingly to reflect those changes along with any amendments arising from revisions to the code of practice relating to the presentation of the Council’s annual Statement of Accounts.