Agenda item - Cabinet Members' Items - Report of the Finance and Corporate Services Portfolio Holder - A.3 - Latest Financial Forecast / Final Budget Proposals 2018/19

To seek Cabinet’s approval of:

· The latest financial forecast and final budget proposals 2018/19 (including Council Tax proposals) for recommendation to Council on 6 February 2018; and

· a Revised Budget for 2017/18.

RESOLVED that Cabinet approves -

(a) the latest financial forecast, as set out in Appendix A to item A.3 of the Report of the Finance and Corporate Resources Portfolio Holder;

(b) that if the financial position changes prior to Council considering the budget on 6 February 2018, the Corporate Director (Corporate Services), in consultation with the Finance and Corporate Resources Portfolio Holder, be authorised to adjust the forecast / budget, including the use of Reserves;

(c) that in consultation with the Leader of the Council and the Finance and Corporate Resources Portfolio Holder, the Corporate Director (Corporate Services) be authorised to report directly to Council in respect of the formal draft resolutions necessary to implement the Cabinet’s budget proposals along with any late information or notifications received from Department for Communities and Local Government etc. as may necessarily affect the budget;

(d) that the Corporate Management Committee be thanked for the work it has undertaken and continues to undertake in supporting the development of the forecast / budget and approves the comments of the Finance and Corporate Resources Portfolio Holder in response to those of the Committee as set out in the report;

(e) that all future expenditure in 2017/18 be in line with the proposed revised budget 2017/18 set out in the Appendices to the aforementioned, subject to final approval by Council on 6 February 2018, and that the corporate financial system be amended accordingly to reflect these changes along with any amendments arising from any revisions to the code of practice relating to the presentation of the Council’s Annual Statement of Accounts; and

(f) that, in respect of the Treasury Strategy 2018/19, the Portfolio Holder for Finance and Corporate Resources be authorised to approve the Strategy for consultation with the Corporate Management Committee.

RECOMMENDED TO COUNCIL that, following the consideration of the comments from the Corporate Management Committee, the following final budget proposals be made (based on a £5 increase in a Band D Council Tax for district services):-

i) that the detailed budgets, as per Appendix B to item A.3 of the Report of the Finance and Corporate Resources Portfolio Holder, be approved which provide for a Council Tax Requirement for 2018/19 of £7.602m (£7.229m for 2017/18) (excluding parish precepts);

ii) that the Council agrees and formally approves:

a) the specific recommendations, calculations and other matters in respect of the Council’s requirements (Appendix D to the above report); and

b) the Council Tax for this Council’s services (Appendix G to the aforesaid report).

There was submitted a report by the Portfolio Holder for Finance and Corporate Resources, which sought seek Cabinet’s approval of:

· the latest financial forecast and final budget proposals for 2018/19 (including Council Tax proposals) for recommendation to Council on 6 February 2018; and

· a Revised Budget for 2017/18.

It was reported that since the Cabinet’s last meeting held on 15 December 2017 (Minute 122 referred), additional changes had been required to the Financial Forecast, primarily as a result of new, or revised, information becoming available which included the Government’s Financial Settlement announcements and early outcomes from on-going Officer pay negotiations. Those required changes had resulted in a deficit for 2018/19 of £0.144m, a change of £0.186m compared to the figure presented to Cabinet in December 2017. The updated forecast had now been translated into detailed estimates which were set out in Appendix B to the Report of the Finance and Corporate Resources Portfolio Holder.

Cabinet was made aware that this figure might change as further adjustments could be required as part of finalising the budget for presenting to Council on 6 February 2018, with a delegation included in the Portfolio Holder’s recommendations to reflect this.

Cabinet was informed that the deficit of £0.144m in 2018/19 had been met by utilising the Forecast Risk Fund as planned. This had however been more than offset by a contribution to the same reserve of £0.454m from the revised budget process for 2017/18, with the various changes set out in the report.

Members noted that the use of the Forecast Risk Fund in 2018/19 had been significantly lower than originally forecast which provided a strong position against which the remaining years of the 10 year forecast could be considered.

Cabinet was advised that taking all of the changes into account, the Council Tax requirement had been revised to £7.602m,which was based on a £5 increase for this Council’s services in 2018/19 with a Band D council tax of £162.64.

Members were made aware that in line with legislative requirements the Council’s Section 151 Officer had confirmed the robustness of the estimates along with the adequacy of reserves.

It was reported that although Prudential Indicators were set out in the report, the associated Treasury Strategy for 2018/19 had been delayed due to external guidance being received late on in the budget setting process. A delegation to the Portfolio Holder for Finance and Corporate Resources had therefore been included in the recommendations to Cabinet in order to enable the Treasury Strategy to be agreed for forwarding onto the Corporate Management Committee for its comments.

Cabinet was aware that. in accordance with the Constitution, the Corporate Management Committee had been consulted on the Updated Financial Forecast / initial budget proposals 2018/19. That Committee had met on 18 December 2017 and its comments back to Cabinet were set out in the Finance and Corporate Resources Portfolio Holder’s report together with his responses thereto.

The Portfolio Holder for Finance and Corporate Resources read out the following statement on the General Fund budget proposals –

“This report provides an update on the position reported to Cabinet on 15 December 2017. This could have not been finalised at that time as we were still waiting for the Government to announce details on the Local Government Finance Settlement for 2018/19.

The Settlement announcement was made just before Christmas and no significant changes to the forecast have been necessary. It did include confirmation that District Councils could increase their Council Tax by £5 as well as confirming a new homes bonus amount of £1.3million in 2018/19. There was unfortunately also a reduction in the amount of housing benefit administration grant that we receive, which is disappointing, as we have yet to see a significant reduction in overall workload as claimants move across to universal credit from housing benefit.

There have been some other changes to the 2018/19 forecast and these are set out on pages 18 to 19 of the agenda. You will notice that the most significant is the increase in salary costs. Although pay negotiations remain on-going an offer of 2% has been made along with fixed increases for officers on lower salary points which will have a significant impact on the long-term forecast. However, in the words of the Corporate Management Committee this is a good stress test of the forecast. It is still expected to be flexible enough to respond to such issues in the long-term.

The report also sets out a number of changes to the revised budget for 2017/18. Many of the changes required mirror those included in the 2018/19 forecast along with additional items that areas set out on pages 20 and 21 of the report.

Because of the remarkably good house-keeping which produced a very favourable position for 2017/18 we now have the opportunity to set aside funding to support a number of cost pressures, which would otherwise have needed to be addressed at some point over the ten year forecast period. This approach therefore reduces pressure on the budget in future years, as well as not sticking our heads in the sand.

As I highlighted back in December, I am really pleased to be able to include the necessary funding to support the successful residents parking scheme in the budget on an on-going basis rather than it being subject to decisions on a more short-term basis as has previously been the case. At the time when we promised free parking we did not get taken seriously but here we are seven years down the line and not only still delivering it but it is now included in the base budget.

Unless anything significant changes between now and when the budget is presented to Council on 6 February we would have successfully delivered our first budget within the new longer term forecast. This is extremely important as not only it builds confidence in the new longer term approach but it will go a long way to satisfy our Auditors. Having said that, we do need to continue to deliver the necessary savings, as set out in the forecast. This is against the background of forecasting always being subject to various financial pressures each year which has been demonstrated in 2018/19 by the increase in salary costs that need to be funded on an on-going basis.

As we have stated in the past the longer term forecast will need to remain ‘live’ and so once the budget is agreed for 2018/19 we will need to swiftly turn our intentions to 2019/20 and beyond. It is worth noting that we in Tendring are the 3^rd lowest authority in Essex with regards to the Council Tax levy and we still deliver excellent value for money to all our residents.

Mr Chairman I do commend this to you and I hope that everyone who have examined the excellent report in front of them will be very supportive of the proposals.”

Having considered the information in the report and in order to allow the financial forecast and final budget proposals for 2018/19 to go forward to full Council in accordance with the requirements of the Council’s Constitution and legislation:

It was moved by Councillor G V Guglielmi, seconded by Councillor McWilliams and:-