Agenda item

Budget Strategy 2017/18

Minutes:

(Link to Council Priorities: All)

 

The Portfolio Holder for Resources introduced the report that presented the first stage in the Council’s annual budget planning process.

 

The report also updated on the Budget position for 2017/18, as was included in the Medium Term Financial Strategy (MTFS), together with details of the forecast savings required to balance the budget over the medium term in the context of the funding reductions from the national Government.

 

The Cabinet noted that whilst the Council had set a balanced budget for 2016/17 and was working from a sound financial base, it remained a very challenging period.  The support that the Council could provide through all of its activities to stimulate and promote economic growth, business development and job creation in the Borough remained central to the delivery of the MTFS.

 

The Portfolio Holder advised that the Council would seek to optimise the use of its reserve balances in delivering priorities, making decisions on a corporate basis and maximising opportunities to maintain an appropriate balance between short-term expenditure and long- term investment. Reserves would be used wisely for investments that would contribute towards financial independence and resilience for the Council.

 

With regard to rental income, Members noted that the Council currently generated £1.5 million which supported the revenue base budget.  The Financial Strategy for the medium term was focused on reducing the reliance on Government grants by the year 2020 by continuing to invest in Property Assets to secure regular rental income and retaining more Business Rates.

 

The Portfolio Holder further reported that the Council had received notification that Surrey County Council would be reducing the funding made available to the Council for social care services by 25% in year one and 50% in year 2, totalling £200,000.  Whilst there were proposals for meeting this reduction in the short term (Minute No. 7/16 refers), this reduction in funding from SCC was likely to follow in line with the Government funding reductions.  It was noted that the Council currently received £800,000 of funding from SCC, with the majority of it being spent on providing services to older people as part of Community Support Services.

 

With regard to the move to 100% Business Rates Retention and a 4-year Local Government Finance Settlement, the Portfolio Holder reminded colleagues that the Government had announced that Councils would retain all locally raised Business Rates by 2020 under radical local government finance reforms.  As part of the reforms, the Government would abolish the Uniform Business Rate and give local authorities the power to cut Business Rates to boost economic activity in their areas.  In addition, core grant (i.e. Revenue Support Grant (RSG)) from Central Government would be phased out by 2020.  The 2016/17 Local Government Finance Settlement announced in February 2016, included indicative figures for 2017/18, 2018/19 and 2019/20.  It was noted that as part of the settlement, the Government had stated that it would offer any Council that wished to take it up, a four-year funding settlement to 2019/20.  Whilst there had been no indication of the format of the plan, Councils would need to produce and submit an efficiency plan as part of the request.  In this regard, Councils would have until 14 October 2016 to make this request.

 

The Portfolio Holder advised that the Government had given local authorities the option of a multi-year finance settlement, however, the Government had proposed significant changes to the system during the course of the settlement, including a major reform of Business Rates.  Accordingly, whilst a multi-year settlement would bring certainty for the first 3 years of the settlement, there was significant risk attached to accepting the multi-year settlement for year 4 and in this regard, it was proposed that the Council accept, in principle, the multi-year settlement for years 1, 2 and 3 but not year 4 due to significant negative RSG.

 

As part of his introduction, the Portfolio Holder referred to the Department for Communities and Local Government’s consultation on ‘Self-sufficient Local Government: 100% Business Rates Retention’ and discussion paper entitled ‘Fair Funding Review: Call for Evidence on Needs and Redistribution’; both of which had been published earlier that day.  As the consultation responses were due by 26 September 2016, the Portfolio Holder proposed an additional recommendation that officers, in consultation with the Performance and Finance Standing Panel, draft a response and that this be reported back to Cabinet in September 2016, which was supported by Members.

 

Whilst welcoming the comprehensive report, the Cabinet noted that in respect of the additional recommendation, a meeting of the Performance and Finance Standing Panel would be arranged in early September 2016.

 

RECOMMENDED: THAT

 

(A)       THE UPDATED REPORT AND OVERALL APPROACH TO THE PREPARATION OF THE 2017/18 BUDGET, BE AGREED;

 

(B)       OFFICERS BE ASKED TO IDENTIFY ADDITIONAL INCOME STREAMS AND SAVINGS TO ENABLE A BALANCED BUDGET TO BE SET FOR 2017/18;

 

(C)       OFFICERS, IN LIAISON WITH RELEVANT PORTFOLIO HOLDERS, WORK UP DETAILED SERVICE PLANS AND BUDGET PROPOSALS IN ACCORDANCE WITH COUNCIL PRIORITIES;

 

(D)       IN PRINCIPLE, THE COUNCIL ACCEPT THE MULTI-YEAR SETTLEMENT FOR YEARS ONE, TWO AND THREE, BUT NOT YEAR FOUR, DUE TO SIGNIFICANT NEGATIVE REVENUE SUPPORT GRANT, AS PROPOSED IN THE FINAL SETTLEMENT IN FEBRUARY 2016, SUBJECT TO FURTHER CONSIDERATION OF ANY FURTHER DEVELOPMENT AT THE PERFORMANCE & FINANCE STANDING PANEL, CABINET AND COUNCIL MEETINGS IN SEPTEMBER 2016;

 

(E)       THE OUTLINE HIGH LEVEL BUDGET TIMETABLE, AS SET OUT IN SECTION 11 OF THE REPORT, BE NOTED; AND

 

(F)       WITH REFERENCE TO THE DEPARTMENT FOR COMMUNITIES AND LOCAL GOVERNMENT’S CONSULTATION DOCUMENTS PUBLISHED YESTERDAY, ‘SELF-SUFFICIENT LOCAL GOVERNMENT: 100% BUSINESS RATES RETENTION’ AND ‘FAIR FUNDING REVIEW: CALL FOR EVIDENCE ON NEEDS AND REDISTRIBUTION’, DELEGATED AUTHORITY BE GIVEN TO THE STRATEGIC DIRECTOR AND DEPUTY CHIEF EXECUTIVE, IN CONSULTATION WITH THE PORTFOLIO HOLDER FOR RESOURCES, GROUP LEADERS AND THE PERFORMANCE & FINANCE STANDING PANEL, TO AGREE A DRAFT RESPONSE WHICH WOULD BE REPORTED TO CABINET IN SEPTEMBER 2016 FOR RESOLUTION.

Supporting documents: