Issue - meetings

The report and its first two appendices are at item 6 of the agenda (pages 16 to 32) for the Cabinet’s meeting on Tuesday 5 December 2017 and its third appendix is in the first agenda supplement (page 1).

The Cabinet made the following recommendations to the Council:

That the Council:

(1)  Approves the key financial principles and actions of the five-year financial strategy set out in appendix 1 to the agenda report.

(2)  Notes the current five-year Financial Model in appendix 2 to the agenda report.

(3)  Approves that a minimum level of general fund reserves be set at £5m and the £1.3m provision for revenue support be maintained, having considered the recommendations from the Corporate Governance and Audit Committee.

(4)  Approves that Chichester District Council participates in the West Sussex 100% Business Rates Pilot for 2018-2019 if the bid is accepted by the Ministry of Housing, Communities and Local Government or continues to participate in a West Sussex Business Rates pool for 2018-2019 if the pilot bid is unsuccessful.

(5)  Notes the current resources position as set out in appendix 3 to the agenda report.

[Note Since the foregoing recommendations were made CIPFA has adopted an accounting standard which might have an adverse effect on Chichester District Council’s (CDC) budget for 2018-2019 and potentially on its reserves at 31 March 2019. This new accounting standard (IFRS9) applies to certain types of investments. Unless the government issues a statutory override, the impact would potentially be a charge to the revenue budget of £565,000 and an estimated loss in March 2019 of £3.65m. A full explanation of this was issued by the CDC’s Head of Finance and Governance Services by e-mail to all members on 8 January 2018. In order to address this financial risk and in the current absence of a statutory override Peter Wilding (Cabinet Member for Corporate Services) will propose at this meeting the replacement of recommendation 3 above with the following:

3 (a) That the £5m General Fund Reserve and £1.3m Revenue Support Reserve be combined to provide a £6.3m General Fund Reserve.

3 (b) That the draft 2018-2019 budget which will be considered by the Cabinet in February 2018 should provide for a £565,000 charge to revenue in respect of IFRS9 unless a statutory override is issued by the government in the meantime.

3 (c) In the event that the government issues a statutory override after the budget is approved in March 2018, officers shall review these allocations at 3 (a) and 3 (b) above and make recommendations to release potentially both the £1.3m and the £565,000 back to being available for investment purposes.]

The Council considered the recommendations made to it by the Cabinet at its meeting on Tuesday 5 December 2017, as set out on the face of the Council agenda, the details in respect of which were contained in the report and its first two appendices on pages 16 to 32 of the Cabinet agenda and the third appendix in the first agenda supplement.

In her introduction Mrs Hamilton (a) referred to the note on the Council agenda stating that recommendation (3) made by the Cabinet would be the subject of an amendment proposal and (b) advised that the text of recommendation (4) would be changed in view of the unsuccessful outcome of the bid mentioned therein, as a consequence of which the words ‘participates in the West Sussex 100% Business Rates Pilot for 2018-2019 if the bid is accepted by the Ministry of Housing, Communities and Local Government or’ were no longer applicable and so had been deleted.  

Mr Wilding (Cabinet Member for Corporate Services) formally moved the Cabinet’s recommendations and this was seconded by Mr Dignum (Leader of the Cabinet).

Mrs Tull, the chairman of CDC’s Corporate Governance and Audit Committee (CGAC) commented that the recommendation to the Cabinet made by the CGAC at its meeting on 23 November 2017 (minute 161), and which had been approved in an amended form by the Cabinet on 5 December 2017 (recommendation (3)), was now to be the subject of a further amendment as explained in the Council agenda. She confirmed her support for the additional revision.     

Mr Wilding introduced the report, which updated CDC’s financial strategy and plan for 2018-2019 and set the scene for the forthcoming annual budget. Whilst there was a degree of certainty due to being halfway through the four-year settlement with central government, some elements of CDC’s revenue stream were subject to the vicissitudes of the wider economy.  He drew attention to the five-year financial model in appendix 2, which since 5 December 2017 had changed in certain respects. He summarised (a) what the model reflected, the council tax assumptions made and some of the more significant uncertainties and risks set out in para 4.16 of the agenda report; (b) the 13 key financial principles behind the financial strategy (appendix 1); (c) the resources position (appendix 3) which demonstrated that CDC was in a sound and sustainable financial state going forward; and (d) two key changes which had been identified while preparing the budget estimates: (i) the lower than anticipated  income growth from the commercial programme board (revised down by approximately £150,000 for 2018-2019) and (ii) a general reduction in the current year planning fee income due to fewer large developments coming forward than expected (revised down by £250,000 for 2018-2019). He drew attention to and explained two other significant changes: (1) the receipt of the Draft Financial Settlement (three key factors meant there was a predicted surplus on the revenue budget of £1.4m) but subject to (2) the impact  ...  view the full minutes text for item 7

The Cabinet is requested to consider the agenda report and its three appendices and to make the proposed recommendation to the Council set out below:

PROPOSED RECOMMENDATION BY THE CABINET TO THE COUNCIL

That the Cabinet recommends to the Council:

(1)  The key financial principles and actions of the five-year financial strategy set out in appendix 1 to the agenda report.

(2)  That the current five-year Financial Model in appendix 2 to the agenda report be noted.

(3)  That a minimum level of general fund reserves be set, having considered the recommendations from the Corporate Governance and Audit Committee.

(4)  That Chichester District Council participates in the West Sussex 100% Business Rates Pilot for 2018-2019 if the bid is accepted by the Department of Communities and Local Government or continues to participate in a West Sussex Business Rates pool for 2018-2019 if the pilot bid is unsuccessful.

(5)  That the current resources position as set out in appendix 3 to the agenda report be noted.

RECOMMENDED TO THE COUNCIL

That the Council:

(1)  Approves the key financial principles and actions of the five-year financial strategy set out in appendix 1 to the agenda report.

(2)  Notes the current five-year Financial Model in appendix 2 to the agenda report.

(3)  Approves that a minimum level of general fund reserves be set at £5m and the £1.3m provision for revenue support be maintained, having considered the recommendations from the Corporate Governance and Audit Committee.

(4)  Approves that Chichester District Council participates in the West Sussex 100% Business Rates Pilot for 2018-2019 if the bid is accepted by the Department of Communities and Local Government or continues to participate in a West Sussex Business Rates pool for 2018-2019 if the pilot bid is unsuccessful.

(5)  Notes the current resources position as set out in appendix 3 to the agenda report.

The Cabinet received and considered the agenda report and its three appendices, the third of which had been omitted from the agenda papers and was circulated subsequently in the first agenda supplement.

The report was presented by Mrs Hardwick.

Mrs Belenger was in attendance for this item.

In commending the recommendations to the Cabinet, Mrs Hardwick said that the report updated the financial strategy and plan for 2018-2019 and created the framework within which the council tax base would be set (agenda item 9) and set the scene for the budget in February 2018.

The backdrop to the strategy was the uncertain geo-political climate and reducing central government funding for local government. CDC was two years into its four-year agreed settlement with central government, so there was a degree of certainty over some parts of the funding stream, although only until 2019-2020. Thereafter retained business rates would provide an increased proportion of funding but that source and much of CDC’s other income eg from car parks and planning fees was fairly unpredictable, reflecting the state of the wider economy. Thus CDC would have to navigate through financial uncertainty into a new era outside the EU.

Appendix 2 showed the updated five-year model, reflecting the consolidated budget from the service areas, the four-year settlement and the most up-to-date estimates for the wider CDC activities including the Programme Boards and other planned savings. 

Confirmation was awaited from the government as to whether CDC could raise council tax by 2% or the higher rise (for CDC) of £5 (for a so-called Band D property) without a referendum. This higher rise was applied in 2016 and the current model assumed the higher (£5) increase this year as the government’s consultation proposed that option for at least one more year with increases of 2% thereafter. 

The model reflected various uncertainties and risks set out in para 4.16, from which she drew particular attention to (a) income from fees and charges; (b) pay settlements; (c) localisation of business rates; and (d) the new homes bonus (the parish allocation in respect of which was the subject of the next agenda item).

Appendix 1 set out the key financial principles behind the financial strategy and appendix 3 summarised the resources position, with the up-to-date position of CDC’s reserves and assets, demonstrating that CDC remained in a sound and sustainable prospective financial state.

As previously notified to the Cabinet and circulated on a sheet immediately prior to the start of this meeting, the third recommendation in para 3.3 of the report had been amended twice so that it now read:

‘That a minimum level of general fund reserves be set at £5m and to maintain the £1.3m provision for revenue support, having considered the recommendations from the Corporate Governance and Audit Committee.’

She expressed her own and the Cabinet’s gratitude to Mrs Belenger and her team.

Mrs Belenger did not wish to add to Mrs Hardwick’s introduction.

The Cabinet noted and agreed with the amended version of  ...  view the full minutes text for item 445

The committee is asked to consider the attached report and to make recommendations to Cabinet on the Council’s five year financial strategy.

Mrs Belenger introduced the report which set out the financial strategy and the principles which underpinned the council’s approach to managing its financial matters and medium term financial plan. Part of that process was trying to understand the risks and how we could control and mitigate some of those risks. The council was currently in year three of a four year government settlement. 2019-20 was the final year of the settlement and thereafter officers had made assumptions based on best information. Part of that was underpinning the key financial principles and how we approach those future years with an unknown quantity.

One of the key financial principles set out in Appendix 1 relating to investment income had been amended. Last year the investment income from the property fund was used to support the deficit reduction plan. It was intended that the extra £8m we were placing in mixed asset bonds would also be used to close that gap. 

Mrs Belenger recommended that we maintain the £5m reserve and continued to maintain the provision of £1.3m of revenue support which would allow the council to smooth things in relation to business rates retention as localisation had some risks. The council has not used this reserve which was first earmarked in 2010 and she assured the committee that the reserves figure was there to help mitigate risks with the council’s spending plans.

The committee made the following comments and received answers to questions as follows:

·       Queried which elements of current fees and charges were susceptible to the economy. Certain areas such as green waste and car parks were subject to fluctuation. The council had a fees and charges policy setting out that the user pays for the service where it was not a statutory service. The increase in charges in 2017-18 had been 3%. An income of £16.4m had been achieved through our income streams. Officers did their best to forecast this figure based on a number of predictions. The council was working in a more commercial environment; officers were expected to look for new opportunities and services were expected to continually assess their charges.

·       Queried the point of entering the business rates pilot for 2018-19 if there was no impact on the model. There was no impact on individual authorities but as part of a wider pool the growth money that would have gone to the government would be available to the pool to invest across the county. The bid required to be submitted from an economic area and all authorities in West Sussex were part of that bid.

·       Queried whether certain areas would not get their full business rate return. Even with localisation there would still be a mechanism to redistribute business rate income to areas where need was greater. The mechanics had not yet been divulged.

·       Queried the current council tax premium payable on empty properties following the Chancellor’s announcement of the power to charge a 100% premium. The council currently has a zero council tax discount policy  ...  view the full minutes text for item 161