Agenda item

The Cabinet is requested to consider the agenda report and its three appendices and to make the following recommendations to the Council:

That the Council approves:

(a)   A net budget requirement of £12,362,700 for 2017-2018.

(b)   An increase in council tax by £5 from £145.81 to £150.81 for a band D equivalent in 2017-2018.

(c)   An increase in the Investment Opportunities Reserve by £470,600.

(d)   An adjustment in the transfer to the Investment Opportunities Reserve above should the final settlement differ (by way of an increase or decrease) from the provisional settlement.

It is also requested to consider the following matters:

·       The capital programme, including the asset renewal programme (appendix 1c and 1d).

·       The current resources position (appendix 2).

·       The budget variances included in the Draft Budget Spending Plan as set out in appendix 1b including growth items.

RECOMMENDED TO THE COUNCIL

(1)   That a net budget requirement of £12,362,700 for 2017-2018 be approved.

(2)   That council tax is increased by £5 from £145.81 to £150.81 for a band D equivalent in 2017-2018.

(3)   That the Investment Opportunities Reserve is increased by £470,600.

(4)   That, should the final settlement differ from the provisional settlement, any increase or decrease be dealt with by adjusting the transfer to the Investment Opportunities Reserve above.

RESOLVED

(1)  That the capital programme including the asset renewal programme (appendix 1c and 1d to the agenda report) be noted.

(2)  That the current resources position (appendix 2) be noted.

(3)  That the budget variances included in the Draft Budget Spending Plan as set out in appendix 1b to the agenda report including growth items be noted.

The Cabinet received and considered the agenda report, its three appendices (appendix 1 consisted of appendices 1a to 1d) in the main agenda supplement, and the second agenda supplement (copies attached to the official minutes).

In addition to the public copies of the main and the second agenda supplements, hard copies of appendix 1b (pages 8 to 13) in the main agenda supplement were available to those observing the meeting. 

The report was presented by Mrs Hardwick.

Mr Ward and Mr Cooper were available to answer members’ questions on points of detail.

Mrs Hardwick explained that this report was a sequel to the approval by the Council in January 2017 of CDC’s Financial Strategy and, ahead of setting the budget and council tax in March 2017, it focussed on the budget spending plans of each Cabinet portfolio and how these aggregated and with various funding streams underpinned the balanced budget now before the Cabinet.

She acknowledged at the outset that the budget process involved an impressive co-operation between individual budget managers and CDC’s finance team, overseen by the Corporate Management Team, to ensure that service delivery priorities were met within the inevitably tough constraints of limited public sector financial resources.

The report identified CDC’s current funding sources and set out the best estimate for funding going forward. The final details would not be received from central government until after 20 February 2017 as part of the local government annual financial settlement. However, given that CDC had accepted the government’s offer of a four-year settlement prior to Christmas 2016, no significant change was anticipated in the final settlement.

CDC undertook balancing the revenue budget (an important statutory requirement) in the context of a five-year financial strategy. The key variables and issues that influenced the strategy included income from fees charges and rents and the use of reserves and council tax. As to council tax, it was considered correct to take up central government’s offer of allowing, without a referendum, a rise in council tax by £5 (band D equivalent) to offset the continued withdrawal of central government funding. This would generate an extra £260,000 per annum and assist closing the budget deficit which would otherwise emerge in the medium term. That measure was taken alongside the continuing work on the deficit reduction plan with aims to generate further income and savings amounting to £3.9m over the next five years so as to minimise future council tax increases.

The budget process assessed whether and how CDC’s actual performance differed from the year’s budget. Para 9.1 of the agenda report (as amended by the second agenda supplement) highlighted that overall in 2016-2017 CDC was likely by the year end to underspend the budget by some £400,000.  This was due largely to staff vacancies (£505,000) and additional revenue generated from the Local Authority Property Fund (LAPF) investment (£360,000), which set off against car parks shortfalls (£360,000) and less housing benefit subsidy (£120,000). 

Overall the 2017-2018 budget summarised in the income and expenditure statement on page 7 of the main agenda supplement showed a net revenue requirement of £12.363m (or £9.288m excluding the New Homes Bonus). If the final settlement differed from the provisional settlement, any increase or decrease would be dealt with by adjusting the transfer into the Investment Opportunities Reserve.

The budget process generated detailed variances by department and service area, the major ones of which were summarised on pages 8 to 13 of the main agenda supplement. She drew attention also to the budget summaries by portfolio, the capital and projects programme, the asset replacement programmes and the resources statement.

The statement of reserves, which was consistent with the strategy, remained robust and healthy. It highlighted the purpose of specific reserves and the respective authorisations for their use and demonstrated that the capital programme and asset replacement programmes were fully funded. Mr Ward had duly certified, as required by statute, that CDC’s financial estimates were sound, the estimates robust and the reserves adequate.

At Mrs Hardwick’s invitation Mr Ward commented on his assessment and the budget spending plans more generally. He said that all spending requests contained within other agenda items at this meeting were assumed to have been approved, and therefore were provided for in the draft budget. An increase of £5 in the council tax had been assumed in the financial strategy and the deficit reduction programme reports. A lower or no council tax increase would require an increase to the £3.9m of savings required in the deficit reduction programme. alternative source for funding the £12,363 budget requirement for 2017-2018. It was not known if there would be the latitude to increase council tax without a referendum in future years.   

During the discussion members commended how the budget had been prepared and in so doing reflecting CDC principles of maintaining services and making efficiencies.

Mr Dignum highlighted several of the budget variations: (a) increases - tourism support, recycling project officers, Chichester Festival Theatre and Pallant House Gallery; (b) decreases – return on investments; (c) service efficiencies (achieved not by cutting at the frontline but in the most efficient manner eg the Westgate Leisure Centre outsourcing (which would achieve eventually a £1.5m per annum saving)). The element of uncertainty relating to, for example, scope for the current fiscal opportunity to raise modestly council tax in future years and Brexit should not be underestimated. 

In concurring other members pointed out the importance of previous decisions to achieve a balanced budget;  widening the range of investments defined as acceptable to include for example the LAPF; CDC’s budgetary achievements against successive years of government funding cuts; the fact that only one of the two new posts of recycling project officers was appointed externally with the other post being an internal appointment and so there was scope for further saving here (section 8 on page 10 of the main agenda supplement); the recent allocation to CDC from the government’s Community Housing Fund was a government grant which would be held on the balance sheet and matched to expenditure when incurred. It had no impact on the draft revenue budget.

Mrs Hardwick and Mr Ward answered members’ questions on points of detail with regard to NNDR appeals provision (para 6.3 of the agenda report) and the contribution to the Investment Opportunities Reserve (net movement) (section 22 on page 8 of the main agenda supplement).

Decision

At the end of the discussion members voted unanimously on a show of hands in favour of the budget spending plans as set out below.

Mr Dignum thanked Mr Ward and Mr Cooper for the work they and their colleagues had undertaken to prepare the draft budget.   

RECOMMENDED TO THE COUNCIL

(1)   That a net budget requirement of £12,362,700 for 2017-2018 be approved.

(2)   That council tax is increased by £5 from £145.81 to £150.81 for a band D equivalent in 2017-2018.

(3)   That the Investment Opportunities Reserve is increased by £470,600.

(4)   That, should the final settlement differ from the provisional settlement, any increase or decrease be dealt with by adjusting the transfer to the Investment Opportunities Reserve above.

RESOLVED

(1)  That the capital programme including the asset renewal programme (appendix 1c and 1d to the agenda report) be noted.

(2)  That the current resources position (appendix 2) be noted.

(3)  That the budget variances included in the Draft Budget Spending Plan as set out in appendix 1b to the agenda report including growth items be noted.