Issue - meetings

See report (Agenda Item 6) to Cabinet on 1 December 2015

RECOMMENDED BY THE CABINET

That:

(1)  The key financial principles and actions of the 5 year financial strategy be as set out in paragraph 6 of the Cabinet report.

(2)  That the current 5 year Financial Model at Appendix 1 is noted.

(3)  That a minimum level of general fund reserves of £5m be set, having considered the recommendations from the Corporate Governance & Audit Committee.

(4)  That this authority continues to participate in a West Sussex Non-Domestic Rates (NDR) pool, until such time as the government fully localise NDR, at which point the situation will be reviewed.

(5)  That the current resources position, as set out in Appendix 2, be noted.

(6)  That a decision on the level of Council Tax for 2016/17 be deferred until the details of the Local Government settlement are known.

In the absence of Mrs Hardwick, Mr Dignum (Leader of the Council), seconded by Mrs Tull, moved the recommendations of the Cabinet.

He commented that it was not the ideal time to be presenting a Financial Strategy because the Chancellor of the Exchequer had only just announced the comprehensive spending review, setting out the Government’s own plans for the next 4 years. It was not yet clear how the Council would fare compared with the average real reduction of 24% in Government funding for Local Government planned over the next 4 years. There were three components in that funding: New Homes Bonus (NHB), Business Rates and Revenue Support Grant.

NHB receipts could be cut by far more than 24%. The Government’s favoured option as it goes out to consultation was a 2/3 cut, probably from 2017/18.

Local Government as a whole would keep 100% of business rates receipts by 2020, but it was not clear what proportion the Council would retain of business rates collected by Chichester District Council.

Revenue Support Grant would, as expected, be reduced to zero by 2020 but the pace of elimination over the 4 years was not known.

Given these uncertainties, the 5 year Financial Model in Appendix 1 to the report was the best forecast that could be made at present. The underlying assumptions were that: no NHB would be received from new homes completed from 2017/18, but NHB from previous housing completions would be received for the full six years; no radical change was expected in business rates except the anticipated growth from new enterprises; Revenue Support Grant would fall steadily to zero by 2020/21.

The Model assumed no increase in Council Tax. Whether this would be sustainable in later years would depend on whether there were unforeseen cost pressures or income setbacks after 2017/18. On the current forecast, significant savings would be needed to offset a deficit in 2020/21. Major elements in the forecast included the expected gain if a decision was made to outsource leisure services, and a significant additional cost, perhaps of £700,000 per year from 2018/19, to meet the EU objective of 50% recycling by 2020.

On present forecasts, it appeared that an increase in council tax in 2016/17 would not be necessary, but no decision could be made until the Government policies were clearer. Moreover, not raising council tax had implications in later years. If the allowed 2% increase was not made then it was foregone forever; it could not be made up later.

All the Council’s policies conformed to the principles of prudent finance itemised in Sections 6 and 7 of the report.

Mr Dignum drew attention to paragraph 7.2(c) of the Cabinet report. The Corporate Governance and Audit Committee had endorsed the maintenance of a minimum level of general reserve of £5m.

Mr Plowman thanked the Council for making grants to parish councils from the New Homes Bonus. These grants had provided welcome capital for a number of projects, especially for young people, for which funds  ...  view the full minutes text for item 57

To recommend the Council to update the its financial strategy and action plan to help guide the management of the Council’s finances during a period of diminishing resources, and to build upon the work already achieved in this area in previous years.

RECOMMENDED TO COUNCIL

That:

(1)  The key financial principles and actions of the 5 year financial strategy be as set out in paragraph 6 of the Cabinet report.

(2)  That the current 5 year Financial Model at Appendix 1 be noted.

(3)  That a minimum level of general fund reserves of £5m be set, having considered the recommendations from the Corporate Governance & Audit Committee.

(4)  That this authority continues to participate in a West Sussex Non-Domestic Rates (NDR) pool, until such time as the government fully localise NDR, at which point the situation will be reviewed.

(5)  That the current resources position, as set out in Appendix 2, be noted.

(6)  That a decision on the level of Council Tax for 2016/17 be deferred until the details of the Local Government settlement are known.

The Cabinet considered the report circulated with the agenda (copy attached to the official minutes). In the absence of Mrs Hardwick, Mr Dignum introduced the report.

He commented that it was not the ideal time to be presenting a Financial Strategy because the Chancellor of the Exchequer had only just announced the comprehensive spending review, setting out the Government’s own plans for the next 4 years. It was not yet clear how the Council would fare compared with the average real reduction of 24% in Government funding for Local Government planned over the next 4 years. There were three components in that funding: New Homes Bonus (NHB), Business Rates and Revenue Support Grant.

NHB receipts could be cut by far more than 24%. The Government’s favoured option as it goes out to consultation was a 2/3 cut, probably from 2017/18.

Local Government as a whole would keep 100% of business rates receipts by 2020, but it was not clear what proportion the Council would retain of business rates receipts in Chichester District.

Revenue Support Grant would, as expected, be reduced to zero by 2020 but the pace of elimination over the 4 years was not known.

Given these uncertainties, the 5 year Financial Model in Appendix 1 to the report was the best forecast that could be made at present. The underlying assumptions were that: no NHB would be received from new homes completed from 2017/18, but NHB from previous housing completions would be received for the full six years; no radical change was expected in business rates except the anticipated growth from new enterprises; Revenue Support Grant would fall steadily to zero by 2020/21.

The Model assumed no increase in Council Tax. Whether this would be sustainable in later years would depend on whether there were unforeseen cost pressures or income setbacks after 2017/18. On the current forecast, significant savings would be needed to offset a deficit in 2020/21. Major elements in the forecast included the expected gain if a decision was made to outsource leisure services, and a significant additional cost, perhaps of £700,000 per year from 2018/19, to meet the EU objective of 50% recycling by 2020.

On present forecasts, it appeared that an increase in council tax in 2016/17 would not be necessary, but no decision could be made until the Government policies were clearer. Moreover, not raising council tax had implications in later years. If the allowed 2% increase was not made then it was foregone forever; it could not be made up later.

All the Council’s policies conformed to the principles of prudent finance itemised in Sections 6 and 7 of the report.

Mr Dignum drew attention to paragraph 7.2(c) . The Corporate Governance and Audit Committee had endorsed the maintenance of a minimum level of general reserve of £5m.

As reported in paragraph 4.7, the Council had purchased a number of property assets which helped to reducedependence on centralgovernment funding, in addition to the economic and community benefits such  ...  view the full minutes text for item 97

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

The Committee considered a report by the Head of Finance & Governance (copy attached to the official minutes). A revised Appendix 1 was tabled (copy attached to the official minutes).

Mr Ward advised members that the purpose of this report was to allow the committee to assess the financial strategy in terms of risk. The Government’s spending review announcement was due the following day so the timing was unfortunate. Officers’ assumptions were included regarding pay, pension and a council tax freeze over the next five years as well as anticipated savings. A surplus position was predicted over the next four years but not in the fifth year. Some of the risks to the Council include the achievement of EU set recycling targets, the localisation of business rates and phasing out the New Homes Bonus. An analysis was included of figures with a council tax freeze and without. There were a number of uncertainties – pay increases, welfare reforms and cultural grants with no further provision beyond 2018.

Mrs Hardwick asked for clarification of the operation of the business rate pool. Mr Ward advised that since April 2013 the business rate collection in the district was shared 50% with Government, 40% retained and 10% passed to WSCC (which receives 10% from each of its districts/boroughs). The Government decided that a 40% share (approximately £17m)was too high in comparison with our funding need so a levy was imposed removing all but £2m. In terms of growth the government also assessed 40% retention to be too high and so a levy is applied so we only retain 20% of the growth. The other 20% i.e. the levy that would have gone to Government is retained by the business rate pool and that money is spent on projects that would have an economic impact, either individually by Council or collectively. Finance officers assess the business case for projects and the West Sussex Leaders determine how the money is spent. The advantage of pooling for the Councils in the pool is worth an estimated £2m in 2015/16 that would otherwise have gone to the Government.

The types of projects coming forward include a bid for a West Sussex coastal tourism project and a request for a European Union (EU) Funding Officer based in WSCC to provide support to local authorities.

Mr Barrett asked whether we had a model in order to compete with wages in the private sector. Mr Ward responded that we undertake a review of salaries through South East Employers and had recently introduced some supplements for Chichester Contract Services (CCS) drivers and for Planning Officers. The cost of this, and a further similar amount has been built into the projections, however at this stage we were not sure where cost pressures may come from.

A number of services, but particularly Careline, had in the past suffered the effects of inflation in setting their fees as they are dealing with vulnerable customers often on limited income and were also struggling to expand  ...  view the full minutes text for item 34