Issue - meetings

(See report at Agenda Item 7 (pages 28 to 37) of the Cabinet papers of 6 September 2016)

RECOMMENDED BY CABINET

That the Head of Finance and Governance be authorised to submit a request to the Department of Communities and Local Government for a four-year settlement and that this Deficit Reduction Plan is used as the basis for that request.

Mrs Hardwick (Cabinet Member for Finance & Governance), seconded by Mr Dignum, moved this recommendation from Cabinet. She stated that in May 2013 the then Cabinet had approved a Deficit Reduction Plan to yield £2.4m of savings and income, aiming to close an anticipated deficit in the then 5 year model.  Since then through the hard work of officers and members the Council had achieved savings of £3.6m (over £1.2m more than expected through both revenue savings of £2.2m and additional income of £1.4m). Despite these achievements, the financial forecast remained challenging, with ongoing risks including the full localisation of business rates by 2020, New Homes Bonus likely to be reduced, a possible general downturn in the economy which would inevitably hit income streams and challenging amended waste and recycling targets. The latest five year plan model showed a predicted £2.5m deficit by 2021/22, assuming current policies are continued.  If the Council recognises the further risks and cost pressures and agrees and implements the policy decisions, the predicted deficit would grow to £3.8m by 2021/22.

However Officers and Members have continued to develop plans for more savings and yet further income generation and these policies are modelled to generate savings and further income year on year rising to just under £3.9m by 2021/22. The model had assumed modest council tax increases but the need for this would be reviewed annually. In December 2015 the Government offered the Council a specific four year financial settlement if we submitted an ‘efficiency plan’ demonstrating that we could achieve a balanced budget, however if we did not take up this offer we were likely to achieve worse settlements year on year.

Mr Oakley queried the tax base growth rate of 1.1% and the level of housing delivery rate this would equate to; the costs or estimates of cultural grants when they transfer from being funded from reserves to revenue; and any other ‘unknown unknowns’ that could undermine the Council’s planned balanced budget. Mrs Hardwick advised that the model built in prudence at every level, however implicit in these figures were some uncertainties. Mr Ward confirmed that local government finance was going through a significant period of change. Moving from 50% to 100% localisation of business rates and the Government’s review of the Needs Assessment (effectively the baseline funding position) could create significant risk for the council. A prudent approach had been taken in forecasting. The tax base growth rate was not derived from housing numbers but the equivalent of band D properties and net of discounts e.g. council tax benefits. There was an item within the five year model for grants including cultural grants.

Mr Cullen queried whether it would be at the end of the four year period, when we had received our entire grant, that we could say that we hadn't achieved the savings. Mrs Shepherd (Chief Executive) responded that the model was reviewed quarterly and that there was a legal requirement that each local authority balance its books. This council had been  ...  view the full minutes text for item 149

The Cabinet is asked to consider the agenda report and its two appendices and to:

(1)  Approve the Deficit Reduction Plan of £3.8m set out in Appendix 2 to the report for eliminating the budget deficit and

(2)  Recommend to the Council that it authorises the Head of Finance and Governance to submit a request to the Department of Communities and Local Government for a four-year settlement and that this Deficit Reduction Plan is used as the basis for that request.

[Note The issue in (1) is a key decision but the item is included within this section of the agenda because of the recommendation to the Council in (2)]

RESOLVED

That the Deficit Reduction Plan of £3.8m as set out in appendix two to the agenda report for eliminating the budget deficit be approved.

RECOMMENDATION TO THE COUNCIL

That the Council authorises the Head of Finance and Governance to submit a request to the Department of Communities and Local Government for a four-year settlement and that this Deficit Reduction Plan is used as the basis for that request.

The Cabinet considered the agenda report and its two appendices (copies attached to the official minutes).

The report was presented by Mrs Hardwick. With reference to the revenue savings achieved and additional income generated during the 2013-2016 Deficit Reduction Plan period (para 4.1 of the report), she referred to the savings and enhanced income streams as set out in appendix one. Notwithstanding those pleasing outcomes, the financial forecast posed continuing challenges and risks such as full localisation of business rates by 2020; a likely reduction in the level of the New Homes Bonus; a general downturn in the economy which would consequently affect income streams; and the demands of meeting amended waste and recycling regulations. The current five-year plan model featured in appendix two, which showed a predicted £2.5m deficit by 2021-2022 and if new policy initiatives were added the deficit would rise to just under £3.9m by 2021-2022. She explained how the deficit was going to be eliminated namely by a mixture of further efficiency savings and income generation and that frontline services would continue to be protected. She drew attention to the proposals in para 6.3 of the report which required the Cabinet’s approval. The model assumed modest council tax increases. In Dec 2015 CDC was offered by the government a specific four-year financial settlement provided that it was able to submit an efficiency plan demonstrating that it could achieve a balanced budget. In default of that CDC was likely to achieve worse settlements year on year. In that regard the Cabinet was asked to authorise Mr Ward to submit a request to the Department for Communities and Local Government for a four-year settlement on the basis of the proposed revised version of the Deficit Reduction Plan.

Mr Ward advised that the four-year settlement would run up to and including 2020.

There were no questions by Cabinet members in respect of this item.

Decision

The Cabinet voted unanimously on a show of hands in favour of the recommendations in para 3.2 of the report.

RESOLVED

That the Deficit Reduction Plan of £3.8m as set out in appendix two to the agenda report for eliminating the budget deficit be approved.

RECOMMENDATION TO THE COUNCIL

That the Council authorises the Head of Finance and Governance to submit a request to the Department of Communities and Local Government for a four-year settlement and that this Deficit Reduction Plan is used as the basis for that request.