The material relevant to this item is the report on pages 33 to 37 of the agenda and 1 to 19 of the (main) agenda supplement considered by the Cabinet at its meeting on Tuesday 4 December 2018.
The following recommendations were made by the Cabinet to the Council:
RECOMMENDATIONS TO THE COUNCIL
(1) That the key financial principles and actions of the five year Financial Strategy set out in appendix 1 to the agenda report be approved.
(2) That the current five year Financial Model detailed in appendix 2 to the agenda report be noted.
(3) That, having considered the recommendations from the Corporate Governance and Audit Committee, the Minimum Level of the General Fund Reserves be set at £6.3m.
(4) That the Director of Corporate Services be given delegated authority, following consultation with the Cabinet Member for Corporate Services, to accept the government’s offer to participate in the 75% localisation business rate pilot for 2019-2020, if the West Sussex councils’ bid is successful or if not to revert back to the Coastal West Sussex existing pooling arrangement for the coming financial year.
(5) That the current resources position as set out in appendix 3 to the agenda report be noted.
Minutes:
The Council considered the recommendation made to it by the Cabinet at its meeting on Tuesday 4 December 2018, as set out in pages 33 to 37 of the agenda report and pages 1 to 19 of the agenda supplement for that meeting.
Mr P Wilding (Cabinet Member for Corporate Services) formally moved the Cabinet’s recommendation and this was seconded by Mr A Dignum (Leader of the Council and Cabinet Member for Growth and Place).
Mr Wilding presented the Cabinet’s recommendation. He explained that the report updated the Financial Strategy and Plan for 2019-2020 and created the framework within which the council tax base was set (agenda item 8) as well as setting the scene for approval of the budget in March 2019. The backdrop to the strategy was one of increasing political uncertainty and reducing central government funding for local government. CDC was in the fourth and final year of its agreed settlement with central government, so there was certainty over its government funding stream in 2019-2020. Retained business rates would continue to provide an increased proportion of CDC’s funding. However, much of its other income, for example car parks and planning fees, was dependent on the state of the wider economy and so was much less predictable.
He drew attention to the following:
(1) CDC’s key priorities set out in appendix 1, one of which was to manage CDC’s finances prudently and effectively. The Finance Strategy was linked to this specific corporate priority, as were also the key financial principles which underpinned CDC’s financial planning approach listed in annex A.
(2) The updated five-year financial model in appendix 2, which reflected the consolidated budget from the service areas, central government funding and the most up-to-date estimates for wider CDC activities including the programme boards, and other planned savings.
(3) The risks and opportunities estimates in section 4 of appendix 1. The key assumptions were:
(a) An assumed £5 increase in council tax (for a band D property) for each year in the five-year financial model (equivalent to approximately 3% increase per annum). The Council would make the decision in March 2019 as to the council tax level for 2019-2020 following the local government settlement.
(b) Recent quarterly revenue monitoring had identified some deterioration in car park and planning income and in recognition of this an adjustment of £300,000 had been built into the model for each year of the five-year period.
(c) A number of costs during the past year which could not be met from the Asset Replacement Programme and so were financed from reserves. An extra provision of £200,000 for asset replacement had therefore been included in the model for each year over the five-year period. A detailed review was underway and the precise amount required would be built into the annual budget.
(d) The provisional finance settlement for 2019-2020 and the outcome of the bids for participating in the pilot 75% Business Rates Retention Scheme for 2019-2020 were announced by the Ministry of Housing, Communities and Local Government (MHCLG) on 13 December 2018. The draft settlement was in line with CDC’s expectations, other than there having been a slight improvement in respect of New Homes Bonus. However, CDC did not rely on this source of funding to balance its budgets as it had always been viewed as being susceptible to change.
(e) At the time of the Cabinet report officers were still awaiting the outcome of the pilot bid for 75% retained business rates and so delegation was sought to the Director of Corporate Services to accept the bid if it were successful. West Sussex councils were subsequently notified by the MHCLG that their submission was successful, which meant that for one year only the councils would collectively retain approximately £20m of business rates for joint strategic investment across the county area. This was money which would otherwise have been paid to the government. The MHCLG required all of the councils’ section 151 officers across the county area to accept or decline the offer by 10 January 2019 or lose that opportunity of additional funding. CDC’s Director of Corporate Services had, therefore, accepted the offer on behalf of CDC. Accordingly recommendation (4) made by the Cabinet as set out in the Council agenda was in effect defunct and did not now need to be approved by the Council at this meeting.
(f) CDC was assuming no further reduction in overall local government funding but a shift to upper-tier councils (West Sussex County Council (WSCC)) to meet social care costs. It had, therefore, assumed a £500,000 reduction in government funding from 2020-2021 onwards.
(4) The five-year financial model contained many assumptions which would become more precise with time, so it would evolve and have changed by the time the Cabinet considered the detailed budget on 5 February 2019 prior to the next Council meeting on 5 March 2019.
(5) The anticipated resources position of CDC’s reserves and assets in the medium term in appendix 3, which demonstrated that CDC remained in a sound and sustainable financial state going forward.
Mr Wilding thanked Mrs Belenger (Divisional Manager Financial Services) and her team for their efforts in compiling the Financial Strategy and Plan.
Mr Wilding and Mr Dignum responded to members’ questions and comments on points of detail (the responses are denoted by the use of italics):
(a) Mr S Oakley (Tangmere) asked whether the Financial Strategy and Plan to take into account WSCC anticipated changes in costs with regard to housing, recycling credits and the collection of food waste: account had been taken insofar as was currently possible on the available information from WSCC.
(b) Mr J Ransley (Wisborough Green) asked whether, in view of the amount proposed to be spent on Chichester District’s museum service, CDC would allocate further funds to deal with the backlog in documenting Chichester District’s social history and caring for its artefacts as opposed to expenditure on the physical infrastructure: this was a very valid point and whilst consideration would be given to addressing this issue, in view of in particular the prevailing national economic uncertainty no commitments could currently be made to this or museum infrastructure expenditure.
Decision
On a show of hands the members voted in favour of the Cabinet’s recommendation (as amended by the deletion of para (4)) with no votes against and no abstentions.
RESOLVED
(1) That the key financial principles and actions of the five year Financial Strategy set out in appendix 1 to the agenda report be approved.
(2) That the current five year Financial Model detailed in appendix 2 to the agenda report be noted.
(3) That, having considered the recommendations from the Corporate Governance and Audit Committee, the Minimum Level of the General Fund Reserves be set at £6.3m.
(4) That the current resources position as set out in appendix 3 to the agenda report be noted.