Agenda item

The Committee is requested to consider:

·         The updated key financial principles in Appendix 1, which underpin the Council’s aim to set balanced budgets without the use of reserves, except where necessary in the short term.

·         In the short to medium term that the Council maintains a minimum level of  reserves of £6.3m for general purposes;

The Committee considered the report circulated with the agenda.

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 financial plan.  Part of that process was to understand the risks associated with it and how the Council could control and mitigate those risks.  The Committee was also requested to consider the minimum level of reserves held by the Council.

The Council’s five year strategy model was being worked up at the moment by officers.  It took into account the Government’s technical consultation, which gave the Council some indication of what our financial settlement would be like for 2020-21.  The Council understood from the Autumn statement that the settlement for 2020-21 would be for one year only and broadly in line with the settlement received for 2019-2020, as the changes to the fair funding arrangements, which included the fair funding review, localisation of business rates and resetting of the baselines have all been delayed by the Government now until 2021-22.

With regard to the Council’s membership of a Business Rates Pool, it was unlikely to participate in one as it had for 2018-19 as part of the Coastal Business Rates Pool, nor the 75% Business Rates Pool Pilot with all other West Sussex authorities in 2019-20, as this one year pilot was no longer on offer by the Government after 2019-20. This was mainly due to the potential impact of a court case launched by the NHS against councils that they should be able to reduce the amount of business rates payable as they were a charitable trust.  As St Richards Hospital was located in the District  the Council was unlikely to opt into a business rates pool during 2020-2021, as it did not want to put the pool at risk due to the court case and potential appeal risk. 

Mrs Belenger and Mr Catlow responded to members questions. 

·         With regard to the court case launched by the NHS a decision was expected to be made March/April 2020.  It was thought that the court case may affect whether or not other council’s joined a West Sussex Business Rates Pool in 2020/21.

·         As part of the budget process specific service reviews would take place to look at the different ways of delivering Council services and high cost high spend areas in comparison to other local authorities, and looking to see if there were any other income opportunities to identify ways of closing the Council’s potential funding gap.

·         The objective of future Government funding and the Fair Funding review was set out.  In previous consultations the Government had looked at different income streams, such as car park income for Councils. Potentially this type of income could have been taken into account when deciding each council’s settlement.  However, there had been no further updates in the latest consultation received as whether or not the Government would target this type of income in the future.  Updates were expected in the coming year along with further consultations due to the major changes expected.  

·         It was confirmed that the New Homes Bonus monies already held was not at risk under any current government regime. Unlike other councils this funding was not used to balance the budget but held for one off projects instead.

·         Recycling credits loss of income to the Council was considered in the Financial Strategy.

·         Total reserves held by the Council, an explanation of the different types of reserves held was given.

In response to members question concerning savings expected as part of the budget setting, The Leader, Mrs Lintill, was invited to address the Committee from the public gallery.  Mrs Lintill advised that the Local Government Association had been asked to provide an all member session on priority setting support.  It would take place ideally before the end of this year or if not before the budget setting process. 

The Committee noted that the possibility that West Sussex County Council would withdraw its recycling credits as part of its proposed budget cuts was a real threat.

The Chairman advised that it would be interesting in the future for officers to do some benchmarking on the Council’s reserves to give more clarity where the Council stood and a better understanding.

RECOMMENDED TO CABINET

1.  The updated key financial principles in Appendix 1, which underpin the Council’s aim to set balanced budgets without the use of reserves, except where necessary in the short term; and

2.  In the short to medium term that the Council maintains a minimum level of reserves of £6.3m for general purposes.