Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report and reminded Members that in the current exceptionally difficult national funding situation, the overriding financial strategy had been, and remained, to drive down the Council’s costs.

The key aims in developing this approach to the budget were to:

·         Do everything possible to protect frontline services with a modest increase in council tax

·         Identify savings that could be achieved through reorganisation of service delivery or raising additional income rather than through service cuts.

The Cabinet Member informed the meeting that the council had taken up the offer of a four year settlement from central government and the decision to grant this was received on 16 November. It should be noted that in applying for a multi-year settlement the Council was guaranteeing a minimum settlement allocation, not a fixed allocation.  She referred Members to the table at 2.7 which illustrated the proposed levels of government funding for the council.

Between 2009 and the present there had been an unprecedented squeeze on finances. Government core funding for the council had been reduced from £8.8 million to £3.1 million a year.  The proposed settlement for 17/18 was indicating a further reduction of 17.5 % or £0.677 million in cash terms. To address these reductions without cutting services, radical changes had already been embraced in the way services were organised.

With regard to retained business rates In April 2017, a new rating list would come into effect which would impact each business rate property in the borough and, would impact upon the value of business rates collected. Under the Scheme, this volatility was expected to be smoothed by an adjustment to the "tariff” set by central government.

The Cabinet Member highlighted that a significant level of risk remained due to the volume of outstanding business rates appeals which were being processed by the Valuation Office. She reported that the Council had made provision for its share of the cost of outstanding appeals in its financial statements. The level of provision would be reviewed as part of the preparation of the business rates estimates for 2017/18 in January 2017.

The amount of New Homes Bonus (NHB) used to fund the base budget was capped at £1.75 million in 2016/17, with the excess bonus (c. £0.400 million) contributing to the Council’s New Initiatives Fund, deferred REST savings, the Community Pride scheme and other one-off supported growth schemes. The interim budget proposals for 2017/18 maintained the capped amount of £1.75 million.

The Cabinet Member explained that for 2018/19 onwards, it was assumed that NHB of c. £1.9 million could be payable. This value reflected the following: the scale of housing development expected in the Borough; that NHB would be awarded for 4 years rather than the current 6 years; and provided for the introduction of some further changes to the scheme which were yet to be determined by government, once this was received further modelling would be carried out and confirmed in the budget proposals for the February Council meeting.

She reported that for 2013/14 through to 2016/17, the value of grant awarded to the 5 parish councils for Local Council Tax Support was £10,269.  Funding for LCTS was “rolled” in to the Revenue Support Grant and the Retained Business Rates Baseline Funding Position.  As Government funding reduced, the Council was under increasing pressure to reduce the funding available for Local Council Tax Support available to the parish councils. However, in order to give parish councils a degree of financial stability and give them the assurance they required to set their own precepts, once again it was not proposed to pass on any reductions in 2017/18, although it was likely reductions would commence in 2018/19.

The Cabinet Member said that looking at the uncertainties surrounding the future of NHB, which represented a significant proportion of the council’s income, and the actual final local government settlement which was not likely to be announced until January 2017, and could place a number of the council’s discretionary services at risk, consideration as to the level of council tax increase which was sustainable, without creating an increased risk of service cuts and/or larger tax increases in the future was necessary. Therefore, at this stage the proposal was for an increase in council tax in 2017/18 of £5.00 for the year for a Band D property.

She went on to explain that in preparing the interim budget proposals, a general philosophy of no growth in services unless there was a statutory requirement or a compelling business case for an ‘invest to save’ scheme was being proposed. The full list of proposals for growth, including one off initiatives, was included in Appendix 3.

As in previous years, the budget for the coming year was the result of a great deal of activity and hard work throughout the year. The interim budget proposals for closing the budget gap in 2017/18, which was the result of this work, was detailed in Appendix 4.

The Bridging the Gap programme and the commissioning process had helped to move towards a robust four-year strategy for closing the funding gap. The work done on leisure and culture services, shared services with partner councils, management restructuring and the accommodation strategy, as well as a number of smaller pieces of work, had given the council the opportunity to think ahead over a period of several years, rather than planning its budgets a year at a time.

The Cabinet Member referred to the third recommendation of the report and amended the reference to Section 7 to Section 6. She then wished to put on record her thanks to all staff, particularly the leadership team and the specific support provided to her by the Section 151 Officer.

Finally, the Cabinet Member Finance informed members of a letter that had been sent by the District Councils Network expressing serious concerns about the future of the New Homes Bonus which may go beyond the 6-4 years reduction in order to find £800m for adult social care. It was encouraging district councils to seek support from their local MP by setting out to Government what NHB had enabled the council to do in terms of investment in supporting infrastructure and the delivery of homes where they were needed most.

The Leader added that this was a sensible approach which should be supported. He reiterated thanks to officers in producing the interim budget proposals for consultation.

RESOLVED THAT

1.    the interim budget proposals be approved for consultation including a proposed council tax for the services provided by Cheltenham Borough Council of £197.12 for the year 2017/18 (an increase of 2.60% or £5.00 a year for a Band D property).

2.    the growth proposals be approved, including one off initiatives at Appendix 3, for consultation.

3.    the proposed capital programme at Appendix 6 be approved, as outlined in Section 6.

4.    authority be delegated to the Section 151 Officer, in consultation with the Cabinet Member for Finance, to determine and approve any additional material that may be needed to support the presentation of the interim budget proposals for consultation.

5.    consultation responses be sought by 13^th January 2017.