Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report and explained that this would be the final year of the four year funding settlement. She reported that in July this year the government released a technical consultation on the local government finance settlement for 2019/20 to which this Council made a formal response. The headlines from that consultation were:

·         Confirmation of the 4 year offer as set out in 2016/17;

·         Under the council tax referendum principles, the flexibility to increase council tax by the greater of up to 3% or £5 based on a Band D property; The medium term financial strategy was already predicated on the basis of a 2.99% increase

·         A proposal to remove negative Revenue Support Grant (RSG) in full via the governments share of business rates receipts; The removal of this would equate to an increase in funding of around £390K

·         Proposals to increase the baseline target for New Homes Bonus (NHB) which was currently 0.4%; if there was an increase in the baseline target it could negate this benefit. An increase to 0.6% would reduce our funding by c. £100k whereas an increase to 0.8% would equate to a reduction of c. £200k and effectively mean no additional NHB would be received in 2019/20 despite the fact that Cheltenham delivered an additional 368 new homes for occupation over the last 12 months.

·         An invitation to bid for a pilot programme for 75% business rates retention for 2019/20.  Gloucestershire had applied to the government to pilot the 75% Business rates retention.She reported that an important change to the 75% pilot scheme was that there would not be a “no detriment” clause.  Under the existing pilot, this had ensured that Gloucestershire was no worse-off than the individual authorities would have been in aggregate under the 50% scheme. She explained that significant growth had been achieved across the pool since business rates retention commenced in 2013/14. Detailed modelling acknowledged the significant financial risk that the NHS appeal created, but also acknowledged that this Council could not mitigate this risk by being outside the pool or pilot. The modelling actually acknowledged that there would be a greater financial risk to the council if it were to leave the existing pool.

The MTFS projections were in the process of being updated to reflect the best estimates of the financial pressures impacting on the Council. The estimate of the funding gap for 2019/20, based on the previous iteration of the MTFS was £2.096m. As in the previous year, given the current uncertainty surrounding business rates retention, new homes bonus and the Ubico contract sum, it was prudent to defer the full publication of the MTFS to the Cabinet meeting in December as part of the interim budget proposals. This would enable the Cabinet to react positively to any changes announced and ensure that the MTFS was robust and fit for purpose.

The Cabinet Member explained that part of the drive towards financial sustainability included  identifying new opportunities to generate income and investment in projects which provided good financial returns. The commercial strategy aligned closely with other key strategies including place-making, economic growth, digital transformation, workforce and skills development, investment and asset management. This sent out the combined message that Cheltenham Borough Council had entered a new era of business enterprise, growth and innovation.  CBC would  work with partners who shared the council’s  ambition and values and would continue to put the best interests of Cheltenham residents at the heart of everything.

The Cabinet Member Finance elaborated that in February this year some aspirational targets were set which had already resulted in overachieving the new revenue income target through the adoption of the car parking strategy, development of a new crematoria, and the acquisitions of 4 new commercial investment properties Ellenborough House, Sainsbury’s, Café Nero and 53-57 Rodney Road.  In addition, investment in public realm across the town had attracted major new businesses such as John Lewis and Partners and Urban Outfitters which had a positive effect on both business rates income and the vibrancy across the town.

The Cabinet Member explained that the Budget Scrutiny cross party working group would continue to support the budget process and she referred to the proposed key stages in the process for setting the budget for 2019/20 at Appendix 2.

Finally, she stated that In the current exceptionally difficult national funding situation, the Cabinet’s overriding financial strategy had been, and remained to drive down the Council’s net costs via a commercial mind-set. The aim was to hold down council tax as far as possible, now and in the longer term, while also protecting frontline services from cuts – an immensely challenging task in the present climate with so much uncertainty surrounding future funding.

In concluding the Cabinet Member wished to thank officers for their commitment and exceptionally hard work.

RESOLVED THAT

1.    the budget setting timetable at Appendix 2 be approved.

2.    the budget strategy outlined in section 5 be approved

3.    the estimated funding gap of £2.096m in 2019/20 and the large amount of work done so far to close this gap be noted.

4.    the intention for this Council to remain in the Gloucestershire Business Rates Pool in 2019/20 as outlined in section 6 be noted and that it be noted that Gloucestershire has applied to the Government to pilot 75% Business Rates Retention in 2019/20.

5.    the Section 151 Officer and the Cabinet Member for Finance be requested to consider suggestions from the Budget Scrutiny Working Group in preparing the interim budget proposals for 2019/20 as outlined in section 7.