Agenda item

Cabinet reports of the 13 December of the Cabinet Member Finance and the Chief Finance Officer (45 mins)

With the agreement of the committee, this item was taken as the first main item on the agenda.

The Cabinet Member Finance and Community Development introduced the general fund budget proposals in the form of the Cabinet report dated the 13 December. 

The Cabinet Member explained that the budget process for the coming year had been easier than expected.  This was as a result of targeted decisions that had been made in the last budget round but also the Icelandic bank decision which had been dealt with more expeditiously than expected. In addition £250k of New Home Bonus had been built into the 2012/13 base budget and the impact of HRA self-financing was a positive one. On top of this a predicted overspend of more than £500k had been addressed by an immediate freeze on recruitment, supplies and services.

The Cabinet Member highlighted the following structural issues, which included low level investment interest. Car parking income continued to decline, as was the case nationally. Concessionary fares also played a role in this decline. The Garden Waste scheme had not generated as much income as envisaged and whilst the scheme funded itself the estimated revenue had been reduced in next year’s budget.

Whilst this year’s budget saw the continuation of the council tax freeze the Cabinet Member warned that the situation would be very difficult in the following financial year as there would effectively be 5 % uplift in the level of council tax.

Mark Sheldon, Director of Resources gave a brief presentation on the budget. 

The following responses were given by the Cabinet Member Finance & Community Development and Accountant, to questions from members of the committee;

A member asked why the staff savings seemed to be relatively low at only 5 full-time equivalents out of 514 considering all the commissioning reviews that were currently taking place. The Director Resources referred members to appendix 4 which listed the savings to be achieved from the various restructuring projects. Additional staff savings would be made in future years within the Medium Term Financial strategy (MTFS).

A member asked the Director of Resources whether he was happy with the reserve balances set out in appendix 5.  In response the Director advised that he was currently working on his section 25 report for Council where he would give his view on these matters. He was satisfied that a general reserve at just over £2 million exceeded the top end of the recommended range for this reserve.  He acknowledged that other reserves would go down during the term of the MTFS but this was expected as some of the reserves had been earmarked to support specific initiatives previously identified. The reduction in the maintenance reserve would be offset by the contribution being made over the term of the MTFS. On balance he was happy with the reserves as currently set however the council was due to receive significant receipts from the sale of Midwinter and North Place and this would provide an opportunity to review the reserves in the summer.

A member queried how the Capital Reserve for GF estimated to be £535K at the end of 2012/13 financial year on page 72, would be sufficient to fund the Capital Programme spend of £700K in the next four years according to figures on page 75. Was this an appropriate way to manage the Capital Reserve and could it lead to a  risk of bankrupting the council, particularly in the light of the Cabinet Members comments regarding the 5% uplift in council tax which would be required next year due to the difficult financial circumstances. If the Capital Reserve could not be made up from the revenue account, this could lead to the council having to cut back its capital expenditure in a critical period for building.

The Director explained that he had not included the full projections of the MTFS in the papers but would ensure these were included in the budget papers for Council in February. These projections supported the capital expenditure and he was not aware of any shortfall.

A member asked whether it was prudent to ring fence some of the New Homes Bonus, which was essentially a one-off grant, and build it into the base budget. The Director of Resources said that this mirrored the approach being taken by other councils in Gloucestershire. The allocations had been notified by government and he was confident that the level of potential revenue streams from brown field sites in Cheltenham was sustainable. The Cabinet Member added that the New Home Bonus formed part of a 6 year commitment and the projections were based on the historical performance of brown field sites and did not attempt to predict the outcome of the Joint Core Strategy.

A member asked whether it was sensible for the Council to be considering the merger of off and on street parking at this stage given that the County Council had significant concerns about the operation of the car parking teams in Cheltenham. The Cabinet Member responded that he was aware of the county's approach but next year's budget related to some initial work which could achieve some immediate savings.

The Director of Resources are clarified the total savings listed in appendix 4.  The £253,900 savings had been identified in the previous budget round and therefore were already built into the base budget for 2012/13.  Further savings had been identified with a total of £861,600 and it was these savings which Council would be asked to approve.