Agenda item

A presentation on the Bridging the Gap strategy (Appendix 4) in the budget proposals for 2013/14 by the Cabinet Member Finance and Mark Sheldon, Director of Resources and an opportunity for the committee to ask any questions and make any recommendations they would like Cabinet to consider. 

(Appendix 2 and 4 of the budget papers have been circulated with the papers and Members are referred to the full budget papers for Cabinet on 21 December 2012 available on the website and in the Members Room or on request from Democratic Services)

The chair explained that at this stage in the budget cycle, the committee would normally expect to receive a report from the Budget Scrutiny Working Group on the budget proposals together with any recommendations they wish to make to Cabinet. For the reasons previously given by the working group, they were not in a position to do this for 2013/14 however they had received a presentation on the budget at their meeting earlier this week.

The Director of Resources as Section 151 Officer gave a brief presentation on the Cabinet’s Interim Budget Proposals 2013/14 for consultation. The presentation outlined the budget assumptions, funding sources, the impact of the late settlement and areas of uncertainty in the MTFS.

He explained that the council had only been notified of the final government settlement on the Wednesday before the Friday 21^st December Cabinet meeting.  The impact of the settlement had been assessed and a revised version of the budget summary in appendix 2 of the budget papers had been circulated at the meeting on 21 December. The settlement had been better than expected in 2013/14 but was significantly worse in 2014/15. Consequently there was still further work to be done in remodelling the MTFS following the late settlement.

The Cabinet Member Finance referred to the Bridging the Gap strategy set out in appendix 4 of the budget papers.  He gave some context to the budget challenges by highlighting that since February 2008 the Council's net budget had fallen by about two and a half million pounds in less than five years and if inflation was factored in, this was a fall of around 25%. Over the next four years this figure could rise to a 40% cut in core government support since 2008.

Longer term, the financial challenge was to bridge the projected funding gap over the period of the MTFS. This was why a detailed, quantified five-year strategy for cutting costs and maximising income and bridging the medium term funding gap was being developed as outlined in Appendix 4 of the report. Overall he felt the council had been successful to date in dealing with significant cuts in resources without cutting essential services and whilst holding down council tax and parking charges. However he warned next year's budget would be a far greater challenge.

The Director of Resources reported that the budget scrutiny working group had expressed some nervousness about the increased worth of efficiency savings yet to be identified in 2014/15 which took the savings required from £275,000 to approximately £624,000.  They had asked whether there was any opportunity to bring forward savings from future years.  He advised that this would be the biggest topic for the bridging the gap meeting later this month.

The Cabinet Member Finance explained that the way that the New Homes Bonus (NHB) was used had been rethought and last year it was accepted that it needed to be treated as a regular source of income so part of it was taken into the revenue budget. He indicated that the council would have to look carefully at the use of the NHS bonus going forward as the funding was cumulative and could be a way of making up the shortfall in government funding.

In response to a question, the Cabinet Member Finance advised that the colours highlighted in the bridging the gap summary were an indication of the current assessment of the level of deliverability of each of the savings.  Green indicating that the saving was almost there through to red indicating there was a lot more work to be done. The chair asked what contingency plans were in place if the savings highlighted in red, amounting to almost £800,000, failed to deliver. The Cabinet Member advised that the red savings were not necessarily difficult to deliver but simply that there was a lot more work to be done before they could be firmed up. For example, he was comfortable that the senior management team review could deliver that quantity of savings but it was not yet planned out how they would be achieved.

The following responses were given to additional questions from members?

• Regarding the advantages of pooling business rates across the county, the Director of resources advised that they had been working with the other Gloucestershire authorities and the financial modelling supported pooling and appeared to demonstrate that it would be advantageous to Cheltenham Borough Council and more rates would be retained in Gloucestershire. However there were still one or two issues to be resolved and the final decision was due to be taken on 15 January.
• The options for debt rescheduling to maximise investment income had largely been exhausted. Income from Icelandic Banks was coming in but the flow was unpredictable so consequently it was difficult to predict the levels of interest in the financial plans.
• The Cabinet Member Finance advised that the council was adopting a carrot and stick approach to vacant properties. Although the council had the power to compulsory purchase vacant properties, the preferred strategy was that the new vacant property officer would engage with property owners and encourage them to get empty properties back into use. The target would be a reduction of 26 empty properties per year and he considered this would be a good rate of return for the investment in the new post and would in turn increase the amount received in the New Homes bonus.
• The Cabinet Member Finance advised that the £20,000 saving in economic development would be achieved through a restructure rather than any cuts in the service. In terms of encouraging growth of new business in the town, one of the key objectives of the pooling of business rates was to set up an economic growth fund which could be used to stimulate growth at both county and local level. 
• Asked whether the stated 1% freeze p.a in staff pay could be backed up by a guarantee that there would be no compulsory redundancies, the Cabinet Member Finance said that they were not in a position to give a guarantee however they would continue to work hard to avoid the need for any compulsory redundancies. He was pleased to advise that to date, staff savings had largely been achieved through natural wastage, voluntary redundancies or early retirement and ongoing management of vacancies.
• Asked for an update on the potential savings from the accommodation strategy set out for 2015 to 2017, he advised that this was very much work in progress. The rationale for moving out of the Municipal Offices would become increasingly apparent as the core organisation continued to transfer staff out to shared or commissioned services.

In terms of recommendations regarding the budget, a member requested that a budget be allocated to ensure that all members of Planning Committee receive essential training and attendance is made compulsory. He considered this was an invest to save initiative considering the cost of appeals if decisions were made incorrectly.

The chair also requested that the Cabinet Member consider allocating a budget to support the overview and scrutiny process.

Resolved that the Cabinet Member Finance note these requests when finalising the budget proposals.