Agenda item

Report of the Cabinet Member Finance and the Director Resources

The Mayor invited the Cabinet Member Finance to introduce the budget which would then be followed by a statement from the Director of Resources, Mark Sheldon as the Council’s Section 151 officer. To facilitate the presentation of the Budget, the Mayor proposed suspension of certain rules of debate, namely:-

That the time limit on speeches is relaxed with regard to the following speeches

• Cabinet Member Finance when moving the motion to adopt the budget being proposed by the Cabinet.

• Group leaders or Group spokesperson when making budget statements on behalf of their group.

The Cabinet Member Finance and Group Leaders could also speak more than once in the debate (in addition to any rights of reply etc) for the purpose of putting and answering questions. 

This was agreed by Council with 2 abstentions.

The Mayor referred to a letter from the DCLG which had been sent to all Chief Executives suggesting that a recorded vote was held on all items relating to the budget. She proposed that a recorded vote was held on any significant decision relating to the budget or council tax (including any amendments) as set out in Part 4A – Council Procedures Rule 14.5 as required by the ‘Local Authorities (Standing Orders) (England) (Amendment) Regulations 2014’. This will apply to agenda items 8 and 9.

This was resolved unanimously.

The Cabinet Member Finance introduced the 2014/15 budget proposals with a detailed speech (please see Appendix 1).  

The Cabinet Member Finance moved acceptance of the 2014/15 budget as set out in the report.  The motion was seconded by Councillor Jordan who reserved his right to speak.

The Director of Resources referred to appendix 2 in the budget papers which set out his assessment of the budget and the financial risks and made the following points:

• He was satisfied that sufficient provision had been made in the budget and MTFS for future pay awards and pension-fund costs.
• There had been positive progress regarding recovery of the Icelandic bank deposits as a result of the auction of Llandsbanki claim in January 2014, where the amount recovered was above expectations, but the full impact of this was still to be built into the MTFS.
• He considered setting up a car parking reserve from the North Place receipts was a positive step to cover any shortfall in car parking income. The setting up of other reserves to support Civic Pride and implementation of the Leisure and Culture Trust was also a sensible approach. Overall the general reserve remained in his previously recommended range of £1.5 to £2 million.
• Management of pooled business rates had been challenging for officers particularly with the continuing release of guidance from government but he was confident that the future was bright. There would continue to be ongoing volatility so a reserve was prudent.
• There was a sound business strategy to support the MTFS through commissioning, shared services and other projects.
• He acknowledged that the decision to freeze council tax had been a political one but was justifiable in view of the Chancellor's Autumn statement.
• He thanked Members of the Budget Scrutiny Working Group who had made a valuable contribution to the budget proposals this year.
  
  

He concluded that it was a balanced budget which did not rely heavily on reserves and was a sensible approach in view of the ongoing financial climate.

In response to questions from Members, the Cabinet Member Finance gave the following responses:

• Would he agree that the figures from Ubico don't show a great deal of ambition in contributing to the overall savings needed in the MTFS?
  • The Cabinet Member could not disagree but he reassured Members that this was an area constantly under discussion and review.
• What is the makeup of the £440,000 reported underspend? £255,000 of it appears to be one-off windfall income so does the council have the money in the bank to spend?
  • He preferred to refer to them as budget savings rather than underspends but nevertheless nearly £0.5 million in budget savings was a very welcome result. He acknowledged that there had been windfall income resulting from changes to government funding for the small business rates scheme and other changes to the financial framework.
• There appears to be a contradiction between page 65 para 7.6 of the Pay and Policy Statement (PPS) which states that the council does not operate a performance related pay policy with a statement on page 63 regarding the grading framework which suggests that increases are made annually but can be enhanced or withheld depending on performance?
  • He indicated that he would be happy to provide a written response to all Members.
  • The Chief Executive added that the officers were required to put a PPS before Members and there was a specific question about performance related pay. The reference on page 63 referred to the basic grading framework for officers. In practice all chief officers were at the top of their grade so this did not apply. It would only apply to new chief officers who generally started at the bottom of a grade.  
• As £350,000 of the underspend has been earmarked for the Leisure and Culture Trust, can the Cabinet Member explain the business plans for the trust which require such a huge sum of money to be marked as contingency funds?
  • He advised that there was an additional need for investment in Finance and HR systems to support the complex arrangements of the new trust. He considered it was a sensible move to get sound systems in place.
• Why is it only now that the Cabinet Member Finance is setting up a reserve for lost car parking income when he had known about this for some time?
  • The reserve is only relevant now that work on North Place and Portland Street is getting under way. 
• There is a concern that the New Homes Bonus (NHB) may not be sustainable and how many houses would need to be built to achieve this income stream?
  • The NHB lasts for six years so cushions against fluctuations. The NHB projections are retrospective and not based on future targets for new homes.
  • The Director of Resources added that the NHB projections had undergone detailed scrutiny by the Budget Scrutiny Working Group (BSWG) and were based on current delivery of new homes and projections of planned developments which had already gone through the planning system.
• Has the financial loss to the council of not having a fully operating abatement system at the Crematorium and the additional £53,000 of remedial work on the cremators been factored into the budget?
  • He considered that the immediate priority was to make the cremators serviceable and safe and once this had been achieved it would be important to look at the abatement system so that the council could avoid paying the £50,000 contribution for not abating mercury.
• Given the council's apparent failure to deliver projects and the likelihood of GO shared services not hitting targets and losing clients, what is the potential impact on the MTFS?
  • He considered the underperformance of GO was only a potential risk and he considered the MTFS was robust in terms of the savings it identified from project delivery. Any underperformance or lack of delivery would be a concern which would be reviewed.

CouncillorGarnham gave a response to the budget on behalf of the Conservative party.  He endorsed the thanks given to Officers and personally thanked the Members of the BSWG and the officers who had supported it from Finance and Democratic Services.  The BSWG had looked at the vision of the council and their workplan had facilitated a good scrutiny process outside of the political process for the budget.

Whilst he was not proposing an alternative budget or any amendments, he did make a suggestion that some of the receipt from North Place could be used to refurbish some of the war memorials in the town as part of the 1914 Great War centenary.

His party disagreed with the budget and therefore would not be supporting it.  They were particular concerned by the £1.2 million shortfall in the MTFS and that the MTFS was based on underspends, windfalls and knee-jerk reactions to crises. The budget contained no long-term vision or ideas for generating more income for the Council. He indicated that his party did have a financial vision but they would not be presenting it at this Council meeting to be voted down by the ruling group. They would present their budget to the public at election time in May and the public would be able to judge it at the ballot box. If successful they would then bring back revised budget proposals to Council in July.

Councillor Godwin had no amendments to raise on behalf of the People Against Bureaucracy and he felt the administration had produced a budget which was the best it could in the circumstances. As an independent group their role was to listen to the facts and they would be happy to support a budget if it met the requirements of the people of Cheltenham. He had been able to discuss the budget with the Cabinet Member Finance and he was pleased that as a result the budget report did make a specific reference to GloucestershireAirport.  He did have a concern that the ongoing freezing of council tax may result in the need for a sudden large increase in the future which would be a serious blow to residents.

CouncillorJordan added his comments as seconder of the motion and on behalf of the Liberal Democrats.  He said that the budget could be considered low key as there were no major cuts in services or increases in council tax and consequently there had been a limited public response to the consultation.  However there had been an enormous amount of hard work to achieve that result and he thanked the Cabinet Member and officers for their achievements. Whilst he understood Councillor Godwin's concerns about a sudden steep rise in council tax, if the Council had not frozen council tax this year they would not receive the government grant so there would be no net benefit. He supported the living wage for council staff and referred to the positive contributions made to the town by the Cheltenham Development Task force and the small business advisory service.

Another member commented that the balanced budget was a remarkable achievement and in particular commended the provision for the refurbishment of the pavilion at NauntonPark. Another member commented on the benefits brought to the town by thinking differently and gave Cheltenham Festivals, the Wilson, Boots Corner and the refurbishment of the promenade as examples. This reinvigoration of the town was essential for its economic survival. They also challenged the quality of any budget which was not thoroughly scrutinised through the normal budget process.

In his summing up, the Cabinet Member Finance emphasised that the revenue budget did not depend on underspends but used these wisely to strengthen reserves or on one-off expenditure. He acknowledged that the budget did depend on future savings being achieved and clearly there will be further challenges to face if the national financial situation was to worsen. He challenged the statement that the budget represented a lack of vision and the launch of the Wilson was a prime example and he hoped further projects would follow such as the redevelopment of the Town Hall. He considered the judgement to freeze council tax had been a sound one and demonstrated to the public that the council was doing its best to keep council tax to a sensible increase.

Before the vote, the Mayor reminded Members that the report referred to under recommendation 6 was to be dealt with under agenda item 12.

A recorded vote having been requested, upon a vote the recommendations in the report were all CARRIED.

Recommendations 1 and 9 to 12

Voting For 33: Councillors Barnes, Britter, Chard, Coleman, Driver, Fisher, Flynn, Garnham, Godwin, Hall, Harman, R Hay, C Hay, Hibbert Holliday, Jeffries, Jordan, Massey, McCloskey, McLain McKinlay, Prince, Rawson, Regan, Ryder, Seacome Stewart, Sudbury, Thornton, Walklett, Wheeler, Whyborn and Williams

Against 1: Councillor Smith.  

No Abstentions

Recommendations 2 to 8

Voting For 22: Councillors Barnes, Britter, Coleman, Fisher, Flynn, Godwin, R Hay, C Hay, Holliday, Jeffries, Jordan, Massey, McCloskey, McKinlay, Rawson, Stewart, Sudbury, Thornton, Walklett, Wheeler, Whyborn and Williams

Against 11: Councillors Chard, Driver, Garnham, Hall, Harman, McLain, Prince, Regan, Ryder, Seacome and Smith.  

Abstentions 1: Councillor Hibbert

Councillor Malcolm Stennett had left the chamber before the vote and did not return to the meeting.

RESOLVED THAT

1.                The revised budget for 2013/14 with a projected budget saving of £444.6k be noted and that the proposals for its use be approved as detailed in Section 3.2.

2.                Having considered the budget assessment by the Section 151 Officer at Appendix 2 the following recommendations be agreed :

3.                The final budget proposals including a proposed council tax for the services provided by Cheltenham Borough Council of £187.12 for the year 2014/15 (a 0% increase based on a Band D property)be approved.

4.                the growth proposals, including one off initiatives at Appendix 4, be approved.

5.                The savings / additional income and the budget strategy at Appendix 5 be approved.

6.                The proposed capital programme at Appendix 6, as outlined in Section 9, including the additional underwriting of £360,000 to support the Art Gallery and Museum redevelopment scheme (separate report to Council) be approved.

7.                The proposed Property Maintenance programme at Appendix 8, as outlined in Section 10 be approved.

8.                The reserve realignments outlined in section 8 and the level of reserves projected at Appendix 6 be approved.

9.                The Pay Policy Statement for 2014/15 at Appendix 9 be approved.

10.            a level of supplementary estimate of £100,000 for 2014/15 as outlined in Section 14 be approved.

11.            It be noted that the Council will remain in the Gloucestershire business rates pool for 2014/15 (para 4.12).

12.            There be no change to the Local Council Tax support scheme in 2014/15 (para 4.18).