Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report which summarised the revised budget for 2015/16 and the Cabinet’s final budget proposals and pay policy statement for 2016/17.

He reported that when the draft budget was published in December 2015 there were three key methods of dealing with the customary large gap between what was needed to maintain services and what money would be available next year. Firstly a council tax increase of just under two percent, secondly £738 000 of efficiency savings and thirdly the restrained use of reserves to overcome the short term problems such as the drop in business rates income. This whole package assumed a drop in revenue support grant of £331 000 based on the Department of Communities and Local Government modelling provided in the autumn.

He then explained however that the Government’s funding settlement announced on December 18 was a cut of £839 000 or 40% cut in 2016/17 followed by a similarly large cut the following year and in all the Government indicated that it would cut three quarters of revenue support grant in the next two years and phase it out completely by 2020.

The Cabinet Member reported that the settlement was much worse for Cheltenham than for the average district council. He said that whilst letting councils maintain a share of business rates had its merits the proposals for redistributing business rates were unlikely to be published for some time. He reminded Members that he had written to the Secretary of State before Christmas to urge that the cut in the revenue support grant should be applied more gently over a four year period so the council did not face such a precipitous drop in the first two years. This was followed up in the New Year by a long and detailed submission to the Government by finance officers explaining the reason why the settlement was unfair and based on unrealistic assumptions.

In the interim officers had worked hard to consider a way forward in these difficult circumstances. Additional income had been found, particularly identifying additional business rates income that was likely to come through business rates pooling. Savings in the current financial year were also sought and found in order to strengthen the budget strategic support reserve and cushion services against cuts in government grant. More savings and additional income was also added to the Medium Term Financial Strategy, not just for 2016/17 but for 2017/18 and the following years.

The Cabinet Member Finance emphasised that a clear strategy, focused on economic growth, was vital for the future of the town. The council would continue its support for the Business Improvement District and the emerging tourism strategy to ensure that Cheltenham played to its strengths as a visitor destination.

He also highlighted the following proposals :

·         Car parking charges to be abolished after 6pm

·         £36 000 to be allocated to fund an intensive clean-up of the town centre, a project which could be extended to other key areas of the town

·         The council would be working with voluntary groups to clean up litter and mess across the town as part of the nationwide Clean for The Queen initiative to mark The Queen’s 90th birthday.

The Cabinet Member then reported that on Monday (8 February) Government made a significant concession in response to the council’s representations and in order to compensate for the sharp reduction in RSG. This comprised a transitional grant of £74 000 a year over two years and allowing shire districts like Cheltenham to raise council tax by £5 a year on band D properties.  He believed that Cheltenham should take advantage of this new flexibility that Government was allowing on council tax. This additional £51 000 of council tax income, together with the transitional grant next year, would strengthen the council’s finances very substantially and reduce dependence on reserves. This would directly benefit Cheltenham residents by reducing the budget gap in future years and thereby protect services from cuts. The Cabinet was therefore proposing a £5 increase in Council tax compared with the £3.72 that was originally proposed.

The Cabinet Member Finance invited the S151 Officer, Paul Jones, to address Cabinet. He explained that in October work had been done on the MTFS in terms of a risk based approach with regard to Government funding in future years but at this stage there was a balanced MTFS. He reported that when the frontloaded cuts were announced immediately before Christmas officers had to take stock and revisit the MTFS. He believed that Cheltenham was unique in that it had the potential to grow as an economy and reserves could be boosted. Further to representations by Cheltenham and other councils and the Local Government Association a significantly improved financial settlement had been announced.

In discussing the proposals Cabinet Members welcomed the specific proposals to intensively clean the town centre and cut car parking charges after 6 pm. This was set against the council continuing to run all existing projects such as the cemetery and crematorium projects, the war memorial, new build and the Pittville Park play area. This proved the council’s ongoing commitment to the town.

The Leader of the Council wished to put on record his thanks to the Cabinet Member Finance and to the finance officers who had to deal with particularly challenging circumstances this year. It was encouraging that Government had taken into account representations received but concern remained with regard to how and in what form changes to the redistribution of business rates would take place. He believed that given the current financial circumstances it was right to take advantage of the new flexibility provided to shire districts in terms of increasing council tax, particularly after a 5 year council tax freeze. Finally he highlighted the positive budget which had economic development at its core.

RESOLVED THAT it be recommended to Council that :

1.    the revised budget for 2015/16 be noted and the recommendation of the Section 151 Officer to transfer the identified saving of £307,900 to the budget strategy (support) reserve as detailed in Section 3.1 be approved.

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

3.    the final budget proposals including a proposed council tax for the services provided by Cheltenham Borough Council of £192.12 for the year 2016/17 (an increase of 2.67% or £5.00 a year for a Band D property) be approved.

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

5.    the savings / additional income totalling £780,700 and the budget strategy at Appendix 5 be approved.

6.    the use of reserves and general balances be approved and the projected level of reserves, as detailed at Appendix 6 be noted.

7.    the proposal to abolish charges in council car parks after 6pm as detailed in Section 8 be approved.

8.    a 1% increase in all Member allowances, in line with the proposed increase in staff pay, as detailed in Section 9 be approved.

9.    the local council tax support scheme for 2016/17 as outlined in Section 11, which remains unchanged from 2015/16 other than the annual uprating for non-dependant deductions, be approved.

10.  the proposed capital programme at Appendix 7, as outlined in Section 13 be approved.

11.  the Pay Policy Statement for 2016/17, including the continued payment of a living wage supplement at Appendix 9, be approved.

12.  a level of supplementary estimate of £100,000 for 2016/17 as outlined in Section 18 be approved.

13.  it be noted that the Council will remain in the Gloucestershire business rates pool for 2016/17 (para 4.15).

14.  it be noted that the award of Transition Grant in 2016/17 of £74,460, which when added to the additional £51,557 raised through council tax, results in a reduction in the contribution required from the budget support (strategy) earmarked reserve of £126,018.