Agenda item

To consider a report by the Head of Financial Services prior to its consideration by the Cabinet.

(Councillor J A Gray, Executive Councillor for Resources, was in attendance for this item).

With the aid of a report by the Head of Financial Services (a copy of which is appended in the Minute Book) the Panel reviewed the Medium Term Plan (MTP) 2013 – 2017) and the Budget and level of Council Tax for 2012/13 in advance of their consideration by Cabinet and final determination by the Council.

By way of introduction to the report, the Executive Councillor for Resources drew attention to the changes which had been made to the Budget and MTP since the Panel's deliberations in December 2011. He also drew attention to the proposal to increase Council Tax in 2012/13 and the rationale behind this.

Members were advised that, further to their previous discussions, it was now possible to set the level of reserves at £4.5M. Their attention was drawn to the graph at Annex C to the report, which contained forecasts of the level of reserves that would be held by District Councils at March 2012. It was suggested that the graph could be updated and reviewed in September 2012 as part of the financial forecast. Councillor Gray then reiterated that although efficiency savings had been higher than anticipated in the current year, the Cabinet was not complacent and was mindful of the need to achieve further savings throughout the year ahead.

The Managing Director (Resources) outlined the context within which the draft Budget and MTP had been prepared and the Head of Financial Services provided a detailed explanation of the content of the report. Having welcomed the inclusion of a number of their previous recommendations, the Panel proceeded to examine each section of the report.

During discussion on the spending variations that had been identified since the draft budget had been prepared, a Member asked whether it was possible to breakdown the figure of £221,000 which had been allocated to the heading 2011/12 Forecast Outturn. In response, the Head of Financial Services explained that further details could be found in the revenue and capital monitoring reports which were prepared for the Cabinet on a quarterly basis and that copies of the reports could be provided to Members on request. With regard to the significant savings which had been generated by the agreement with employees that they would accept a pay freeze in April 2012, the Panel expressed their appreciation of employees’ contribution towards improving the Council's budget position.

Councillor M F Shellens queried whether it was premature to include budgetary provision for the A14 inquiry, but was advised that the inquiry was likely to commence in March. Having noted that, owing to the Council's success in collecting Council Tax, there would be a surplus of £464k on the Collection Fund, the Panel congratulated the Head of Customer Services on the performance of the Council Tax team.

The Panel discussed the additional £188,000 which had been allocated for Voluntary Sector Grants in 2012/13 and the process that would be put into place to distribute this money. The Executive Councillor stated that the Cabinet wished to ensure that the District Council obtained value for money from voluntary sector organisations and that they would be required to prepared a business case to secure funding. Councillor B S Chapman reported that he, along with the Executive Leader, was in the process of arranging a meeting with the Huntingdonshire Citizerns Advice Bureaux to discuss opportunities for securing efficiency savings in its operation. A suggestion having been made that Members should be informed of the next steps that would be taken to finalise future arrangements between the Council and the voluntary sector, it was agreed that the Social Well-Being Panel should be invited to examine in detail the policies and mechanisms that were proposed for this purpose.

In considering the “Risks and Sensitivities” that were identified in the report, Councillor M F Shellens suggested that it might be prudent for the Council to consider its strategic approach if its financial position and the economy generally were better than expected. While there could be a danger of creating expectations that could not be met if such plans were developed, it was suggested that there was value in planning for the full range of changes that might affect the Council’s financial position in the future. However, a number of members commented that the District Council faced a number of challenges and it was, therefore, right to maintain a degree of caution. The Head of Financial Services suggested that this matter might be considered further as part of the discussions on the financial forecast in September 2012.

The Panel welcomed the Cabinet's decision to increase revenue reserves to £4.5M and noted that this would remain a live issue for some time. Members were of the opinion that the Council should seek to increase its reserves and that, if it was reasonable, reserves should be increased to £5M. In doing this, Members acknowledged that these sums would not be used to provide services. However, the Panel’s view which was partly informed by the fact that it was only possible to use reserves for one-off projects. Members recommended that the Council’s level of reserves and its position in terms of reserves compared with overall spending relative to other district council’s was regularly reviewed.

In considering the contents of the graph at Annex C showing the level of reserves forecast to be held by District Councils at March 2012, comment was made that it was difficult to establish how the graph would change in future years; however, over time it would be a useful monitoring tool. Members were advised that the figures for council spending included parish precepts and there would be very few local authorities who collected as many precepts as Huntingdonshire District Council.

Members unanimously agreed that Council Tax should be increased by £4.34 per year for a band D property in 2012/13. The level of increase would generate approximately £100k and it was noted that this might, for example, contribute towards the indicative budget for the voluntary sector, which was approved at the Cabinet’s last meeting, instead of requiring alternative savings to be found.

Consideration was then given to the proposed Budget and MTP. Following reference to a recent example, which had emerged during the syudy on support services, comment was made on the need to ensure that previously identified savings were rigorously applied to ensure each section’s budget was accurate at the start of the year. The Head of Financial Services explained that issues such as the one referred to would normally identified as part of routine budget discussions with Activity Managers; however, he undertook to convey this message to the Financial Service Team.

While the 2012/13 Budget contained no unidentified savings, Members reiterated the view that the feasibility of achieving some future years’ savings in 2012/13 should be investigated.

Members welcomed the inclusion in the report a summary of budgets controllable by each senior manager. Reference was made to the reduction in the revenue budget for the Head of Planning Services over the MTP period and Members were advised that this reflected the transfer of car parking to Operations. With regard to the inclusion of interest within the revenue budget for the Head of Financial Services, it was suggested that it might be better to list this figure as a separate item. As the Council’s reserves reduced and its borrowings increased, Members were of the opinion that it was important to identify clearly interest costs. With this in mind it was suggested that interest rates and other such “corporate” items should be identified separately.  The Executive Councillor was invited to review the presentation of corporate items in future reports.

In considering the budgets by service area, a question was raised regarding the reduction in the recycling budget for 2012/13. The Head of Financial Services explained that this was a result of a change to the way in which the Council was charged for recycled material. Whereupon, and having noted that it was no longer necessary to require the Managing Director (Resources) to make adjustments to revenue reserves, it was

RESOLVED

(a)  that the Panel’s comments be conveyed to the Cabinet for their consideration; and

(b)  that the Cabinet be informed of the Panel’s support for

v  the proposed MTP, Budget and Financial Plan as submitted; and

v  a £4.34 per year increase in the Council Tax for 2012/13.

In concluding this discussion, the Panel expressed their appreciation of the work undertaken by the Financial Services section to prepare the MTP, budget and Financial Plan.