Agenda item

To consider and comment on a report by the Head of Financial Services prior its submission to the Cabinet.

(All Members of the Council have been invited to attend for the discussion on this item).

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

(During the discussion on this item (7.20pm) Councillor S Greenall took his seat at the meeting).

Consideration was given to a report by the Head of Financial Services (a copy of which is appended in the Minute Book) in relation to the Council’s financial forecast. By way of introduction, Councillor J A Gray explained that at present the Council was in a better position than had previously been anticipated but this could change. He drew attention to the progress which had been made in achieving planned savings and explained that further work was being undertaken by Cabinet Members to identify additional savings and efficiencies, the details of which would be made available in due course. He explained that the Cabinet wanted to achieve a balanced revenue budget and ultimately reach a position in which borrowing was only undertaken for investment in physical assets.

The Head of Financial Service drew attention to the significant level of outstanding risks in the current forecast and explained that the risks and unknown factors facing the Council were of a greater magnitude than in previous years. It was hoped that some of these factors would be resolved before the Council set its budget in February 2013. He then acquainted Members with detailed aspects of the report. In considering the risks which had been identified, specific attention was drawn to the assumed continued growth in the New Homes Bonus and the Council’s potential liability arising from the insolvency of Municipal Mutual Insurance in 1992.

In considering the contents of the report, Councillor P G Mitchell outlined his concerns with regard to the growth in forecast spending. Although Councillor Mitchell was of the opinion that the increase in cumulative borrowing in the medium term meant that the repayments would have an unacceptable effect on the Council’s revenue budget, the Executive Councillor was of the view that borrowing should be undertaken if it was for appropriate capital purposes. In this case the Panel noted that, the Council needed to retain the flexibility to borrow when the most advantageous terms were available and hence it would not be appropriate to set an absolute borrowing limit. With this in mind, Members concluded that the Panel needed to debate what the Council’s policy ought to be and agreed that a Working Group should be established to identify the terms of this debate and develop an understanding of the District Council’s approach to borrowing. A report would then be requested from officers on the Council’s current and future borrowing requirements and the Council’s assets.

In considering the Council’s level of reserves, Mrs H Roberts queried whether any consideration had been given to the pooling of reserves between local authorities. However, the Head of Financial Services indicated that this would not meet the full requirements of reserves as their purpose included covering Countywide and national events. In terms of the references within the report to the belief of the Overview and Scrutiny Panel (Economic Well-Being) that there may be argument for higher levels of reserves, Councillors M F Shellens and P G Mitchell indicated that they wished to disassociate themselves from this statement. Members noted that the Working Group would be reporting on its findings to the next meeting of the Panel and would not recommend that the minimum level of reserves was increased.

Councillor M F Shellens raised a number of specific questions and comments regarding the savings and unknown factors, which were identified within the report. These related to the provision in the reserves for Municipal Mutual Insurance, the savings from the rental of office space in Pathfinder House, the provision for doubtful debts in the current climate of changes to Council Tax benefit and car parking charges during the pre Christmas period. Reference was also made to the significant financial impact which might result from an increase in the number of individuals with housing and financial difficulties. Whereupon, it was

RESOLVED

a)  that the contents of the report be noted;

b)  that the recommendations that the Council should continue to use the annuity basis for the calculation of Minimum Revenue Provision as outlined in Annex b to the report now submitted be endorsed;

c)  that a working group be established comprising Councillors P G Mitchell, M F Shellens, A H Williams and Mrs L Duffy to develop an understanding of the District Council’s approach to borrowing.