Agenda item

To consider a report by the Head of Financial Services.

A copy of the report – Controllable Budgets by Budget Holder has been circulated separately to the Agenda.

(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).

With the assistance of a report by the Head of Financial Services (a copy of which is appended in the Minute Book), the Panel considered an update on the 2013/14 Budget and MTP. By way of introduction the Chairman reported that he had presented the conclusions reached by the Panel at the recent informal meeting to the Executive Leaders Strategy Group on 3^rd December. As a consequence, he had received an assurance that the presentation of financial information would be discussed with the Panel at the conclusion of the current budget cycle. In terms of the priority areas for potential savings, Members were advised that the Cabinet was developing its own range of options for savings, many of which were similar to those which had been identified by the Panel. In this regard, the Executive Leader and the Executive Councillor for Resources would be meeting shortly to establish a package of potential savings measures for further consideration.

The Head of Financial Services provided a detailed presentation on the contents of the report, which included information on service budgets, Council Tax subsidy, retention of business rates, the New Homes Bonus, the Council tax level, inflation and interest rates and the key risks associated with the current budgetary situation. Having been reminded that the Council had agreed to support in principle the pooling of business rates, the Panel discussed the consequences of not adopting this approach.  Members were advised that further work would be undertaken before a decision was taken for next year and they were reminded of the principles upon which the pooling arrangement would operate. It was dependent upon all Cambridgeshire authorities agreeing to enter into the pool. If it was decided not to proceed in the forthcoming financial year, it would still be possible to do so in future years.

In terms of the predictions that had been made for future housing completions, Members enquired whether the data took into account the potential for a slow down in house building over the course of the next few years. The Head of Financial Services explained that a paper on future projections had recently been received from the Planning section and, once this had been worked through in more detail, further information could be brought to a future meeting. Having emphasised the need to exercise caution in this respect, Members were advised that a risk provision for slower completion of new homes had been included in the current report.

With regard to Council Tax levels for future years, a Member enquired whether the Council would ever be in a position where it would not rise. In response, the Head of Financial Services explained that there would always be pressure on the Council’s finances from inflation, which meant this was unlikely. The Executive Councillor for Resources also commented that in previous years the rise in Council Tax had not been greater than any rise in benefits or pensions and that he would try to ensure that any future increases were not at a greater rate than any rises in these areas. Members were informed that the Executive Leader had recently met with the Department for Communities and Local Government to discuss a proposal that any limitation on Council tax increases should be based on the average for that class of authority so as not to disadvantage those councils like Huntingdonshire who had historically low levels of Council Tax.

Turning to the assumptions which had been made for inflation and interest rates, a Member enquired what contracts were currently in place for electricity and gas and whether there was any scope to secure economies of scale by negotiating contracts jointly with other Councils. In response, it was explained that consultants were used to review the contracts at renewal time. The Head of Financial Services undertook to establish what work had been undertaken with regards to bulk purchasing. Another Member then expressed the view that no provision should be made for performance related pay within the Council’s Budget and that additional pay should only be awarded for better than expected performance against the budget. The Executive Councillor for Resources, however, indicated that there should be a performance related element in employees’ pay.

In terms of the borrowing trends, a Member enquired at what point the projected increase in borrowing was expected to even out. The Panel’s attention was drawn to the fact that borrowing was largely required to fund Disabled Facilities Grants. Following a further question, Members were informed of the increase in income as a result of the rise in the population level of the District.

Discussion then ensued on the impact of the risk proposals on the use of the Council’s reserves and unidentified savings. The Chairman invited comments on whether the Council should be identifying savings at an earlier stage or reducing the level of the Council’s reserves. Overall Members were of the opinion that the Council should seek to effect what savings it could rather than run down reserves. In this regard, Members enquired what efforts had been made to identify savings thus far and they were advised that all Heads of Services had a budgetary target and were required to make continuous improvements.  In response to a question about efficiencies which had been achieved from energy performance initiatives, attention was drawn to the energy efficiency proposals which had been identified within the Head of Environmental Management’s Service budget. In order to establish a complete picture, Members requested information on the savings that had been achieved to date and ongoing monitoring data against savings targets. The Executive Councillor reiterated that he would be meeting with the Executive Leader shortly to develop a range of options for savings, which would be submitted to the Panel for consideration.

RESOLVED

  that the Cabinet be recommended to:

(a)  note the contents of the report; and

(b)  examine what additional savings can be made so as to reduce the rundown of the Council’s reserves whilst maintaining those services that impact on the community.