Agenda item

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

A copy of Annex E – 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).

(Councillors J D Ablewhite, Executive Leader and J A Gray, Executive Councillor for Resources were 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) 2014 – 2018) and the Budget and level of Council Tax for 2013/14 in advance of their consideration by Cabinet and final determination by the Council. By way of introduction, Councillor Gray reminded the Panel of Executive Councillors’ four financial objectives relating to achieving a balanced budget by 2016, the level of reserves, securing the Council’s finances after the New Homes Bonus ceased and capital borrowing. He then thanked the Financial Services Division for producing the documents under consideration in unusually challenging and complex circumstances.

The Head of Financial Services provided Members with a detailed explanation of the contents of the report. Their attention was drawn to a revised version of Annex D, which had been amended following Government confirmation of this year’s financial settlement. He also reported that after the current budget round, in response to a proposal made by the Panel’s Borrowing Working Group, the implications of funding shorter life assets from revenue would be considered. The Executive Councillor also indicated that this was something in which the Cabinet had an interest. He then welcomed the Panel’s suggestions for savings, which had been made at its previous meetings. He explained that the Cabinet was working to develop a clear plan to reduce the gap between income and expenditure and that the Budget represented the best compromise between achieving a balanced financial position and maintaining services. The Panel then proceeded to examine each section of the report in turn.

A Member drew attention to the fact that the overall budget was 4.8% higher than the forecast outturn for 2012/13. This was attributed to multiple factors but inflation was a major contributor. The Panel was advised of the historical reasons for the provision for performance related pay and the risk provision for future years, which would in future be influenced by the pay review.

With regard to the level of Council Tax, a Co-opted Member questioned whether the Council should introduce the maximum increase allowed and commented on the public’s perception of such a decision. In response, the Panel was reminded that historically the Authority had a low Council Tax base, that significant financial pressures had been faced in recent years and that the Council continued to subsidise services from reserves. The Council’s most significant cost continued to be its employees but reducing this cost was not easy because there was anecdotal evidence that the Council’s rates of pay were no longer attractive in comparison with other authorities. The Executive Councillor stated that a freeze in Council Tax would affect the Council’s ability to deliver services to the public and to maintain standards and in this regard it was appropriate to seek to bring the Council Tax up to a level which would appropriately support these services. Whereupon, Members agreed to recommend that Council Tax was increased by £4.67 per year, which equated to a Band D Charge of £133.18.

Having been acquainted with the methodology, which had been introduced to determine the Council’s position in respect of Business Rates, the Panel suggested that the potential for local businesses to migrate to the Enterprise Zone and its impact on the Council’s Business Rates income should have been taken into account. In response, the Executive Leader referred to a Memorandum of Understanding agreed with Urban and Civic, which prevented Huntingdonshire based businesses from transferring to the Enterprise Zone unless their need to expand could not be accommodated in their existing locations.

The Panel considered a suggestion by Councillor S J Criswell that the current provision within the MTP of £357k each year for Town and Parish councils tax base grant should not be provided after 2013/14. Councillor Criswell was of the view that the District Council could not afford to subsidise this expenditure on an annual basis. Although a number of members expressed support for the planned on-going provision, the treatment of the grant by some councils had led others to agree with Councillor Criswell. Should the grant cease, Members suggested that an adequate period of notice should be provided and that consideration should be given to providing a “soft landing”. Having noted that the Cabinet had not yet reached a decision on the matter, that there was no legal requirement to provide the contribution and that it had been guaranteed for 2013/14 only, the Panel requested that they be consulted before a final decision was taken. On a related matter, the Executive Leader reported that the Secretary of State had indicated that he would not be introducing a capping regime at this stage for town and parish councils, though he was continuing to monitor the situation.

In considering the changes in spending assumptions that had been identified since December, the Panel expressed its appreciation of the additional provision of £100k for homelessness. An explanation of the variations in revenue inflation and the revenue impact of reduced income targets for car parking was then provided. Members recognised that the budget did not include any unidentified savings for 2013/14, which was a considerable achievement.

Councillor R B Howe suggested that, in general terms, although the Council was working at capacity, it was not necessarily the case that all areas were operating as efficiently as they might be. He referred to the fact that the service budget summary was increasing year on year and suggested that the organisational culture needed to develop so that all sections constantly strove to find efficiencies. This would be assisted if there was a change to the Budget process, so that it was influenced from the top down as well as the bottom up. In responding to these points the Executive Councillor indicated that it was not straightforward to make a comparison with the private sector. Most companies were experiencing increases in costs and falling revenues. The Cabinet would continue to work in collaboration with Heads of Service and Managers to find further efficiencies.

With regard to the potential risks outlined in Annex C to the report now submitted, Councillor P G Mitchell requested feedback on the savings which had been identified in 2010/11. In response it was explained that this was a ‘live’ document and did not demonstrate the progress which had been achieved to-date. An explanation of the decision to include the sale of land at California Road in the list of potential risks was also provided.

Members’ attention having been drawn to the Service budgets in Annex F, answers were received to a number of questions about items within the summary. Specifically, explanations were provided of the reductions in the 2013/14 budget provision for planning services and for community services. On the make-up of the budget of £1.5M for Parks, it was explained that the Council currently spent in excess of £800,000 per annum on grass cutting and the Executive Councillor for the Environment had been asked to develop some proposals for this service area. The Head of Financial Services undertook to circulate the reasons for the increase in the budget for Transportation Strategy from £382,000 in the current year to £788,000 in 2013/14.

Having thanked Officers and Executive Councillors for their work in preparing a sound, efficient and effective Budget in particularly difficult circumstances, it was

RESOLVED

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

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

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

va £4.67 per year increase in the Council Tax for 2013/14 (a Band D charge of £133.18).