Agenda item

To receive a report by the Head of Resources on the 2016/17 Budget and Medium Term Financial Strategy 2017/18 to 2020/21.

RECOMMENDS

that the Council approve:

i.  the budget for 2016/17 and MTFS 2017/18 to 2020/21 (this includes Revenue at Section 2 and the Capital Programme at Section 3 of Appendix 1 of the submitted report) subject to the following amendments;

a.  Section 3 – Capital - Table G

Regarding the Disabled Facility Grant that the gross amount in the budget remains the same and the ‘Grants and Contributions’ and ‘Internal Borrowing’ amended to reflect the additional £0.5m in Disabled Facility Grant that has been awarded to the Council for 2016/17. 

b.  Section 6 - Formal 2016/17 Council Tax Resolution (as tabled at the meeting)

6.1 .b (i)  £82,326,188

    6.1.b (ii)  £68,949,819

    6.1.b (iii)  £13,376,369

    6.1.b (v)  £5,471,086

ii.  fees and charges for 2016/17 (Appendix 1, Section 7 and Annex A of the submitted report);

iii.  freezing of the Council Tax for 2016/17 at £133.18 at Band D; and

iv. new ‘Plan-on-a-Page’ financial savings targets.

By way of a report from the Head of Resources (a copy of which is appended in the Minute Book), the Cabinet considered the final budget for 2016/17, detail of the draft service budgets and the Medium Term Financial Strategy (MTFS) for the period 2017/18 to 2020/21.

At the meeting of the Cabinet in January 2016 the Cabinet approved the draft budget and MTFS.  Since then it was explained that there had been significant changes.  The One Leisure draft income budgets had been re-profiled and reduced over the period of the MTFS in order to better reflect the service demands, the impact across the MTFS being a reduction in income of £0.9m. The revenue projections, the cost base and capital investment levels beyond 2016/17 were estimates pending the publication of the 2016-2021 Strategic Plan in February 2016.

Following a detailed analysis of the draft Local Government Settlement issued by the Department for Communities and Local Government (DCLG) in December the Revenue Support Grant (RSG) had been increased by £0.4m over the MTFS period.

The Local Government Finance Settlement in respect of the Non-Domestic Rates (NDR) Base Line had indicated an increase of 2.1% in 2017/18 rising to 3.5% by 2019/20.  As a consequence of the appeals the Council had received regarding NDR, it was explained that this growth was considered optimistic.  Therefore in the final 2016/17 budget and MTFS, the NDR income remained as reported in the draft budget of a 1% growth each year, on the basis that business rates still proved to be volatile and a more prudent view of NDR income was appropriate.

Regarding the Revenue Support Grant (RSG) the Local Government Finance Settlement had confirmed the decisions made by the Council were correct when setting the 2015/16 budget and MTFS, as RSG would be removed as core funding by 2019/20. However, the profile of decline in RSG was less than the Council had modelled in the draft 2016/17 budget and MTFS.  Therefore the amounts shown in the Local Government four year settlement were included in the final 2016/17 budget and MTFS.

The other significant change from the draft budget was that the Voluntary Sector Grant budget had been reduced over the four years from 2016/17 to 2019/20 by £0.2m following the decision of the Cabinet at its meeting in January 2016.

The net impact of these changes was that by 2020/21 additional contributions of £0.4m were required from the General Reserves.

The submitted report had provided the Cabinet with the risks associated with the budget.  The Cabinet were referred to Table 5 within of the Officer’s report which reflected the final budget and MTFS including the freezing of Council Tax.

In the 2016/17 budget there was a surplus of £2.3m.  However, by 2018/19 there was a funding gap of £0.8m which increased to £3.5m by 2020/21.  The Cabinet were referred to Table 6 within the Officer’s report which illustrated that the funding gap for 2018/19 and 2019/20 could be met from the estimated General Fund Reserve.  However, by 2020/21 the Council was forecasting a negative balance on the General Fund which showed that the current budget was unsustainable over the medium-term.

To address the funding gap the Cabinet at its meeting in January agreed that the Council would continue investment in the Commercial Investment Strategy (CIS), including the £6.8m transfer from the General Fund Reserve; continue to use the Zero Based Budgeting principles and to develop the actions and programmes as set out in the ‘Plan on a Page’ to identify further savings and efficiencies in order to maintain a prudent level of reserves throughout the MTFS.

When the Council set its MTFS for 2016/17 to 2019/20 it adopted a strategy referred to as the ‘Plan on a Page’ that reflected the various approaches being taken to identify the required savings.  The aim of the ‘Plan-on-a-Page’ was for the Council to be financially independent by the end of 2019/20.  The Cabinet were referred to Table 7 within the Officer’s report which illustrated that the Council had made good progress against the 2015/16 ‘Plan-on-a-Page’ savings target by reducing the 2019/20 budget gap by £4.7m (22%).  The ‘Plan on a Page’ had been modified to detail the revised savings over the period of the new MTFS (2017/18 to 2020/21) of £3.5m.  The Cabinet were referred to the revised budget targets listed within Table 8 of the Officer’s report.

Fees and Charges were a key income stream for local government and it was only discretionary services that were subject to a Council levied fee or charge.  The fees and charges, as appended to the Officer’s report, had to be reviewed each year to ensure that they were at the correct level to both maximise income generation and achieve the policy objectives required.

The Council’s Responsible Financial Officer (Section 151) was required to make a statutory statement in respect of the budget and reserves.  The Cabinet was informed that the 2016/17 estimated reserves provision was satisfactory.  However, by the end of the MTFS period reserves would reduce to a negative balance of (£0.8m), £3.5m below the minimum level of reserves.  The Cabinet was informed that this differed to that contained within the Officer’s report, (£1.2m) and £3.8m respectively referred, as tabled at the meeting.

Further tabled at the meeting were amendments to Section 6 – Formal 2016/17 Council Tax Resolutions.  These were required to account for the additional One Leisure income of £25,000 following re-profiling of the budgets and Barham and Woolley Parish Council having notified the Council that they would be increasing their original 2016/17 precept from £600 to £800.

The Cabinet was provided at the meeting, as tabled, with the results of Business Community Consultation for the Budget 2016/17 and MTFS.  By law the Council was required to consult its businesses.  The Cabinet was informed that two consultations had taken place, one in the summer and one in January 2016.  In total 1,300 businesses were invited to complete the recent Business Community Consultation Survey and in total fifteen responses had been received, which was an increase of four from the previous year.

Although there was a slight increase in the number of responses to the survey the Cabinet were disappointed with the response rate and agreed that further work was required to engage with the business community.

The Cabinet agreed that a robust budget had been developed that was a credit to the authority and to the officers that had worked to develop a sound budget in times when local government funding was volatile.

The Cabinet was informed that the Council had received confirmation from the Better Care Fund that the amount of Disabled Facility Grant (DFG) it would receive was double than expected.  Having referred to Table G in the budget the Cabinet agreed that the gross amount in the budget regarding DFG was to remain the same and the ‘Grants and Contributions’ and ‘Internal Borrowing’ be amended.  It was noted to the Cabinet that this would also have a minor impact on the Treasury Management Strategy.

The Cabinet were sceptical that a better response rate to the Business Community Consultation would provide a different outcome as businesses were being asked about Council Tax which was not applicable to them.  The Cabinet accepted that it was a statutory responsibility for the Council to consult its businesses, but in doing so it also needed to consider value for money.

Having been invited to address the Cabinet, the Chairman of the Overview and Scrutiny Panel (Finance and Performance) stated that the Panel were impressed with the robust processes that had been undertaken to achieve the savings whilst developing the budget.  It was noted that the Panel had received a budget amendment proposal at its meeting in order to assist Cambridgeshire County Council to address the issues regarding the adult, children and families budget. 

Having considered the comments of the Overview and Scrutiny Panel (Finance and Performance) the Cabinet agreed that it was imperative for Cambridgeshire County Council to review its budgets and managerial structures before the District Council considered subsidising any County Council services and in conclusion the Cabinet,

RECOMMENDED

that the Council approve:

i.  the budget for 2016/17 and MTFS 2017/18 to 2020/21 (this includes Revenue at Section 2 and the Capital Programme at Section 3 of Appendix 1 of the submitted report) subject to the following amendments;

a.  Section 3 – Capital - Table G

Regarding the Disabled Facility Grant that the gross amount in the budget remains the same and the ‘Grants and Contributions’ and ‘Internal Borrowing’ amended to reflect the additional £0.5m in Disabled Facility Grant that has been awarded to the Council for 2016/17. 

b.  Section 6 - Formal 2016/17 Council Tax Resolution (as tabled at the meeting)

6.1 .b (i)  £82,326,188

      6.1.b (ii)  £68,949,819

      6.1.b (iii)  £13,376,369

      6.1.b (v)   £5,471,086

ii.  fees and charges for 2016/17 (Appendix 1, Section 7 and Annex A of the submitted report);

iii.  freezing of the Council Tax for 2016/17 at £133.18 at Band D; and

iv.  new ‘Plan-on-a-Page’ financial savings targets.