Agenda item

The Panel is to receive an update on the 2016/17 Draft Budget and the Medium Term Financial Strategy.

By means of a report by the Head of Resources (a copy of which is appended in the Minute Book) the Panel was updated on the Draft Budget for 2016/17 and the Medium Term Financial Strategy (MTFS). Members were informed that savings of £2.2m had been found through the Zero Based Budgeting (ZBB) process and this was expected to rise to nearly £4m by 2021.

The Panel had been advised that there has not been any growth within the budget except for items where it was unavoidable such as additional pension costs, statutory technical adjustments and some limited budget corrections.

Members noted that the budget for 2016/17 and MTFS was based on a Council Tax freeze over the period of the MTFS. As the Government has indicated that they would like Local Authorities to be self-financing the Council is expected to see a reduction in the number of grants received.

A cause for concern was highlighted in respect to the anticipated deficit of £637k the General Fund would have by the end of 2021. This would be as a result of a reduction in Government funding and contributions from the reserve towards the budget over the life of the MTFS. As such Members were told that budget savings of £3m would have to be sought by 2021.

The Panel has been acquainted with three options the Council has to consider in order to ensure it is budgeting in a sustainable manner both in terms of on-going revenue and funding and its reserves. The options are:

1)  Maintain the current level of reserves and Commercial Investment Strategy (CIS) investments and continue the programme of ZBB reviews in order to find the necessary savings to bring the General Fund reserve back to prudent recommended levels.

2)  The decision to transfer £6.8m from the General Fund reserve to the CIS earmarked reserve is reversed. As a result the approved CIS business case will need to be reviewed.

3)  Take a less aggressive view on the reduction of Government funded New Homes Bonus and therefore anticipate higher levels of government grant in future years or growth in business rates.

Following a question regarding business rates the Panel was informed that the current situation is that Local Authorities will keep 100% of business rate growth however this would become 100% of all business rates at a future date. Although the Government had not stipulated how business rates would be distributed between the Local Authorities.

In response to a concern over the effect a reduced budget would have upon services the Executive Councillor for Resources informed the Panel that the focus was to provide services as well as an improved customer experience. The Executive Councillor emphasised that it is important that Members were involved with the budget process and were fully informed of the proposals.

Members discussed the possible introduction of the Bus Departure Levy. The levy was suggested as part of the ZBB process however it was decided by the Head of Service and Executive Member responsible that it would not be implemented. The proposal was that at the Council owned Huntingdon and St Ives bus stations the bus companies would be charged 50p for each bus that departs from those locations. It was estimated that the levy would raise an estimated £75k per annum.

The Panel noted that resources would have to be invested in the bus stations so that bus departures could be effectively monitored. This could mean that as a result of the levy the bus companies may reduce the service they provide. However Members were keen that the option of the bus departure levy should be explored.

Following a question by Councillor P L E Bucknell in regards to the Council Tax freeze, the Panel was informed that the MTFS was based on a Council Tax freeze for the life of the plan however the Government would be removing the incentive for freezing Council Tax.

In light of this information the Panel indicated that it is an admirable aspiration to freeze Council Tax although if Council Tax needs to rise as a result of changing circumstances then Members would be amenable to this. Members noted that a 1% increase in Council Tax would raise an additional £80k.

The Panel,

RESOLVED

i)  that the Cabinet should make it clear that freezing Council Tax is an aspiration and not a commitment.

ii)  the option of a bus departure levy should be explored.

iii)  that the Cabinet adopts Option 1 for dealing with the potential deficit in reserves.

iv)to note the Council Tax base calculations for 2016/17.

v)  to note the four-year financial settlement however withhold any comments until Members have seen the details.

(At 7.05pm, during the discussion of this item, Councillor J A Gray entered the room).

(At 8.28pm, during the discussion of this item, Councillor S Greenall left the room).