Agenda item

The Executive Director for Finance and Corporate Resources presented a report outlining the Medium Term Financial Plan for the Council for the period 2014/15 – 2016/17.

During the presentation of this report the following issues were highlighted for
Members’ consideration:

·                The report contained both details that had been presented for the Cabinet’s consideration earlier in the month as well as some additional updates.

·                The key considerations for the Council’s budget going forward were how to make budget savings by; reducing waste in the system, generating income and redesigning services.

·                There was the potential that there would need to be some staff redundancies as a result of redesigning services.  In total £250,000 had been set aside in reserves to help fund redundancy costs.

·                Budget cuts proposed by Worcestershire County Council (WCC) would potentially lead to an increase in demand for the Council’s services, though it was difficult at this stage to identify where this impact would be greatest.

·                It was unclear how much the Council might be required to pay out to businesses as a result of appeals relating to business rates levied prior to the introduction of the Business Rates localisation.  For this reason there had been no draw down of funding from the Greater Birmingham and Solihull Business Rates Pool that the Council is part of.

·                The New Homes Bonus was not a ring fenced allocation of funds.  In Bromsgrove a decision had been taken to allocate the New Homes Bonus to the general fund.

·                Officers were proposing a Council Tax increase of 1.9%.

·                The majority of budget pressures considered unavoidable had been identified in cases where external bodies were due to remove or reduce funding.

·                The reduction in funding from WCC for the customer service centre was occurring at the same time as the County Council had started to require residents to apply for services such as blue badges online.  This, it had been suggested, would lead to less direct demand from the customer for support from Customer Service Advisors.

·                The additional one year accommodation costs of £130,000, which were due to be offset by the savings on the move to Parkside School, would fund the costs associated with the use of Redditch Town Hall to accommodate shared services.

·                The Head of Legal, Equalities and Democratic Services had submitted a bid to the government to help pay for the costs associated with the Independent Electoral Registration.

·                The borrowing costs detailed in the report would be used to pay for the £3.5 million redevelopment of Parkside and the £11.5 million anticipated to pay for a new leisure centre (subject to the outcomes of a business case).  To an extent borrowing costs for Parkside would be partially offset by the sale of the current Council House.

·                An additional bid had been received since publication of the report from the North Worcestershire Water Management team for up to £20,000 to fund flooding mitigation works in the district.

·                WCC would be contributing £60,000, rather than £120,000 as in previous years, to the Essential Living Fund (ELF).  Bromsgrove District Council would contribute the remainder of the funding from reserves to ensure that the total remained £120,000.

·                Officers were now anticipating that there would be a shortfall in the budget of £640,000 in 2015/16 and £880,000 in 2016/17.

·                It was anticipated that the bid to fund the Town Centre Officer would be offset by income from Worcester City Council which paid this Officer to provide expert advice two and a half days a week.

Following the presentation Members raised a number of additional points for discussion:

·                The Council’s membership of two Local Enterprise Partnerships (LEPs).  Officers confirmed that this did not impact on the requirement for the Council to pay a set proportion of the district’s business rates to WCC.

·                The benefits of membership of the Greater Birmingham and Solihull LEP, due to the significant amounts of business development within that area from which Bromsgrove district could benefit.

·                The Council was working on the assumption that there would be no changes to the New Homes Bonus settlement, even if there was a change of government in the period.  Officers confirmed that any change to the New Homes Bonus that led to a reduction of 10 – 15 % or more could potentially place the Council’s budget at risk.

·                Members requested a breakdown of the borrowing costs for the Council, to be made available in time for the full Council meeting on 26th February.

·                The payment of one year accommodation costs for staff.  Officers confirmed that this issue had been identified by external auditors.  The majority of support staff were based in Redditch Town Hall and these costs reflected this situation.  In the long-term, due to capacity at the site, many staff would be required to hot desk at Parkside rather than to work permanently on the site.

·                The potential for any shortfall in the funding from Lifeline to be funded from reserves following the possible withdrawal of the contract for Lifeline by WCC.

·                The suitability of permitting budget bids in the budget setting process in the following two years.  Officers confirmed that Heads of Service were always consulted about the potential need for any budget bids, though it was not anticipated that the same level of bids would be proposed in future years.

·                The £1 million projected as the cost of borrowing by 2016/17.  Officers confirmed that this figure would cover the net borrowing for Parkside, the new leisure centre (if it was approved) and fleet replacement.

·                The business case for the new leisure centre in Bromsgrove district.  Officers confirmed that this consider both the data and evidence available and the requirements of customers.  The business case was being prepared by council Officers rather than by external consultants.

Concerns were expressed that the Board had not been provided with sufficient time during the year to scrutinise the Council’s budget effectively.  It was noted that at other local authorities budgets were pre-scrutinised (prior to a Cabinet decision) and the Council’s finances were considered much further in advance of the budget being set.  Officers confirmed that the Council’s budget setting process had been reassessed at a corporate level as it had been recognised that budgetary matters needed to start to be addressed at an earlier date.  In future years the Council’s budget would start to be assessed in the autumn.  The Overview and Scrutiny Board would be involved in this process.

A number of Members had additional questions regarding the budget.  Due to the time available during the meeting it was agreed that these questions should be forwarded for the attention of the Executive Director of Finance and Corporate Resources and answers provided for the meeting of full Council on 26th February 2014.

RESOLVED that the current position for 2014/15 – 2016/17 be noted.