Agenda item

Medium Term Financial Plan

Minutes:

The Executive Director of Finance and Corporate Resources provided an update on the Medium Term Financial Plan and delivered a presentation on the subject of the Financial Settlement 2016/17 to 2019/20. During this presentation the following matters were raised for the Board’s consideration:

· The financial settlement for the Council from the Government had been much more challenging than anticipated.

· The Council was one of 15 local authorities most severely impacted by reductions to the Revenue Support Grant (RSG) and the only such Council North of the M25.

· The reduction in the RSG was partly due to changes in the way that the Government calculated how much grant funding to provide to Councils. A new approach, Settlement Core Funding, took into account likely Council Tax revenue both from existing stock and any new housing due to be developed.

· Bromsgrove had a relatively high number of E, F, G and H properties. This had impacted on the funding assessment for the district.

· The Planning department had a more conservative estimate than the Government for the number of homes that would be built. By year 4 Officers were anticipating that the Council would receive £500,000 less in Council Tax than levels predicted by the Government.

· The Government was also working on the basis that Council Tax levels would continue to increase at a rate of 2 per cent per annum.

· Under the new funding arrangements the Council would have to repay the Government from 2017/18.

· By 2019/20 Officers were anticipating that the Council would have experienced a 62 per cent reduction in funding.

· Funding changes were also anticipated for the New Homes Bonus (NHB) from 2017/18.

· The Government had launched a consultation about the future of NHB which was due to end in March. The responses to this consultation exercise would be reported to Council in due course.

· There were a number of questions arising from this consultation process that needed to be addressed in order to provide clarification about how NHB would operate in future years.

· The Government had confirmed that in future there would be a maximum of £1.4 billion available to all Councils from NHB, and this would need to be divided between Councils rather than unlimited funding being available as and when developments occurred.

· The 15 Councils that had been the worst affected had produced a Joint Settlement Response, though no feedback had yet been received.

· Whilst the Government was promising that Councils could retain business rates growth in future years this would only occur once all of RSG funding had been removed.

· The Council had a number of unavoidable pressures, which included limited income from garden waste collection services because the fee was less than Officers had originally anticipated and fewer customers had opted into the service in 2015 than had been predicted.

· Free evening car parking would also be an unavoidable pressure if the decision was taken to continue with this arrangement at the end of the 12 month trial.

Following the presentation a number of key points were considered in further detail:

· The Government’s proposal to consider making no NHB payments for homes built on appeal and the potential implications that this had in respect of predetermination at Planning Committee meetings.

· The option for the Council to address the budget deficit for 2016/17 using funding from balances. It was acknowledged that this funding was not finite and would not address funding challenges for every year.

· The advisability of retaining balances at least at the level of £745,000, though the Council had chosen to set the limit at a more comfortable £1.1 million.

· The probability that the Council would be able to set a balanced budget for 2016/17 and that there would be an unbalanced position over the 3 years. The Government’s Efficiency Plans were discussed which may enable the Council to secure a 4 year settlement agreement but the details were not yet available from the Government.

· The value of reviewing the fees and charges that had been proposed for 2016/17 as a source of additional funding for the year.

· The limit in terms of the amount by which Councils could increase Council Tax without a referendum. Officers confirmed that any rise of Council Tax over 2 per cent for a district Council would trigger a referendum.

· The financial costs involved in managing a referendum in relation to Council Tax increases and the extent to which residents were likely to vote in favour of an increase.

· The legal implications of holding a referendum in respect of Council Tax at the same time as Local Government elections or the EU referendum were taking place.

· The amount of involvement of the local MP in discussions about the Council’s settlement. It was confirmed that the matter had been discussed.

· The level of savings that had been identified by Heads of Service by the date of the meeting and the time available to identify further savings before the budget needed to be balanced.

· The need to avoid making rushed decisions which could be counterproductive in the long-term.

· The extent to which the Council could achieve more efficiency savings following a period of a number of years where this had already been addressed through service transformation.

· The amount of detail required for inclusion in the efficiency plans.

· The funding settlements for other Councils in the county. Officers confirmed that most local authorities had been surprised by the settlement and were also in the process of attempting to identify savings.

· The potential for the Council to lease vehicles, rather than to invest capital in replacing the fleet. Officers explained that this option had been investigated but the financial costs had been found to be less advantageous than if the Council purchased vehicles.

· The length of time vehicles were used for and the use of spare parts wherever possible once the vehicles were no longer operational.

· The inclusion of Christmas parking in the list of unavoidable pressures. Members noted that this arrangement had been in place for some years and therefore questions were raised as to why this had been included within the list.

· The potential for greater revenue to be generated from Civil Parking Enforcement. Members noted that they regularly observed illegal parking which was inconsistent with reports of increased compliance.

· The possibility of holding an extra meeting of the Board to consider the Cabinet’s budget proposals before a decision was made by Council. Members concurred that a further meeting was not needed, but any additional information, in respect of unavoidable pressures, potential savings and why those savings had been identified should be circulated electronically for Members’ consideration.

At the end of this debate Councillors S. J. Baxter and S. R. Colella left the room whilst the Board considered the Capital Bids that had been received from elected Members.

In total 4 capital bids had been received from elected Members, though further bids could be submitted throughout the year. It was noted that a separate bid for funding for Hagley Scout Club had been received by the New Homes Bonus Community Grants Panel. The panel had recognised the value of the scouts group’s work however the bid had been rejected on the basis that the bid was considered to be premature due to the lack of a clear project plan.

Members concurred that each of the bids were valid and once funded the projects could make a valuable contribution to local communities. For this reason, and in acknowledgement of the time taken to prepare and submit these bids, the Board agreed that they should be discussed further at a forthcoming Council meeting, as Members expressed concerns about any decisions being taken to fund these projects in the current difficult economic circumstances. Members also discussed whether it was appropriate for the bidding process to continue in light of the challenging financial position that the Council was likely to face for the foreseeable future.

RECOMMENDED that

(a) Cabinet note the Board’s position, in that Members do not feel able to recommend that any of the Capital Project Bids from elected Members be approved in the current challenging economic circumstances though would support further discussion of these bids and the Capital Project Bid Scheme at a future meeting of Council;

(b) Cabinet note the Board’s position that Members do not feel able to recommend any of the other Capital or Revenue Bids, as detailed in the appendices to the Medium Term Financial Plan, in the current challenging economic circumstances;

(c) Cabinet reconsider the Council’s Fees and Charges for 2016/17, and consider increasing fees and charges by 3 per cent wherever possible.

Supporting documents: