Agenda item

The Corporate Director to submit a report giving Members the opportunity to consider a number of key items which will feed into the Council’s Medium-Term Financial Strategy (MTFS) and the 2018/19 budget and service planning preparation process.

The Corporate Director submitted a report to consider a number of key items which will feed into the Council’s Medium-Term Financial Strategy (MTFS) and the 2018/19 budget and corporate planning preparation process.

 

The Corporate Director explained that 2018/19 will be the third year of the four year funding settlement which was guaranteed with the submission of the efficiency statement. It was said that there is still much uncertainty surrounding the Local Government finance with a fair funding review underway and changes to the New Homes Bonus still on the agenda. It was explained that the Autumn statement is due on 22 November 2017 which may bring further information.

 

It was said that the budget process and MTFS review is being started and it would be timely to revisit efficiency plans as done with other assumptions as part of this process. It may become necessary to utilise reserves over the life of the MTFS in order to balance the budget whilst longer term savings are identified and delivered as the Council pursues its growth and commercialisation agenda.

 

It was also explained that a technical consultation is out at present which has proposals to limit council tax to the higher 2% or £5. The council tax was raised by £5 last year and this is included in the forward projections in the MTFS.

 

The Corporate Director further explained that based on previous experience and inflation forecasts it is proposed that no inflation be provided for non pay costs even by way of a contingency but that 1% be included in the estimates for pay and pay related costs and 2.5% for fees and charges. It was said that the other key issue considered as part of the report is the review of working balances. The risk model attached at appendix B has been updated and confirms that the current level of £640k for the general fund working balance is reasonable. No changes are proposed for the special expenses and HRA working balances.

 

A handout was distributed amongst Members which proposed a new budget timetable. The Chair explained that this was produced following discussion at the Conservative Chairs meeting and is a way of streamlining the budget setting process as there is an overlap in the current process. A Member expressed his dissatisfaction of taking this process and giving it to an informal body which potentially diminishes the role of the Policy, Finance and Administration Committee and queried whether this was a step towards a cabinet structure. It was noted that the Conservative Chairs meeting cannot make decisions and the purpose of utilising this meeting was to enable ideas to be developed before they were brought forward to the committee for discussion and decision making.

 

A Member explained that the Council already utilised member away days for this purpose.

 

The Chief Executive explained that the proposal was seeking to create a clear process and ensure member involvement in the development of ideas and options at the earliest possible stage. It was agreed that the timetable would be amended by replacing the conservative chairs meeting both at the end of November and in early January 2018 with Policy, Finance and Administration Committee.

 

A Member questioned if there is an incentive that we could give in relation to business rates retention and the Corporate Director explained that she does not have the detail but there is flexibility in the scheme, however a policy would be required. A Member was concerned at the impact of business rates increases on local businesses. The Corporate Director explained to a Member that local businesses have been hit by the re-evaluation. The government had provided some relief which is being distributed but we are retaining some funding to use as a hardship fund should this be required. The Government have changed the appeal to make it more difficult and the situation is being monitored and the figures can be made available.

 

A Member was concerned about the level of the working balances and the increase of emergencies across the world. The Corporate Director explained that there is a risk assessment which looks at the kinds of costs involved and those in the working balance are emergencies not covered by insurance which are averaged over a period of time.

 

Another Member questioned the impact of universal credit and the Corporate Director explained that the main impact would be rents on the HRA account, it was explained that this is recognised in the corporate risk register and figures have been sought for this and it is being monitored.

 

All recommendations 2.1 to 2.7 were moved by Councillor Orson and Councillor Graham seconded.

 

The motion was carried by a majority vote. One Member abstained from voting.

 

RESOLVED that:

 

1) The proposed corporate planning and budget framework timetable for 2017/18, in respect of the 2018/19 financial year, set out at and amended in the circulated document, be approved.

 

2) No inflation be provided for in the 2018/19 budget at service budget level, other than fees and charges which has been provided for at the rate of 2.5%, unless adjusted for known prices by budget holders and 1% for pay.

 

3) Council retains its objective of setting a balanced budget for over the life of the Medium Term Financial Strategy.

 

4) The level of working balance for General Expenses, taking into account the revised calculations set out in Appendix B, is maintained at £640k.

 

5) The existing target levels of working balance be retained for special expenses (Melton Mowbray) at £50,000 and the Housing Reserve Account (HRA) at £750,000.

 

6) The Management Team continue to determine the relative priority of schemes for Members to consider and allocate funding based on the information set out in the project mandates.

 

7)  The key dates for the budget process be noted.

 

(Councillor Rhodes here left the meeting whilst recommendation 2.8 was considered.)

 

The Corporate Director explained that the previous government had intended to implement 100% business rates retention in 2019/20 or 2021/22 however that policy is now under review. An invitation has been issued to authorities to bid to be a business rates retention pilot in 2018/19. It was explained that there is a tight deadline on this with submissions required by 27 October 2017, it was also explained that this is not risk free but to mitigate the risks some gains given from the pool would be held back and not passed to the LLEP. The Corporate Director explained that this is a good offer that should be explored.

 

The Corporate Director also explained to a Member that there are £8-10k in consultancy costs plus officer time but that the county council as the lead authority for the pool had indicated they would pick this up but if not it would be split across all partners. It was said that if we were a pilot this year then between £18-19m would have been retained within Leicestershire with no detriment. There are concerns that if we do not move in now then more could be lost.

 

Recommendation 2.8 was moved by Councillor Orson and Councillor Wyatt seconded.

 

All Members were unanimously in favour.

 

RESOLVED that:

 

8) Delegated authority be given to the Corporate Director in consultation with the committee chair to become a 100% business rate pilot as part of the Leicestershire business rates pool should it be in the best interests of the Council.

 

(Councillor Rhodes here re-entered the meeting.)