Meeting documents

Councillor Mordue

Cabinet Member for Resources, Governance and Compliance

 

To consider the attached report.

 

Contact Officer:  Andrew Small (01296) 585507

(a)          Decision(s)

 

(1)          That the Finance and Services Scrutiny Committee be thanked for its input to the budget planning process.

 

(2)          That in relation to Council tax, Council be recommended to approve an increase of £5 (3.48%) in respect of a Band D property for the financial year commencing on 1 April, 2018.

 

(3)          That Council be recommended to approve the budget for 2018/19, which included the use of £1.53m of New Homes Bonus to meet the costs of the Connected Knowledge Programme in 2018/19, and the Medium Term Financial Plan as set out in summary form at Appendix A to the Cabinet report.

 

(4)          That the fees and charges (taken into the final calculations) set out in Appendix E to the Cabinet report be agreed.

 

(5)          That Council be recommended to approve Aylesbury Special Expenditure totalling £864,700, supported by a precept of £45, which represented a Council Tax freeze for Special Expenses (as set out in Appendix F to the Cabinet report).

 

(6)          That Council be recommended to affirm the decision made in February, 2017, following negotiations with unions and the staff side, to approve a two year pay award for staff, with 2% being payable across all grades for 2018/2019, (the second year of the agreement), for which provision had been made in the draft budget proposals.

 

(b)          Reason(s) for Decision(s)

 

The Council is statutorily required to set a budget for 2018/2019 and plan for expenditure in subsequent years based upon the Medium Term Financial Plan.

 

(c)        Alternative Options Considered

 

The development of the initial proposals has involved a number of key elements of choice as set out in previous reports and the latest report submitted to Cabinet, which reflects the Government Grant settlement numbers.

 

(d)       Relevant Scrutiny Committee

 

Finance and Services. That Committee’s comments were reported to Cabinet by the Committee Chairman and were taken into account in reaching the recommendations indicated above (as set out in the Cabinet Minutes) and would be actioned.  In particular, the Leader of the Council indicated that Cabinet would consider the Committee's request to review the possibility of devolving Special Expenses services to Aylesbury Town Council and would seek reports in due course on the implications of this.  Cabinet’s final recommendations will now be submitted to Council and as such are not subject to call-in.

 

 

(e)        Conflicts of Interest / Dispensation(s)

 

None.

The report to Cabinet on 20 December, 2017, had presented a set of initial budget proposals for 2017/18 and beyond.  The report had highlighted uncertainty around a number of issues, particularly further reductions in Government Grant, retained business rates and the New Homes Bonus, although these fears had largely been dispelled following the Government’s draft Grant settlement announcement on the previous day.

 

On 19 December, 2017, the Government had announced the draft Grant settlement for Councils.  Despite indications that there might be significant changes to reflect ongoing pressures on the wider local government sector, Government had largely honoured its commitments contained in the four year settlement.

 

In the few weeks since the initial proposals had been considered, work had continued to refine the budget assumptions.  In practice, little had changed at a service level and consequently the significant elements of the final budget proposals revolved around the impact of the Government grant numbers and changes to other centrally funded support.

 

As set out in the draft proposals, it was proposed to support the Connected Knowledge programme through the use of Council NHB reserves.  The programme underpinned many of the components of Service delivery and Commercial AVDC and therefore the ability to meet the financial agenda for the Council for the coming years.

 

The draft budget and proposals under development were attached as appendices to the Cabinet report as follows:-

 

·                     Appendix A1 – MTFP – 2018/19 to 2022/23 – Final Proposals.

 

·                     Appendix A2 – Summary of Changes.

 

·                     Appendix B – Budget Proposals 2017/18 to 2022/23 (General Fund Revenue Balances).

 

·                     Appendix C – Budget Savings identified in 2018/19 budget planning.

 

·                     Appendix D – Budget Pressures identified in 2018/19 budget planning.

 

·                     Appendix E – Fees and Charges (Amendments) schedule.

 

·                     Appendix F – Aylesbury Special Expenses – Summary Budget 2018/19.

 

The budget report also included information on:-

 

Government Grant Update

 

As referred to above, the draft Grant settlement for 2018/19 had been announced on 19 December, 2017, in which the Government had largely honoured the commitments within the 4 year settlement and left the pre-announced Grant numbers mostly unchanged. Importantly, the Revenue Support Grant and Baseline Business Rates settlements were virtually the same as those announced for 2018/19 (which was Year 3 of the four year settlement).

 

However, there had been a 1% increase in the Council Tax referendum thresholds across all Councils.

 

The Secretary of State for Communities and Local Government had also announced a formal consultation on a review of relative needs and resources which would feed into a new funding system that would be introduced in 2020 to 2021.  Alongside the new methodology, a new phase for the business rates retention programme would also be introduced.  The aim was for local authorities to retain 75% of business rates growth from 2020 to 2021, and was intended to be a lever and incentive for local authorities to grow their local economies.

 

The mechanism for this would be through incorporating existing grants into business rate retention including the revenue support grant, and the public health grant.  Local authorities would be able to keep that same share of growth on their baseline levels from 2020 to 2021, when the system was reset.

 

In 2016/17, the government had introduced the concept of negative revenue support grant and this remained an issue for some councils.  The Secretary of State had announced that he would be re-looking at this element during the forthcoming year, but had warned that any solution would need to be found from within the existing local government funding system.

 

The announcements heralded the most fundamental change to the settlement formula since business rates retention was introduced.  However, with no more funding in the system it was likely that the historic downwards trend would continue.  As such, the Council’s strategy around commercialism and efficiency was considered the right strategy to deal with the financial challenges facing the council.  The additional freedom around council tax increases would soften the challenges marginally, although new pressures, such as those associated with inflation, were likely to absorb any respite offered by them.

 

New Homes Bonus

 

The Government had announced that there would be no new changes to the way New Homes Bonus operated.  The baseline growth would remain fixed at 0.4%, with NHB only paid on growth above this.  AVDC would receive £6.3m in 2018/19 which included previous years’ delivery.  Nationally, NHB payments of £946m would be made in 2018/19.

 

Actual numbers for future years would still depend upon actual housing growth.  However, the decision not to make changes provided sufficient certainty to validate the revenue contribution assumption included within the Medium Term Financial Plan.

 

The draft budget settlement had also confirmed that local authorities could increase planning fees by 20% where they committed to investing the additional income in planning services.

 

Business Rates Pooling

 

The membership of the pool in 2016/17 which was formed around the retention of the Disproportionate Growth Levy had been AVDC, Bucks County Council, Bucks Fire and Rescue, Chiltern District Council and South Bucks District Council.  As part of the finance settlement the Government had confirmed that this pool would continue into 2018/19, unless any of the pooling members notified that they wished to withdraw within 28 days of the provisional finance settlement being announced.

 

It had been recommended that AVDC continue with the pooling arrangement in 2018/19, as it was believed there would again be a gain from it.  No account had been taken of any anticipated gain in the 2018/19 budget proposals so any gain achieved would be placed in the Business Rates Equalisation Reserve.

 

Nationally, a number of local authorities were participating in 100% retention pilots in relation to business rates.  The government had announced a number of further county pilot areas as part of the finance settlement and had said that it might invite further pilots in 2019/20.  The relationship between the 100% retention pilots and the government’s intention to deliver a 75% system by 2020 were still unclear.

 

Fees and Charges

 

Fees and charges are reviewed as part of the annual budget setting review process.  The proposed fees and charges for 2018/19 were detailed at Appendix E.

 

A significant review was planned during the forthcoming financial year of car parking charges and, in particular, season ticket prices.   Any proposed changes to income levels might potentially be implemented in year.  This additional income had not been factored into the financial plan.

 

The fees and charges in relation to Taxi Licensing were subject to review by the Licensing Committee and were excluded from the proposed list of charges.

 

Council Tax

 

The initial budget proposals had recommended increasing Council Tax from 1 April 2018 by the assumed maximum expected amount of £5.00 (3.48%) for a Band D property.  This was the maximum allowable for lower tier councils and would represent an increase equivalent to 10 pence per week and would increase the Band D Council Tax for Aylesbury Vale District Council to £149.06.  The Government had assumed that each council would make maximum allowable increases and had reduced the amount of Grant awarded to councils by an equivalent amount.

 

Increasing Council Tax by this amount would generate £362,400 and help to protect services valued by residents and businesses in the Vale.

 

In the finance settlement announcement, Government had also confirmed they intended to defer the setting of referendum principles for Town and Parish Councils for 3 years.

 

Impact on the Budget Proposals

 

The numbers announced in the draft Finance Settlement in December had been as expected and only very marginally different to those assumed in the Cabinet’s initial budget proposals.

 

Consequently, the Revenue Support Grant for 2018/19 had provisionally been set at £3,826,500 for 2018/19 which was £12,700 less than had previously been assumed.  The MTFP had been amended to reflect this by adjusting the proposed contribution to balances in 2018/19.

 

Reserves and Balances

 

Members were informed that earmarked reserves represented the prudent saving of sums against the recognition of future financial events which, if not prepared for, would be difficult to deal with at the point they occur.  In short, earmarked reserves were an essential part of sound financial planning.  The reserves were held for legitimate reasons and the balances were reasonable given a fair assessment of the budgetary pressures that they were held against.

 

It was expected that the total balance held in reserves would dip significantly over the next 2 years as the pressures against which they were being held materialised and the infrastructure schemes, for which the New Homes Bonus was held, were delivered.

 

The Council also held general working balances as insurance against unexpected financial events.  This included failure to generate expected income as well as financial claims against the Council.  The current minimum assessed level of balances was £2 million which had been arrived at based upon a risk and probability assessment of potential budgetary factors during 2018/19.

 

Medium Term Financial Plan (2018/19 and After)

 

The report to Cabinet in November 2017 had set out the rationale for the core assumptions used in the Medium Term Financial Plan.  Whilst some of the uncertainty surrounding the Government Settlement and the future of New Homes Bonus had now diminished following the publication of the draft Settlement in December, there were still multiple uncertainties and risk factors which needed to be managed beyond 2020.

 

The single biggest issue that was likely to remain was the ongoing and severe impact of the reductions in Government Grant and how public sector austerity continued to impact upon local government, as a whole, and the demands of the communities it served and the services it provided.

 

The reality of continued public sector austerity through this Parliamentary term had been confirmed within the 4 Year Funding Settlement.  Further, the Chancellor had announced within his Autumn Statement that he expected the austerity agenda to continue into the next Parliamentary term, thereby potentially spanning another 6 years.

 

Special Expenses

 

Members were informed that the work undertaken since the preparation of the initial proposals had confirmed that the Special Expenses budget for Aylesbury Town should remain frozen at its current level for 2018/19.

 

The Chairman of the Finance and Services Scrutiny Committee attended the meeting and elaborated upon the consideration given by that Committee to the budget proposals.

 

He reported that the Committee had felt that future reporting should include more explanatory information on budget savings and pressures to help non cabinet members better understand all the issues.  It had also been felt that it might be helpful at some stage for the Environment and Living Scrutiny Committee to have an opportunity to examine how recycling costs might be mitigated beyond the current contract with UPM.  The Committee had also noted that there should have been another line in the fees and charges schedule relating to the car park at Cornwalls Meadow, Buckingham to show that the charge for up to three hours was 50 pence.

 

The relevant Cabinet Members indicated that they would take all of these comments on board.

 

Lastly the Committee had asked that cabinet should seriously examine the possibility of devolving some of the Special Expenses items to Aylesbury Town Council.  The Leader of the Council agreed that Cabinet should look at the implications of such an arrangement and would call for reports during the course of the forthcoming financial year.

 

The Cabinet Member for Finance, Resources and Compliance reminded Members that agreement had been reached with the unions and staff side in February, 2017 for a two year pay award providing for 1% in 2017/18 and 2% in 2018/19 across all grades.  This had been provided for within the draft budget proposals.

 

RESOLVED –

 

(1)          That the Finance and Services Scrutiny Committee be thanked for its input to the budget planning process.

 

(2)          That in relation to Council tax, Council be recommended to approve an increase of £5 (3.48%) in respect of a Band D property for the financial year commencing on 1 April, 2018.

 

(3)          That Council be recommended to approve the budget for 2018/19, which included the use of £1.53m of New Homes Bonus to meet the costs of the Connected Knowledge Programme in 2018/19, and the Medium Term Financial Plan as set out in summary form at Appendix A to the Cabinet report.

 

(4)          That the fees and charges (taken into the final calculations) set out in Appendix E to the Cabinet report be agreed.

 

(5)          That Council be recommended to approve Aylesbury Special Expenditure totalling £864,700, supported by a precept of £45, which represented a Council Tax freeze for Special Expenses (as set out in Appendix F to the Cabinet report).

 

(6)          That Council be recommended to affirm the decision made in February, 2017, following negotiations with the unions and staff side, to approve a two year pay award for staff, with 2%  being payable across all grades for 2018/19, (the second year of the agreement), for which provision had been made in the draft budget proposals.