Agenda item

(Cabinet Member with Special Responsibility Councillor Bryning)

 

Report of Head of Resources

(Cabinet Member with Special Responsibility Councillor Bryning)

 

Cabinet received a report from the Head of Resources which provided an update on the Council’s financial position to help inform development of Cabinet’s budget proposals.  Given that the Local Government settlement had not yet been received, the report was primarily for information, rather than seeking any specific decisions.

 

The options, options analysis, including risk assessment and officer preferred option, were set out in the report as follows:

 

GENERAL FUND REVENUE BUDGET – CURRENT YEAR

 

An in-depth analysis of all current year budgets had been undertaken and a summary of the budget and variance analysis was attached at Appendix A to the report.   There was still time for the revised budget position to change further over the coming weeks and therefore Cabinet was simply requested to note the overall position at this stage. In terms of earmarked reserves and provisions, a full review had not yet been completed.  This would be undertaken in time to report to January’s Cabinet meeting. 

 

2013/14 DRAFT REVENUE BUDGET

 

The first draft of the 2013/14 budget had been produced, in accordance with Financial Regulations and the Council’s Medium Term Financial Strategy (MTFS).  Further information would be provided for the January meeting.   Currently the draft budget for 2013/14 stood at £20.196M, as shown in Appendix A to the report, which also showed the provisional variance analysis undertaken so far.

 

LOCAL GOVERNMENT FINANCE SETTLEMENT

 

The provisional Local Government Finance Settlement was not expected to be announced until later this month and therefore the impact would be reported formally into January’s Cabinet meeting.  The MTFS approved in February assumed that Government support would reduce by 2% in 2013/14 (over 4% in real terms) compared with 2012/13, and 0% (about 2% in real terms) the year after. 

 

COUNCIL TAX

 

In addition to the change in the referendum trigger threshold being reduced to 2%, the Government had also announced proposals for a continuation of the Council Tax Freeze Grant.  Under this proposal, the Council would receive the equivalent of a 1% tax rise (£84K) for 2013/14 and 2014/15, should it choose to freeze or reduce council tax for 2013/14.  Take up of this arrangement was voluntary.

 

SAVINGS REQUIREMENTS: SCENARIOS

 

At this stage it was impossible to give any reasonably accurate picture of what the Council would need to save next year to continue with existing services, depending on its council tax targets.  This was mainly because of the uncertainties over Government funding and other legislative changes.  Some scenarios were set out in the report. 

 

RE-DIRECTION OF RESOURCES (SAVINGS & GROWTH OPTIONS)

 

The Council’s financial prospects could change significantly as a result of the Government funding settlement.  In view of this position, Cabinet was advised once again to focus its attention on identifying and prioritising areas for making recurring savings and this linked to the Corporate Priorities report elsewhere on the agenda.  It was reiterated that without such an approach, Cabinet ran the risk of:

 

-        not being able to formulate a set of balanced budget proposals for consideration by Council in February, or

 

-        resorting to drawing heavily on reserves and balances, and storing up pressures and difficulties for the following year; and / or

 

-        presenting an unaffordable and undeliverable medium term Corporate Plan to Council, leading to unmanageable expectations of stakeholders.

 

A further update was set out below on the themes for achieving savings in line with the MTFS:

 

Efficiencies

Sessions with Service Heads and Portfolio Holders to review their own detailed budgets were currently being arranged.  This would provide a useful forum in which to recognise the efficiencies already gained and identify any new areas.

 

Invest to Save Schemes

At present the reserve established to fund such schemes had provisionally been fully allocated against completing the Lancaster Market leasehold surrender.  If this did not change, then there will be a need to address capacity for providing up front funding for any new invest to save proposals.  A report elsewhere on the agenda sought direction regarding the adoption of an Energy Strategy and this was one potential area in which new schemes might be developed.

 

Income Generation

A report elsewhere on this agenda set out proposals for a range of increases to fees and charges for a number of key service areas, and sought views on any other potential areas.

 

Service Reductions

It was still expected that the Council would need to reduce the level and/or range of services provided, in order to establish sustainable balanced budgets for the medium term. 

 

GENERAL FUND CAPITAL PROGRAMME

 

The capital programme had been updated for slippage in a number of schemes, mainly resulting from the delay in the South Lancaster capital receipt, and a number of new Information and Communications Technology (ICT) schemes.  Full details were contained within Appendix B in the report.

 

All of the Council’s capital investment plans needed to be affordable, sustainable and prudent.  As with revenue, the big risk regarding capital investment was affordability, but prudence also needed particular consideration – this was more about ensuring that the Council did not take on too much at one time, in capital terms.

 

Members were reminded that when combined, all the potential pressures on borrowing could make it inadvisable to take forward all capital investment options at the same time, even if they were affordable (though clearly this latter point had not yet been addressed).  In view of Council’s stance on Lancaster Market, this still represented the first priority for additional capital resources.  Cabinet was advised to reflect this accordingly, in developing its draft priorities further.

 

COUNCIL HOUSING (HOUSING REVENUE ACCOUNT- HRA)

 

In September, Cabinet adopted a HRA medium term financial strategy and rent policy that supported the future investment needs of the HRA housing stock, whilst enabling the Council to consider using HRA funding in a wider regeneration context.

 

As part of the current budget process both revenue and capital estimates had been updated.  The HRA capital programme has been updated for the items previously referred to in the September Cabinet report and included:

 

·         Provision for additional fire precaution works

·         Provision for remodelling of sheltered schemes

·         Provision for improvements to communal areas to flats.

·         Increase the boiler replacements

·         Renewable technologies

·         Increase the environmental budget.

 

Full details or the programme, together with a detailed review of provisions and reserves would be presented to Cabinet in January.  This would also include proposals for rent increases and the impact they had on reserves and investment opportunities.

 

TREASURY MANAGEMENT 

 

In accordance with the CIPFA Code of Practice on Treasury Management Members were presented with regular monitoring reports on treasury activities.  The report for the first half of the year was attached at Appendix C to the report and provided Members with the latest position on Icelandic investments as well as investment and borrowing activities.  Cabinet was requested to note the treasury management update report and refer it onto Council. 

 

At this stage Cabinet was requested to note the budgetary position but more importantly, take forward a number of actions to help develop a balanced set of budget proposals.  In particular, direction was sought for areas in which savings options should be developed.  The Officer preferred options were reflected in the recommendations.

 

Once the Settlement has been received, the Council’s financial outlook should become much clearer, although generally local authorities were expecting that further significant savings would need to be made in future years.

 

Councillor Bryning proposed, seconded by Councillor Sands:-

 

“That the recommendations, as set out in the report, be approved.”

 

Councillors then voted:-

 

Resolved unanimously:

 

(1)        That the draft budgetary position for current and future years be noted.

 

(2)       That the mid-year treasury management progress report set out at Appendix C to the report be noted and referred on to Council.

 

(3)       That as part of identifying services areas for review linked to corporate priorities, Cabinet indicates the lower priority areas within General Fund for which service reductions should be developed and progress against the above actions be reported to the January Cabinet meeting.

 

Officers responsible for effecting the decision:

 

Head of Resources

 

Reasons for making the decision:

 

To note the latest position.