Issue - meetings

(Cabinet Member with Special Responsibility Councillor Roger Mace)

Report of the Head of Financial Services (to follow).

(Cabinet Member with Special Responsibility Councillor Mace)

The Head of Financial Services submitted a report providing updated financial projections for future years based on information currently available, to allow Cabinet to review the appropriateness of existing targets for Council Tax increases and make recommendations on to Council as appropriate.

The options, options analysis, including risk assessment on the key aspects, were set out in the report as follows:

Council Tax Targets:

(a)          Option 1 -retain the existing Council Tax target increases for future years

Current forecasts indicate that this would require net savings of £1,822K and £2,479K to be identified for 2009/10 and 2010/11 respectively.

(b)          Recommend an alternative Council Tax target increase for future years.

The level of any net savings requirement (and the associated risks) would depend on the tax level proposed.

The main risks attached to either option follow on from the assumptions and information underlying the revision of the financial projections and the ability of the Council to take decisions on matching service levels with the money available to fund them.  In addition, the reputation and public perception of the Council may be affected. The key risks can be summarised as follows:

-          Actual savings targets prove to be substantially different from shown above, due to changes in financial projections.

-          Required savings targets can’t be met, without having an unacceptable impact on service delivery – either from the Council’s own viewpoint or from public perception.

-          Government / the public perceive the increase to be too high, resulting in capping action being taken against the Council and/or a negative impact on public relations and the Council’s reputation

-          Council tax targets are too low, resulting in them being unsustainable in the longer term, without having adverse effects on future service delivery and/or the Council’s financial standing and reputation.

The report highlights that there is significant scope for the projections to change, as a result of both internal and external factors. To counter this, there will be further opportunities to review target increases during the forthcoming budget as more definite information becomes available on forecast spending.

With regard to capping, the report provides information on Government’s actions this year and its commitment to using its capping powers in future.  Should Cabinet wish to support spending levels that result in a Council Tax increase much higher that the current MTFS target, then there are strong indications that the Government is likely to challenge this course of action.  This may well result in the Council’s budget being capped – in such a situation it would be forced to cut spending / services in an unplanned way and it would incur rebilling costs.  Alternatively, if Cabinet wish to support a much lower increase, then future sustainability may become an issue.  At present the financial projections for 2009/10 appear much worse than previously reported but they could change significantly, though on balance it is felt they are likely to get worse, rather than better.

In terms of options, the impact  ...  view the full minutes text for item 81