Agenda item

2016/17 Budget Update

[Report of the  Chief Operating Officer. To be introduced by the Cabinet Member for Resources and Culture.] The  report will update Cabinet on the issues arising from these statements and in particular their effect on the Council’s budget for 2016/17; the impact on future years’ budgets will be considered later in 2016  as the  Council begin to review the MTFS for future years. The report will  release the budget for 2016/17 to Overview and Scrutiny consideration and comment.

 

Minutes:

The Cabinet Member for Resources and Culture introduced the report which set out the issues arising from the recent Autumn Statement and Spending Review 2015 and provisional local government finance settlement with particular focus on their effect on the Council’s budget for 2016/17. Cabinet noted that the impact on future years’ budgets will be considered later in 2016 as the Council begin to review the MTFS for future years.

The Cabinet Member reported that the Local Government Finance settlement had, generally, not been kind to local authorities with a reduction in spending powers. Cabinet also noted that there would now be 4 year settlements to provide local authorities with more certainty to plan their budgets. Therefore the Council’s early choice to take forward a three year MTFS and Corporate Plan had been the correct course of action to take.

The report was proposing to keep Council Tax fixed but due to the demand pressures in Adult social care, the Council would take forward an Adult’s Services precept, meaning a 2%  increase in Council Tax. This would be for specific use on Adult Social Care and reducing the pressure on care packages.

In regards to the impact of this in the savings programme of the Council, the Cabinet Member for Resources and Culture reiterated that these were still financially challenging times for the Local Authority and it was important to ad hear to the existing financial savings timetable.

In response to Cllr Engert’s question on the use of the  expected £1.7m income coming forward from the precept and keeping services open for local people, it was evident from the budget monitoring report that even with day care centres currently still open, there was a continuing budget pressure in Adults services to tackle. The additional £1.7m income, from the 2% precept, on a financial yearly basis, would provide the Council with the flexibility to support reducing spend arising from demographic pressures or to support the co production initiatives coming forward.

The Leader reminded Cabinet of the London and national funding issue with Adults Social Care Services; even with all local authorities applying the 2% precept for funding social care this would only fund £1 in every £3 for Adults Social Care and would not provide a sustainable financial future for Adult Social Care.

The Leader further reiterated that when taking forward changes in social care the Council has an obligation to fur fill better care outcomes for all adults in the borough.

 

RESOLVED

1.    To note the outcomes arising from the Provisional Local Government Finance Settlement and the impact on the Council’s financial plans for setting the 2016/17 budget.

2.    To agree that the Council should advise the Department for Communities and Local Government of its intention to consult on the implementation of the 2% Adult Social Care precept.

Reasons for decision

In February 2015, and following extensive consultation, the Council approved its Corporate Plan and Medium Term Financial Strategy (MTFS) covering the period 2015 - 18. The Corporate Plan set out the Council’s priorities, the MTFS outlined the overall financial strategy and the Workforce Plan outlined the workforce strategy for achieving those priorities.

As a result of the significant reductions to the Council’s funding from central government grants, the MTFS required around £70m of approved saving proposals to deliver a balanced budget position in each of the three years’ covered by the MTFS (2015 – 18).

Previous government Spending Reviews have provided information covering the financial years up to and including 2015/16; projections beyond that point have been made on assumptions based on national data and trajectories provided by the Office for Budget Responsibility (OBR).

Following the General Election in May 2015 a new Spending Review was necessary and the November 2015 announcement provided summary financial data for the period up to 2020.

On 17th December the Department for Communities and Local Government (DCLG) provided much of the authority level detail necessary to update the information required to finalise the setting of the 2016/17 budget. Whilst the Council has already approved a three year MTFS, the Council must statutorily set an annual budget including agreeing the level of the Council tax for that year.

Alternative options considered

The Council has already approved a three year Medium Term Financial Strategy in February 2015 and we are not proposing to revisit the savings decisions made at that point in time as we still consider them to be the right ones. The approved savings for 2016/17 have been restated in Appendix B for ease of reference. A number of further alternatives have also been considered as set out below:

(i)  The 2015/16 budget monitoring information indicates that there are some financial pressures (slippage) arising from the delivery of the 2015/16 saving proposals and consideration has been given to using reserves to cover the slippage in the short term. However, whilst it has been concluded that the use of reserves is an appropriate approach to dealing with slippage, and the Council will adopt this approach where it is agreed through the budget monitoring process, the Council has no evidence to suggest that it should change any of these savings plans however, we will be conducting further reviews in 2016/17. If these reviews identify that savings are unachievable then the Council will explore what different options are available to achieve the transformational changes that are required in the provision of Council services.

(ii) Further Service Savings - There has been consideration, as an alternative to raising Council tax, that the organisation could find more savings in its service base thereby reducing the service budget requirement. This was discounted because the services are already faced with a significant savings programme. Adding more savings to an already difficult programme would be detrimental to the achievement of outcomes already agreed in the Corporate Plan.

(iii)The option of raising Council tax has also been considered. Due to the significant pressures in Adults Social Care we are consulting on whether to apply the Adult Social Care precept, announced by the government in the Spending Review. This would raise an estimated £1.7m. It is further possible to increase Council tax by up to 2% before a referendum is required. We are not proposing to implement this more general increase. This decision has been made because the Council’s current level of Council tax is above the London average and there are concerns about the regressive nature of the tax.

 

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