Agenda item

[Report of the Chief Operating Officer. To be introduced by the Cabinet Member for Finance and Health.]To consider  the Council's  proposed Medium Term Financial Strategy   for 2017/18-2021/22 including the Capital Programme.  The final budget and Council Tax for 2017/18 will go forward to Cabinet and Full council in February 2017.

The Cabinet Member for Finance and Health introduced the report which set out the strategic financial context and details of the major budget changes being proposed for the five year planning period 2017/18 to 2021/22, and, in addition, the process for setting the Council’s 2017/18 budget.

The Cabinet were aware that this had been a difficult year for the budget with a £20m overspend. However, it was important to keep in mind that the MTFS, devised in 2015, had provided real clarity on how to deliver a sustainable financial plan and had made the required strategic choices on how to prioritise resources in the context of staggering cuts to services and budgets.

The Cabinet Member continued to outline the context in delivering savings against the backdrop of a 45% reduction in staff and by having 12 fewer Council buildings.

The Cabinet Member further described the key influences on the budget for this year  which were not known in 2015.These were: business rate devolution with details of how devolution will work still to be agreed, Brexit, Housing policy reforms, welfare reform. Therefore, it was prudent to examine the MTFS assumptions made in 2015 to understand if accurate which these changes in mind.

Ultimately there was a £20m shortfall and the budget papers examined closing this gap through the use of the MTFS principles agreed in 2015 which still applied and  focussed on growth, early help and intervention .

The Cabinet Member thanked participants in the pre -budget consultation which had highlighted the difficulties both residents and officers had faced in finding priorities for spend. The Cabinet Member further encouraged residents, interested in the financial sustainability of the Council, to examine and comment on the proposals which would be released for consultation this week.

Councillor Weston, Cabinet Member for Children and Families provided assurance to Members and colleagues that, in coming to Priority 1 saving proposals, the Children’s Service had continued to prioritise providing the support of safeguarding services to vulnerable children. The majority of the proposals focused on transformation and improvement of the service. There would be continuing investment in early help and targeted services to stop escalations into social care services. The Children’s Service were not compromising the safeguarding of children and young people and the continued aim was to provide high quality support against a back drop of the significant cuts to Council budget funding.

In response to questions from Councillor Morris, the following information was noted:

• The Haringey Development Vehicle meets the growth priority for the borough and would enable the Council to increase income through the business rates and Council tax rate base by the provision of additional homes and businesses. The Council did not currently have the funding and expertise to drive growth through the development of new homes and business. The Council have land and already undertake transactions with developers. A joint partnership with a preferred partner would allow the Council to better patrol what happens with land deals to generate regeneration. The Council were currently, rightly cautious with budget plans as a partner had not yet been selected.

• There was £25m of funding available in reserves, but at his present time an indication could not be given on  how much of this funding would be spent on the overspend as it was prudent to await the forthcoming budget monitoring reports to understand if the overspend will reduce further. There had already been indication, in the previous two budget monitoring reports, that the overspend was reducing. The use of the reserves would likely be a combination of General Fund reserves and allocated reserves. The Cabinet Member for Finance and Health re-iterated that Council could not continue to be reliant on reserves in the long term and the budget proposals had this in mind.

• In previously bringing forward the unachievable savings, it was important to note that Members and officers would have used information at their disposal and would have been trying to bring forward the best proposals to not negatively impact on residents. There was better data now in place and a strong finance team, with the officer core working hard to use improved data and having a wider understanding of the best practices outside of the borough when compiling savings proposals.

• The cost of borrowing was at historically low rates. The Council could ultimately drive better outcomes for the borough through capital spend on parks, schools, buildings. Therefore, the Council may borrow to do this but in the long term the returns would be significant and sustainable.

Cabinet agreed that Councillor Carter is provided with written responses to the following questions.

1. A breakdown of the expected £150,000 savings concerning the Library services?
2. What is the cost of implementing these savings (in terms of redundancy payments or any other related costs of this nature)?
3. Will there be redundancies (Voluntary? Compulsory?)?
4. Of the 95 staff in our Library Service, how many are managers please?
5. How many people have been upgraded with a pay increase (say, in the last 12 months)?Why was that done prior to working out what hours will be worked

RESOLVED

1.    To note the initial budget proposals and financial planning assumptions set out in this report and note that they will be refined and updated after the provisional Local Government Finance Settlement is published in December;

2.    To note the 5 year MTFS 2017/18 to 2021/22 to be reviewed at Cabinet in February 2017, to recommended for approval at Full Council’s meeting in February 2017 to set the budget for 2017/18;

3.    To agree consultation with residents, businesses, partners, staff and other groups as necessary on the draft revenue proposals for 2017/18-2021/22 as set out in Appendix 2;

4.    To note that the results of the consultation on the draft revenue proposals will be considered by Cabinet in February 2017 and recommendations made to Full Council at its meeting in February 2017 for the Council’s formal budget setting for 2017/18;

5.    To note that the detailed proposals will be submitted to Scrutiny Committees in December and January for scrutiny and comments;

6.    To note proposed changes to Fees and Charges in respect of executive functions will be considered by Cabinet in February 2017 and those requiring approval by the Regulatory Committee to be considered at its meeting in January 2017;

7.    To note the capital programme for 2017/18-2021/22 for those schemes requiring corporate resources and grant, to be considered again by Cabinet in February 2017 and then to be recommended to the Council at its meeting in February 2017;

8.    To note the draft Housing Revenue Account (HRA) budget for 2017/18 as set out in Appendix 5 which will be considered again by Cabinet in February 2017 and then recommended to the Council at its meeting in February 2017;

9.    To note that the proposed housing Council rent changes and service charges for 2017/2018 set out in section 16 and 17 of the report will be considered by Cabinet for approval in February 2017, that:

10. Rent charged to tenants for general needs accommodation is reduced by 1% from their current levels from Monday, 3 April 2017;

11. That the proposed weekly tenants’ service charges set out in section 17, table 22 is approved;

12. That the existing rents in HRA hostels should remain unchanged for 2017/18.

13. To approve the proposed changes to the draft Dedicated Schools Budget (DSB) set out in section 19.

Reasons for decision

The Council has a statutory requirement to set a balanced budget for 2017/18 and this report forms a key part of the budget setting process by setting out the likely funding and expenditure for that year. Additionally in order to ensure the Council’s finances for the medium term are put on a sound basis, this report also sets out the funding and expenditure assumptions for the following four years in the form of a Medium Term Financial Strategy.

Alternative options considered

This report recommends that the Cabinet should consider proposals to deliver a balanced and sustainable MTFS over the five year period 2017/18 to 2021/22, to be reviewed further at Cabinet in February, and ultimately adopted at its final budget meeting at Full Council in February 2017, which is a statutory requirement in terms of agreeing the Council’s 2017/18 budget.

Clearly there were a number of options available to achieve a balanced budget and officers have developed the proposals for determining levels of both income and service provision in this report taking account of the Council’s priorities, the extent of the estimated funding shortfall and the Council’s overall financial position.