Agenda item

[Report of the  Chief Operating Officer.  To be introduced by the Cabinet member for Finance and Health.  Following public consultation and Scrutiny review , to consider the final budget package for 2017/18 and later years, proposed council tax for 2017/18 and approval of HRA rents. The  strategy  will then go forward to Full Council on the 27^th of February  for adoption.

 

 

The Cabinet Member for Finance and Health introduced the report which set out the current Council financial position. The report finalised the Council’s General Fund Medium Term Financial Strategy (MTFS) for the period 2017/18 to 2021/22 and proposed approval of the constituent elements of the strategy to Council on 27^th February 2017 together with the Council’s revenue and capital budgets for 2017/18.

 

The Cabinet Member spoke of the rapid increases in demand for Children services, Adults Social Care and Temporary Accommodation combined with significant difference in funding for the Council and wider financial strains in the public sector. Despite this, £50m of savings had been made but there was a gap of £45m, over the next 5 years, so the challenge faced was stark.

 

It was noted that the Adults Social Care Precept, at the time consultation of the budget was taken forward in December, was proposed at 2% for each proceeding three financial years. However, the Council could now levy 3 % in each of the next two financial years, a total of 6% over three financial years. Therefore, the report was recommending a 3% pre-cept in 2017/18/19 whilst continuing to freeze Council tax base rate. This was important as the Council were expecting growth in GLA precept rate of 1.5 %.

 

In relation to the risks in the MTFS savings proposed that were marked red or amber, these were around 65% of the savings and it was important to be clear that the Council would be consistently monitoring these savings and working with partners and residents to meet these savings requirements which would mean changing the way the Council works, whilst also delivering on the agreed Corporate Plan.

 

The Cabinet Member thanked participants in the consultation and thanked the Overview and Scrutiny Committee for their recommendations. There were two key changes recommended that were accepted. These were the removal of the proposal for Library reduced hours and target operating model for parking. The Council would revisit how the Parking service works and re-asses best value for money in relation to this service.

 

Councillor Connor, Vice Chair of Overview and Scrutiny, introduced the Scrutiny recommendations on the budget which were a result of individual panel work which was collated and discussed at the main Committee meeting. Cllr Connor drew attention to the financial risk outlined in the report and requested that Scrutiny receive, as part of their usual information about the budget, more details on the risk assessment of the savings proposals and mitigations.

 

Councillor Connor was pleased that the Libraries proposal had been withdrawn and mentioned the disability expenditure proposal. There had been debate at Scrutiny on the individual assessment tasks, involved in making this saving, and whether this would reduce the savings. Therefore, a request was made not to proceed with this saving and that further consideration be given to the financial cost around doing this.

 

In relation to the Daycare Opportunities proposal, which had been deferred for a further financial year , it was hoped that with further assessment of this saving ,and the views of users considered, this saving would not proceed in the future.

 

In response to Councillor Engert questions, the following was noted:

 

• With regard to the use of reserves, the Council had to be clear on risks faced, and some savings were rag rated, as red or amber, because more work was needed to flesh out the proposals. The example of Osborne Grove was given because the extent of this saving depends on an options appraisal and choices that Cabinet will make which will have an impact on the MTFS. Some savings would require working in a new way and in some case with other authorities.

 

• The Cabinet Member was clear that officers and Cabinet were working diligently on achieving the savings but it was important to note that the Council were operating with the public sector in a difficult financial context and therefore challenging to have definitive proposals that will guarantee each saving being made. The financial prudence of the Council, in previous years, meant that the Council had reserves in place to mitigate these risks.

 

• The Cabinet Member agreed that the Council cannot rely on reserves indefinitely, so he was clear that there must be focus on growth and this was why the Haringey Development Vehicle, was critical and the previously agreed Housing and Growth strategies important to make the Council sustainable. Proposals also on investments, particularly, on the capital side, were important for the future of the borough.

 

• With regard to the borrowing decisions, it was clear the Council was shrinking in size and there was a need to utilise Council space better. At the moment the Council were not acting efficiently in this respect and needed to release office locations in Wood Green to make homes, improve retail offer and increase jobs.

 

• There was clear commitment to keep Libraries open and maintain Libraries open as they are. The Cabinet were investing significantly in Libraries including expenditure on refurbishment and IT expenditure.

 

• The Cabinet Member committed to maintain the opening hours of Libraries for the next 5 years.

 

RESOLVED

 

1. To propose approval to the Council of the General Fund Medium Term Financial Strategy (MTFS) 2017-2022 as set out in Appendix 1;

 

2. To propose approval to the Council of the 2017/18 General Fund revenue budget as set out in Appendix 1, including specifically a General Fund budget requirement of £255.7m but subject to the final decisions of the levying and precepting bodies and the final local government finance settlement;

 

 

3. To note the Council tax base of the London Borough of Haringey, as agreed by the Section 151 Officer, as 75,365 for the year 2017/18;

 

4. To propose approval to the Council, subject to any agreed amendments, of the budget proposals for 2017/18 as set out in this report at Appendix 6, including the 3% precept on Council Tax towards funding Adult Social Care pressures;

 

 

5. To propose approval to the Council that the overall Council tax to be set by London Borough of Haringey for 2017/18 will be £1,243.54 per Band D property, which represents a freezing of the 2016/17 rate but with an additional 3% for the adult social care precept;

 

6. To note that Fees and Charges in respect of executive functions will be considered under a separate agenda item but that any impact on the 17/18 budget proposals is outlined within this report;

 

 

7. To propose to the Council that, following a review of reserves, £25.1 million is transferred from earmarked reserves to the General Fund non-earmarked reserve;

 

8. To propose approval to the Council of the 2017/18 Housing Revenue Account budget as set out in Appendix 2;

 

 

9. To propose approval to the Council of the 2017/18 General Fund capital programme detailed in Appendix 3;

 

10. To propose approval to the Council of the 2017/18 Housing Revenue Account (HRA) capital programme detailed in Appendix 4;

 

 

11. To approve the changes to the rent levels for General Needs Homes for Council tenants reflecting the regulations requiring a 1% rent reduction in 2017/18 and each of the following two years. This will reduce the average weekly rent from £104.88 to £103.76 as set out in paragraph 9.7 and Table 9.1;

 

12. To approve the changes to service charges for leaseholders set out in Table 9.2

 

13.  To propose to the Council the Dedicated Schools Budget (DSB) allocations for 2017/18 of £250.4m as set out in Appendix 5;

 

 

14. To agree the funding to be distributed to Primary and Secondary schools for 2017/18 based on the figures advised to Schools Forum and submitted to the Education Funding Agency in January 2017 set out in section 8;

 

15. To agree the central budgets (including the use of brought forward DSG) for the Schools Block, High Needs Block and Early Years Block as per Appendix 5;

 

 

16. To approve the responses made to the Overview and Scrutiny Committee recommendations following their consideration of the draft budget proposals and as set out in Appendix 7;

 

17. To note the outcome of budget consultation as set out in Appendix 8;

 

 

18. To note that this report will be considered by the Council at its meeting on 27th February 2017 to inform their decisions on the 2017/18 budget and the associated Council Tax for that year;

 

19. To delegate to the S151 officer, in consultation with the Cabinet Member for Health and Finance, the power to make further changes to the 2017/18 budget proposals consequent on the publication of the final local government finance settlement or other subsequent changes up to a maximum limit of £1.0m;

 

 

20. To approve the application of a charge for bulky waste removal as set out in Priority 3 savings proposals in Appendix 10 Annex 3;

 

21. To approve the application of a charge for replacement wheeled bins as set out in Priority 3 savings proposals in Appendix 10 Annex 3;

 

 

22. To approve the application of a charge for recycling bins and residual bins for registered social landlords (RSLs) as set out in Priority 3 savings proposals in Appendix 10 Annex 3;

 

23. To approve the cessation of sacks for residual and recycling waste and replacement of them with free collection of sacks from libraries and customer service centres as set out in Priority 3 savings proposals in Appendix 10 Annex 3.

 

Reasons for decision

In February 2015, and following extensive consultation, the Council approved its Corporate Plan and Medium Term Financial Strategy (MTFS) covering the three-year period 2015-18.

Since then a number of significant national political changes have taken place all of which bring high levels of uncertainty. Although Haringey has accepted the Government’s multi-year settlement offer (ending in 2019-20) there are still significant changes that are planned to the way local authorities are funded which means that we will continue to operate in an uncertain and changing environment.

Given the level of change over the last 18 months and in order to continue to deliver the priorities for the borough a new 5-year MTFS is proposed to cover the period from 2017/18 to 2021/22. This includes a refresh of the last year of the previous MTFS.

The Strategy considers the estimated revenue funding, from all sources, and estimated expenditure budgets for each of the five years to 2021/22 together with any net funding shortfall and savings proposals that have been developed by officers taking account of the Council priorities.

The report also considers the Council’s capital budget, bringing sources of capital funding together with prioritised projects as approved by Council in July 2016 for both the General Fund and the HRA. Given the level of complexity introduced by the regeneration aspirations of the Council, the capital budget will become an increasingly important component of the Council’s overall financial position.

The report is based on the best available information but is still subject to significant uncertainty.

On 13^th December 2016 Cabinet considered a revised MTFS, which demonstrated a funding shortfall of £42.8m over the five years to 2021/22, and savings proposals of £23.6m. With the gap front loaded to the 2017/18 year (£19m) it was agreed that the strategy would be to smooth the savings over the first two years of the MTFS period through the use of reserves.

Agreement was also given to consult with residents, businesses, partners, staff and other groups as necessary on the draft proposals. This report outlines the outcome of that consultation and sets out our responses to it.

The Council’s Overview and Scrutiny Committee has already scrutinised the savings proposals and this report highlights the recommendations made by the Committee and the Cabinet’s responses to it.

On 17^th December the Provisional Local Government Finance settlement was announced which introduced a number of changes to the funding assumptions and these have now been incorporated in the revised MTFS and proposed budget for 2017/18.

The final MTFS shows a revised funding deficit of £45.6m over the five years to 2021/22 and, assuming that all savings proposals are implemented (£23.6m), a residual shortfall of £22m over the MTFS period. For 2017/18, the £8.8m deficit will be funded from the use of reserves in order to set a balanced budget. The MTFS will be refreshed during 2017/18 and options developed to fund later years’ residual shortfalls.

The level of reserves available will be dependent on the extent to which we utilise our existing reserves to fund our deficit at year-end. The Chief Finance Officer will be seeking to consolidate the reserves position in order to be able to fund the deficit. This will be considered as part of the Chief Finance Officer’s consideration of the adequacy of reserves which will be presented to Council on 27^th February 2017. The Council will look to recommence building Reserves in the next financial year to provide further future resilience to the Council’s financial position.

Taking all relevant factors into account including, in particular, the outcomes from statutory consultation with business rate payers and residents, the recommendations from the Overview and Scrutiny Committee and any other subsequent changes, this report sets out Cabinet’s final budget proposals which, if approved, will be sent for consideration at the Full Council budget setting meeting scheduled for 27th February 2017.

The final budget report to the Council on 27^th February will also additionally include a number of requirements consequent on the proposals set out in this report and in particular:

·      The formal Budget Resolution required in accordance with the LGFA 1992 as amended by the Localism Act 2011, which sets the Council tax for the forthcoming financial year;

·      The Precept of the Greater London Authority (GLA) for 2017/18 in accordance with S40 of the LGFA 1992 which must be added to the Haringey Council element of the Council tax to give a total Council tax for each category (band) of dwelling in the Council’s area;

·      The formal assessment of the relevant basic amount of Council tax against the principles established by the Secretary of State for the purpose of determining whether any Council tax increase is ‘excessive’ and therefore is subject to referendum.

·      Approval of the Cash Limits for 2017/18;

·      The S151 Officers evaluation of the adequacy of the Council’s reserves and the robustness of the estimates including the Council’s reserves policy;

·      Approval of the Treasury Management Strategy Statement (TMSS) which has been formulated by the Corporate Committee and subject to the scrutiny review process.

Alternative options considered

This report recommends that the Cabinet should finalise its budget proposals, to be ultimately agreed at the final budget meeting at full Council on 27th February 2017; which is a statutory requirement. Clearly there are a number of options available to achieve this and proposals in this report take account of the Council’s priorities together with feedback from residents and other partners.

A range of options for determining levels of both income and service provision have been considered taking into account the Council’s Corporate Plan priorities, the extent of the estimated funding shortfall and the Council’s overall financial position.

The proposals in this report rely on the strategic use of reserves over the five year period 2017– 2022. However, there remain significant uncertainties, particularly in the later years of the MTFS and so it is imperative that Members acknowledge and take action to manage identified and emerging risks.