Agenda item

[ Report of the Interim  Deputy Chief Finance Officer. To be introduced by the Cabinet Member for Finance and Health.] To agree the Council's Medium Term Financial Strategy 2018/19-2022/23 including the Capital Programme and to approve the final budget and Council Tax for 2018/19 for onward consideration and approval by full Council on the 26th of February 2018.

 

 

The Cabinet Member for Finance and Health introduced the report which finalised the Council’s General Fund and HRA 2018/19 Budgets and the Medium Term Financial Strategy (MTFS) for the period 2018/19 to 2022/23, and proposed approval of the constituent elements of the strategy to Full Council on 26th February 2018, together with the Council’s capital budgets for 2018/19.

 

The Cabinet Member outlined that, since Cabinet consideration of the MTFS in December, the Local Government settlement had been received. The financial position had improved slightly but there were still significant challenges for the budget in 2018/19. The report was proposing, that alongside the £15m General Fund reserve allocation, a budget resilience reserve of £7.2 million be added to provide capacity to help manage the risk in the budget.

 

The Cabinet Member thanked participants for their contributions in the public consultation on budget proposals for 2018/19. There had been a lower response rate than last year but this was due to the 2018/19 proposals building on the budget proposals agreed in 1207/18 budget process.

 

 

RESOLVED

 

1.    To consider the outcome of the budget consultation as set out in Appendix 8, to be included in the report to Council. Having considering this, this report does not propose any amendments to the budget proposed for 2018/19 nor to the Medium Term Financial Strategy (MTFS) 2018-2023.

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

3.    To note the mitigations identified to deal with projected service budget overspend in 2017/18 set out in table 6.7.

4.    To propose approval to the Council of the 2018/19 Budget and MTFS 2018/23 Savings Proposals as set out in Appendix 9

5.    To propose approval to the Council of the 2018/19 General Fund Revenue Budget as set out in Appendix 1, including specifically a General Fund budget requirement of £249.228m, but subject to final decisions of the levying and precepting bodies and the final local government finance settlement.

6.    To propose approval to the Council of the General Fund Medium Term Financial Strategy (MTFS) 2018-2023 as set out in Appendix 1.

7.    To propose approval to the Council of the creation and maintenance of a Budget Resilience Reserve.

8.    To propose approval to the Council, subject to any agreed amendments, of the budget proposals for 2018/19 as set out in this report at Appendix 6, including the 3% precept on Council Tax towards funding Adult Social Care pressures.

9.    To propose approval to the Council that the overall council tax to be set by London Borough of Haringey for 2018/19 will be £1,281.57 per Band D property, which represents a freezing of the 2017/18 rate but with an additional 3% for the Adult Social Care precept.

10. To note the council tax base of the London Borough of Haringey, as agreed by the Section 151 Officer under delegated authority (Article 4.01(b), Part 2, of the Constitution), as 77,093 for the year 2018/19.

11. To propose approval to the Council of the 2018/19 Housing Revenue Account budget as set out in Appendix 2.

12. To approve the changes to the rent levels for General Needs Homes for Council tenants reflecting the regulations requiring a 1% rent reduction in 2018/19. This will reduce the average weekly rent from £103.89 to £102.85 as set out in Table 14.1.

13. To approve the changes to service charges for leaseholders set out in Table 14.3.

14. To approve the introduction of new service charges as set out in Table 14.3

15. To propose approval to the Council of the 2018/19 – 2022/23 General Fund capital programme detailed in Appendix 3.

16. To propose approval to the Council of the 2018/19 Housing Revenue Account (HRA) capital programme detailed in Appendix 4.

17. To propose approval to Council of the policy on the use of flexible capital receipts to facilitate the delivery of efficiency savings including capitalisation of redundancy costs (Appendix 11).

18. To note that Fees and Charges in respect of executive functions will be considered under a separate agenda item, and that Fees and Charges in respect of non-executive functions will be considered by the Regulatory Committee in due course but that any impact on the 2018/19 budget proposals is outlined within this report.

19. To propose to the Council the Dedicated Schools Budget (DSB) allocations for 2018/19 of £255.177m as set out in Appendix 5;

20. To agree the funding to be distributed to primary and secondary schools for 2018/19 based on the figures advised to Schools Forum and submitted to the Education Funding Agency in January 2018 set out in section 15.

21. 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.

22. To delegate to the Director of Children Services, in consultation with the Cabinet Member for Children and Families, the power to amend the Delegated Schools Budget to take account of any changes to Haringey’s total schools funding allocation by the Education and Skills Funding Agency.

23. To delegate to the Section 151 officer, in consultation with the Cabinet Member for Health and Finance, the power to make further changes to the 2018/19 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.

 

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. The Council approved the 2017/18 budget in February 2017 and approved a new five year MTFS to 2021/22.

 

The Council continues to operate under a level of uncertainty in the medium term related to central government financing of local government services. Haringey along with 97% of local authorities accepted the Government’s multi-year settlement offer, which will end in 2019-20. However, planned changes on funding baseline revaluation, 100% business rates retention pilot, outcome of Brexit negotiations and the next spending review means that local authorities will continue to operate in an uncertain and changing funding environment in the medium term.

 

Given the level of uncertainty it is necessary to continue to review the Council’s five year MTFS in order to ensure financial plans support and will aid delivery of priorities. Therefore, a refreshed MTFS that runs from 2018/19 to 2022/23 is presented for agreement.

 

The Strategy considers the estimated revenue funding, from all sources, and estimated expenditure budgets for each of the five years to 2022/23 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, refreshing capital funding and prioritised projects as approved by Council in July 2016 for both the General Fund and the HRA. The report is based on the best available information but is subject to significant uncertainty.

 

On 12^th December 2017, Cabinet considered a revised MTFS, which demonstrated a cumulative funding shortfall of £54.4m over the five years to 2022/23 – the latest position being £30.12m. The decrease in shortfall is due to improved baseline funding announced in the provisional finance settlement in December, the full impact of MRP savings from previous Council decision and the reduction in the estimated cost of levies.

 

Cabinet also agreed to consult with residents, businesses, partners, staff and other groups as necessary on the draft budget proposals. This report outlines the outcome of that consultation and sets out the Cabinet’s responses to this.

 

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

 

On 19^th December, the Provisional Local Government Finance settlement was announced which introduced a number of changes to the funding assumptions. These have now been incorporated into the revised MTFS and proposed budget for 2018/19. The final settlement is expected in February 2018.

 

The level of reserves available in 2018/19 will be dependent on the extent to which the Council utilises its existing reserves to fund its deficit at 2017/18 year-end. This report describes the improved position in 2017/18. As part of the Chief Finance Officer’s consideration of the adequacy of reserves and balances, which will be presented to Council on 26^th February 2018, the utilisation of reserves and balances will be set out in detail.

 

The Council will look to maintain reserves and balances to support the financial strategy including the creation and maintenance of a Budget Resilience Reserve to offset any potential non-delivery of planned savings. This establishment of a Budget Resilience Reserve will help ensure that the 2018/19 budget / 2018/23 MTFS is able to withstand unforeseen changes.

 

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 26^th February 2018.

 

The final budget report to the Council on 26^th February will 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 Local Government Finance Act (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 2018/19 in accordance with section 40 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 priority areas in 2018/19;

 

·         The Section 151 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.

 

The Council has a statutory requirement to set a balanced budget for 2018/19 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

 

Clearly, there are a number of options available to set the budget for 2018/19 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 and the Council’s overall financial position.

 

The report also describes the assumptions and proposals incorporated into the MTFS update to 2022/23.