Agenda item

[Report of the Director of Finance. To be introduced by the  Cabinet Member for Finance.]

The report sets out details of proposed budget for 2019/20 and MTFS to 2023/24, including savings, growth and capital proposals. The report will also set out details of provisional funding for 2019/20 and if available the remainder of the planning period and highlight areas of risk. The budget proposals will be released for public consultation and Scrutiny  consideration.

The Cabinet Member for Finance introduced this report which outlined the 2019/20 budget and the Medium Term Financial Strategy (MTFS) for 2019/20 – 2022/23. This was due to go out to consultation and be considered by the Overview and Scrutiny Committee from the 17^th December. It was anticipated that the revenue gap for 2019/20 would be £6.5m.The overspend reflected the impact of austerity and the reduction in one budget leading to an overspend in another area. Examples such as the cuts to children’s centres impacting on the budgets for children’s social care, and cuts to youth services leading to increases in costs in the criminal justice system illustrated this.

The Cabinet Member outlined the difficulty in cutting services where the demand was constant, such as in Adults Services and Children Services. Other local authorities shared the Council’s situation across the country and the Cabinet Member acknowledged the tough situation officers found themselves in when being instructed to make cuts in vital service areas, without creating negative consequences for residents.

The draft budget and MTFS would seek to reduce the Council’s spending in a way that increased income fairly and delivered efficiency savings, but the Cabinet Member acknowledged this was getting harder to achieve. Nevertheless, the majority of the proposals would be trying to achieve this and change the way in which the Council delivered its services.

The Cabinet Member highlighted the administration’s manifesto priorities which the budget sought to incorporate. This included certain changes such as increasing support for the delivery of youth services as it was recognised the importance of investing more Council resources into youth services programmes. There was a proposal to invest in a school meals pilot scheme. It was also a commitment of the administration to become a London Living Wage employer as everyone should be in receipt of a decent wage. The budget also reflected the commitment to extend the Council Tax Relief Scheme (CTRS) to 100% for the boroughs least well-off families, which would significantly assist single mothers. Finally, the recent announcement to remove the Housing and Revenue borrowing cap by the government was welcomed as it would support the administration in delivering its commitment to deliver at least 1,000 new council homes at council rents by 2022. This would help reduce the Council’s reliance on temporary accommodation which would save on costs.

The Cabinet Member concluded by accepting the difficult pressures faced by services with households coming to the Council with more needs as a result of welfare reduction and the rising housing costs.

Following questions by Cllr Morris, the following was noted:

• The Cabinet Member advised that Councils do not traditionally spend money on police and the Flexible Police resourcing scheme was a GLA scheme which the council signed up to and ends in March 2019. The reason for proposed discontinuation was that the government had indicated it would grant permission for the GLA to raise more funding through taxes for the police. This was thought to be approximately £24 per household. There had also been an extra £10m put into police services in Haringey via the mayor’s precept. In 2018 so additional funding has been put into Haringey since 2018 for policing
• It was not known if there would be referendum caps in 2019.All options were on the table as set out in the report.
• Regarding the increased budget allocation for ‘Non Service Revenue’ in 2019 to £36 mil (up from £13m in 2018), Officers noted this related to non-controllable costs such as pay/non-pay inflation costs, treasury management costs, pensions costs relating to retired/deferred members of the pension fund and payments due to levying bodies. This was the part of the budget where these increase costs manifested themselves .The Director for Finance advised that some of these services costs in this category would be subsequently moved to other service categories during the course of the year. It was also noted the need to show one off grants in a particular year which also increased the budget allocation. The Director of Finance referred Cabinet to paragraph 9.1 which discusses the unavoidable budget growth to the extent that can be afforded, and that it was in the service category ‘Non Service Revenue’ which further reflected how these costs manifested themselves

• The Director of Finance provided an explanation of paragraph 14.9.This outlined the formation of the capital programme which was an important aspect of the Council’s financial planning, and provided Members clarity on what is in the capital programme and likely to be financed from the Council’s revenue or projects that will form the basis of a business plan that are self–financing. This information was important to consider so that the capital spend impact on the Council’s revenue account can be at a minimum.

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 on 6^th December and also to incorporate further budget changes as required;

2. To consider and note the draft 2019/20 budget/5 year MTFS (2019/20 to 2023/24) detailed in this report.

3. To note that an updated Draft 2019/20 Budget/5 year MTFS (2019/20 – 2023/24) will be put to Cabinet on 12^th February 2019 to be recommended for approval to the Full Council meeting taking place on 25^th February 2019.

4. To consider and note Draft Budget Reductions proposals summarised in section 8 and Appendices 2 and 3;

5. To consider and note the Draft General Fund Capital Budget for 2019/20 – 2023/24 as set out in Appendix 4;

6. To agree to commence consultation with residents, businesses, partners, staff and other groups as necessary on the draft revenue proposals for 2019/20-2023/24;

7. To note that the results of the consultation on the Draft Revenue Proposals will be considered by Cabinet on 12^th February 2019 and recommendations made to Full Council at its meeting on 25^th February 2019 for the Council’s formal budget setting for 2019/20;

8. To note that the detailed proposals will be submitted to Overview and Scrutiny Committees/Panels in December 2018 and January 2019 for scrutiny and comments;

9. To note proposed changes to fees and charges in respect of executive functions will be considered by Cabinet on 12^th February 2019 and those requiring approval by the Regulatory Committee to be considered at its meeting on 21^st January 2019;

10. To note that the Housing Revenue Account (HRA) budget will be considered by Cabinet on 12^th February 2019 and recommendations made to Full Council at its meeting on 25^th February 2019 for the Council’s formal budget setting for 2019/20.

11. To note the proposed changes to the draft Dedicated Schools Budget (DSB) set out in section 16 and that the final agreed budget will be presented to Cabinet on 12^th February 2019.

Reasons for decision

The Council has a statutory requirement to set a balanced budget for 2019/20 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

The Cabinet must consider how to deliver a balanced 2019/20 budget and sustainable MTFS over the five-year period 2019/20 to 2023/24, to be reviewed further at Cabinet in February, and ultimately adopted at the final budget meeting of Full Council on 25^th February 2019.

Clearly there are options available to achieve a balanced budget and officers have developed the proposals contained in this report for determining levels of both income and service provision in this report. These take account of the Council’s priorities, the extent of the estimated funding shortfall and the Council’s overall financial position. The February report will include the outcome of the local government finance settlement, other potential grants and any other development and further proposals required to achieve a balanced budget.

These proposals are subject to consultation both externally and through the Overview & Scrutiny process and the outcomes of these will inform the final budget proposals.