Agenda item

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

 

 

Following public consultation and Scrutiny Review, the report will set out the details of proposed budget for 2019/20 and MTFS through 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 report will be for onward approval by Full Council on the 25th of February, and will include the details of the council tax resolution.

 

[ Appendix 7  - Overview and Scrutiny recommendations and responses  to  these recommendations is marked to follow]

[Cllr Mark Blake entered the meeting for the start of this item]

 

The Cabinet Member for Finance introduced the Council’s 5 year Medium Financial Strategy for 2019-24. This would provide a clear financial plan during this period of uncertainty for local authority budgeting. It was noted that the Council had been able to bridge the £6.5m budget gap communicated in the December MTFS report. This had been arrived at through minimal recourse to additional savings or cuts to services.

 

The Cabinet Member re-iterated the unprecedented reductions to government funding for local services over the last 8 years. This meant that Councils were finding it difficult to keep up with rising cost or demand. This was also causing an impact on those most in need and further causing an impact on quality of life for residents.

 

The Cabinet Member commented that local authorities had reached a stage where making cuts would now cause an  overspend in another area of the budget. This has been highlighted by the ‘breaking point’ campaign being led by the Islington Council Leader.

 

In compiling the Medium Term Financial Plan, there had been attention given to supporting the manifesto priorities of supporting the delivery of Youth services, become a London Living wage employer, and extending the council tax reduction scheme.

 

The Cabinet Member further welcomed the removal of the borrowing cap on the HRA which would help the Council in their commitment to deliver 1000 new Council homes at Council rents.

 

However, it was important to recognise that the next year’s budget process will again be a hard process with demand increasing and households coming under pressure from welfare reductions and rising housing costs.

 

The attached report was putting forward a balanced budget for 2019/20. It was also currently estimated that the Council will not need to utilise balances in 2018/19.

 

The Vice Chair of Overview and Scrutiny was invited to present the scrutiny recommendations contained at appendix 7 of the report pack. She drew attention to the important work of scrutiny and the key role of this function in the budget setting process. There was a request for increased access to officers with financial expertise to assist the panels and main Committee in their scrutiny of the budget and their regular consideration of the quarterly budget update. This was particularly important given the number of medium to high risk savings listed in the budget.

 

The Vice Chair of Overview & Scrutiny continued to draw attention to the medium to high-risk savings listed in the Scrutiny recommendations. It was important to note real risk around these areas and the risk to achieving savings next year. The Overview and Scrutiny Committee had noted the use of reserves to balance the 2019/20 Budget. Whilst the Committee fully acknowledged the risk around unachievable savings, there was also the risk attached to savings that were being taken forward negatively affecting residents that need support the most.

 

The Vice Chair of Overview and Scrutiny highlighted three areas of savings for reconsideration by Cabinet:

 

• Within the Adults and Health services area, there was a saving proposed on charging for managed accounts. The Overview and Scrutiny argued for the removal of these charges as it was felt that a maximum charge of £650 per year would negatively impact those on benefits. Only service users with savings below £1000 will not be applicable for this charge. Many families were struggling and it was felt that increasing these charges could be a financial tipping point for a family that was just about managing and this could cause an impact on another area of the Council’s budget.

 

• The transfer of high cost day opportunities would initially lead to spend on high quality care to achieve the required savings later. By placing these savings in year two, this was felt to place an enormous pressure on Heads of Service to make savings when this was not achievable. High quality care may provide savings but these needed to be person focused and based on care needs. Therefore, making savings too soon could negatively affect care. The Vice Chair proposed that these savings be reduced or spread over more time to mitigate this.

 

• The Flexible Police resources cessation in funding was opposed. The Vice Chair of Overview and Scrutiny requested that Cabinet reconsider this saving with concerns over safety, a high priority in the borough. This was also illustrated in the EQIA attached to the borough Plan. The Cabinet response acknowledged this yet this proposal to not agree this saving was not agreed.

 

The Vice Chair of Overview & Scrutiny advised that in considering the Capital programme spend, the Panels found that there was not enough detail to accompany the capital projects listed. Going forward, it was suggested that the quarterly budget reports, considered by the panels, contain an update on the capital projects and an indication given when the businesses cases are ready to be scrutinised. This will allow the O&S Committee to have a rolling timetable of capital projects and be able to scrutinise them when the budget decision is available.

 

In response to a question from Cllr Brabazon, the Leader responded on the development at Fortismere, advising that the current summary of the project was contained in the main report. The process around the capital programme was based  on projects that the Council may want to take forward. Similarly, this capital project would be based on a business case coming forward. In order to arrive at a business case, the Council had to complete a due diligence process and this meant completing desktop research and feasibility studies

 

In response to questions from Cllr Dennison the following was noted:

 

In relation to the £6.5m gap, this had been bridged in the last few weeks through 3 main areas, service improvements, technical adjustments and grant changes. The details of this was as follows:

• In relation to the service improvements, this entailed extra cost from parking but a saving was envisaged later on where investing in a car pound.
• The commercial portfolio had moved to the General Fund last year and the Council were considering ways to invest in this and generate income from rent, further considering how the Council generally manage this portfolio.
• Libraries stock had been considered and the opportunities to increase income
• There was a reduction in the growth provision in Adults. This was where officers previously thought that there could have been a growth in a service area but had now been able to assess how the new grants received had been utilised.

Grant changes – meant more money was available through the Government settlement with £1.2m from the levy surplus payment.

• The Council identified that the government grant was greater than forecast for housing benefit / council tax administration to the Council so this improved this budget assumption.
• There was a technical adjustment including a higher projection for council tax collection. This was low risk as the Council tended to outperform previous projections.
• The cost of borrowing was reduced, and less capital expenditure as expected due to the Council having not taken forward the HDV.
• The Council was able to further make use of the Flexible Homelessness grant funding and make use of capital receipts, to be used for revenue spend where transforming a service or delivering efficiency. The government had extended this provision for transformative use for three years.

 

In relation to future rent charges in 2020/21, the Council were expecting this formula to be CPI plus 1%. The Council had to ensure that the housing stock was not run down and the government had likely kept rent levels low in order to maintain housing benefit payment cost. This rent increase had been factored in the budget for future years.

 

In relation to the measure of success for the free school meals, a written response would be provided on this.

 

Cllr Berryman notified the meeting of a proposed correction to recommendation 3.1.5 . this should read as follows: Propose approval to the Council of the 2019/20 General Fund Revenue Budget as set out in Appendix 1, including specifically a General Fund Budget Requirement of £241.182m, but subject to final decisions of the levying and precepting bodies and the final local government finance settlement. Cabinet agreed to the amendment of this recommendation.

 

 

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 an amendment to the budget proposed for 2019/20 not to the MTFS 2019/24.

 

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 and in a subsequent addendum to follow this report.
3. To note that the Quarter 3 corporate financial forecast is that the level of General Fund balance will remain unchanged at the end of 2018/19.

 

4. To propose approval to the Council of the 2019/20 Budget and MTFS 2019/24 Budget Reduction Proposals as set out in Appendix 9.

 

5. To propose approval to the Council of the 2019/20 General Fund Revenue Budget as set out in Appendix 1, including specifically a General Fund Budget Requirement of £241.182m, but subject to final decisions of the levying and presenting bodies and the final local government finance settlement.
6. To propose approval to the Council of the General Fund Medium Term Financial Strategy (MTFS) 2019-2024 as set out in Appendix 1.

 

7. To propose approval to the Council that the Haringey element of Council Tax to be set by London Borough of Haringey for 2019/20 will be £1,319.89 per Band D property, which represents 2.99% increase on the 2018/19 amount.

 

8. 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 77,265 for the financial year 2019/20.

 

9. To propose approach to the Council of the 2019/20 Housing Revenue Account budget as set out in Appendix 2.

 

10. To approve the changes to the rent levels for General Needs Homes for Council tenants reflecting the regulations requiring a 1% rent reduction in 2019/20. This will reduce the average weekly rent from £102.85 to £101.82 as set out in Table 16.1.

 

11. To propose approval to the Council of service charges as set in Appendix 2A.

 

12. To propose approval to the Council of the 2019/20 – 20123/24 General Fund capital programme detailed in Appendix 3.

 

13. To propose approval to the Council of the 2019/20 – 2023/24 Housing Revenue Account (HRA) capital programme detailed in Appendix 4.

 

14. To propose approval to the Council of the capital Strategy detailed in Section 14 of this report.

 

15. To propose approval to the 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).

 

16. 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 has been considered and approved by the Regulatory Committee and that the impact on the 2019/20 budget proposals is outlined within this report.

 

17. To propose to the Council the Dedicated Schools Budget (DSB) allocations for 2019/20 of £256.326m as set out in Appendix 5.

 

18. To agree the funding to be distributed to primary and secondary schools for 2019/20 based on the figures advised to Schools Forum and submitted to the Education Funding Agency in January 2019 set out in Section 17.

 

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

 

20. To delegate to the Director of Children’s Services, in consultation with the Cabinet Member for Children, Education 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.

 

21. To delegate to the Section 151 officer, in consultation with the Cabinet Member for Finance, the power to make further changes to the 2019/20 budget proposals to Full Council up to a maximum limit of £1.0m.

 

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 2019/24m to be reviewed and ultimately adopted at the meeting of the 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 proposals have been subject to consultation both externally and through the Overview and Scrutiny Process. The outcome from these consultations have been reported to be considered by Cabinet who received the reports on these outcomes contained in these appendices. After due regard, Cabinet considers that the issues raised are addressed in its budget strategy and it is not therefore proposing any consequential changes.