Decision details

Draft Revenue Budget and Medium Term Financial Plan 2015/16 and Draft Capital Programme

Decision Maker: Cabinet, County Council

Decision status: Recommmend Forward to Council

Is Key decision?: Yes

Is subject to call in?: No

Purpose:

For cabinet to recommend the draft budget and MTFP and Capital Programme to Council.
For cabinet to recommend to Council the draft Treasury Management Strategy
For cabinet to recommend to Council the precept on District Council in 2014/15
For cabinet to recommend to Council the levels of the County Council’s share of Council Tax in 2014/15 for the eight property bands
For cabinet to recommend the planned use of General Reserves and earmarked reserves in 2014/15, updated strategy in respect of general reserves

Decisions:

The Chief Executive introduced the report which presented to Cabinet the draft Medium Term Financial Plan (MTFP) 2015-2018 which set out the Council’s revenue and capital spending plans, based on the budget saving propositions that were consulted on by Cabinet. The draft MTFP was attached at Appendix A. Cabinet noted that having saved £130M by the end of the current financial year the savings delivered by the Council would amount to £211M by the end of 2018 which presented a huge challenge for the organisation.  1800 jobs would be lost over the coming three years and a huge programme of changing what and how services were delivered would continue.  The Chief Executive thanked the council’s committed staff who continued to deliver quality services in the face of an unprecedented financial challenge.

The Assistant Director – Finance presented the technical detail confirming that in addition to the draft MTFP, the report set out the Council’s draft Budget for 2015/16 and the Council Tax Requirement for 2015/16. Cabinet was asked to consider the recommendations set out in Section 3 in making its Budget proposal to Council for Council to consider at its meeting on 19th February 2015.

The Medium Term Financial Plan was the financial expression of the Council Plan which was agreed by Council in February 2014 for the period 2014-2017. Taken together they demonstrated how the Council intended to align its priorities with its resources to deliver outcomes for the people of Cumbria for the next three financial years, 2015/16 to 2017/18. Resource planning continue to be undertaken against a backdrop of reductions in funding from Government.

So far the Council had identified savings of £127 million (2011/12 – 2014/15).  This reflected in the main reductions in central government grants as government seeks to rebalance public finances.  The reductions in core grant support to local government continued.  The latest government estimates suggested that the national finances would not be in balance until 2018/19  and therefore the Council must take into account likely levels of funding as it planned its expenditure and service priorities over the medium term.

The draft Revenue Budget for 2015/16 (expenditure less specific grants and fees and charges) was £380.169m. The draft budget was based on the assumption of a 1.99% increase to the County Council’s element of Council Tax for 2015/16. Cabinet was asked to consider recommending to Council an increase of Council Tax by 1.99% for 2015/16. This would result in a Council Tax Requirement for 2015/16 of £192.259m and if the Council Tax increase was accepted, the annual Council Tax on a Band D property would increase to £1,184.61.

The draft Budget 2015/16 took into account new savings of £32.558m  to ensure a balanced budget was presented for consideration. Further savings of £13.250m in 2016/17 and £5.374m in 2017/18 had been identified.  This was a total of £51.182m of new savings identified between 2015/16 and 2017/18. 

Savings still to be found of £17.345m were estimated for 2016/17 and an additional £15.650m for 2017/18. This represented a total of £32.995m of additional savings to be found over the two years.

In total £84m (£51.182m+ £32.995m) of savings would need to be delivered from 2015/16 to 2017/18 in addition to the £127m already found.

Included within the £127m was £13.956m of savings the Council had already agreed in February 2014.  This included £7.325m of additional savings in 2015/16 and £6.631m for 2016/17.

Overall it is projected the Council would have to deliver savings of £211m between 2011/12 and 2017/18. The table below summarised the position.

Table 1 – Summary of Saving 

2011/12

2015/16

2016/17

2017/18

Total Savings

To 2014/15

 

£m

£m

£m

£m

£m

Existing Savings already identified 

113.100

7.325

6.631

0

127.056

New Savings identified

0

32.558

13.250

5.374

51.182

Savings still to find

0

0

17.345

15.650

32.995

Total Savings

113.100

39.883

37.226

21.024

211.233

Total Savings

113.100

98.133

211.233

 

Due to the funding arrangements for local government introduced in 2013/14, there remained a number of uncertainties within the revenue budget as presented. Final figures from District Councils in relation to locally Retained Business Rates were awaited with details of the final Local Government Finance Settlement from Government received on 4 February which had included an additional £678k of Revenue Support Grant for 2015/16 only. Consultation and engagement on the Reshaping Services and Internal Reshaping of the Council budget propositions commenced on 23rd October 2014. Sessions had been held with Trade Unions, Business and Voluntary Sector and other key stakeholders.  The consultation closed on the 20th January 2015. The summary of the responses received from the consultation was set out for Cabinet’s consideration, in Appendix D.

The draft Capital Programme for 2015/16was £103.579m (inclusive of £19.977m of new schemes proposed in this report). This was set within an overall capital programme of £304.896m over the five years 2015/16 – 2019/20. This total included £0.442m additional spend in 2014/15.  Overall the total of all new schemes proposed to be included in the capital programme was £186.849m.

Including Accountable Body programme spend of £7.700m the overall Capital Programme was £312.596m over the five years 2015/16 – 2019/20 (including £0.442m in 2014/15).

In agreeing the Budget for 2015/16, the Council was also required to agree its Treasury Management Strategy for 2015/16 setting out the Council’s approach to cash management, long-term borrowing and investment of cash and this was set out in Appendix F. The Treasury Management Strategy included the prudential indicators supporting the level of proposed prudential borrowing to finance the draft Capital Programme.

Cabinet was asked to recommend to Council to agree the Fees and Charges Schedule (set out in Appendix E) and to inform Council of the allocation of budgets to Local Committees (set out in Appendix G).

In setting out the technical detail of  the draft Budget to Cabinet, the Assistant Director -Finance, in her capacity as the Council’s Section 151 Officer had considered the robustness of the estimates used in determining the 2015/16 Budget, MTFP and Council Tax requirement for 2015/16 and the adequacy of Council reserves to meet the known financial risks facing the Council over the medium term. The MTFP assumed the level of General Fund Balance (i.e. General revenue reserves) to be no less than £15m. 

The Deputy Leader thanked officers and members for their hard work in difficult circumstances in preparing the draft budget for consideration by Cabinet.  Despite the challenges facing it the Council remained committed to protecting the most vulnerable and had sought to insulate services as far as possible from effects of significant cuts in local government funding.  In the budget to be proposed 80% of the savings would be delivered internally with only 20% affecting outward facing services.  Commenting on the consultation exercise undertaken the Deputy leader advised that of the 624 respondents 68% supported a rise in council tax.  There had been less support (50%) for the proposed savings in the highways budget and as a result that proposal had been withdrawn.  Higher than anticipated council tax receipts (an additional £613k) and an extra £678k in Revenue Support Grant had required some adjustments to the proposals set out in the report and accordingly the Deputy Leader proposed revised recommendations set out below:

1.      Cabinet notes the feedback to the Budget consultation set out in Appendix D and the EIA’s and the advice of the officers.

2.      Cabinet recommends to Council the increase of Council Tax by 1.99% for 2015/16, reflecting existing strategic planning assumptions which would result in the following:- .

a)     The draft Net Revenue Budget Requirement for 2015/16 of £380.847m

b)     The Council Tax Requirement for 2015/16 of £192.259m which results in the precepts on the Districts as set out below:-

Table 2 – Precepts

£

Allerdale

34,241,496

Barrow

21,395,795

Carlisle

37,598,368

Copeland

23,510,197

Eden

23,150,952

South Lakeland

52,362,889

Total

192,259,697

 

c)      The following levels of Council Tax for each property band as set out below:-

Table 3– Council Tax Levels

£

Band A (up to £40,000)

789.74

Band B (£40,001 to £52,000)

921.36

Band C (£52,001 to £68,000)

1,052.99

Band D (£68,001 to £88,000)

1,184.61

Band E (£88,001 to £120,000)

1,447.86

Band F (£120,001 to £160,000)

1,711.10

Band G (£160,001 to £320,000)

1,974.35

Band H (£320,001 and over)

2,369.22

 

3.                 Cabinet recommends to Council a Budget for 2015/16 based on the budget proposals as set out in the Budget Consultation documents, except for the following:

(a)   those specific changes that respond to the consultation feedback and officer considerations since October, as set out in paras 5.17 to 5.28 and in Table 13.

 

(b)   the amendments as set out in the Budget Revision Schedule 1 attached utilising the Revenue Resources Unallocated of £0.613m.

 

(c)   the amendments as set out in the Budget Revision Schedule 2 attached utilising the additional Revenue Support Grant announced on 3rd February 2015 of £0.678m.

4.                 Cabinet agrees:-

a)     The detailed Local Committee revenue budget allocations of £8.407m and capital allocations of £22.022m as set out in Appendix G, subject to agreement of the total Council budget.

b)     The detailed highways capital schemes as set out in Appendix H, subject to agreement of the total Capital programme.

5.                 Cabinet recommends to Council :-

a)   The draft Medium Term Financial Plan (set out in Appendix A).

b)   The draft CCC Capital Budget for 2015/16 of £103.579m, set within the rolling programme of £304.896m (2015 - 2020).

c)   The School’s Budget for 2015/16 of £329.896m

d)   The use of reserves and levels of forecast reserves contained in the MTFP.

e)   The fees and charges schedule for 2015/16 as set out in Appendix E.

f)     The adoption and publication of the statutory Pay Policy Statement 2015/16 set out in Appendix I.

6.                 Cabinet recommends to Council the approval of the Treasury Management Strategy for 2015/16 which is set out in Appendix F, specifically the :-

 

a)   Treasury Management Strategy at Appendix F Section 4 (including the borrowing strategy is set out in Section 4.4).

b)   Annual Investment Strategy Statement at Appendix F Section 5).

c)   Prudential Indicators at Appendix F Section 6.

d)   Minimum Revenue Provision (MRP) Policy Statement at Appendix F Section 7.

7.      To delegate to the Assistant Director - Finance (Section 151 Officer) in consultation with the Leader and Deputy Leader revisions to the Draft Budget and Medium Term Financial Plan 2015-2018 and Capital Programme between Cabinet and Council meeting of 19th February 2015, including any consequential amendment arising from the revised sheets attached.’

 

The Leader spoke in support of the revised recommendations and emphasised that the magnitude of the savings required would continue for the foreseeable future given that to date only 40% had been delivered, leaving a further 60% to come.  By 2019/20 there would be no Revenue Support Grant whereas in 2012/13 this stood at £148m for Cumbria.  The changing nature of local government financing meant that funds previously allocated directly to authorities were now increasingly held by government with bids for funds needing to be submitted.  As part of the consultation exercise the public had been asked for their views on the introduction of a unitary council for Cumbria and 75% of respondents supported such a move yet the government had stated that they would not be proposing any changes in the local government structure at this point.

Cabinet members spoke in support of the proposals and on the requirement to think differently about service delivery to protect services to people whilst making the required savings.  Members were proud of the commitment to the Council paying its staff at least the Living Wage not least as the money played an important role in the cumbrian economy.    

 

RESOLVED,that

 

1.      Cabinet notes the feedback to the Budget consultation set out in Appendix D and the EIA’s and the advice of the officers.

2.      Cabinet recommends to Council the increase of Council Tax by 1.99% for 2015/16, reflecting existing strategic planning assumptions which would result in the following:- .

d)     The draft Net Revenue Budget Requirement for 2015/16 of £380.847m

e)     The Council Tax Requirement for 2015/16 of £192.259m which results in the precepts on the Districts as set out below:-

Table 2 – Precepts

£

Allerdale

34,241,496

Barrow

21,395,795

Carlisle

37,598,368

Copeland

23,510,197

Eden

23,150,952

South Lakeland

52,362,889

Total

192,259,697

 

f)        The following levels of Council Tax for each property band as set out below:-

Table 3– Council Tax Levels

£

Band A (up to £40,000)

789.74

Band B (£40,001 to £52,000)

921.36

Band C (£52,001 to £68,000)

1,052.99

Band D (£68,001 to £88,000)

1,184.61

Band E (£88,001 to £120,000)

1,447.86

Band F (£120,001 to £160,000)

1,711.10

Band G (£160,001 to £320,000)

1,974.35

Band H (£320,001 and over)

2,369.22

 

3.      Cabinet recommends to Council a Budget for 2015/16 based on the budget proposals as set out in the Budget Consultation documents, except for the following:

(d)   those specific changes that respond to the consultation feedback and officer considerations since October, as set out in paras 5.17 to 5.28 and in Table 13.

 

(e)   the amendments as set out in the Budget Revision Schedule 1 attached utilising the Revenue Resources Unallocated of £0.613m.

 

(f)     the amendments as set out in the Budget Revision Schedule 2 attached utilising the additional Revenue Support Grant announced on 3rd February 2015 of £0.678m.

4.      Cabinet agrees:-

c)      The detailed Local Committee revenue budget allocations of £8.407m and capital allocations of £22.022m as set out in Appendix G, subject to agreement of the total Council budget.

d)     The detailed highways capital schemes as set out in Appendix H, subject to agreement of the total Capital programme.

5.      Cabinet recommends to Council :-

g)   The draft Medium Term Financial Plan (set out in Appendix A).

h)   The draft CCC Capital Budget for 2015/16 of £103.579m, set within the rolling programme of £304.896m (2015 - 2020).

i)     The School’s Budget for 2015/16 of £329.896m

j)      The use of reserves and levels of forecast reserves contained in the MTFP.

k)   The fees and charges schedule for 2015/16 as set out in Appendix E.

l)      The adoption and publication of the statutory Pay Policy Statement 2015/16 set out in Appendix I.

6.                 Cabinet recommends to Council the approval of the Treasury Management Strategy for 2015/16 which is set out in Appendix F, specifically the :-

 

e)   Treasury Management Strategy at Appendix F Section 4 (including the borrowing strategy is set out in Section 4.4).

f)      Annual Investment Strategy Statement at Appendix F Section 5).

g)   Prudential Indicators at Appendix F Section 6.

h)   Minimum Revenue Provision (MRP) Policy Statement at Appendix F Section 7.

7.      To delegate to the Assistant Director - Finance (Section 151 Officer) in consultation with the Leader and Deputy Leader revisions to the Draft Budget and Medium Term Financial Plan 2015-2018 and Capital Programme between Cabinet and Council meeting of 19th February 2015, including any consequential amendment arising from the revised sheets attached.

 

 

Report author: Pam Duke

Publication date: 10/02/2015

Date of decision: 05/02/2015

Decided at meeting: 05/02/2015 - Cabinet

Accompanying Documents: