Agenda item

(Director of Finance & ICT) To consider the report (FPM-010-2013/14). Report to follow.

The Director of Finance & ICT presented the Financial Issues Paper, which provided the framework for the Council’s budget in 2014/15 and highlighted a number of financial issues that would affect the Council in the short to medium term.

The Director reported that the greatest area of current financial uncertainly and risks to the Council were:

·         Central Government Funding – the assumption that the overall reductions of 13.6% and 14.1% were common to each element of the Funding Assessment and on that basis it had been proposed that reduced funding to parish councils would be applied 13.6% (£43,621) for 2014/15 and 14.1% (£39,007) for 2015/16.

·         Business Rates Retention – the cash collection had not been a concern but the reduction on the overall value of the rating list had been a concern as the Council retained 40% of the gains and losses and the effect of potential loss of businesses to the Enterprise zone in a neighbouring district, coupled with the lack of progress on the appeals position for non-domestic rates paid prior to 1 April 2013. There was also a possibility of pooling with other authorities to share the risk and possibly reduce levy payments through the Essex Leaders Strategic Finance Group which should be in place for 2014/15.

·         Welfare Reform – the Local Council Tax Support settlement figures had been sufficient to cover the loss to parish and the districts expenditure with a small surplus. The other welfare reforms Benefit Cap and Spare Room Subsidy had only just been implemented and early indications showed that the collection rate for housing rents for the first quarter had fallen to 92.17% with the target being 96%. The Universal Credit had been subjected to delays and therefore clarity would still be required on the Councils role.

·         New Homes Bonus – The Council would receive £495,000 in 2014/15, which would be allocated to the Continuing Services Budget. A prudent position had been adopted for future years with £445,000 built into the Medium Term Financial Strategy.

·         Development Opportunities – These would not be prudent to be included in the Medium Term Financial Strategy until firm decisions on the different projects had been made.

·         Reducing Income Streams – The actual figures up to date had not been encouraging and the North Weald Market remained on a reduced rent, with the profit share element not being triggered so far in 2013, which would reduce the CSB income by £200,000 and adjust the Medium Term Financial Strategy.    

·         Waste and Leisure Contracts Renewals – The waste contract would not be included in the Medium Term Financial Strategy as it had been too early in the procurement and the Leisure Management Contract had been extended for another three years, whilst a Leisure Strategy was being prepared and the Council’s role in leisure provisions was considered.

·         Organisational Review – Any potential changes, in the structure of the Council had not yet been included, although it had been anticipated that it would be included in the final figures for the 2014/15 budget.

The Director reported that the Council was in a stronger financial position than had been anticipated due to the greater level of savings in 2012/13 and reductions in underspent budgets. However the greater challenge lay ahead with future funding reductions in Government grants, top slicing of the NHB and a drop in local income streams. The net CSB savings required £2.3million of savings across the forecast period and this would lead to tough decisions on fees and charges and future level of service provisions, in particularly in discretionary areas. The balance at the end of 2013/14 on the general fund reserve was predicted to be £9.466m and a balance of £2m in DDF, which means that the Council does not need to make savings in year one but can take a measured approach to reduce net spending.

Recommended:

(1)       That the establishment of a new budgetary framework including the setting of budget guidelines for 2014/15 be set including:

(a)     The ceiling for Continuing Services Budget net expenditure be no more than £14,069million including net growth;

(b)     The ceiling for District Development Fund expenditure be no more than £142,000;

(c)     The balances continue to be aligned to the Council’s net budget requirement and that balances be allowed to fall no lower than 25% of the net budget requirement; and

(d)     The District Council Tax not be increased, with Council Tax for a Band ‘D’ property remaining at £148.77.

(2)       That a revised Medium Term Financial Strategy for the period to 2017/18 be developed accordingly:

(3)       That communication of the revised Medium Term Financial Strategy to staff, partners and other stakeholders be undertaken;

(4)       That a detailed review of fees and charges, specifically parking charges be undertaken; and

(5)       That reductions of 13.6% and 14.1% in parish support, in line with the reductions in the central funding this Council receives be taken forward.

Reasons for Proposed Decisions:

By setting out clear guidelines at this stage the Committee establishes a framework to work within in developing growth and savings proposals. This should help avoid late changes to the budget and ensure that all changes to services have been carefully considered.

Other Options Considered and Rejected:

Members could decide to wait until later in the budget cycle to provide guidelines if they felt more information, or a greater degree of certainty, were necessary in relation to a particular risk. However, any delay will reduce the time available to produce strategies that comply with the guidelines.