Agenda item

(Director of Finance & ICT) To consider the attached report (FPM-006-2013/14).

The Director of Finance and ICT presented a report regarding three financial consultation papers, a guidance note on capitalisation procedures and a prospectus for business rates pooling from the Government. Two of these consultations ran for eight weeks to 24 September 2013 and other for ten weeks up until 2 October 2013.

The Director advised that the Technical Consultation regarding the Local Government Finance Settlement 2014/15 and 2015/16 sought views on a range of detailed and technical issues. The illustrative figures for the 2014/15 Settlement were published on 4 February 2013 and already showed a significant reduction in funding with a further 1% reduction from the local government spending control totals. The increased amount of funding held back would cover safety net payments, as part of the local retention of business rates. The Spending Review earlier in the year had shown a headline reduction in local government funding in 2015/16 of 10%, for individual district councils the reductions would exceed 15%. The updated Medium Term Financial Strategy (MTFS) and Financial Issues Paper had been adjusted to reflect the greater funding reductions in 2014/15 and 2015/16.

The Director advised that the Technical Consultation for New Homes Bonus and the Local Growth Fund sought views on the suggested mechanism for the pooling of £400 million of New Homes Bonus (NHB) through Local Enterprise Partnerships to support strategic housing and other local economic growth priorities.

The key issue in the consultation was on how much individual authorities would lose to fund the £400 million. Question two proposed that the same percentage reduction be applied to the NHB of all authorities to achieve the required top slice of £400 million which would be approximately 35%, and in monetary terms for the Council would be close to £800,000 in 2015/16 and approaching £1 million in subsequent years (when the scheme would have been in place for a full six years). Question 3 proposed an alternative for two tier areas that would see county councils lose all their NHB and districts making up the additional amount to reach £400 million overall. The proposal would reduce the loss from 35% to 19% and in monetary terms it would be £425,000 in 2015/16 rising above £500,000 in later years.

The Local Government Association had criticised the top slicing of NHB but given the conflict that questions 2 and 3 inspired between counties and districts, had not expressed a view on the method. It was likely that counties would respond in favour of question 2 and so it is important that districts respond in favour of question 3. The MTFS had been prepared on the prudent basis that the Council would lose 35% of the NHB from 2015/16.

The Director advised on the consultation document regarding the proposals for the use of capital receipts from asset sales to invest in reforming services aimed to gauge the level of interest from local government for the use of capital receipts to pay for the revenue costs of reforming, integrating or restructuring services, which required authorities to draw up detailed business cases and disposal plans that could be aborted if they were unlucky in the lottery of the application process.

The Cabinet Committee remarked on the usefulness of the comments and that they should be included with the draft responses, to make the Council’s responses more robust. Members requested that the draft responses be agreed in liaison with the Chairman.

Resolved:

(1)       That the proposed responses to the Technical Consultation regarding the Local Government Finance Settlement 2014/15 and 2015/16, New Homes Bonus and the Local Growth Fund and the Proposals for the use of Capital Receipts from Asset Sales to Invest in Reforming Services are more robustly worded in favour of the council’s views and include the officers comments within the draft responses.

Reasons for Proposed Decision:

To determine the responses to be made to the consultations.

Other Options Considered and Rejected:

Members could decide to not respond, to respond in part or to respond in full to each of the three consultations.