Agenda item

(Director of Resources) To consider the attached report (FPM-005-2014/15).

The Director of Resources advised that the report provided a framework for the Budget 2015/16 and updated Members on a number of financial issues that would affect the Authority in the short to medium term. The greatest areas of current financial uncertainty and risk to the Authority were;

• Central Government Funding – the assumption that the overall reductions of 12.5% and 15.4% were common to each element of the Funding Assessment and on that basis it had been proposed that reduced funding to parish councils of 15.4% (£42,604) would be applied for 2015/16.
• Business Rates Retention – the basic amounts within the system had been fixed for an extended period until 2020 with an indicative tariff figures of £10.038 million and £10.315 million for 2014/15 and 2015/16 respectively. The major concern was that all appeals and refunds were to be accounted for in the new system and that in getting to a predicted level of non-domestic rates for 2013/14, allowance had to be made for the amounts of money which were anticipated to be paid out in appeals and refunds. The cash collection in the new system and the CSB budget increase of £25,000 for legal action on difficult, high value cases had proved a sound investment and boosted the collection rate to 98.09%. The current Secretary of State had indicated to an increase in percentages retained and alongside various developments opportunities in the District, the Council could be self-sufficient and not rely at all on revenue support grants within 5 years. 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 2015/16.
• Welfare Reform - the Local Council Tax Support settlement figures had been sufficient to cover the loss with a small surplus. The other welfare reforms Benefit Cap and Spare Room Subsidy had not caused major problems with many residents deciding to pay a higher proportion of their rent themselves. 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 approximately receive £130,000 in 2015/16, which would be allocated to the Continuing Services Budget. A prudent position had been adopted for future years with £130,000 taking the NHB income in the CSB to £1.95 million.
• Development Opportunities – the Winston Churchill public house site, St Johns area, Epping and the Langston Road shopping development are moving forward but it would not be prudent to include them in the Medium Term Financial Strategy until firm decisions on the different projects had been made.
• Income Streams; The actual figures up to date had been encouraging and the improved position in the second half of 2013/14 had continued into 2014/15. The North Weald Market remained on a reduced rent, with the profit share element not being triggered so far, which would reduce the CSB income and would be kept under review.
• Waste and Leisure Contract Renewals - The waste contract had been procured at a lower cost than the current contract and the savings had been included in the Medium Term Financial Strategy. 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 provision was considered as it was not sustainable in the long term given the Council’s financial position.
• Organisational Review – The 2014/15 budget had included the effects of the first stage of the organisational restructure and each Directorate was now evaluating both opportunities to improve efficiency and areas that had been historically under resourced.

The Director of Resources reported that the Council was in a stronger financial position than had been anticipated with the General Fund Reserve increasing, despite the reductions in funding. The Council was also better informed about LCTS and retained business rates with a realistic prospect of becoming self-financing over the medium to long term. If the percentage of rates retained locally were increased and the strong progress on our development sites continued the Council would be very well placed, although the General Election and possible change of Government creates a greater uncertainty overall for the medium term.

The four-year forecast would give the total CSB figures for 2014/15 revised of £13.699m and 2015/16 of £13.146m, which set the net DDF expenditure at £2.269m for the revised 2014/15 and £204,000 for 2015/16 and it was likely that the DDF would be used up in the medium term. Over the period of the MTFS the balance on the Capital Fund reduces significantly from £17.462m in 2014 to £5.702m in 2019.

Recommended:

(1)        That the establishment of a new budgetary framework including the setting of budget guidelines for 2015/16 be set including:

(a)  The ceiling for Continuing Services Budget net expenditure be no more than £13.146million including net growth;

(b)  The ceiling for District Development Fund expenditure be no more than £204,000;

(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 2018/19 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 15.4% in parish support, in line with the reductions in the central funding this Council receives be taken forward.

Reasons for 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 had 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, was necessary in relation to a particular risk. However, any delay will reduce the time available to produce strategies that comply with the guidelines.