Agenda item

To consider the attached report (C-028-2019-20).

The Cabinet noted:

1.    That the Financial Strategy of the Authority had been further developed and consisted of four linked papers. The papers and figures were subject to final review because of Government announcements and final due diligence.

2.    That to allow for this level of final change before presentation of the Financial Strategy to the Full Council in February adjustments with a cumulative net impact of £500,000 can be made on the direction of the Leader in consultation with the Portfolio Holder for Finance and the Section 151 Officer and reported back to the Cabinet.

3.    That adjustments to the papers with a value more than £500,000 were brought back to the Cabinet.

Paper A, Medium Term Financial Strategy:

1.    The Cabinet approved the approach set out in the Medium Term Financial Strategy, particularly in respect of inflation of cost, charges and fees and the aim to maintain the financial strength of the Authority as evidenced by reserve balances.

2.    The Cabinet agreed to support the increase in the importance of the income from Qualis in respect of the medium term financial strategy and the budget.

Paper B, Budget 2020/21:

1.    Cabinet approved the 2020/21 budget in outline and confirmed the approach to cost and income inflation at 3.0%, noting that rents would rise per the national formula at 2.7% and car parking income would not rise at all pending the outcome of the review.

2.    The Cabinet approved the 2020/21 budget in outline and confirmed the list of developments for which funding would be released on implementation.

3.    The Cabinet approved the general and HRA capital spend of £26,171,528 in total.

4.    The Cabinet approved the loans to Qualis which totalled up to £160m in 2020/21 as set out in the report.

5.    The Cabinet approved the 2020/21 budget in outline and confirmed that the overall funding adjustments for District Development Fund and savings and contingency were as set out, i.e. a net draw from DDF of £1,774,906 (£2m forecast last year), £500,000 of savings, the formation of a contingency fund assumed spent of £1,095,540.

Paper C, Prudential Indicators:

1.    The Cabinet noted the intent of keeping the financial strength of the Authority at current levels.

2.    The Cabinet noted the impact of taking loans and onward granting loans to Qualis with a margin of profit for the Authority.

3.    The Cabinet noted the general risk price approach to the loans granted to Qualis.

4.    The Cabinet noted that the full set of prudential indicators along with the treasury strategy would be taken to the Full Council in February.

Paper D, Council Tax Increase:

1.    The Cabinet approved the council tax increase of 1.5% (half the predicted inflation rate) for 2020/21.

2.    The Cabinet noted that in 2021/22 the options to increase or reduce council tax rates exists (though the Government expectation on what should be raised from council tax should be noted).

The Leader of the Council, in the absence of the Business Support Services Portfolio Holder, introduced the report on the Finance Strategy, noting that there were four papers to this report covering the Medium-Term Financial Strategy; the Budget for 2020/21; the Prudential Indicators; and the Council Tax setting. The main aim of the financial strategy was to support the priorities of the authority through self-sufficiency and autonomy through sustainable growth.

In most respects the financial plan for the next five years took a prudent approach to cost and income change and neither increases nor depletes reserves.

The most significant change in this MTFS was the forecast growing income stream from Qualis, a wholly owned group of companies. The income from Qualis was designed to grow to be significant and to ensure sustainability, and allowing a new fiscal approach to evolve.

The Budget paper was not a decision paper but sought a further Cabinet steer on both the general assumptions that drive the budget in Section 2 and the specific development proposals set-out in Section 3 of the report.

The paper had been put together following consideration of various options to raise council tax.   This paper was written around raising council tax by 1.5%, half the predicted rate of inflation.  

As for Prudential Indicators, the Local Government Act 2003 required the Council to have regard to the Chartered Institute of Public Finance and Accountancy’s Prudential Code for Capital Finance in Local Authorities (the Prudential Code) when determining how much money it could afford to borrow.

The objectives of the Prudential Code were to ensure, within a clear framework, that the capital investment plans of local authorities were affordable, prudent and sustainable, and that treasury management decisions were taken in accordance with good professional practice. To demonstrate that the Council had fulfilled these objectives, the Prudential Code set out indicators that must be set and monitored each year.

As for Council Tax setting - the Cabinet must recommend a Council Tax Rate to the Council in February. The Cabinet was aware that general inflation trends were running at around 3.0% but were also aware of the burden of council tax on individual households and that currently discards of more than £6m are granted.

Cabinet were also aware that new income sources from Qualis would commence in 2020/21 and part of the benefit of this would allow council tax rises to be pegged at half the inflation rate, i.e. 1.5%.

The Authority was awaiting precept information from parishes, the county council and other county-wide bodies. These precepts would be included in the final budget figures presented to Council in February.

Councillor Jon Whitehouse asked if, as in previous years, members could be provided with a four-year forecast of how the balances change. It was agreed that this could be provided when the report went up to full council.

Councillor Brookes asked if the Development company would also develop Ongar. She was told that there would be some development in 20/21 and a Cabinet report will be coming forward for the options that were being considered for Ongar Leisure Centre.

DECISIONS:

The Cabinet noted:

1.    That the Financial Strategy of the Authority had been further developed and consisted of four linked papers. The papers and figures were subject to final review because of Government announcements and final due diligence.

2.    That to allow for this level of final change before presentation of the Financial Strategy to the Full Council in February adjustments with a cumulative net impact of £500,000 can be made on the direction of the Leader in consultation with the Portfolio Holder for Finance and the Section 151 Officer and reported back to the Cabinet.

3.    That adjustments to the papers with a value more than £500,000 were brought back to the Cabinet.

Paper A, Medium Term Financial Strategy:

1.    The Cabinet approved the approach set out in the Medium-Term Financial Strategy, particularly in respect of inflation of cost, charges and fees and the aim to maintain the financial strength of the Authority as evidenced by reserve balances.

2.    The Cabinet agreed to support the increase in the importance of the income from Qualis in respect of the medium-term financial strategy and the budget.

Paper B, Budget 2020/21:

1.    Cabinet approved the 2020/21 budget in outline and confirmed the approach to cost and income inflation at 3.0%, noting that rents would rise per the national formula at 2.7% and car parking income would not rise at all pending the outcome of the review.

2.    The Cabinet approved the 2020/21 budget in outline and confirmed the list of developments for which funding would be released on implementation.

3.    The Cabinet approved the general and HRA capital spend of £26,171,528 in total.

4.    The Cabinet approved the loans to Qualis which totalled up to £160m in 2020/21 as set out in the report.

5.    The Cabinet approved the 2020/21 budget in outline and confirmed that the overall funding adjustments for District Development Fund and savings and contingency were as set out, i.e. a net draw from DDF of £1,774,906 (£2m forecast last year), £500,000 of savings, the formation of a contingency fund assumed spent of £1,095,540.

Paper C, Prudential Indicators:

1.    The Cabinet noted the intent of keeping the financial strength of the Authority at current levels.

2.    The Cabinet noted the impact of taking loans and onward granting loans to Qualis with a margin of profit for the Authority.

3.    The Cabinet noted the general risk price approach to the loans granted to Qualis.

4.    The Cabinet noted that the full set of prudential indicators along with the treasury strategy would be taken to the Full Council in February.

Paper D, Council Tax Increase:

1.    The Cabinet approved the council tax increase of 1.5% (half the predicted inflation rate) for 2020/21.

2.    The Cabinet noted that in 2021/22 the options to increase or reduce council tax rates exists (though the Government expectation on what should be raised from council tax should be noted).

Reasons for Proposed Decision:

The Budget was a statutory requirement for the Council.

Other Options for Action:

N/A.