Agenda item

The Council's Final 2018/19 Budget, Medium Term Financial Strategy and Council Tax Proposal

Decision:

Cabinet:

1. Noted the forecast outturn on service directorates at period 9 and the actions being taken by SLT to manage expenditure within approved budgets set out in section 5 of the report.

2. Approved the income generation and savings proposals as set out in Appendix A of the report.

3. Considered the advice of the Chief Finance Officer as set out in Appendix F of the report when recommending the Council budget.

4. Approved the following budgets for 2018/19:

The Council’s General Fund budget as set out in Appendix D of the report.
The Delegated Schools’ draft budget set out in section 4 of the report
The Capital Programme as set out in section 9 and Appendix G of the report.

5. Delegated to the Chief Financial Officer the implementation of the 2018/19 capital and revenue proposals once approved by Council unless further reports or Cabinet Member authorities are required.

6. Agreed that the Chief Financial Officer be authorised to allocate funding from the Capital Contingency included within the draft Capital Programme.

7. Agreed that the relevant Cabinet Member, together with the Cabinet Member for Financial Management, ICT (Client) & Transformation be delegated authority to commence tender processes and accept tenders for capital schemes included within the approved programme under the block programme allocations or delegation arrangements set out in this report.

8. Agreed that to facilitate the usage of unringfenced resources, the Chief Financial Officer in consultation with Service Directors will review any such new funds allocated to Havering; make proposals for their use; and obtain approval by the Cabinet Member for Financial Management, ICT (Client) & Transformation.

9. Delegated to the Chief Financial Officer in consultation with Service Directors the authority to make any necessary changes to service and the associated budgets relating to any subsequent specific grant funding announcements, where delays may otherwise adversely impact on service delivery and/or budgetary control, subject to consultation with Cabinet Members as appropriate.

10.Approved the schedule of proposed Fees and Charges set out in Appendix J of the report, with any recommended changes in year being implemented under Cabinet Member delegation.

11.Agreed that if there are any changes to the GLA precept and/or levies, the Chief Financial Officer authorised to amend the recommended resolutions accordingly and report these to the next Council meeting as required.

12.Will recommend to Council for consideration and approval:

The General Fund budget for 2018/19
The Council Tax for Band D properties and for other Bands of properties, all as set out in Appendix D, as revised and circulated for the Greater London Authority (GLA) Council Tax.
The Delegated Schools’ budget for 2018/19, as set out in section 4 of the report.
The Capital Programme for 2018/19 as set out in section 9 and supported by Annexes 1, 2 and 3 of Appendix G.
That it passes a resolution as set out in section 11.3 of the report to enable Council Tax discounts to be given at the 2017/18 level.

Minutes:

The Leader of the Council, Councillor Roger Ramsey, presented the report to Cabinet.

The report introduced followed on from various updating reports that came before Cabinet in October, December and January all of which advised and updated on the position regarding the budget gap in the lead up to the Budget setting Cabinet meeting.

Cabinet agreed to receive the Second Dispatch Agenda.

The Council is required to set an annual budget for 2018/19 and a Mid Term Financial Strategy for the five year period ending 2022/2023. The report details recommendations to Council for the formal Budget Setting process and setting a Council Tax increase of 1%, plus a 2% Adult Social Care precept, for the Havering element of Council Tax. The report recommends to Council the Council Tax level at band D as £1363.83 before the inclusion of the GLA precept.

The Local Government Financial Settlement (LGFS) has been confirmed and some additional funding has been allocated as a result including the Adult Social Care Supplementary Grant of £600,000 which will be placed in reserves for that sole purpose. There has also been a change in the new homes Bonus which gives extra income of around £30,000 and some other smaller adjustments in tariffs and top ups. This is all very welcome and does not affect the budget recommendations being made to Cabinet in this report.

The Senior Leadership Team of the Council continues to work hard to develop proposals to balance the 2018/19 budget. Savings proposals and the application of the Government Grants have reduced the budget gap of £4.158 million in 2018/19 rising to £33.355 million by 2022/23 and this is demonstrated in Table 1 of the report.

The Mid-term Financial Strategy and Budget Update report went for discussion to the Overview and Scrutiny Board on 23^rd January, 2018. There were no comments to be brought forward to Cabinet.

The results of the public consultation produced a wide variety of views and were satisfying in so far as 60% agreed with the Council Tax budget strategy.

The public engagement and budget consultation to understand residents’ views on 2018/19 Budgets and the Medium term financial Strategy (MTFS) saving proposals and Council Tax changes began on the 5^th January and closed at mid-night on Friday 2 February 2018.

There were a total of 251 responses. The top three priority services responses want to protect are:

· School and education - 55.38%

· Adult Social Care - 36.25%

· Roads and Transport - 34.66%

The top three priority services responses want to reduce are:

· Parking - 50.60%

· Council Tax Support - 45.02%

· Planning and Building control - 39.84%

When asked if there were any comments on the Budget Strategy as a whole there were 177 responses and these were grouped into themes as follows:

• Salaries: reducing councillor’s allowances and senior staff salary

• Council tax (general comments)

- Of the 40 that commented on Council tax increase,

o 16 were in favour of an increase

o 22 were not in favour whilst

o 2 were neutral

• Protecting vulnerable residents such as the elderly and children service

• Roads: complaints about “unnecessary” council spending on road improvements such as the installation of speed bumps, enforcement of Yellow box junction

• Cutting council administration costs and back office spending

• Waste – introduction of bins

• Central government cut

• No option in consultation for not cutting any services

There was a particular emphasis on Yellow Box Enforcement and whether such enforcement is cost effective and whether such enforcement is correctly used to generate income.

The Local Government Financial Settlement details also the schools funding. The Government plans to introduce a national funding formula for schools starting this coming financial year. Havering will be able to move straight to this National Formula following consultation. This will mean that all schools will receive a minimum increase of 0.5% per pupil up to a maximum of 3% per pupil and this is demonstrated in Table 3 of the report.

One of the key aspects is the cessation of the Education Services Grant from September, 2017. For 2018/19 a sum of approximately £0.590 million has been included in the new Central School Services Block. This leaves a shortfall against the cost of providing LA statutory services and this is depicted in Table 6 of the report. It is intended that the shortfall will be managed as part of the ongoing transformational review of the service which will include an investment in education traded services which will be used to supplement £0.835 shortfall.

Table 7 of the report depicts the forecast overspend along each directorate which is reducing. In the main, this has been due to the planned contribution from the Corporate risk budget to Children’s Services and further improvement in Neighbourhoods, OneSource and the Chief Operating Officer forecasts.

Demographic growth continues to impact on the level of demand for services in the Borough particularly in housing and adult social care and this is a trend that is expected to continue in the coming years.

Negotiations continue with the Government over the pay award increase. Any changes in this will be reported back to Cabinet when known and an update, will be provided for the Council meeting, if available.

Fees and charges have been reviewed in order to deliver an increase in income of 3%. Government and specific grants are reducing outside of the general grant. The provisional Public Health Grant has seen a £0.289 million reduction.

The New Homes Bonus has been reduced by £2.640 million and it is anticipated that this will reduce to approximately £3.8 million by 2018/19. Levying Bodies need to be taken into account. The levies are part of the Local Government Settlement and are therefore taken when setting the Havering element of the Council Tax.

The estimated ELWA levy for 2018/19 is £15.992 million. If this is confirmed this will represent an increase of 7.15% or £1.067 million and is £0.067 million more than expected. The ELWA levy is based on the weight or rubbish disposed of by residents when in the normal waste or by way of recycling and this continues to present as a significant financial pressure.

Residents can assist here and make a substantial contribution to reducing the future levy by participating in the Council’s waste management and recycling initiatives.

Payments to external bodies have seen a welcome reduction and initiatives such as the Freedom Passes project have produced a benefit.

The Corporate Risk budget is available to support the corporate organisation to meet a range of necessary expenditure to meet financial pressures and unavoidable overspends. It was reported in the 2017/18 MTFS that the Corporate Risk Budget has reduced significantly in recent years. As margins reduce there is a greater need to balance the budget tightly.

The Greater London Authority (GLA) precept covers services of the Metropolitan Police, the London Fire and Emergency Planning Authority, the London Development Agency together with the core functions of the GLA and Transport for London. The precept is outside the control of the Council. It has been very disappointing for Havering to have suffered such a decrease in policing generally.

The Green Paper on Adult Social Care has been delayed until the summer of 2018 so there is real uncertainty here. This has been reflected in the assumption that the improved Better Care Fund will not continue beyond 2019/20. Cabinet will be updated as more information comes through in relation to Social Care Funding and the Fair Funding Review.

Tables 10, 11 and 12 of the report detail the Capital Programme.

There are a number of schemes which were considered by Cabinet in December. Most notably, these consist of Economic Development which includes the Bridge Close Regeneration, Mercury land Holdings Business plan Schemes and Rainham Beam Park Regeneration. In addition the SLM Leisure Contract was considered by Cabinet in November 2017.

Mercury Land Holdings has been successful in generating a worthwhile income for the Council and it is hoped that the company will continue to flourish.