Agenda item

The Board were presented the Capital Strategy and Programme, the Treasury Management Strategy Statement 2019/20 and the 2019/20 Budget and 2019-2023 Medium Term Financial Strategy.

In July 2018 the Council had a budget gap for 2019/20 of £14.7m rising to £37.8m over 4 years.  The Council’s Medium Term Financial Plan estimated the likely pressures which the Council could face over the next four years (including 2019/20) and had identified that the main pressures were in the following areas:

•      Central Government Cuts

•      Inflation

•      Demographic Pressures (Social Care and Homelessness)

•      Capital Financing Costs

•      Cost of Waste Disposal (East London Waste Levy)

In June and July, the Council identified over £7m of savings, of which over £3m of these savings would contribute to the 2019/20 budget. Every assumption in the Medium Term Financial Strategy was tested and updated to ensure the most accurate estimates were used.  The transformation programme was now fully underway and had already identified £18.5m of savings (£4.8m in 2019/20). 

The Council undertook a comprehensive consultation process on the budget and the budget was updated to include Member priorities.  The regeneration programme was at the heart of the Council’s plans and business cases were going to Cabinet in February 2019 and were fully incorporated in the financial planning.

The budget key headlines were:

·           A council tax increase of 3.5% council tax (1.25% for main Council services plus 2% Adult Social Care precept);

·           £40 million over four years had been included in the revenue and capital budgets to improve roads and pavements;

·           £400,000 to increase the frequency of street cleaning in residential streets;

·           £11.9million to improve leisure facilities; £18.8million to expand school place; and

·           £8.2million to improve neighbourhoods, build genuinely affordable homes and create jobs; and £250,000 to improve community safety through more effective use of CCTV.

Members were advised that key issues to consider on the budget gap in later years, particularly 2020/21 were:

•        The new Spending Review was due to be implemented in 2019;

•        The Council may be too pessimistic regarding the Fair Funding Review which distributed funding across local authorities;

•        New savings proposals continued to be considered through the Transformation Programme; and

•        The aim for future years was only to consider council tax increases to fund improved services.

The inevitable risks and uncertainties in planning beyond 2019/20 included:

•      The potential implications from the change in relationship between the UK and EU;

•      Changes in interest rates and inflation;

•      Demographic Pressures;

•      Spending Review 2019;

•      Fair Funding Review;

•      Adult Social Care Green Paper;

•      Reform of Business Rates;

•      Complexity of the Regeneration Programmes; and

•      Future waste disposal arrangements.

During discussion, concern was expressed that the Fair Funding review would adversely impact on inner and outer London, upon which it was explained that the current proposals would affect the inner London boroughs.

The London Mayor was proposing an 8.9% increase in Council tax, which was higher than in recent years, due to the additional investment in crime, in particular front policing officers.  The proposal was being scrutinised by the Greater London Authority.

Members suggested that the topic group on debt collection be reconvened and were advised that officers were not concerned regarding the 97% council tax collection rate, and there would be ongoing attempts after year end to collect any outstanding tax due.

Members raised concern regarding the risk of Brexit on the market value of properties and were reassured as Havering would become more connected to the South East which should secure property prices and that modest property prices had been built into business plans. The benefit of regeneration in the borough was that it would uplift property prices.  However, the market would continue to be reviewed annually.

Members expressed concern of impact that business rates would have on the local economy and raised that importance of supporting the local businesses and the high street.

The Board requested that further detail on the CCTV expenditure be circulated Members. 

The Board RESOLVED to consider, review and scrutinise the content of the three reports.