It was noted that Cabinet received reports on the 28 September 2016 and the 14 December 2016 which had provided updates on developments at the national level and the consequential impact on local government funding and which also set out information on the financial position within Havering.

The October and December reports set out the Council’s financial strategy to manage the implications of funding reductions and cost pressures over 2017/18 and 2018/19. It also considered the in-year budgetary pressure and set out an approach to bringing the position back on track and mitigate the impact on the MTFS.

The December report confirmed that the Government had approved the Council’s application for a four year financial settlement. It was reported that whilst this provided for greater certainty over the MTFS cycle it would also result in substantial reductions in Government funding. As a consequence of the loss of government funding and service demand pressures the report concluded that there would be a budget gap of £13m over the three years to 2019/20 of which £3.8m relates to 2017/18.

The report also updated Members on the Local Government Financial Settlement announced on 15 December 2016, summarising the key elements of the Autumn Budget Statement, the implications for the corporate budget and the proposed financial strategy for the coming year. It also included the latest in year financial monitor and the latest proposals for the capital programme.

It was noted that Havering’s financial strategy included provision for the reduction in Revenue Support Grant (RSG) over the next three years based upon the four year financial settlement applicable from 2016/17 and these reductions were re-confirmed and would reduce from £20.89m in 2016/17 to £1.376m in 2019/20.  The impact of the settlement on Business Rates and New Homes Bonus were being evaluated although it was not expected to have a material impact on the 2017/18 forecast position as reflected in the MTFS model. A full analysis would be included in the February Council Tax setting report.

Finally, local authorities would be able to increase the Social Care Precept by up to 3% per annum in 2017/18 and 2018/19.  The additional 1% compared to the increased allowed in 2016/17 would require the authority to set out how the money was being spent on improvements in adult social care. The total increase allowed for over the three-year period to 2019/20 would be limited to 6%.

Reasons for the decision:

The decision enabled the Council to develop its budget as set out in the constitution.

Other options considered:

The Constitution required consideration of a report as a step towards setting its budget.

Cabinet:

1.         Noted the progress made to date with the development of the Council’s budget for 2017/18 and of the implications for Council Tax setting, although no decisions will be taken until the February cabinet meeting.

2.         Noted that an additional 3% increase in Council Tax precept may be levied for the sole purpose of funding and improving Adult Social Care.

3.         Noted the outcome of the Autumn Budget Statement and the likely impact on local authorities.

4.         Noted the provisional local government financial settlement announcement, and that this largely confirmed the budgetary assumptions set out in the MTFS based upon the four year financial settlement.

5.         Delegated authority to the Cabinet Member for Adult Social Services and Health, after consultation with the Leader to approve an annual spend plan for the Public Health grant.

6.         Delegated to the Directors of Children and Adults authority to agree inflation rates with social care providers for 2017/18.

7.         Noted the financial position of the Council in the current year and that action plans to recover the forecast overspend during 2016/17 and 2017/18 would be presented to Cabinet in February.

8.         Agreed the adjustments to the budget assumptions as set out in the table at paragraph 8 of the report, which give rise to an increase in the funding gap over a three year period 2017/18 to 2019/20.

9.         Approved the draft Capital programme for 2017/18 as set out in paragraph 9 for inclusion in the final Capital Strategy report to be considered at the February Cabinet meeting and for onward approval by Council.

10.       Agreed that any underspends from the Corporate Risk Budget, and from any service revenue underspends, are to be allocated to a Business Risk Reserve.

11.       Noted the summary of the GLA’s consultation budget and the expected date for the publication of the final proposals.

12.       Noted that a public engagement exercise on the budget process will be carried out during January 2017.

13.       Noted the Equalities Impact Assessment in respect of the CTS Scheme as set out in appendix C to the report.

14.       Recommended to Full Council that the CTS Scheme 2017 be approved.