Agenda item

Councillor Roger Ramsey, Cabinet Member for Value, introduced the report.

It was explained that over the course of the previous two years, Havering Council had agreed a package of savings to mitigate the impact of very significant cuts in central government funding to local authorities.

These savings, totalling in excess of £19 million in the first tranche, with a further £16 plus in the second tranche, consisted of a range of measures designed to reduce back-office costs, cut bureaucracy and focus resources where they would have the most impact – while remaining fair to those local residents who relied most on the Council for their day-to-day support.

Government plans for radical changes to a number of areas had been announced over this period, with more detail gradually emerging. These changes would fundamentally alter the way in which local authorities were funded.

The report also updated Cabinet Members on developments relating to the localisation of business rates.  The current arrangement where local authorities effectively collected business rates on behalf of the Government and receive general grant funding, would be replaced with a system whereby local authorities would retain funds generated locally through business rates. However, the proposals announced by the Government would not see full retention.  Instead, it had been proposed that authorities would retain only 50% of the sum collected, with the remaining 50% being returned to the Government.  In return, local authorities would receive a general grant.  There would also be limits on how much authorities could “gain” or “loose” through local shifts in the level of business rates, so for example, a material reduction in local business rates would be compensated for.

Details of funding, including the base amount for business rates and the level of general grant, would be set out in the Local Government Financial Settlement (LGFS).  The exact funding position would not be known until the settlement was released which was not expected until December.  This would mean that a significant amount of work would need to be undertaken at that time and that it would not be possible to provide details to Cabinet until January, when budget proposals were formally submitted for consultation purposes.  

It was noted that further reports would be submitted to Cabinet as more information became available on the various issues covered in the report.  It was proposed to provide an update to Cabinet at the next meeting on a range of other financial matters and an assessment of the financial position and its potential impact on 2013/14.

A joint Overview and Scrutiny Committee meeting would be held to consider budget proposals, however the date for that meeting could not fixed as the precise date for the receipt of the Local Government Financial Settlement was not yet known although it was anticipated to be towards the latter half of December.

Cabinet AGREED:

1.         To note the current position with developments relating to the funding of local authorities through the localisation of business rates.

2.                  To note that details of the Local Government Financial Settlement for 2013/14 would be reported to Cabinet in full in January.

3.                  To delegate to the Cabinet Member for Value approval of the Council’s response to the technical consultation on the localisation of business rates.

4. To note that a further report would be submitted to Cabinet on a range of other financial matters.

Reasons for the decision:

It was essential that the Council’s financial strategy took due account of Government plans, and any other material factors where these were likely to have an impact on the Council’s financial position.  The report provided an update to Cabinet on the most immediate issue relevant to the budget setting process.

Other options considered:

None.  The Constitution required the report as a step towards setting the Council’s budget.