Agenda item

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

At its previous meeting, Cabinet received a report which set out an update on national developments and information on the financial position within Havering.

The report updated Members on the progress of the corporate budget and the proposed financial strategy for responding to the financial position facing the Council. It was announced that £13million worth of savings would have to be found in the 2013/14 budget, which would be submitted for consideration at the February meeting of Cabinet.

The report set out the additional proposals now identified for consideration by all the relevant Committees and for consultation with stakeholders.

The provisional Local Government Financial Settlement had been announced with grant funding losses of £2million for 2013/14 and £6million for 2014/15. It was explained that additional budget savings of £4.5million would have to be found over the next two years to accommodate the grant losses. The loss of grant funding for specific projects such as the Early Intervention Grant was a particular concern for Cabinet Members as the shortfall in funding would need to be found elsewhere within the budget. It was anticipated that there would be a gross budget gap of £8.6million for 2013/14 and 2014/15, with the net figure amounting to £2.7million.

With regard to the formula grant damping, concerns had been raised with the Department for Communities and Local Government (DCLG) over the precise methodology used for calculating the figures referred to in the report. A response from DLCG was expected in the coming weeks.

Senior Members met with Rt. Hon. Don Foster MP to explain the difficult financial position Havering found itself in. A paper setting out specific details was forwarded to the Minster, a copy of which would be included in the budget report to the February Cabinet meeting.

Cabinet noted that since the report had been drafted, the funding for the transfer of the Public Health function to the Council had been announced. The Council would receive £8.833million for 2013/14 and £9.716million for 2014/15. Members were reminded that this funding was ring-fenced.

Other relevant details were included in the report, together with a summary of the key elements of the Autumn Budget Statement.

Reasons for the decision:

The report enabled the Council to develop its budget as set out in its Constitution.

Other options considered:

None.  The Constitution required this as a step towards setting its budget.

Members were joined in their praise for staff who had drafted the report in challenging circumstances given the lateness of the disclosure of the grant funding. Members also expressed their disappointment that the recent revisions to the local government funding arrangements had, in their view, resulted in an even more complex system which left them little time to consider the budgetary implications for the Council.

Suggestions were made as to how the Council could maximise its financial position, including the development of a business growth strategy, and alternative investments for the Council’s Pension Fund.

There was also a brief discussion on the possibility of seeking judicial review of the local government grant formula. It was explained that discussions on such matters were premature as further information was awaited from DCLG. After that point the Council would consider its position.

Cabinet:

1.         Noted the progress made to date with the development of the Council’s budget for 2013/14 and beyond.

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

3.         Noted the outcome of the provisional local government financial settlement announcement, and that officers were continuing to work on the details as the information was produced very late, or in some cases, still awaited.

4.         Noted, arising from the settlement, the reductions in mainstream Government funding for 2013/14 and 2014/15, of around £2m and £6m respectively, that equate to additional reductions of around £1.5m and £3m, or £4.5m in total.

5.         Noted the potential reduction in funding in early intervention services, which was still under review.

6.         Noted that a response to the consultation process had been submitted and that a meeting with the Minister had taken place.

7.         Noted the expected date for the announcement of the final settlement and that, owing to timing, further supplemental information to the main Council Tax report may need to be submitted at the February Cabinet meeting.

8.         Noted that the proposals contained in the reports to Cabinet in July 2010 and July 2011 had been incorporated in the Council’s future budget as appropriate.

9.         Noted that the Administration was committed to maintaining the stability of the Council's finances whilst doing everything it could to keep Council Tax rises to a minimum and if at all possible, to freeze Havering’s Council Tax at the current level.

10.      Noted the Council’s intention to take advantage of the new Council Tax freeze grant for 2013/14.

11.      Issued the Cabinet report for consultation to Members, the unions and affected staff, and other stakeholder groups.

12.      Agreed that a consultative presentation would be made to a joint meeting of the Overview & Scrutiny Committees.

13.      Noted the financial position of the Council in the current year.

14.      Agreed that any future underspends from the Corporate Contingency Fund, from the Transformation budget, and from any service revenue underspends, be allocated to the Strategic Reserve.

15.      Approved the updated version of the Corporate Plan set out in Appendix F of the Cabinet report.

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