Agenda item

Cabinet NOTED:

1.            The analysis of the National Budget and the Comprehensive Spending Review and associated announcements.

2.            The Secretary of State’s announcement on the timing of the financial settlement, which was now expected to be after Christmas.

3.            That a further report would be submitted to the next meeting of Cabinet, setting out the impact of these announcements on the Council’s financial planning.

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

The report before Members provided an update on a range of Government announcements that would impact the Council’s funding and budget setting process for a number of years to come.

Following the Chancellor’s Budget in March 2013 and the Comprehensive Spending Review announcements on 26 June 2013, the key points impacting on Havering’s long term budget strategy would be as follows:

·                     Departmental Expenditure limits would be subject to a 1% reduction.

·                     Further departmental reductions of £11.5bn for 2015/16

·                     NHS and Education remain ring fenced from any funding reductions

·                     10% cut in the Department for Communities and Local Government departmental spend

·                     The creation of a pooled fund of £3.82 billion between the NHS and local authorities in addition to the existing £1billion. It was unclear what new responsibilities would accompany this funding

·                     Public sector pay rises would be limited to an average of 1% in 2015/16 and a removal of time served pay progressions.

·                     A 1% increase Council Tax freeze grant for 2 years 2014/2015 and 2015/201616

It was explained that further announcements on local government financial settlements were expected in January 2014 which would cause difficulty in setting the Council’s budget before February 2014. 

It was acknowledged that these were challenging prospects.  The Council’s projected budget gap in funding over the next four year period had been assessed at £40million, however, this figure would be reviewed in light of the Budget and Comprehensive Spending Review announcements. Cabinet was advised that a further report would be made available at the September meeting.

There was currently a 2% limit on Council Tax increases without a referendum and that a referendum would cause further confusion with significant costs. 

Reasons for the decision

That the Council’s financial strategy takes due account of Government plans and any other material factors where these are likely to have an impact on the Council’s financial position. 

Other options considered

None. The Constitution requires this as a step towards setting the Council’s budget.

Members were united in expressing their disappointment and frustration at the Government’s decision to delay the announcement of the local settlement to January. Members recognised that the costly delay would increase the pressure on staff and the Council when setting the Council Tax and agreeing the budget for 2014/15.

Cabinet NOTED:

1.            The analysis of the National Budget and the Comprehensive Spending Review and associated announcements.

2.            The Secretary of State’s announcement on the timing of the financial settlement, which was now expected to be after Christmas.

3.            That a further report would be submitted to the next meeting of Cabinet, setting out the impact of these announcements on the Council’s financial planning.