Agenda item

Joint report of the Director of Finance (Treasurer) and Chief Fire Officer (DSFRA/18/1) attached.

The Authority considered a joint report of the Director of Finance (Treasurer) and Chief Fire Officer (DSFRA/18/1) on the proposed revenue budget and associated Council Tax levels for 2018-19.

A provisional local government settlement for 2018-19 of £22.618m had been announced on 19 December 2017, as part of a four-year grant settlement. The Settlement Funding Assessment represented a reduction for 2018-19 of 5.3% over 2017-18 and an overall reduction of 25.4% by 2019-20 when compared to the settlement for 2015-16.  The Director of Finance (Treasurer) confirmed at the meeting that the provisional settlement as announced on 19 December had subsequently been confirmed as the final settlement for 2018-19.

The government had also announced a threshold of 3% for Council Tax increases for the next two financial years, beyond which local authorities would be required to hold a referendum.  This was a 1% increase over the 2017-18 threshold, possibly in recognition of likely pay awards.  The proposed budget contained provision for a 3% pay award for uniformed staff.  Each 1% pay award equated, for this Authority, to a cost of £0.517m which was greater than the income that an additional 1% Council Tax increase would generate (£0.487m).  The report also identified, however, the view of the Director of Finance (Treasurer) that, in light of an indicative cost of £2.3m to hold a referendum, consideration of a Council Tax increase in excess of 3% was not a viable option for this Authority.

A core budget requirement of £75.871m (representing a 4.51% [£3.275m] increase over the 2017-18 budget) for 2018-19 had been identified and, in light of the referendum threshold, two associated Council Tax options were proposed:

Option A – freeze Council Tax at the 2017-18 level (£81.57 for a Band D property);

Option B – increase Council Tax by 2.99% above the 2017-18 level (£84.01 for a Band D property).

Even with a 2.99% increase, the core budget requirement exceeded available funding.  Consequently, the report identified savings of £0.711m and also proposed that, depending on the decision on the level of Council Tax to be set, the remaining shortfall in funding required to set a balanced budget in 2018-19 should, as a short-term solution (given the need to maintain the Comprehensive Spending Review earmarked reserve to fund future change activity), be met by reducing the revenue budget contribution to capital funding as indicated:

Option A (Council Tax freeze) – reduction of £2.571m;

Option B (2.99% Council Tax increase) – reduction of £1.289m.

While the four-year settlement afforded greater certainty for future funding, the Authority’s Medium Term Financial Plan indicated that further savings would be required beyond 2018-19 to deliver a balanced budget, with the actual level of savings ranging between £8.4m (2.99% Council Tax increase) to £14.6m (Council Tax Freeze).

As required by the Local Government Finance Act 1992, non-domestic rate payers

had been consulted on the proposals for Council Tax levels. Additionally, as previously agreed by the Authority, public consultation had also taken place. The consultation had been conducted by telephone surveys and by using social media, within the budget of £13,500 as previously agreed by the Authority.  The results of the consultation, which ran from 13 November to 18 December 2017, were, in summary:

·         for the telephone survey, the majority of business respondents (62%) and the public (63%) felt that it would be reasonable for the Authority to increase its precept to lessen the impact of funding cuts;

·         73% of on-line responses were supportive of increasing the precept;

·         the majority of business respondents (50%) and the public (60%) were in favour of a flat-rate £5 precept increase, with this being supported by 48% of the respondents to the online survey;

·         the Twitter poll resulted in responses of 30% support for a £5 flat-rate increase, 21% support for a 2% increase, 15% support for a 1% increase, with 34% being in favour of no increase at all.

The report also featured a statement on the robustness of the budget estimates and adequacy of the level of the Authority’s reserves prepared by the Proper Financial Officer in accordance with the requirements of the Local Government Act 2003.

The 2018-19 revenue budget and council tax levels and been considered by the Resources Committee (Budget) meeting held on 8 February 2018 which had resolved (Minute RC/13 refers)

“that it be recommended to the Authority that the level of Council Tax in

2018-19 for a Band D property be set at £84.01, as outlined in Option B of report RC/18/7, representing a 2.99% increase over 2017-18”.

Following debate on the matter, Councillor Hannaford MOVED, with Councillor Greenslade seconding:

“that the Authority approves Option B – a 2.99% increase in Council Tax for the 2018-19 financial year.”

Members then debated proposals to amend this Motion to the effect of:

·         making representations to the Government expressing disappointment that, for the forthcoming (2018-19) financial year the Authority had not been afforded the same flexibility on the Council Tax referendum limit as had applied to other authorities with similar sized budgets (despite having made representations to this effect); and

·         that, for the 2019-20 financial year, the Authority should develop a business case on Council Tax referendum limits reflecting Service need requirements, with local Members of Parliament engaged in both supporting and promoting this business case.

Councillor Hannaford indicated that he was prepared to accept an amendment to this effect.  The Motion as duly amended was then put to the vote and declared CARRIED, unanimously, whereupon it was

RESOLVED

(i).       that, as recommended by the Resources Committee meeting held on 8 February 2018 (Minute RC/13 refers), the level of Council Tax in 2018-19 for a Band D property be set at £84.01, as outlined in Option B of report DSFRA/18/1, representing a 2.99% increase over 2017-18;

(ii).      that, accordingly, a Net Revenue Budget Requirement for 2018-19 of £73,870,800 be approved;

(iii).     that, as a consequence of the decisions at (i) and (ii) above:

(A).     the tax base for payment purposes and the precept required from each billing authority for payment of a total precept of £50,329,338 (Option B), as detailed on page 2 of the respective budget booklet (circulated separately with the agenda for the meeting) and reproduced in the following table, be approved:

(B).     that the Council Tax for each property band A to H associated with the total precept of £50,329,338 (Option B), as detailed on page 2 of the respective budget booklet and reproduced in the following table, be approved:

(iv).     that the Treasurer’s “Statement of the Robustness of the Budget Estimates and the Adequacy of the Authority’s Reserve Balances”, as set out at Appendix B to the report and reproduced at Appendix A to these Minutes, be endorsed;

(v).      that the Director of Finance (Treasurer) be asked to write on behalf of the Authority to the Ministry for Housing, Communities and Local Government expressing disappointment that, for the forthcoming (2018-19) financial year the Authority had not been afforded the same flexibility on the Council Tax referendum limit as had applied to other authorities with similar sized budgets (despite having made representations to this effect); and

(vi).     that, for the 2019-20 financial year, a business case on Council Tax referendum limits (reflecting Service need requirements) be developed, with local Members of Parliament engaged in both supporting and promoting this business case.

(SEE ALSO MINUTE DSFRA/63(c) ABOVE).