Agenda item - Council Budgets 2015/16

(Finance Portfolio Holder) To consider the attached report (C-067-2014/15).

(1) That the following guidelines for the Council’s General Fund Budget in 2015/16 be recommended to the Council for adoption:

(a) the revised revenue estimates for 2014/15, which were anticipated to increase the General Fund balance by £7,000;

(b) an increase in the target for the 2015/16 Continuing Services Budget (CSB) from £13.15million to £13.35million (including growth items);

(c) an increase in the target for the 2015/16 District Development Fund (DDF) net spend from £204,000 to £1.123million;

(d) no change in the District Council Tax for a Band ‘D’ property to keep the charge at £148.77;

(e) the estimated reduction in General Fund balances in 2015/16 of £30,000;

(f) the four-year Capital Programme 2015/16 – 2018/19;

(g) the Medium Term Financial Strategy 2014/15 – 2018/19; and

(h) the Council’s policy on General Fund Revenue Balances to remain that they be allowed to fall no lower than 25% of the Net Budget Requirement;

(2) That the Housing Revenue Account (HRA) budget for 2015/16, including the revised revenue estimates for 2014/15, be recommended to the Council for approval;

(3) That the Council be requested to approve the proposed rent increases proposed for 2015/16 to give an overall average increase of 2.2%;

(4) That the creation of a new earmarked reserve, called the ‘Invest to Save Fund’, in the sum of £500,000 to consider proposals which would reduce the Continuing Services Budget in the long-term be recommended to the Council for approval; and

(5) That the Chief Financial Officer’s report to the Council on the robustness of the estimates for the purposes of the Council’s 2015/16 budgets and the adequacy of the reserves be noted.

The Finance Portfolio Holder presented a report on the Council’s proposed Budgets for 2015/16.

The Portfolio Holder set out the detailed recommendations for the Council’s budget for 2015/16. The proposed budget would use £30,000 of reserves but the Council’s policy on the level of reserves could still be maintained throughout the period of the Medium Term Financial Strategy (MTFS). Over the course of the Strategy, the use of reserves to support spending would peak at £347,000 in 2016/17 and then reduce to £179,000 in 2018/19. The budget was based on the assumption that Council Tax would be frozen and that average Housing Revenue Account rents would increase by 2.2% in 2015/16.

The Portfolio Holder also highlighted the Chief Financial Officer’s report on the robustness of the estimates for the purposes of the Council’s 2015/16 budgets and the adequacy of the reserves within the budget report. It stated that the estimates as presented were sufficiently robust for the purposes of the Council’s overall budget for 2015/16. In addition, the Council’s reserves were adequate to cope with the financial risks facing the Council in 2015/16, but that further savings would be required in future years to bring the budget back into balance in the medium term. Concerns about the New Homes Bonus and potential changes to the funding structure for local authorities due to the forthcoming General Election in May 2015 were noted.

The Portfolio Holder proposed the creation of a new earmarked reserve, called the ‘Invest to Save Fund’, with an initial allocation of £500,000 to consider proposals which would reduce the Continuing Services Budget in the long-term. It was intended for all proposals to be considered initially by the Finance & Performance Management Cabinet Committee, with recommendations made to the Cabinet for decision.

The Cabinet noted that the proposed funding from Central Government of £5.497million was a reduction of 14.2% from 2014/15. Since the Medium Term Financial Strategy had been published in the Summer, the ceiling for the Continuing Services Budget had risen by £200,000 to £13.35million, and the ceiling for the District Development Fund had risen by £919,000 to £1.123million. However, there had been an underspend of £1.147million in 2014/15 and, taking the two years together, there would be a net underspend of £228,000 for the District Development Fund. Although the four-year Capital Programme envisaged expenditure of £116million, it was anticipated that there would still be £1.8million of usable capital receipts at the end of this period. The balance of the Housing Revenue Account was expected to be £2.03million at 31 March 2016, after a deficit of £987,000 in 2014/15 and a surplus of £52,000 in 2015/16.

The Portfolio Holder clarified that the ‘Transformation Fund’ had financed the necessary changes arising from the Management reorganisation undertaken by the Chief Executive last year. The proposed new Fund would be used for implementation costs from new measures that would reduce the Continuing Services Budget. The Cabinet welcomed the establishment of the new Fund, recognising that the need to reduce the Continuing Services Budget and for the Council to become as self-financing as possible. It was hoped that some clear proposals would be put forward for the Cabinet to consider in the future.

The Leader of the Council commended the proposed budget to the Cabinet and highlighted that the District Council Tax had again remained unchanged whilst front-line services had been protected. However, the Council needed to protect itself for the future and the earlier start to the budget setting process in July had helped to achieve this.

Decision: