Agenda item - Council Budgets 2016/17

(Finance Portfolio Holder) To consider the attached report (C-067-2015/16).

(1) That the following guidelines for the Council’s General Fund Budget in 2016/17 be recommended to the Council for adoption:

(a) the revised revenue estimates for 2015/16, which were anticipated to decrease the General Fund balance by £1.55million;

(b) confirmation of an increase in the target for the 2016/17 Continuing Services Budget from £13.0million to £13.25million (including growth items);

(c) an increase in the target for the 2016/17 District Development Fund net spend from £0.55million to £0.75million;

(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 of £36,000 in 2016/17;

(f) the four-year Capital Programme for the period 2016/17 to 2019/20, and including the use of £3million of the General Fund balance in 2015/16;

(g) the Medium Term Financial Strategy for the period 2015/16 to 2019/20; 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 2016/17, including the revised revenue estimates for 2015/16, be recommended to the Council for approval;

(3) That the Council be requested to approve the proposed rent reductions for 2016/17, to give an overall decrease of 1%; and

(4) That the Chief Financial Officer’s report to the Council on the robustness of the estimates for the purposes of the Council’s 2016/17 budgets and the adequacy of the reserves be noted.

The Finance Portfolio Holder presented a report on the Council’s proposed Budgets for 2016/17.

The Portfolio Holder set out the detailed recommendations for the Council’s budget for 2016/17. The proposed budget would use £36,000 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 £345,000 in 2017/18 and then reduce to £3,000 in 2019/20. The budget was based on the assumption that the District Council Tax would remain unchanged and that average Housing Revenue Account rents would decrease by 1% in 2016/17.

The Portfolio Holder also highlighted the Chief Financial Officer’s report on the robustness of the estimates for the purposes of the Council’s 2016/17 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 2016/17. In addition, the Council’s reserves were adequate to cope with the financial risks facing the Council in 2016/17, but that further savings would be required in future years to bring the budget back into balance in the medium term. Particular concerns about the New Homes Bonus and the resolution of the backlog of appeals for the discontinued Business Rates were noted.

The Cabinet noted that the proposed funding from Central Government of £4.58million was a reduction of 16.3% from 2015/16. Since the Medium Term Financial Strategy had been published in the Summer, the ceiling for the Continuing Services Budget had risen by £250,000 to £13.25million, and the ceiling for the District Development Fund had risen by £200,000 to £750,000. However, there had been an underspend of £895,000 in 2014/15 and, taking the two years together, there would be a net underspend of £693,000 for the District Development Fund. Although the four-year Capital Programme envisaged expenditure of £171million, it was anticipated that there would still be £3.5million of usable capital receipts at the end of this period. The balance of the Housing Revenue Account was expected to be £2million at 31 March 2017, after deficits of £83,000 in 2015/16 and £450,000 in 2016/17.

The Portfolio Holder emphasised some further issues arising from the Medium Term Financial Strategy:

Ø A potential negative Revenue Support Grant in 2019/20 if the Council’s retained Business Rates exceeded the Settlement Funding Assessment.

Ø The change in Government policy to remove grants from the funding system and for local authorities to fund themselves from Council Tax and retained Business Rates.

Ø The technical consultation on the New Homes Bonus issued by the Government with the aim of reducing the cost of the scheme by 55%.

Ø The Epping Forest Shopping Park, due for opening at Easter 2017, which was anticipated to provide £2million of rental income to the Council by 2019/20.

The Portfolio Holder thanked the Director of Resources and his Accountancy team for their efforts in preparing the budget before the Cabinet.

The Portfolio Holder for Planning Policy reassured the Cabinet that every possible effort was being made to complete the Local Plan. The Portfolio Holder emphasised that the Council had to do it right, and do it right first time.

The Housing Portfolio Holder informed the Cabinet that the Welfare Reform and Work Bill that was currently progressing through Parliament required all social landlords – including all Councils – to reduce their rents by 1% per annum from April 2016, for the next 4 years. Accordingly, this was the recommendation before the Cabinet. However, last week in the House of Lords, the Government announced that the Bill would be amended to allow social landlords to increase rents for supported housing schemes, including sheltered housing, by up to inflation + 1% - for one year only - from April 2016, if they so desired. This followed concerns raised by a number of social landlords, nationally, about the viability of reducing rents for supported housing schemes and would allow the Government time to consider the issues and implications. However, following careful consideration and consultation with the Leader of Council and Finance Portfolio Holder, the Portfolio Holder had decided to remain with the original recommendation to reduce such rents by 1% next year, a view that was also supported by the Chairman of the Housing Select Committee.

The Cabinet welcomed the budget report and noted that the proposed increase in revenue spending was being matched by increased revenue income. Members also welcomed the policy to use the Capital Programme to increase the Council’s revenue streams, which was funding the proposed 0% increase in the District Council Tax.

The Leader of Council commented that a decade of careful planning had put the Council in the enviable position where it could continue to invest in local services and protect the frontline services valued by residents. The proposed 1% reduction in rents for tenants in sheltered housing was also welcomed, as it would not be reasonable to increase the rents for such tenants when the remaining Council tenants were benefiting from a 1% reduction in their rents. The Leader stated that the whole Officer team had contributed to this budget, which should be commended to the Council for adoption.

Decision: