Agenda item - Council Budgets 2017/18

(Finance Portfolio Holder) To consider the attached report (C-061-2016/17).

(1) That the following guidelines for the Council’s General Fund Budget in 2017/18 be recommended to the Council for adoption:

(a) the revised revenue estimates for 2016/17, which were anticipated to decrease the General Fund balance by £0.78m, including a transfer of £0.2m to the Invest to Save Reserve;

(b) confirmation of the target for the 2017/18 Continuing Services Budget (CSB) of £13.11m (including growth items);

(c) an increase in the target for the 2017/18 District Development Fund (DDF) net spend from £0.26m to £1.89m;

(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 £100,000 in 2017/18;

(f) the five year Capital Programme for the period 2016/17 – 2020/21;

(g) the Medium Term Financial Strategy for the period 2016/17 – 2020/21; 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 2017/18, including the revised revenue estimates for 2016/17, be recommended to the Council for approval;

(3) That the Council be requested to note that the rent reductions proposed for 2017/18 will give an average overall fall 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 2017/18 budgets and the adequacy of the reserves be noted.

The Finance Portfolio Holder presented a report on the Council’s Budgets for 2017/18.

The Portfolio Holder set out the detailed recommendations for the Council’s budget for 2017/18. It was intended to use £100,000 from reserves but the Council’s policy on the level of reserves could 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 £143,000 in 2019/20 and reduce to £113,000 in 2020/21. The budget was based on the assumption that Council Tax would not increase and that average Housing Revenue Account rents would decrease by 1% in 2017/18.

The Portfolio Holder also highlighted the Chief Financial Officer’s report on the robustness of the estimates for the purposes of the Council’s budgets for 2017/18 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 2017/18. In addition, the Council’s reserves were adequate to cope with the financial risks facing the Council in 2017/18, 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 rating list, which had been exacerbated by changes to transitional relief and the appeals system, and the continuing backlog of appeals for the current rating list were noted.

The Cabinet noted that the proposed funding from the Government of £3.85million was a reduction of 15.9% from 2016/17. Since the Medium Term Financial Strategy had been published in the Summer, the ceiling for the Continuing Services Budget had remained at £13.11million, and the ceiling for the District Development Fund had risen from £0.26million to £1.89million. The proposed increase in provision for the District Development Fund was due to an allocation of £1.028million for the Local Plan, plus further provision of £218,000 for Recycling Schemes and £104,000 for the Planned Building Maintenance Programme. It was also anticipated that a transfer of £500,000 would be required from the General Fund Reserve in 2018/19 to ensure that there were sufficient funds available until the end of the Strategy period.

Although the five-year Capital Programme envisaged expenditure of almost £125million, it was anticipated that there would still be £1.7million of usable capital receipts at the end of this period. The balance of the Housing Revenue Account was expected to be £2.022million at 31 March 2018, after a surplus of £494,000 in 2016/17 and a deficit of £1.674million in 2017/18.

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

Ø Future Government funding would reduce with the Revenue Support Grant turning negative in 2019/20.

Ø The target for Continuing Services Budget growth had been achieved for 2017/18, but further efficiencies would be required if the new Leisure Contract failed to yield the predicted savings.

Ø The Epping Forest Shopping Park was anticipated to achieve its revised opening date and provide the expected levels of rental income to the Council.

Ø As highlighted earlier, a transfer of £0.5million for the District Development fund from the General Fund Reserve would be required in 2018/19 to ensure that there were sufficient funds for the Local Plan programme.

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

Cllr Philip, as Planning Policy Portfolio Holder, enquired as to whether the New Homes Bonus projections were based on current building rates or the building rates forecast in the Local Plan? The Director of Resources stated that the projections were based on the historical building rates for the District; the New Homes Bonus was under threat as the Government was considering adding further restrictions, so a prudent view was taken of future building rates. Cllr Basset, Portfolio Holder for Governance & Development Management, highlighted the section of the report dealing with the retention of Business Rates, especially the two misconceptions corrected within the report, and also that the Government was now insisting that Council rents should reduce after a number of years where the policy was to align them more with private sector rents.

The Leader of Council endorsed the excellent budget before the Cabinet, and also added his thanks to the Finance Portfolio Holder, the Director of Resources and the Accountancy team for their efforts. It was emphasised that the Council had been preparing for these changes to Local Government funding and that the Council had again set a 0% increase in the District Council Tax.

Decision: