Agenda item

The Director of Resources presented the report for Members’ information and approval.

Members were required to set a balanced budget for the financial year of 2017/18. To ensure this single year was agreed within a sustainable context it was important that Members were able to make decisions about the financial position for 2017/18 within a longer term context.

To facilitate the longer term context Members would be asked to consider a five year medium term financial plan (MTFP) for which the budget for 2017/18 would form the first year and establish the base for the further years within the plan.

The report set out a range of assumptions on which Members would be asked to agree, to establish the basis for the MTFP to be reported in February 2017.

Achievements to date were listed in the report:

·         Council Tax Freeze – 4 out of 6 years

·         Impact of Council Tax Income foregone - £400k

·         Council Tax – dwellings increase of 4.4% since 2013/14

·         NNDR Pooling Benefit - £236k over past 2 years

·         New Homes Bonus £8.0m (set aside for investment)

·         Service savings of £3.9m – 28% reduction since 2012/13

Government Policy Pressures include:

·         Settlement Funding Reduction  - £2.5m – 38%

·         Impact of Localisation of Council Tax Support Scheme - £194k

On 3 March 2016 Members agreed a medium term financial plan for the five year period 2016–2021 which made a number of assumptions. The underlying assumptions at that time were as follows:

·         Pay award 1%

·         RSG to reduce to £0 by 2019/20

·         NNDR 0% increase/growth

·         NHB scheme ceases 2015/16

·         Utilities inflation 4%

·         Contractual Inflation applied

·         Fees and charges increases above inflation where full cost recovery is not being achieved.

Indications from the new Government were that commitment to balancing the budget in this Parliament had been relaxed.  Devolution continued to evolve, although Lincolnshire was now considering options after two authorities voted against the proposal.  With the decision to withdraw from the European Union, there was a considerable amount of uncertainty around the impact on the UK economy.

It was intended that by 2020 Local Authorities will retain 100% of NNDR (Business Rates).  In addition there had been a review of rateable values after a delayed valuation exercise was undertaken.  New Rateable Values would be applicable from 1 April 2017.

Further pressures included:

The government announced that it will introduce a Living Wage which would start at £7.20 raising to £9.20 by 2020.  This would mean an additional cost to the Authority of circa by £140k by 2020.

The introduction of an Apprenticeship Levy from 1.4.2017 would result in the Council being charged 0.5% of its payroll as a levy, this would be offset by funding towards the training of apprentices.  The net impact being circa £18kper annum.

The Autumn Statement issued on 23 November 2016 confirmed that the Government would stand by their commitment to 4 year Settlement Funding, however clarity around New Homes Bonus and other Government Grant funding remained unclear. 

The assumptions for the basis of the MTFP for 2017-22 were set out in paragraphs 7 and 8 of the report.

Councillor Bierley, as the Council’s representative on the Rural Services Network and SPARSE, noted that the last meeting had been the AGM and also attended by the Director of resources.  Whilst acknowledging that the four year deal gave more certainty the demographics of rural areas meant that more resources were required, and the rural settlement was not necessarily acceptable.

RESOLVED that the assumptions listed in paragraphs 7 and 8 of the report be agreed as the basis for developing the MTFP for 2017-2022.