The Director of Resources introduced the report which set out the financial context both local and national within which the budget and council tax for 2017/18 had to be agreed.
The paper was based on the provisional settlement announced on 15 December 2016, (the final settlement was expected in the next week or so) and would need to reflect any changes in the final paper for full Council. The final position on NNDR was also awaited due to late changes required by Government on the method of calculation
The document was the Council’s primary strategic financial document and met a number of regulatory requirements. Firstly the authority was required to agree a balanced budget for the coming financial year 2017/18. Secondly the requirement to set the level of council tax, and also meet the best practice of setting the 17/18 budget in a medium term context
The Financial Plan was designed to deliver the corporate objectives set out in the Corporate Plan 2016-20 which were covered in paragraph 2 of the Executive Summary.
Over the last four years the authority had delivered bottom line improvements of £4.4m through efficiencies and income generation. Efficiencies and increased income were continually sought through the five year plan and it was possible to show that the plans deliver a balanced budget for the next two years. With a deficit of over £400k remaining in 2020/21. This was in an environment where the authority’s core spending power, as calculated by Government had reduced over that time by 11% and the Government Grant had reduced by £2m since 2015/16. The reduction from 16/17 to 17/18 was £626k.
The balanced position was achieved primarily by the assumptions as set out in paragraph 4.11.2
· Employee Pay Award 1% per annum
· Council Tax increase at £4.95 per annum and growth 0.5%
· Commercial Property Investment of £20m to generate £0.6m savings by 2020/2021
· No growth in NNDR
· Contractual inflation only applied to service expenditure budgets
· 4 year funding settlement in line with draft figures issued by Government
· New Homes bonus is based on Government estimates and payable over 4 years.
· NNDR 1.8% (August RPI)
· Electricity 4%
· Gas 4% from 2018/19
· Capital Programme – total investment; total borrowing; use of reserves; balances at end of five years
During the year a number of initiatives, projects and reviews were undertaken with the aim of achieving £2m of savings in five years. The projected savings requirement for 2017/18 was £0.382m. The Council had been successful in identifying these savings against this target. The significant savings have been achieved from;
· Budget and service reviews £0.147m
· Fees and Charges £0.043m
· Staffing Restructures £0.231
· Removal of Localisation of Council Tax Support (LCTS) Parish Grant £0.169m
· Contract Renewals £0.520m
· Planning Fee Income £0.086
This was against pressures identified during the budget process and legislative impacts
· No charging for Green Waste in 2017/18 £0.502m
· Apprenticeships incl Levy £0.48m
In addition to the above the continued focus on maximising New Homes Bonus through capital investment and identification and intervention measures relating to empty homes had resulted in a further £0.208m per annum of additional grant having been generated. However the New Homes Bonus scheme had been reviewed and allocations would be for a four year period reduced from a six year period. Further reductions may be required in future years to support other public services. The total allocation for 2017/18 was £1.889m. Future projections were based on Government estimates.
The Council continued to set aside New Homes Bonus to support growth and housing regeneration investment (many other authorities require this grant to support their revenue budgets).
The Medium Term Financial Plan also included an ambitious Capital Programme of over £53m which was to be funded from a mix of our own reserves, Grant Funding and borrowing.
Appendix M to the Strategy provided Members with a comparison against other authorities using standard financial measures and due to the level of reserves West Lindsey compared reasonably well in many areas.
The Rural Services Network representative thanked the authority for taking the lead role in the previous year in lobbying for a better settlement for rural areas, the same success was not expected for the 2017/18 year. Reductions in Government funding were greater for rural areas and the gap was widening. It was necessary to take all opportunities to lobby for rural support.
The changes to the New Homes Bonus were unprecedented. The Council currently used this to support regeneration investment, however in future years this may be required to support other public services.
Members gave further consideration to the proposals and the recommendations were moved and seconded, and on being voted upon it was RESOLVED that:
a) the Draft Financial Strategy and Medium Term Financial Plan 2017/18 to 2021/22 (which may be subject to change once the final settlement is announced) be recommended to Council for approval;
b) the Capital Investment Programme 2017/18 to 2021/22 be recommended to Council for approval; and
c) any housekeeping changes (including any required by the final settlement) be delegated to the Draft Financial Strategy and Medium Term Financial Plan to the Director of Resources following consultation with the Chairman of the Corporate Policy and Resources Committee prior to the final consideration by Council on 6 March 2017.