Agenda item

To recommend a budget to Council for 2017/18.

That it be RECOMMENDED TO COUNCIL that:

1.    a net budget of £9,913,693 be APPROVED;

2.    a Band D Council Tax of £109.36, an increase of £5.00 per annum, be APPROVED;

3.    the use of New Homes Bonus, as proposed in Paragraph 3.8 of the report, be APPROVED;

4.    the Capital Programme, as proposed in Appendix A to the report, be APPROVED;

5.    the Capital Prudential Indicators, as proposed in Appendix B to the report, be APPROVED;

6.    the annual Minimum Revenue Provision (MRP) statement, as contained in Appendix B to the report, be APPROVED; and

7.    the 2017/18 Treasury Management Strategy, as proposed in Appendix C to the report, be APPROVED. 

79.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 51-83, set out a proposed budget for 2017/18 which Members were asked to recommend to the Council for approval along with a proposed Band D Council Tax of £109.36; the use of New Homes Bonus as proposed in Paragraph 3.8 of the report; the Capital Programme, as proposed in Appendix A to the report; capital prudential indicators, as proposed in Appendix B to the report; the annual Minimum Revenue Provision statement, as contained in Appendix B to the report; and the 2017/18 Treasury Management Strategy as set out in Appendix C to the report.

79.2           The Head of Finance and Asset Management advised that the Council had considered its financial position, as shown in the Medium Term Financial Strategy, at its meeting on 6 December 2016 and that Strategy outlined the budget pressures facing the Council, both now and in future years. The deficit over the five years of the Medium Term Financial Strategy was estimated to be in the order of £3.3 million with a gap, in 2017/18, of approximately £2,050,000. Since the Medium Term Financial Strategy had been produced, the Chancellor had given his autumn statement, the Council had been accepted for a four year funding deal from the government and the details of the provisional local government settlement for 2017/18 had been received.

79.3           The report currently before Members brought together general information on the financial climate with the detailed figures associated with the 2017/18 budget and the work undertaken by the Transform Working Group and made a proposal for a balanced budget and resultant Council Tax. Members were advised that Section 25 of the Local Government Act 2003 required that the Chief Financial Officer make a statement to the Council on the robustness of the estimates, and adequacy of financial reserves, and that statement was set out within the report at Paragraph 10. The Council had a statutory obligation to have regard to that when making its decision on the proposed budget. In setting the budget for 2017/18, the Head of Finance and Asset Management explained that the Council had continued to provide the same level of service as in previous years and, in many areas, to provide an enhanced service with much of the deficit being met through increased income and financing streams, restructure of management and services, increased commercial activity and increased Council Tax. It was felt that future budget setting may not find those areas as plentiful and Members and Officers would be faced with tough decisions on the operation of the Council including reducing or stopping some services and taking further risks in its commercial activities. Members were reminded that, at a recent meeting of the Transform Working Group, it had been suggested that £50,000 be taken away from community grants and instead be put into an IT and property management reserve; this amendment had been made in the current report and this was also drawn to Members’ attention.

79.4           Referring to business rates retention, the Head of Finance and Asset Management explained that the last two financial years had seen the Council in a safety net position as a result of the scheme. This meant that no income had been retained by the Council and that losses had been made. As a result of the position in respect of appeals etc., Tewkesbury had withdrawn from the Gloucestershire pool for the start of 2016/17 and would continue to operate independently for 2017/18; in that circumstance the safety net position was financed by central government rather than the Gloucestershire pool. In respect of New Homes Bonus funding, as had been expected, the government had decided to reduce the number of years for which the bonus was paid from the current six year allocation down to four years. That transition would happen over two years with a five year allocation being paid in 2017/18 and the four year allocation being paid in 2018/19. However, what had not been expected was the introduction of a growth baseline below which no New Homes Bonus would be paid. Having consulted on introducing a 0.25% baseline, and with 80% of respondents against the proposal, the government had introduced a baseline of 0.4% from 2017/18. All growth below that baseline, which was measured against the number of properties on the current tax base, would be ignored for calculating New Homes Bonus payments; for Tewkesbury this had resulted in 151 properties being disregarded and a reduction in the Council’s payment by over £180,000 for the next year. The revised projection of New Homes Bonus payments was included at Table 2 on Page No. 55 of the report. As with the current year, the government had set an excessive Council Tax threshold which meant that increases above £5 or 2% for District Councils would trigger a local referendum. The thresholds set for upper tier authorities included a standard Council Tax increase of 2% but also the ability to raise a social care levy of up to 3%. Whilst the government had consulted on the introduction of thresholds for Town and Parish Councils, it had decided to refrain from introducing them for the next financial year. Given the reductions in core funding, New Homes Bonus and retained business rates, as well as the investment needed in service areas due to the expansion of the Borough, it was necessary to recommend that the Council increased its Band D Tax by £5 per year which would bring the total Council Tax to £109.36 for 2017/18. However, in proposing that increase, the Council would retain its position within the lowest charging authorities thereby honouring its commitment to maintain a low Council Tax. The impact of the proposals was shown on Table 3, Page No. 58, of the report. The base estimates for the Council in 2017/18 had been compiled and were shown at Table 5 of the report.

79.5           In terms of risks, the Head of Finance and Asset Management explained that the Council’s budget was prepared using best estimates for the level and timing of expenditure, budget and efficiency savings and available resources. However, a number of uncertainties existed which could have an impact on the budget of the Council including the fact that the government support settlement was only provisional and therefore could be subject to change; the fact that further changes to New Homes Bonus funding could not be ruled out; the review of the business rates scheme and the detail of the 100% retained rates scheme being unknown; the fact that interest rates remained at a historically low level; the roll out of universal credit; the savings plan targets being met; the possibility of a salary award being agreed which was higher than the assumed 1%; and income assumptions being correct. The current capital programme was attached the report at Appendix A and covered estimates of expenditure in the current year along with forward forecasts of the next four years; the Treasury Management Strategy, attached to the report at Appendix C, set the framework in which day-to-day and strategic treasury activities were operated; and the Minimum Revenue Provision Statement for the 2017/18 financial year was set out at Appendix B. 2017/18 would be the first year where charges would be necessary following the purchase of a commercial property in Tewkesbury which had been funded by prudential borrowing.

79.6           Having considered the report, and information provided, it was