Decision details

The Executive noted that, whilst it was for the Council to decide upon the level of Council Tax set, the Executive could make a recommendation.  Members were advised that the budget had been prepared on the assumption that Council Tax would be increased by £5 per band D property, being the maximum permitted without requiring a referendum.

It was reported that, from 2017/18 the Council would receive no Revenue Support Grant from Central Government to pay for its services. This included funding for services transferred by Central Government to the Council, such as the Local Council Tax Support Scheme which had replaced Council Tax benefit.

The net cost of Services for 2017/18 was £736k lower than last year. This was due to the significant investments which the Council had made in property during the year. As a result of this investment, there was no longer a need for a general savings target, nor did the Council have to use any of its New Homes Bonus this year to support the revenue budget. 

Wages and salaries budgets had increased this year following many years of real term reductions. This reflected the creation of new posts to manage the new investment property function of the Council, but also took account of pressures the Council was facing in respect of pensions and competitive wage costs. The budget had therefore risen to cover these associated costs.

In line with the Council’s strategy to increase income, a number of fees and charges had been increased and had been approved in accordance with financial regulations. These changes were reflected within the budget.

The previous Chancellor George Osbourne had announced a four year local Government settlement in his 2015 Autumn Statement.  Authorities could agree to the settlement if they submitted an efficiency plan.  Over 97% of Councils across the country had agreed to the settlement.  Although this Council had reluctantly agreed to the settlement, it had objected in the strongest terms to the “negative Tariff” in 2019/20, which was effectively a “tax” on the residents of the borough by Government. It was likely that this would be reviewed as part of the work in connection with the 100% localisation of business rates due to come in in the same year, but no change to this position had been assumed in the financial forecast.

The figures announced last year for 2017/18 had been confirmed in the provisional settlement announced on 15 December 2016 and had been used in calculation of this budget.

The Government had consulted during the year on the future of the New Homes Bonus (NHB). Although it had been confirmed that the scheme would continue, the Government had wanted to “sharpen” the incentive. The provisional settlement indicated that this Council would receive £1.226m in 2017/18, compared to £1.421m in the previous year.

Expenses totalling £645k were being charged directly to reserves set aside for this purpose.  The General Fund was estimated to be at least £2m at the end of 2017/18, if the savings and budget were delivered as predicted.

The outcome of the forecast was that savings of about £186k would be required by 2021/22 on the assumption that the reduced New Homes Bonus was used to support the budget. This would need to be covered by a combination of increases in the Council tax base and Business rates, through new construction, as well as income generation from commercial activities and savings in the delivery of services.  If the Council was unable to bridge the gap, then services might have to be reduced or stopped to ensure that the budget remained in balance.

The investment in property had transformed the Council’s finances for 2017/18 and more of this would be required if future financial challenges were to be met. Despite the risks attached, this was the only credible way that services could be maintained in the face of reductions in government funding.

Members were reminded that the Council paid a special grant to parishes to compensate them for the change to the tax base due to the introduction of the Local Council Tax support scheme.  It was proposed that this grant would remain unchanged from that paid in 2016/17, despite the fact that it was no longer funded by central government.

Recommended to Council that

(i)              the 2017/18 General Fund Revenue Budget of £10,507,079, as set out in Annex A to the agenda report be approved;

(ii)            the support grant for parishes to compensate them for the effects of the local council tax support scheme be unchanged for 2017/18 compared to 2016/17;

The Executive noted

(i)              that the budget contained £645,000 as per paragraph 11 of the agenda report, chargeable to reserves set aside for this purpose;

(ii)            that a minimum revenue payment of £1.389m had been allowed to repay debt;

(iii)          that the Council no longer received Revenue Support grant which had reduced Government funding by £357,000;

(iv)          that the provisional NNDR baseline of £1,464,663 and the final settlement would be reported to Council at its meeting on 22 February 2017;

(v)            that a full report, setting out Council Tax proposals for 2017/18 would be presented to Council on 22nd February 2017;

(vi)          that, although investments had been made, further savings and income generation through investment would be required as a result of anticipated reductions in Government funding in the future; and

(vii)        the increase in the Council tax base generated from the development of new housing which delivered an extra £85,000 a year in Council Tax.