Agenda item

The net cost of services for 2017/18 at £10,787,136 represented a decrease of £736,496.  This was mainly as a result of £1.5m of additional income from investment property purchased in 2016/17. Despite some related additional staffing and pension costs, the Council, for the first time for a number of years, had managed to set a balanced budget without any general savings target or the use of the New Homes Bonus to support the revenue spending. It was noted that not all of the net cost of services would be met by Council Tax and that the council tax requirement would be determined following deductions made to allow for sources of funding.

Members noted that no reduction was proposed in 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 reported that the Section 151 Officer had determined that a surplus of £2,000,000 could be declared on the Collection Fund for the year. Of this £1,501,127 would be paid to Surrey County Council, £260,615 to the police and the remaining £238,258 to this Council.

The Council would receive a New Homes Bonus (NHB) of £1.226m in 2017/18 which would be placed into reserves.  The Government had announced that NHB would be continued indefinitely but that there would be a number of changes going forward with a view to saving £250m from NHB.  The changes were likely to cost the Council over £4m in lost NHB up to 2021 if houses continued to be built at the current rates.

It had been determined that the items totalling £645,000 should be funded from reserves relating to community grants, transformation costs, community safety, property maintenance, survey work in the Town Centre and Family Support.

The cost of any revaluations fell on the Council together with any interest due.  The 2017 revaluation was likely to lead to a significant number of appeals thus making income levels difficult to predict.

The Council had worked hard to increase economic growth in the borough and it was likely that this year there would be a surplus on business rates. To reflect this, an additional £200k had been included in the budget in addition to the base line set by Government.

Special Expenses reflected the cost of providing services to non-parished areas which in parished areas were funded by a parish precept. The charge was billed as a separate item to non parished areas in a similar way to a precept in parished areas.

In December 2016 the Government had announced that the referendum trigger for 2017/18 for Council Tax for District Councils would be set at 2% or £5 whichever was the higher.  The Section 151 Officer had strongly recommended that Council Tax be increased by the maximum permitted in order to meet the financial challenges the Council faced in 2019/20 and beyond.

It was noted that Surrey County Council, would again be permitted to increase its Council Tax by 1.992% for services plus an additional 3% to meet the costs of Adult Social Care.

All reserves and provisions were considered appropriate and supportive of future expenditure requirements. Revenue Reserves (including earmarked reserves) were projected to be around £19m at 31 March 2018.  However all capital reserves would have been exhausted.

In respect of the General Fund Working Balance, a risk calculation indicated that a minimum balance of £1.4m was needed to provide financial cover for day to day cash flow and any financial emergencies which might occur during the financial year. This would be satisfied by both the Council Tax options presented.

A number of fees and charges had been increased and have been approved in accordance with the Financial Regulations. 

The Council was required to consider a financial forecast which predicted the Council’s finances for the next 5 years.  The Council noted the assumptions which had been made on the basis of what was known at the moment.

The financial forecast had changed completely when compared to the same time last year. There was now a gap of £184k in 2020/21 compared to £1.7m in the forecast last year. The investment in property driven by Key Priority 2 had contributed significantly to closing this financial gap. This means that despite the forecast assuming that the whole of the New Homes Bonus would be used to support the budget in later years the whole scale of the funding challenge had reduced significantly.

As part of the 3 year settlement for local authorities, the Council’s grant funding would reduce to zero in 2017/18 and would become £1m negative in 2019/20.  As a result, the delivery of a balanced budget would become more difficult.  To meet this challenge the Council had recognised that it was vital to take control of its own financial destiny.  Reducing expenditure through efficiencies and joint working had made an important contribution but would not be enough by itself. As a result, in line with Key Priority 2, the Council had worked to increase income. This had been done not only by investing money in property but also by supporting economic growth and in particular the delivery of housing. In so doing the Council had been able to continue to provide the broad range of services and balance the budget. This strategy would need to continue if the Council was to meet the challenges it faced in 2019/20 and beyond.

The Council’s Chief Financial Officer had confirmed he was satisfied that the preparation of the 2017/18 estimates had been undertaken with rigour and due diligence and provided the appropriate level of resources to meet forecast service requirements whichever budget option was adopted.  He also reported that the Council’s Reserves, Provisions and the General Fund Working Balance, supplemented by the Revenue Capital Reserves were at such levels to meet all known future expenditure requirements and fund any unforeseen or urgent spending which may arise. The Chief Financial Officer drew attention to the risks within the budget particularly around the Council’s ability to continue to deliver savings in the future.

It was moved by Councillor Moira Gibson and seconded by Councillor Richard Brooks and

Resolved

(i)              to note that under delegated powers the Executive Head of Finance calculated the amount of the Council Tax Base as 37,318.03 (Band D Equivalent properties) for the year 2017/18 calculated in accordance with the Local Government Finance Act 1992, as amended;

(ii)            to note expenditure totalling £645,000 be charged directly to reserves;

(iii)          to note that an increase in Council Tax above £5 was deemed to be “excessive” by Government;

(iv)          to note the level of Minimum Payment Range required;

(v)            to note that the Revenue Support Grant had been reduced to zero in 2017/18;

(vi)          to note the there was no reduction in the grant given to Parishes for the Local Council Tax Support Scheme;

(vii)        to note that a council tax surplus of £2,000,000 was being declared;

(viii)       to note the comments in respect of the robustness of the 2017/18 budget and the adequacy of the Council’s reserves, provisions and the General Fund Working Balance;

(ix)          to note the comments in respect of the financial forecast in respect of the budget gap and the potential impact on the future financial sustainability of the Council;

(x)            to note that of the Council’s Budget requirement, £176,000 be a special expense relating to the non-parished area of the Borough.

(xi)          that the Budget Requirement for 2017/18 be £10,507,079 as set out in Annex A of the agenda report;

(xii)        that the Council Tax Requirement for the Council’s own purposes for 2017/18 be £7,698,710 as set out in Annex A to the agenda report and;

(xiii)       that the Council Tax for 2017/18 (excluding special expenses and Parish precepts) be set at £206.30 for a Band D property being an increase of £5 compared to 2016/17.

Note: In accordance with the Local Authorities (Standing Orders) (England)(Amendment) Regulations 2014, a recorded vote was taken. The followingMembers voted in favour of the decision: Councillor Dan Adams, David Allen,Rodney Bates, Richard Brooks, Nick Chambers, Bill Chapman, Vivienne Chapman, Ian Cullen, Paul Deach, CraigFennell, Surinder Gandhum, Moira Gibson, Edward Hawkins, Josephine Hawkins, Paul Ilnicki,David Lewis, Oliver Lewis, Jonathon Lytle, KatiaMalcaus Cooper, David Mansfield, Alan McClafferty, Charlotte Morley, MaxNelson, Adrian Page, Robin Perry, Chris Pitt, Joanne Potter, Nic Price, WynnePrice, Darryl Ratiram, Ian Sams, Pat Tedder, Victoria Wheeler, Valerie White, John Winterton.