Agenda item

The net cost of services for 2018/19 at £11,349,000 represented an increase of £561,864.  This was as a result of

 

·                 one off items funded from reserves for grounds maintenance and waste contract implementation;

·                 an increase in payroll costs due to investment in staffing and pay increases driven by inflation;

·                 reductions in grants from Surrey County Council in particular for waste which have had to be absorbed;

·                 increases in costs driven by inflation and the fall in sterling; and

·                 some of these increases had been offset by increases in income,  particularly from property.

 

In relation to Employees costs, Members were advised that reference to employment of staff to manage the Council’s new functions, such as property, and to generate income had been included in the report in error and related to 2017/18.  This did not however affect the budget calculations.

 

Investment in property had enabled the Council to maintain services and a balanced Budget for 2018/19.  Overall there was no general savings target required this year and none of this year’s New Homes Bonus would be needed to support revenue expenditure.    However the financial forecast had identified further challenges in future years driven by Council funding being taken by Government, inflation and the capital programme.

 

Members noted that no reduction was proposed in the 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 £3,000,000 could be declared on the Collection Fund for the year. Of this, £2,242,200 would  be paid to Surrey County Council, £378,300 to the Police and Crime Commissioner, with the remaining £379,500 to this Council. This would be used to support the Budget for 2018/19.

 

The Council could expect to receive £863,886 in New Homes Bonus for 2018/19.  Of this £251,603 had been generated by the increase in the tax base over 2017/18. The Government had committed to retaining New Homes Bonus as an incentive in the future although its value might well decline over time.

 

It had been determined that items totalling £816,390 of expenditure should be funded from reserves relating to community grants, transformation costs, grounds maintenance for SANGS, grounds and playgrounds maintenance, family support and the Joint Waste Contract.

 

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 2017, the Government had announced that the referendum trigger for Council Tax for Districts for 2018/19 would be set at 3% or £5 whichever was the higher.

 

It was noted that Surrey County Council had decided to levy a precept of just under 6% taking advantage of its ability to levy an additional social care precept of 3% on top of its Council Tax limit of 3%.

 

All reserves and provisions were considered appropriate and supportive of future expenditure requirements. Revenue Reserves (including earmarked reserves) were projected to be around £18m at 31 March 2019.  However the Council had no capital reserves which meant that all capital expenditure had to be funded through borrowing.

 

In respect of the General Fund Working Balance, a risk calculation indicated that a minimum balance of £2m was needed to provide financial cover for day to day cash flow and any financial emergencies which might occur during the financial year.

 

It was noted that a number of fees and charges had been increased and had been approved in accordance with the Financial Regulations. 

 

The Council was required to consider a financial forecast which predicted the Council’s finances over the short and medium term.  This year had proved to be especially difficult as the Government had given no indication as to the level of Local Government funding beyond 2019/20.

 

The forecast assumed that there would be no radical changes to services or income save for the impact of inflation. In addition large capital projects had also been ignored, since it had been assumed that they would at the very least be self-financing and therefore not impact on the Council’s Service Budget.  The Council had invested significantly in property during 2016/17 and this had resulted in good returns which now supported services. Although these investments were not risk free, further investment would be required if future funding gaps were to be addressed.

 

The continuing trend of reducing Government funding coupled with inflation meant that the Council had yet another £1.3m to find within the forecast period.  In fact during this period the Council was likely to become a net contributor to Government funds due to the negative grant. The Council had pursued a policy of increasing income rather than cutting services to balance the Budget.  If, however, this was not possible then service reductions coupled with a cessation of the Council’s capital investment plans, or a closer collaboration with a neighbouring Council might be required to ensure that the Budget remained in balance.

 

Having no capital receipts meant that the Council would need to continue to borrow to fund its capital aspirations. If these projects were not in themselves self-financing then the interest and Minimum Revenue Provision have to be covered.  

 

The Council’s Chief Financial Officer confirmed he was satisfied that the preparation of the 2018/19 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 might arise. 

 

The Chief Financial Officer drew attention to the risks within the budget particularly around the reliance on income to fund services and the continuing need to make further savings and/or income, as shown by the Medium Term Financial Forecast, if services were to be maintained in to 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 37,540.62 (Band D Equivalent properties) for the year 2018/19 calculated in accordance with the Local Government Finance Act 1992, as amended;

 

(ii)            to note expenditure totalling £816,390 be charged directly to reserves;

 

(iii)          to note that an increase in Council Tax above 3% was deemed to be “excessive” by Government;

 

(iv)          to note the level of Minimum Revenue Provision required;

 

(v)            to note the impact of the Business Rates Pilot and the previous authority given to the Executive Head of Finance to finalise the agreement;

 

(vi)          to note that the Council receives no Revenue Support Grant;

 

(vii)        to note that there is no reduction in the grant given to Parishes for the Local Council Tax Support Scheme;

 

(viii)       to note that a Council tax surplus of £3,000,000 was being declared;

 

(ix)          to note the comments in respect of the robustness of the 2018/19 Budget and the adequacy of the Council’s reserves, provisions and the General Fund Working Balance;

 

(x)            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;

 

(xi)          to note that of the Council’s Budget requirement, £180,000 be a special expense relating to the non-parished area of the Borough;

 

(xii)        to resolve that the Executive Head of Finance be authorised to finalise and enter into the Surrey Business Rates Pilot;

 

(xiii)       to resolve that the Budget Requirement for 2018/19 be £11,058,943 as set out in  Annex A;

 

(xiv)      to resolve that the Council Tax Requirement for the Council’s own purposes for 2018/19 be £7,974,387 as set out in Annex A and;

 

(xv)        to resolve that the Council Tax for 2018/19 (excluding special expenses and Parish precepts) be set at £212.42 for a Band D property being an increase of £6.12 for a Band D taxpayer compared to 2017/18.

 

Note: In accordance with the Local Authorities (Standing Orders) (England) (Amendment) Regulations 2014, a recorded vote was taken. The following Members voted in favour of the decision: Councillor Dan Adams, Rodney Bates, Richard Brooks, Nick Chambers, Bill Chapman, Vivienne Chapman, Ian Cullen, Paul Deach, Colin Dougan, Craig Fennell, Moira Gibson, Edward Hawkins, Josephine Hawkins, Paul Ilnicki, Rebecca Jennings-Evans, David Lewis, Oliver Lewis, Jonathon Lytle, Katia Malcaus Cooper, Bruce Mansell, David Mansfield, Alan McClafferty, Charlotte Morley, Max Nelson, Adrian Page, Robin Perry, Chris Pitt, Joanne Potter, Nic Price, Wynne Price, Darryl Ratiram, Ian Sams, Pat Tedder, Victoria Wheeler, Valerie White.

 

The following Member voted against the decision: Councillor David Allen.