Agenda item

The Executive considered a report detailing a General Fund Revenue Budget for 2020/21 of £14,176,572. The budget had been prepared on the assumption that Council Tax would be increased by the maximum permitted without requiring a referendum, namely by 1.99% or by £5 on a Band D property, whichever was greater.

Members were reminded that, whilst it was for the Council to decide upon the level of Council Tax set, the Executive could make a recommendation.

The Net Cost of Services for 2020/21 had increased compared to the previous year.  Increased pensions costs and wage increases had added £650k to annual costs and there have been pressures on income in areas such as parking and property. However, this has been offset by an increase in income because of property purchased at the end of 2018/19, but not reflected in that budget. The additional cost of services has been funded by a combination of increased business rates and some new homes bonus. It was advised that, although there was no savings target for that year additional income and savings would be required to deal with budgetary pressures going forward.

Members received a summary of the budget.  It was advised that a number of fees and charges had been increased and approved in accordance with financial regulations. These changes had been reflected within the proposed budget.

The 2019/20 financial year had marked the final year of the 3 year finance settlement. However, in October 2019 the Government had announced that it would defer the outcome of the Fair Funding Review and Business Rates changes and therefore only issue a 1-year settlement. This has meant that the reductions in funding expected, in particular the “negative grant”, had been put on hold for at least a year. If this was implemented in 2021/22 it could result in a significant reduction in funding from Business Rates for the Council.

Members were reminded that the Government had made changes to the New Homes Bonus (NHB) in 2017/18 where the first 0.4% increase in the tax base, 171 houses for Surrey Heath in 2019/20, would not attract NHB. In addition, payments were paid for 4 years rather than 6. These changes had resulted in NHB being a reduced incentive for housing delivery.Although no changes had been made in 2019/20 in October 2019, the Government at that time had announced that from 2020/21 it was its intention to only make a payment for 1 year, rather than 4. This, coupled with the threshold, would mean that the Council was unlikely to get any further NHB payments after the current legacy payments ended.

The Executive was advised that costs of £2,027,000 in the budget had been charged directly to reserves.  The General Fund was estimated to be at least £2m at the end of 2020/21 if the budget was delivered as proposed.

Members were informed that the Council was required to prepare a Medium Term Financial Forecast to demonstrate that it can achieve a balanced budget in the future, or that it understood the challenges in delivering one. This forecast, together with the Financial Strategy, would be presented to Council as part of the Council budget setting report in February 2020. The preparation of the forecast this year was likely to be particularly challenging given there was no information on funding beyond 2020/21. 

RECOMMENDED to Council that the 2020/21 General Fund Revenue Budget of £14,176,572 as set out in Annex A to the agenda report be approved.

RESOLVED to note that

(i)        expenditure totalling £2,027,000 will be charged directly to reserves;

(ii)      a minimum revenue provision of £2,213,000 is required to repay debt;

(iii)     the budget includes provision for a 2% staff pay increase;

(iv)     the provisional NNDR baseline of £1,568,384 and the final settlement will be reported to Council at its meeting on 26th February 2020; and

(v)      afull report, setting out Council Tax proposals for 2020/21 will be presented to Council on 26th February 2020.