Meeting documents

County Council (DCC)
Friday 27 February 2009

Meeting: County Council (County Hall, Durham - Council Chamber - 27/02/2009 10:00:00 AM)

Item: A4 Budget 2009/10 - Report of Cabinet

Please refer to attached PDF at the foot of the page in relation to this report

Purpose of the Report

1 The purpose of the report is to detail the recommendations of Cabinet.

2 The report deals with the County Council’s budget for 2009/10 and the recommendations are referenced to the appropriate page, section, paragraph or appendix of the Budget document unless otherwise identified.

3 It also incorporates the level of council tax increase and the utilisation of available resources.

4 In accordance with statutory requirements, the report details the information to set the council tax for the Council’s area.

Summary of Recommendations

5 It is recommended that:

Section B Priorities

6 Members note the priorities around which the budget proposals are made.

Section C - Consultation responses

7 Responses from consultees are considered as Members determine the budget.

Section D - Local Government Finance Settlement

8 Members note the Settlement.

Section E - Risk

9 Members note the Risks.

Section F - Area Based Grants

10 Members note the flexibility in the use of Area Based Grants.

Section G - Housing Revenue Account and other associated issues

Mortgage Interest Rate

11 The mortgage rates as displayed in Section G, paragraph 9 are implemented from the 1st April 2009, to be reviewed at six monthly intervals.

Housing Revenue Account (HRA)

12 For the Housing Revenue Account:

· The Housing Revenue Account Budget set out in Annex G1 be approved.

· Rent increases be applied as follows:

Durham City area	-	Average rent increase 6.22%
Easington area	-	Average rent increase 5.88%
Wear Valley area	-	Average rent increase 6.03%

· Garage rents and other charges be increased by 5%. · ALMO management fees be inflated in accordance with existing contracts:

East Durham Homes	-	2%
Dale and Valley Homes	-	1%

· Service charges are implemented from 1 April 2009 as suggested by East Durham Homes for costs associated with communal areas of flat bocks managed by the Company

· Other key service charges are reviewed across the County during 2009/10

Housing Land Sales

13 With immediate effect, all capital receipts from housing land sales be applied to projects falling within the following definitions of affordable housing and/or regeneration where:

i) affordable housing is outlined as ‘the provision of dwellings to meet the housing needs as identified by the local authority, of persons on low incomes, whether provided by the local authority or a registered local landlord’

and

ii) where ‘regeneration’ is defined as ‘any project for the carrying out of works of activities on any land where:

¨ the land, or a building on the land is vacant, unused, under-used, ineffectively used, contaminated or derelict, and
¨ the works or activities are carried out in order to secure that the land or building will be brought into effective use. Section H - Revenue Budget

Revised Revenue Budget 2008/09

14 Members note the 2008/09 budget position.

15 The Corporate Director of Resources be authorised to make any proper accounting transactions that would be in the interests of the County Council in relation to the accounts for 2008/09.

Revenue Budget 2009/10

16 For the year ended 31st March 2010;

a)	The Budget Requirement for the County Council be £420,154,810
b)	The County Council agrees a basic council tax at Band D of £1,258.92.

(The average increase in the level of the council tax for the year ended 31st March 2010 is 2.9%, ranging from an increase of 4.75% to a reduction of 1%)

(The statutory recommendations for Durham County Council, as a Billing Authority, are set out in paragraph 42 of this report.)

17 In determining the budget requirement, the County Council:
a) Notes the Corporate Director of Resources’ comments on the robustness of the estimates and the adequacy of reserves and the risks in the budget.
b) Set aside sufficient sums in earmarked reserves as it considers prudent to do so. The Corporate Director of Resources will be authorised to establish such reserves as are required, to review them for both adequacy and purpose on a regular basis reporting appropriately to the Cabinet Portfolio Member for Resources and to Cabinet.
c) Aims to maintain, broadly, a level of general reserves between 3.5% and 4.5% of the budget requirement or about £16m to £20m.
d) Agrees to the fund the investments as set out in Section H, in Annex H2.
e) Agrees to the proposals for savings as set out in Annex H3 and the use of reserves as set out in Annex H4.

18 The total budget requirement for 2009/10 is £431,731,607. This figure includes parish precepts of £11,576,797.

19 The Government has announced the level of grant support for 2009/10 and notified the County Council that the Revenue Support Grant will be £42,037,356 and Redistributed Business Rates will be £182,127,409, a total Formula Grant for 2009/10 of £224,165,765.

Section I - Capital Budget

20 A small group of Members be established to review existing proposals and make recommendations for new projects to be accommodated within existing resources.

Section J - Prudential Code and Treasury Management

21 The Council is recommended to approve each of the six key elements:

· The Prudential Indicators and Limits for 2009/10 to 2011/12 contained within Annex J1 of this section.
· The Minimum Revenue Provision (MRP) Statement contained within Annex J1 which sets out the Council’s policy on MRP.
· Adoption of four key clauses of CIPFA’s Code of Practice for Treasury Management Services, set out in Annex J2; and the Treasury Management Policy Statement in Annex J3.
· The Treasury Management Strategy 2009/10 to 2011/12, the treasury Prudential Indicators contained within Annex J4.
· The Authorised Limit Prudential Indicator (Annex J4).
· The Investment Strategy 2009/10 contained in the treasury management strategy (Annex J4), and the detailed criteria included in Annex J5.

Section K - Dedicated Schools Grant

21 Members note the position of the Dedicated Schools Grant, and note the proposed distribution of DSG as shown in Section K.

Section L - The Charter Trusts for Durham City

22 It is recommended that a Council Tax of £5.00 at Band D be approved for the Charter Trust with a total expenditure of £132,155 being anticipated, using a tax base for the former City of Durham District of 26,431.0.

Section M - Council Tax and other issues

Council Tax Levels

23 The Local Government Finance Act 1992 (referred to as ‘The Act’ in this report) requires the County Council to set its council tax before 11th March 2009.

24 In setting the council tax, the County Council is required to make certain calculations and to approve a number of resolutions in accordance with the Act. The detailed calculations are set out in Annex 2 to 5. The recommended basic council tax at Band D including Fire and Police precepts is £1,491.84. County Durham and Darlington Fire and Rescue Authority have set a band D council tax of £85.41. The Durham Police Authority has set a band D council tax of £147.51. There will also be an additional council tax in any parish area when a precept has been issued and in the former City of Durham District Council area, an additional sum for the Charter Trustees.

25 The Act requires authorities to calculate their net budget requirement for the coming financial year and to determine the demand on the Collection Fund, from which council tax levels are calculated. The details are set out in Annex 2.

Estimated Collection Fund Surplus / (Deficit)

26 The Council also has to determine the estimated surplus or deficit on its Collection Fund at 31st March 2009. The Act requires authorities to transfer the surplus or deficit to the General Fund and to include it in the calculation of the council tax. District Treasurers have estimated collection fund surpluses for 2009/10 based on their experience of collection rates in their respective areas.

27

The table below shows the aggregate position for the County:

	2009/10
	£
Collection Fund Surplus / (Deficit)	2,818,886

28 The estimated surplus or deficit for the council tax is shared between the County Council, the Fire Authority and the Police Authority in proportion to the 2008/09 demands/precepts. This is allocated across precepting authorities as follows:

2009/10

	£
Durham County Council	2,400,000
Durham Police Authority	265,257
Fire Authority	153,629

29 The County Council’s demand on the Collection Fund for council tax purposes for 2009/10, as calculated in accordance with Section 32 of the Act, is £205,166,842.

Council Tax Calculations

Basic Council Tax

30 The County Council’s Cabinet set its tax base at 153,774.70 at its meeting on 29th January 2009 along with the tax bases for various town and parish councils. These are shown at Appendix 3 (column 2).

31 The basic council tax must be calculated by dividing the demand on the Collection Fund by the approved tax base as follows:

£205,166,842 = £1,334.20

153,774.70

32 From this the parish precepts, which are referred to as special items in the Act, are deducted:

£11,576,797 = £75.28

153,774.70

33 The basic council tax for those areas of the County Council where there are no special items is £1,258.92 (£1,334.20 - £75.28). This excludes the Fire Authority and Police Authority precepts. It represents an average increase of £35.98 or 2.9% compared with 2008/09.

34 The calculation of the additional tax for areas where special items, parish precepts, apply is based on the precepts submitted by each parish council and divided by the tax base approved at the Cabinet meeting on 29th January 2009. The council tax in relation to parish precepts is shown in Appendix 3 (column 3). When added to the basic council tax, as calculated in paragraph 31, this provides the Billing Authority’s council tax for each parish area (Annex 2, column 5)

35 Separate arrangements are needed for the Charter Trustees for Durham City because the precept will apply across the whole of the area covered by the former City of Durham District Council. A precept of £132,155 has been submitted, this is shown in Annex 3. The following council tax at Band D is £5.00 and will be added to the County Council’s council tax.

36 Section 30(1) of the Act requires a council tax to be set for each category of dwelling for its area. The council tax bands and the ratio of each band is as follows:

Band	A	B	C	D	E	F	G	H
Proportion	6/9	7/9	8/9	9/9	11/9	13/9	15/9	18/9

37 The council tax set will relate to a Band D which is 9/9 or 1. For other bands proportions will apply. For example, Band A properties will be charged 6/9 of two-thirds of a Band D property.

38 The Billing Authority’s council taxes for each band of property are shown in Annex 4.

Fire and Police Authority Council Taxes

39 County Durham and Darlington Fire and Rescue Authority is a separate body responsible for it’s own financial affairs. The council tax has increased by £2.79 or 3.4% compared with 2008/09 and this was confirmed on 17th February 2009:

Band	A	B	C	D	E	F	G	H
	£	£	£	£	£	£	£	£
Fire Authority	56.94	66.43	75.92	85.41	104.39	123.37	142.35	170.82

40 Durham Police Authority is a separate body responsible for it’s own financial affairs. The council tax has increased by £5.04 or 3.5% compared with 2008/09 and this was confirmed on 26th February 2009:

Band	A	B	C	D	E	F	G	H
	£	£	£	£	£	£	£	£
Police Authority	98.34	114.73	131.12	147.51	180.29	213.07	245.85	295.02

41 The total council tax for each of the parish areas and the remaining area of the County is calculated by adding the charges for the Billing Authority to those of the Fire Authority and Police Authority. The overall council tax for each category of dwelling in each parish area and the remaining areas where there are no parish precepts is set out in Annex 5. The overall increase in council tax for a Band D property is £43.81 or 3.0% as set out below:

	£	%
Durham County Council	35.98	2.9
County Durham and Darlington Fire and Rescue Authority	2.79	3.4
Durham Police Authority	5.04	3.5
Total	43.81	3.0

Council Tax Calculations - Recommendations

42 The County Council is recommended to approve:

(a) That the following amounts be calculated by the County Council for 2009/10 in accordance with sections 32 to 36 of the Act and relevant regulations: i) the aggregate amount which the Council estimates for the items set out in Section 32(2) (a) to (e) of the Act: (total expenditure including Parish Precepts): £1,229,958,702. ii) the aggregate amount that the Council estimates for the items set out in Section 32(3) (a) to (c) of the Act : (total income raised in the year plus the movement on revenue balances): £807,370,327.

iii) the amount by which the aggregate at (a) i) above exceeds the aggregate at (a) ii) above, calculated by the Council, in accordance with Section 32 (4) of the Act, as its budget requirement for the year: £431,731,607

iv) the aggregate of the sums that the Council estimates will be payable for the year into its General Fund in respect of redistributed non-domestic rates, revenue support grant and surplus on the Collection Fund: £226,564,765

v) the basic amount of council tax for the year, calculated by the Council in accordance with Section 33 of the Act: £1,334.20

vi) the aggregate amount of all special items referred to in Section 34 (1) of the Act: (total of all Parish precepts including Charter Trustees): £11,576,797

vii) the basic amount of council tax for those parts of the area that have no parish precepts or other special items calculated in accordance with Section 34 (2) of the Act: £1,258.92

viii) the basic council tax for 2009/10 calculated in accordance with Section 34 (3 ) for dwellings in those areas with parish precepts be as set out in Annex 3, column 5.

ix) The amounts of council tax at items (a) vii) and viii) multiplied by the proportion set out in paragraph 35 which is applicable to each category of dwelling in its area, in accordance with Section 36 of the Act be as set out in Annex 4.

(b) That Members note that for 2009/10 County Durham and Darlington Fire and Rescue Authority has stated the following amounts in the precept issued to the County Council, in accordance with Section 40 of the Act, as shown:

Band	A	B	C	D	E	F	G	H
	£	£	£	£	£	£	£	£
Fire Authority	56.94	66.43	75.92	85.41	104.39	123.37	142.35	170.82

(c) That Members note that for 2009/10 Durham Police Authority has stated the following amounts in the precept issued to the County Council, in accordance with Section 40 of the Act, as shown :

Band	A	B	C	D	E	F	G	H
	£	£	£	£	£	£	£	£
Police Authority	98.34	114.73	131.12	147.51	180.29	213.07	245.85	295.02

(d) That the County Council, in accordance with Section 30 (2) of the Act sets the amounts set out in Annex 5 as the amounts of council tax for 2009/10 for each of the categories of dwellings. (e) That the Chief Executive be instructed to publish a notice in accordance with Section 38 (2) of the Act, relating to the amounts of council tax set.

Contact: Stuart Crowe Tel: 0191 383 3550

Annex 1: Implications

Local Government Reorganisation
(Does the decision impact upon a future Unitary Council?)
Yes - the MTFP and the budget year strategy will impact onto the new Authority.

Finance

This paper is the basis of the County Council’s budget and MTFP

Staffing

Budget decisions will have consequences on this area.

Equality and Diversity

None

Accommodation

Budget decisions will have consequences on this area.

Crime and disorder

Budget decisions will have consequences on this area.

Sustainability

Budget decisions will have consequences on this area.

Human rights

None

Localities and Rurality

Budget decisions will have consequences on this area.

Young people

Budget decisions will have consequences on this area.

Consultation

Widespread consultation on budget proposals.

Health

Budget decisions will have consequences on this area.

Annex 2: Demand on the Collection Fund 2009/10