Agenda item

The Board considered a joint report of the Corporate Director, Resources and the Assistant Chief Executive which provided details on the development of the 2016/17 budget, Medium Term Financial Plan (MTFP 6) and Council Plan / Service Plans 2016/17 to 2018/19. The report also provided details of a review of the Local Council Tax Reduction Scheme and an update on the Discretionary Rate Relief Policy (for copy see file of minutes).

The Head of Corporate Finance reported that the financial outlook for the Council continues to be extremely challenging. The final Coalition Government Budget in March 2015 identified the need for significant reductions in the spending of “unprotected” government departments over the 2016/17 to 2018/19 period. At that point, the forecasted impact on the Council’s medium term financial plan was an additional funding reduction of £75m over the three year period with a £33m reduction in 2016/17.

Initial analysis of the Government’s 8 July 2015 budget however indicated that the pace of funding reductions for “unprotected” government departments would be eased with funding reductions to be delivered over the four year period 2016/17 to 2019/20 rather than the three years previously planned. The scale of the challenge faced by the Council remains undiminished however with total funding reductions across the four year period forecast to be £78m and with the Council also facing increased budget pressures with the introduction of a National Living Wage.

The emphasis since 2011/12 had been to minimise savings from front line services by protecting them wherever possible, whilst maximising savings in management and support functions. This is becoming much more difficult however, as the scope for further savings in managerial and back office efficiencies was becoming exhausted. In the coming months the Council would need to review all services to determine where savings could be best achieved with minimal impact upon the public.

The Head of Planning and Performance added that as in previous years, development of the Council Plan would be carried out parallel to the MTFP and advised members of the budget setting timetable and proposed consultation programme.

Councillor Hopgood highlighted that the Durham Living Wage was reported as £7.20 per hour and queried which figures had been used in the calculations as £7.43 had been agreed at County Council. The Head of Corporate Finance clarified that there was a typing error in the report and confirmed that the correct figures had been used to calculate the shortfall.

In response to Councillor R Bell’s comments on the financial impact of the national living wage to the council and its effect on individuals benefits, the Head of Planning and Performance advised that she would feed concerns back to the Assistant Chief Executive who chairs a working group that looks at poverty issues and the effects of the changing benefits scheme.

Councillor R Bell referred to the funding reduction forecast after the March and July budgets and asked how the council would respond in its planning.  The Head of Corporate Finance responded that the government would like most local authorities to be self-sufficient with services funded from Business Rates and Council tax. He explained that to become self-sufficient the council would have to find £100m to replace government revenue support. Officers and members plan for savings years in advance and although the requirement for savings in 2016/17 was lower than previously forecast, members would still have to decide what, when, where or if to use reserves.

Councillor Nearney referred to the Durham Ask and queried if there was a strategy in place for identifying sites.  The Head of Corporate Finance responded that there had been at least 35 expressions of interest across a wide range of areas. Members felt example case studies would encourage additional interest from local communities, and requested that information available on the scheme on the website be circulated.

Resolved:

(i)           That the contents of the report be considered and refer the detailed scrutiny of the MTFP to the Corporate Issues Overview and Scrutiny Committee, as per the terms of reference of that committee;

(ii)          That the revised timescale for the Spending Review, which is now expected on 25^th November, and the impact of this on the next MTFP Cabinet report, timetabled for November, but now expected in December be noted;

(iii)         That the planned December scrutiny session be combined with the CIOSC meeting on 26^th January, which will incorporate both the December and January Cabinet reports be agreed.