Agenda item

Joint Report of the Corporate Director Resources and Director of Transformation and Partnerships.

The Committee considered a report of the Head of Finance (Corporate Finance) which provided an update on the development of the 2017/18 budget and the Medium Term Financial Plan (MTFP(7) reflecting upon the content of the Chancellor of the Exchequer’s Autumn Statement (for copy see file of minutes).

The Head of Finance (Corporate Finance) provided a summary of the key points from the Autumn Statement highlighting information relating to the state of the national finances and government borrowing until 2020/21. Details were also provided regarding the budget deficit and that it was anticipated that austerity for public services could continue beyond 2012/21.

Details were also reported in respect of the increase in the National Living Wage and the disappointing news that there had been no announcement made regarding additional funding for social care. It was noted however that the Autumn Statement did not provide full details for local authorities and this information was contained within the provisional financial settlement received on 15 December 2016.

The Head of Finance (Corporate Finance) further provided detail on the MTFP(7) model  and it was reported that the financial landscape for local authorities would continue to be extremely challenging until at least 2019/20, but possibly beyond, resulting in the longest period of austerity in modern times.  By 31 March 2017, the Council will have delivered savings of £185.7million since 2011.  Based upon the provisional Local Government Finance Settlement, it was forecasted that the savings required for the MTFP(7) period 2017/18 to 2019/20 would be £59.6milion resulting in total savings over the 2011/12 to 2019/20 period of £245.3million.

Further details were reported in respect of the budget and it was noted that the Council Tax Referendum Limit remained at 2%.  The Government had also confirmed in the settlement that councils had the option to increase council tax by an additional 6% for an adult social care precept over the next three years.  The Council has the option to accelerate these increases and increase Council Tax by up to 3% in both 2017/18 and 2018/19. The maximum increase that can be applied in 2019/20 remains at 2% and the adult social care precept could increase by no more than 6% over the 2017/18 to 2019/20 period.

The Head of Planning and Performance provided an overview of the budget consultation process highlighting that the approach adopted by the Council had engaged over 3,000 people of whom 1,900 gave their views. Overall, almost two thirds of respondents (63%) stated that the approach taken to make future savings was a reasonable way forward.

In addition discussions were held with a range of organisations through existing partnerships and network meetings. Feedback included that it was considered that Voluntary and Community Sector organisations were likely to be impacted by the proposed reduction in Members’ Neighbourhood Budgets by £2,600. This point had been acknowledged and it was noted that AAP’s would make every effort to maximize external match funding.

The Head of Planning and Performance further advised that additional targeted consultation had been undertaken with both people with physical and learning disabilities and children and young people, the results of this stage of consultation were contained within the report.

Regarding scrutiny feedback the Head of Planning and Performance advised that any further feedback received from today’s meeting would be fed into the February 2017 Cabinet report.

Councillor Nearney asked whether any financial modelling had been undertaken based on potential loss of EU funding. The Head of Finance (Corporate Finance) advised that the MTFP model did not rely upon EU funding however it was appreciated that the council did need to maximise what funding was available before it was no longer accessible. This may require in some circumstances to use reserves to match fund.

The Head of Finance (Corporate Finance) advised that it was interesting to learn that Surrey County Council were proposing a 15% increase in council tax rates in a bid to encourage the government to increase funding.

Further discussion ensued regarding the social care precept and Councillor Martin commented that any precept raised should be utilised to fund social care services only and added that he felt it was wrong to invest the social care precept in other areas of the council to reduce additional expenditure. In addition he added that he was disappointed that the committee had not been able to view more up to date information regarding the settlement and revisions to the budget given that the settlement had been received 5 weeks prior to the meeting. Councillor Armstrong confirmed that Cabinet could be asked whether they have any plans on using the additional flexibility in the social care precept.

Councillor Robinson added his congratulations and thanks to the 421 young people who had taken part in the consultation exercise. He further raised a point regarding the cost shunting to social care, and added that he was extremely concerned regarding the impact of the Better Health Care Programme and the future impact this could have upon the council’s finances. He raised concerns about how long the ‘financial dowry’ from health will last, and fully supported comments from the chair on the need to ensure continuity of funding.

Councillor Hopgood added that she agreed that should the social care precept be raised by 3% that detail is provided to residents as to how that money will be spent. Regarding the consultation she commented that less than 1% of the population of County Durham had participated and queried whether those who had, had provided feedback in the past, as it was likely that it was the same people.

In conclusion she raised a query regarding the budget reserve and asked whether the net reserves were forecasted to be lower than the previous financial year. In response the Head of Finance (Corporate Finance) advised that a decrease in reserves of £14m would be seen in 2016/17. In response to queries regarding the consultation, the Head of Planning and Performance advised that a big attempt had been made to engage with new groups during this round of consultation, however the addition of a question to see whether the respondent had participated before could be considered for future surveys.

Resolved:

That the content of the Cabinet report be noted and that the comments raised be forwarded to the Cabinet Portfolio Holder for their consideration.