Agenda item

The Council considered a report from Cabinet which detailed budget recommendations for the 2018/19 Revenue and Capital Budget and Medium Term Financial Plan (MTFP(8)) 2018/19 to 2021/22 (for copy see file of Minutes).

 

In Moving adoption of the Cabinet report, Councillor Henig made a statement on the Budget and Precept for 2017/18, summarised as follows:

 

The recommendations made by Cabinet were the culmination of a lengthy budget process.  Enforced deep austerity cuts which were first introduced by the Conservatives and the Liberal Democrats, and more recently the Conservatives alone, had seen budget reductions of more than £200m in County Durham since 2010.  The North East region had seen £¹/₂b removed over this period, which was an unprecedented situation the Council had to deal with in the best way it could.  By comparison, the process of Local Government Re-organisation in 2008-09 set out to save £20m, which was a fraction of these cuts.

 

Councillor Henig did not think that some people fully grasped the extent of the financial challenge the Council had been forced to deal with since 2010, but this could be highlighted by the financial crisis which had arisen at Northamptonshire County Council.  The Leader of the Labour Party had described the situation after eight years of austerity as a national emergency.  Unfortunately, the government continued with their austerity policies with further deep cuts to come in 2019/20, after which the situation was unknown, though it remained possible the Council could face further cuts in public health and other budgets.

 

As in previous years, the Council had carried out public consultation on its budget and feedback from this was included in the report.  More than 3,300 people had been engaged in the consultation, including meetings of AAP’s and other community groups, and 1,175 people had returned feedback forms.  Of these, 78% of responses agreed that the Council’s approach to making future savings was a reasonable way to progress in 2018/19.

 

The government had announced some changes as part of the final settlement, which had meant some amendments since the Cabinet meeting, and these were contained in the report.  At the twelfth hour the government had allocated an additional £150m nationally in terms of adult social care support grant, of which the Council would receive £1.764m.  Although this additional funding was welcome, it was understood to be one-off funding for 2018/19, and was a fraction of what was needed to close the funding gap in Adult Social Care, according to estimates made by the Local Government Association.

 

Councillor Henig also needed to note amendments to reflect the government error in calculating section 31 grant totalling £264,000 in 2018/19, reducing the utilisation of the budget support reserve by this amount and amendments to the Treasury Management Strategy as set out in the report, which reflected the late publication of government regulatory changes.

 

Unfortunately, County Durham continued to receive no Rural Delivery Grant, which was additional grant awarded to areas of sparsity across the country.  It was regrettable that the government did not appear to believe County Durham to be rural and this meant the council received none of this additional resource for the cost of delivery services.

 

No additional funding had been found by the government for growing financial pressures on children’s services, which were being felt across the country, nor was there any funding for the council’s hard working staff who deserved a decent pay award.  There was no additional funding for a range of other inflationary pressures.

 

Instead the government was assuming in its core spending power calculations that councils would take up the permitted additional 1% increase in council tax, on top of the 1.99% limit, as well as an adult social care precept of up to 3% to make up for the funding shortfall.  Pressures in adult social care and children’s services should be funded from the national government and it was wrong that these were passed on locally.  Government figures on spending power even assumed that council’s would increase council tax while doubtless being very grateful that local authorities took any blame.  Council;s across the country of all colours were increasing council tax, and the Leader of Kent County Council had said they had no choice given the increasing multi-million pound pressures on adult and children’s services.  There was nowhere else to find the additional resource that was needed to fund growing demands on adult and children’s social care.  This was the case in County Durham and a 2.9% council tax increase along with a 2% adults social care precept was being proposed.

 

After years of unfair spending settlements from national government, County Durham’s core spending power per dwelling was not only lower than the England average, but lower even than a county like Surrey which would enjoy 20% higher spending power than Durham in 2018/19.  Because government assumed that council tax would fill the gaps left by its deep budget cuts, if the Council did not increase council tax as proposed, the gap would grow wider and the core spending power for County Durham would fall even further behind the national average.  If Durham was funded at the same level as the national average, it would receive almost £50m in additional resource.

 

Councillor Henig referred to the Capital Budget.  It had always been a high priority for the Council to focus on job creation and engage in economic regeneration schemes across County Durham such as those earlier outlined by Councillor Marshall.  This was investing in the future.  Sources of finance for the capital programme included capital grants, capital receipts and prudential borrowing.  Again, the Council had a significant and fully funded capital programme which included substantial highways maintenance funding, a range of economic development schemes, disabled facilities grants and a new, much needed school in the Bishop Auckland area. 

 

A summary of recommendations could be found at paragraph 262 of Item No 10.  These included approval of the 2018/19 Net Budget Requirement of £395.544m, approval of the revised 2017/18 capital budget of £111.383m, the additional capital schemes for 2018/19 as detailed in Appendix 8 and the MTFP capital budget of £360.798m as detailed at Table 25.

 

The recommendations on Council Tax resolutions could be found in paragraph 27 of Item 11.  These incorporated a 2.99% Council Tax increase for 2018/19and a further 2% increase for Adult Social Care precept, totalling 4.99%, the tax base as agreed by Cabinet set out in the report at paragraph 13, the collection fund surplus and distribution set out at paragraph 12, the precepts for Police, Fire and Parish Councils and the new parish precept for the Durham City area set out at paragraph 18.

 

This remained an incredibly difficult financial situation as the eighth year of austerity was being entered.  The effect of relentless austerity cuts could be seen across the country and nationally a tipping point was being reached.  In the face of these unprecedented pressures, Durham continued to do everything it could to keep going as many of it services it could, in line with public priorities.  This was why, despite massive budget reductions of approaching £250m, almost four in five of the public said they thought the Council’s proposals to be a reasonable approach.

 

Councillor Henig moved the recommendations.

 

In Secondingthe recommendations, Councillor Napier, Deputy Leader and Portfolio Holder for Finance reported that the budget and council tax proposals were as a result of work by members and officers and thanked all those who had been involved in the process.  The Council was facing the 9^th year of austerity which had been introduced initially by the coalition government and continued by the Conservative government.  By the end of the 2017/18 financial year the council will have made savings of £209m, if no austerity had been in place then the council would have had an additional £209m in its budget.  Councillor Napier had never known a time of such uncertainty in local government funding with no indication of available levels of funding beyond 2019/20.

 

As an illustration of the effects of austerity, Councillor Napier referred to Northamptonshire County Council, which had issued a section 114 notice because it was unable to bring In a balanced budget.  The notice was believed to be the first issued by a local authority in more than 20 years.

 

The priority of the council in setting the budget was the protection of frontline services.  Durham’s core spending power per dwelling was lower than the national average, and if funded to the national average, Durham would have an additional £48m of resource.

 

There was a lot of uncertainty of funding after 2019/20, although there were no signs of austerity ending and therefore the council needed to plan the best it could.  95% of councils were planning to increase their council tax level and this was a means to shunt funding from central government onto local government.

 

Councillor R Crute, Chairman of Corporate Overview and Scrutiny Management Board informed Council that there had been four scrutiny meetings to consider the budget, adding that the process had been hindered by the late confirmation of the final budget settlement.  The Corporate Overview and Scrutiny Management Board had scrutinised the budget setting, proposals and settlement and commended officers on the way savings had been carried out to date and the planned way savings were to be carried out.  Feedback from the scrutiny process could be found at paragraphs 92 to 101 of the report at Agenda Item 10.

 

An amendment was Moved by Councillor Shuttleworth, Seconded by Councillor Blakey as follows:

 

The Council, In respect of the Cabinet’s 2018/19 Revenue Budget:

 

(a)  Cease entirely the publication of the County Durham News from April 2018. This would produce an annual recurring saving of £195,000.

 

(b)  Reduce staffing in marketing and communications to 1 press officer and 2 assistants, saving £1,300,000.

 

Total Savings (a+b) = £1,495,000

 

The savings from (a) and (b) above to be allocated as follows:

 

(i)            Reduction in the general council tax increase to 0.99% for 2018/19. The cost of this is £3,995,000.

 

(ii)          Provision of £500 annual grant to 317 village halls and community centres across the County at a cost of £158,500.

 

Total Costs (i+ii) = £4,153,500

 

(iii)         The net cost of these amendments in 2018/19 of £2,658,500 to be met from the budget support reserve.

 

(iv)         The net cost in future years to be added to the overall savings target for 2018/19 to 2021/22 (increasing it from £43.5M to £46.2M).

 

The Council, in respect of the 2018/19 Capital Budget:

 

(a)  Do not proceed with the new County Hall and History Centre. Apply the proposed capital investment in the scheme to the ‘highways maintenance budgets’ across the County.

 

For the Amendment

 

 

Against the Amendment

 

 

Abstentions

 

 

The Amendment was Lost.

 

An amendment was Moved by Councillor R Bell, Seconded by Councillor Henderson as follows:

 

In respect of the Cabinet’s 2018/19 Revenue Budget:

 

(a)  Cease publication of the County Durham News from April 2018 but retain the Events Guide and Guide to Services. This would produce an annual recurring saving of £137,000 to be utilised on the DCC Highways Maintenance Capital budget.

 

(b)  Utilise £364,000 of the non-recurrent £1.764m Adult Social Care and Support Grant (which is proposed to be used for ‘social care prevention initiatives’) to fund existing pressures in Adult Social Care and the released funding of £364,000 to be utilised on the DCC Highways Maintenance Capital budget.

 

(c)  In respect of (a) and (b) – AAPs be consulted on the additional works proposed in their area, and that AAPs be required to consider utilising some of their own capital budgets for this purpose.

 

(d)  REAL directorate to consider applying budget underspends at end of financial year 17/18 to the DCC Highways Maintenance Capital budget.

 

(e)  REAL directorate to undertake a feasibility study for food waste collection and digestion, including pilots and alternative fuel sources for vehicles in advance of current contracts expiring in 2025.

 

For the Amendment

 

 

Against the Amendment

 

 

Abstentions

 

 

The Amendment was Lost.

 

 

An amendment was Moved by Councillor Wilkes, Seconded by Councillor Stokoe as follows:

 

Recent studies have shown that Durham County Council has the largest number of empty properties in the UK by Council area.

 

To address this our Regeneration department will identify 3 additional staff to work solely on bringing empty homes back into use with a target of bringing 65 additional properties a year back into use over 3 years.

 

For 2018/19 the estimated salary costs of the three staff (£103,350) to be met from the budget support reserve. Future years salaries assumed to be paid for from the the empty homes element of the New Homes Bonus which the Council will receive - the equivalent of an additional Band D council tax per year for four years for every net extra property we bring back into use.

 

Note :

The Empty Homes Bonus provides the equivalent of 4 years of Band D council tax for every net additional property brought back into use, which is currently £1590 per year or £6360 per property.

 

This proposal is revenue neutral and only asks that officers bring back into use an additional 1% of all empty properties each year.

 

For the Amendment

 

 

Against the Amendment

 

 

Abstentions

 

 

The Amendment was Carried.

 

The Corporate Director of Resources informed the Council that the Amendment, while not having any impact on the bottom line of the budget, would require the appendices in the MTFP report to be amended.

 

An amendment was Moved by Councillor Martin, Seconded by Councillor Wilkes as follows:

 

Durham County Council currently has a huge highways capital works backlog approaching £200 million. Whilst the Council is doing better than the national and regional average in repairing A and B class roads, we are significantly below the regional and national averages for estate and unclassified roads. We also have a significant backlog of pavement repairs.

 

Council therefore agrees to invest an additional £5m a year for 3 years into road and footway capital works on estate and unclassified roads.

 

This will be paid for by using a portion of the unallocated new prudential borrowing already in the MTFP. This will cost £275,000 in each of the next three years. For 2018/19 this will require additional use of the budget support reserve totalling £275,000.

Notes:

Taken alongside other Lib Dem proposals in this budget, around 50% of the unallocated prudential borrowing would still be available for capital schemes still not identified by Cabinet.

For the Amendment

 

 

Against the Amendment

 

 

Abstentions

 

 

The Amendment was Lost.

 

 

Councillor Hopgood informed the Council that she had submitted a budget amendment, but following discussions with Councillor C Marshall, Portfolio Holder for Economic Regeneration, she would withdraw her amendment.

 

 

A vote was then taken on the main Motion, as amended by Councillor Wilkes Motion, which was the recommendations contained within the report.

 

Medium Term Financial Plan 2-18/19 to 2021/22 and Revenue and Capital Budget 2018/19

 

For the Motion

 

 

Against the Motion

 

 

Abstentions

 

Resolved:

That the report, as amended, and its recommendations be adopted in full.