Agenda item

To discuss with the Executive Member for Transformation and Finance, and the Borough Treasurer the current budgetary position, in preparation for scrutiny of the 2016/17 budget proposals.

The Executive Member for Transformation & Finance and the Borough Treasurer presented the Council’s current budgetary position, in preparation for scrutiny of the 2016/17 budget proposals.

The Government pledge was to eliminate the national deficit by 2019/20, and most would be achieved through reductions in public spending. Health, education and overseas aid had been protected in the past. Defence would be protected as well in future. Real term reductions of 25% or 40% over 4 years were being explored, and this followed 5 years of austerity. Local government and Bracknell Forest needed to play its part.

Budget Strategy: Underlying Principles: Recognition of political priorities, for example, ‘clean and green’; Efficiencies and savings would be taken as early as possible and would not be constrained by financial years; Savings would be focussed on efficiencies and the back office with the impact on front line services to be minimised; Twin track immediate savings and transformational change; Reserves and balances would be used in a measured way to facilitate the implementation of savings; and Business rates from the regenerated town centre and council tax from housing growth would help to bridge the budget gap.

Key planning assumptions included: a grant reduction in 2016/17 of £3m; a reduction of 6% in government support for each of the remaining 4 years; a pay award of 1% each year; general inflation (CPI) to be below 2% throughout the period and only approaching this level in 2-3 years; pressures consistent with previous years (£2.0m); and a Council funded core capital programme of £8m each year. There was a budget gap of £25 million over the next 5 years.

Bridging the gap for the 2016/17 budget would involve taking a firm line to limit future year’s pressures but, they reflected demographic changes and increases in demand for services; increasing Council Tax by 1% would generate £0.5m; a referendum for excessive increases (2%+?); Utilising balances such as £7.0m of accumulated business rates surplus plus £10.0m of general fund balances; £4.0m minimum prudent balance; £13.0m available but only delay the need for alternative measures

Identifying savings such efficiencies, back office or front line services; reducing or stopping non-statutory services.

Budget risks included: Local government finance settlement; New Homes Bonus/Referendum criteria; Waste Tonnages; Looked After Children; Deprivation of Liberty Safeguards; Business rate appeals and revaluation in 2017; and the impact of the living wage. There was a contingency of £1 million but this would be reviewed following the settlement received.

Budget Timetable

24 September 2015    Overview & Scrutiny Commission – Budget Prospects

25 November 2015     Spending Review

15 December 2015     Executive – approves budget package for consultation

Late December 2015  Provisional Finance Settlement

28 January 2015         Overview & Scrutiny Commission – review budget proposals

End January 2015      Consultation Closes

9 February 2015         Executive recommends budget to Council

24 February 2015       Budget and Council Tax agreed

In response to Members’ questions, the following points were made:

• The budget gap was larger in 2016-17 than later years due to reserves having been used in 2015-16.
• The cost of a 1% pay award was based on the current pay bill with current staffing.
• The general principle was to use CPI as it was relevant to the costs the Council incurred and was lower in terms of inflation but there was also a need to use RPI. Fees and charges would increase in line with RPI; they should charge what the market would bear and were expected to be 2 – 3% over the planning period.
• The revaluation of town centre shops at a reduction of 15% had been taken into account. Allowance had been  made for possible revisions and appeals. Rateable values were determined by the Valuation Office. Work was undertaken a few years ago on an estimate of £6 million in additional business rates arising from the regeneration of Bracknell town centre. The Council did not keep all extra income it received. There was a levy on business rates estimated at £1.5 million per year in line with business growth.
• The Council did not expect to hear the outcome of the possible change in government approach to Council Tax until December.
• The majority of additional business rates income was from the transfer of Vodaphone from a central to a local list in 2013. Vodaphone had appealed their valuations, so the £7 million could be used but only as a one-off. It had been accumulated from previous years and it was hoped that there would not be a need to refund it.
• The assumption was that the CPI would be zero. If, however, it went negative it would benefit the Council in budget terms.
• Statutory duties included Education, Social Care, and the maintenance of roads. Much of the Council’s spend was statutory.