*PART 1 – PUBLIC DOCUMENT / AGENDA ITEM No.
9
TITLE OF REPORT: ITEM REFERRED FROM CABINET: 28 JANUARY 2014 – CORPORATE BUSINESS PLANNING – BUDGET 2014/15
The following is an extract from the Draft Minutes of the Cabinet meeting held on
28 January 2014.
97. CORPORATE BUSINESS PLANNING - BUDGET 2014/15
The Portfolio Holder for Finance and IT presented a report of the Strategic Director of Finance, Policy and Governance in respect of Corporate Business Planning – Budget 2014/15. The following appendices were submitted with the report:
Appendix 1 - General Fund estimates (Council Tax freeze);
Appendix 2 - General Fund estimates (1.9% Council Tax increase);
Appendix 3 – Expenditure reduction proposals;
Appendix 4 – Income generation proposals;
Appendix 5 – Revenue Investment proposals;
Appendix 6 – Medium Term Financial Strategy extract – budget assumptions; and
Appendix 7 – Financial Risks assessment.
He also presented a tabled addendum to this report regarding Capitalised Contribution to the Pension Fund which included the following amended appendices:
Appendix 1 – General Fund estimates (Council Tax freeze); and
Appendix 2 – General Fund estimates (1.9% Council Tax increase).
The Chairman of the Royston and District Committee presented a referral from that Committee, made at its meeting held on 15 January 2014, in respect of the Draft Budget 2014/15 (Minute 68 refers).
The Chairman of the Royston and District Committee drew attention to the minutes and recommendation of the Committee as follows:
“With regard to Income Generation Proposals I2 and I3, relating to an increase in car parking tariffs, the Committee commented:
· That charges should be considered car park by car park on an individual basis in each town. All towns were different and had separate requirements. A blanket increase should not be applied. A decrease in tariffs in some car parks could increase usage and therefore increase revenue. Past history has shown that increased charges result in a reduction of ticket sales;
· The Council should invest more in car park maintenance, especially those car parks that are in the worst state;
· Members of the Committee requested to be provided with the revenue and expenditure data for each car park;
· Reduced prices may increase usage in some car parks. Free after 3 had been very successful in Royston;
· The application of prior year "catch up" to charges was not supported; and
· One Member commented on a plan for future year increases, but this was not supported by the Committee.
With regard to Efficiency Proposal E2 to cease the use of bin hangers to advertise services changes to the waste & recycling collection:
· Members had concerns regarding ceasing the use of bin hangers and the impact of communicating the message to residents purely through Outlook.
With regard to Efficiency Proposal E5 to reduce the Council Tax Reduction Scheme grant to Parish and Town Councils:
· There were some concerns, but the Committee recognised that this was as a result of a cut imposed on the District Council.
The Committee asked that specific reference be made that the revenue budget for 2014/15 included funds to undertake a feasibility study for a water splash park facility in Royston, as detailed in the Green Space Management Strategy action plans. The Committee also wished to make reference to the intention to support from the Area Committee discretionary budget the provision of a fitness trail. This was also referenced in the Green Space Management Strategy.
RECOMMENDED TO CABINET: That the comments made by the Royston and District Committee, as detailed above, be taken into account by Cabinet as part of its consideration of the Council’s Budget for 2014/15.”
The Portfolio Holder for Finance and IT stated that he agreed that it was important that NHDC car parks were managed effectively.
The Portfolio Holder for Finance and IT drew attention to the addendum to the report and explained that the addendum had been tabled as, due to very tight timescales, this matter had to be considered by Council prior to 31 March 2013. He advised that Members had already been informed of the potential opportunity to make a lump sum payment to the pension fund and drew attention to Section 7 of the addendum report which detailed the background as follows:
· The 2013 valuation of the pension fund suggested a 75% funding level;
· After the application of the stabilisation methodology the Actuary had proposed contribution rates as detailed at Table 1 of the addendum report;
· Upon application and demonstration that payment was necessary on affordability grounds, the DGLG could give special permission (Capitalisation Directive) for the contribution to be capitalised.
· The Council last made an additional lump sum contribution in 2007/08 of £1.9 million following receipt of a capitalisation directive from the DCLG;
· Funding of a lump sump payment from capital would reduce the pressure on the general fund, which was funded by Council Tax.
Section 8 of the addendum report detailed the following issues:
· The Council applied to the Secretary of State for a capitalisation directive using the information provided in the 2013 valuation and were informed on 20 January 2014 that the application had been successful;
· The directive gave approval to capitalise a lump sum contribution not exceeding £2.447 million by 31 March 2014;
· Table 2 of the addendum report, provided by the Actuary, showed the contribution options for NHDC using the existing stabilisation methodology and the effect of paying a £2.4 million lump sum in 2013/14;
· Using the 10 year option NHDC would pay larger contributions in the first 3 years compared with the 3 year option (although less than the capitalised payment option) but would benefit from reductions in the 7 remaining years;
· The impact of the contribution options was detailed in table 3;
· The capitalised payment of £2.4 million, with reductions over 3 years, gave the largest net reduction in spend in the short term on the general fund compared to the current Medium Term Financial Strategy assumptions;
· The amended Appendices 1 and 2 reflected the position if a capitalised payment of £2.4 million was made to the pension fund by 31 March 2014 and the reductions in annual contributions were spread over 10 years.
The Portfolio Holder for Finance and IT then drew attention to Section 8 of the substantive report, the Executive Summary, and the following key messages:
· Funding - the provisional settlement suggested that Government funding would be 4.5% less in 2014/15 compared to 2013/14 and would reduce by a further 4.8% in 2015/16. The final settlement announcement is expected in late January / early February. There are significant uncertainties around the future of the New Homes Bonus and Housing and Council Tax Administration grant from 2015/16;
· General Fund and Other Reserve Balances - a minimum general fund balance of £2million was recommended. Other earmarked reserves were expected to total around £3.5million at 31 March 2014;
· Collection Fund - the Collection Fund was, at this stage, anticipated to remain in a surplus position by the 31 March 2014. Continued monitoring for the first year of the Council Tax Reduction Scheme and the retained business rates scheme was important;
· Strategic Priorities - a system of priority led budgeting was being operated. Any investment proposals put forward must be linked directly to the strategic priorities or be an “invest to save” option;
· Efficiency and Investment Proposals - expenditure reduction and income generation proposals for 2014/15 totalled £1.514million. Growth pressures of £150,000 for 2014/15 and an investment proposal of £20,000 for the provision of a jointly funded Economic Development Officer were also proposed;
· Budget Estimates 2014/15 – the estimated net budget for 2014/15 was £15.9million. This was a net reduction of £765,000 on the original budget for 2013/14; and
· Other Considerations - income from the Hertfordshire Waste Partnership (HWP) via the Alternate Financial Model (AFM) could increase in 2014/15, but was less certain for future years. A lump sum payment to the pension fund could ease the future burden on the general fund. A Council tax increase would help to protect the base for the future.
The Portfolio Holder for Finance and IT, supported by Cabinet Members, recommended to Council:
(i) an additional payment of £2.4 million to the pension fund before 31 March 2014, on the basis of the 10 year spread option and that this contribution be treated as capital expenditure; and
(ii) a Council Tax increase for NHDC of 1.9% for 2014/15, subject to any further Government announcements on Council Tax Increase Referendum Thresholds.
RECOMMENDED TO COUNCIL:
Recommendations 1 and 2 and amended Recommendation 8 below arise from the tabled addendum to the report regarding Capitalised Contribution to the Pension Fund.
(1) That an additional payment of £2.4 million be made to the pension fund before 31 March 2014, on the basis of the 10 year spread option as detailed in table 2 of the addendum report and that this contribution be treated as capital expenditure inline with the directive received from the Secretary of State;
(2) That the impact of the additional payment, detailed in (1) above, on the general fund estimates and in particular the estimated efficiency targets in the period 2015/16 to 2018/19 as detailed in appendix 1 and 2 be noted;
(3) That it be noted that the provisional start-up funding assessment for 2014/15 is £5.162million, and that this includes the Council Tax Support Grant and Homelessness Grant;
(4) That the position relating to the Council’s General Fund balance be noted, and that due to the risks identified in Paragraph 9.2.3 of the report, a minimum balance of £2million is recommended;
(5) That the position of the Council’s other reserves and provisions, as identified in Section 9.2 of the report, be noted;
(6) That the inclusion of all the efficiency and investment proposals in the final budget for 2014/15, as set out in Appendices 3, 4 and 5 of the report, be approved;
(7) That the estimated position on the Collection Fund be noted, and it be agreed that no contribution to or from the Collection Fund will be made in 2014/15, as referred to in Section 9.3 of the report;
(8) That the estimated 2014/15 net expenditure of £15.636million, as detailed in Appendix 1 of the addendum report be noted and approved; and
(9) That Cabinet indicates that it wishes to recommend to Council a 1.9% increase on the Council Tax rate for 2014/2015, subject to any further Government announcements on Council Tax Increase Referendum Thresholds.
REASON FOR DECISION: To ensure that all relevant factors are taken into consideration when arriving at the proposed Council Tax precept for 2014/15; and to ensure that the Cabinet recommends a balanced budget to Council on 13 February 2014.
The following are the substantive and addendum reports considered by Cabinet at its meeting held on 28 January 2014.
TITLE OF REPORT: CORPORATE BUSINESS PLANNING - BUDGET 2014/15
REPORT OF THE STRATEGIC DIRECTOR OF FINANCE, POLICY & GOVERNANCE
PORTFOLIO HOLDER: COUNCILLOR T.W. HONE
1. SUMMARY
1.1 To consider the budget for 2014/15 and the factors which contribute to the determination of the District Council Tax level and to recommend the appropriate level to Council on the 13 February 2014.
1.2 To consider the known and unknown key factors which could impact on Council finances within the period of the medium term financial strategy (2014 – 2019).
2. RECOMMENDATIONS
2.1 That Cabinet notes the provisional start-up funding assessment for 2014/15 is £5.162million and that this includes the Council Tax Support Grant and Homelessness Grant. Should the final finance settlement be announced prior to Cabinet, an oral update will be provided at the meeting.
2.2 That Cabinet notes the position relating to the Council’s General Fund balance and that due to the risks identified in paragraph 9.2.3, a minimum balance of £2million is recommended.
2.3 That Cabinet notes the position of the Council’s other reserves and provisions as identified in section 9.2.
2.4 That Cabinet approves the inclusion of all the efficiency and investment proposals in the final budget for 2014/15.
2.5 That Cabinet notes the estimated position on the Collection Fund and agrees that no contribution to or from the Collection Fund will be made in 2014/15, 9.3 refers.
2.6 That Cabinet notes the estimated 2014/15 net expenditure of £15.926million, as detailed in appendix 1 and recommends this budget to Council.
2.7 That Cabinet indicates that it wishes to recommend to Council a 1.9% increase on the Council Tax rate for 2014/2015.
3. REASONS FOR RECOMMENDATIONS
3.1 To ensure that all relevant factors are taken into consideration when arriving at the proposed Council Tax precept for 2014/15.
3.2 To ensure that the Cabinet recommends a balanced budget to Council on 13 February 2014.
4. ALTERNATIVE OPTIONS CONSIDERED
4.1 Members were asked for their early input into defining the budget options at the first set of Member workshops in September.
5. CONSULTATION WITH EXTERNAL ORGANISATIONS AND WARD MEMBERS
5.1 All Members were given opportunity to comment on the efficiency and investment proposals at Member Budget Workshops held on the 6/7 November 2013. Notes of the comments raised at the workshops were attached to the Draft Budget report in December.
5.2 The Cabinet consulted on the proposals in this report with the Business Rate Payers Group on the 9 January 2014. The group were broadly supportive of the budget proposals but did ask to be involved in the consultation on the detail of the options for changes to parking tariffs at the appropriate time.
5.3 The Chair of Baldock and District Area Committee and the Chair of Royston and District Area Committee requested the opportunity to consider and comment on the budget proposals at their meetings in January.
5.4 Members of the Baldock and District Area Committee raised the following questions /comments:
· It was noted that Cabinet had removed efficiency proposals E1, E6 and E7 from the budget proposals and so no further comment was required.
· With regards to the planned reduction in Council Tax Reduction Scheme grant payable to the Parish and Town Councils (E5) it should be noted that a small change can have a significant impact on forward planning for the Councils. We should ensure that we have consulted with the Councils properly in a timely manner to ensure there has been adequate warning.