Decision details

Setting the 2019/20 budget and updating the medium term financial strategy and treasury management strategy

Decision Maker: Cabinet

Decision status: Recommend Forward to Council

Is Key decision?: No

Is subject to call in?: No

Purpose:

To agree the draft 2019/20 budget and associated medium term financial strategy and

treasury management strategy for recommendation to Council on 15 February.

The proposed budget reflects current and expected service delivery requirements and the

provisional local government settlement announced on 13 December. To deliver a

balanced budget there is a need to deliver savings of £3.9m in 2019/20 and to increase

council tax by 4.9% (inclusive of 2% adult social care precept).

The draft medium term financial strategy (MTFS), attached at appendix 1, has been extended to 2021/22 based on current assumptions on future funding and service requirements.

The treasury management strategy, attached at appendix 4, includes the proposed borrowing and investment strategy, the council’s expected minimum revenue provision and the associated prudential indicators which demonstrate that the council’s proposed capital investment budget is affordable, prudent and sustainable.

Decision:

That:

(a)  the additional funding announced in the provisional settlement of £1.5m (£1.0m Rural Services Delivery Grant and £0.5m business rate levy account surplus) is added as a budget line for expenditure in 2019/20 as indicated in the table at paragraph 24, to support rural service delivery across the county;

(b)  the following be recommended to Council;

a.    the council tax base of 68,826.03 Band D equivalents

b.    an increase in core council tax in 2019/20 of 2.9%

c.    an additional precept in respect of adult social care costs of 2% applied to council tax in 2019/20 resulting in a total council tax increase of 4.9%; increasing the band D charge from £1,443.95 to £1,514.70 for Herefordshire Council in 2019/20;

d.    the balanced 2019/20 revenue budget proposal totalling £151.0m, subject to any amendments approved at the meeting, specifically:

e.    the net spending limits for each directorate as at appendix 3

f.     delegates to the section 151 officer the power to make necessary changes to the budget arising from any variations in central government funding allocations via general reserves;

g.    the medium term financial strategy (MTFS) 2019/2022 at appendix 1 be approved; and

h.    the treasury management strategy at appendix 4 be approved, this includes ratifying including the top five UK building societies as approved investment counterparties.

(c)  To establish a financial resilience reserve (as shown in paragraph 31), previously titled the minimum revenue provision reserve; and

(d)  Approve responses to scrutiny committee’s recommendations as provided in paragraph 63.

Alternative options considered:

It is open to Cabinet to recommend alternative spending proposals or strategies;

however, given the legal requirement to set a balanced budget, should additional

expenditure be proposed compensatory savings proposals must also be identified. If it is proposed to spend less, the impact on service delivery of the proposed reduction should be considered.

2. Cabinet can propose a council tax increase above the referendum principle levels. This is not recommended as doing so would require the increase to be subject to a local referendum, incurring additional costs to the council.

Wards Affected: (All Wards);

Contact: Josie Rushgrove, Head of corporate finance Email: jrushgrove@herefordshire.gov.uk Tel: 01432 261867.

Publication date: 31/01/2019

Date of decision: 31/01/2019

Accompanying Documents: