To provide an updated budget position and indicate the current “gap” as well as confirming the approach being taken to produce a balanced budget.

The Cabinet Member Corporate Services and Education introduced the Budget  Update report of the Chief Officer, Finance and Commercial and referred Cabinet to the key points summary.

The following points were noted in discussion:

·         It is anticipated that the local government finance settlement would include a reduction in formula grant funding of £5.7m if the grant total announced last year is not changed by government.

·         Cabinet was reminded of the government announcement that a one year grant would be paid to authorities that freeze council tax for 2012/13.  It is proposed to use the grant funding as a one off source of funding for transformation in 2012/13 with particular emphasis towards adult social care.

·         Cabinet congratulated the finance department on the latest figures for the collection of council tax which was a quarter of a percent higher than the target.  There was a similar increase for business rates.

·         In referring to page 39 paragraph 6 of the report, local authorities to retain their business rates, Cabinet was advised that the change to the system would not come about until after 1 April 2013, would only relate to any new businesses not existing businesses and the setting of business rates would still be carried out by central government and not local government.  Under the current system Herefordshire receives more from the national business rate collection ‘pool’ than it collects.  This is likely to continue but the precise position for 2013/14 is not yet known.

·         Cabinet agreed that the changes in business rates could have a significant impact on Herefordshire and other rural counties compared to large city areas.  This was acknowledged by government office.

RESOLVED

              THAT Cabinet:

a)    noted the current position; and

b)    confirmed for budget planning that the 2012/13 Council Tax Freeze Grant would be used to fund transformation measures.