To seek Strategic Monitoring Committee’s views on the draft financial strategy for 2009 – 2012.

(Councillor RJ Phillips declared a personal interest )

The Committee considered the draft financial strategy for 2009-12.

The Director of Resources presented the report.  He commented on the challenging financial climate that had necessitated revisiting the financial assumptions that underpinned the current Medium Term Financial Strategy (MTFS). 

The MTFS had envisaged that there would be £3 million available for allocation in 2009/10.  However, an expected reduction in directorate based income of £500k; a reduction in income as a result of reduced investment interest rates of £1.5 million; and a reduction in the proposed Council tax income, levying a band D increase of 3.9% rather than 4.7 %, mindful of the Government’s expectation that Council Tax increases would be substantially below 5%, accounted for almost all of this sum.  This in turn largely accounted for the £3.6 million of extra budget pressures.

He highlighted the key elements of the Financial Resource Model, containing a series of assumptions and assessments that shaped the financial plan as set out on pages 105/106 of the report and the proposed based budget adjustments for 2009/10.

He drew attention to the intention to use £1m of general fund reserve to assist in meeting pressures.  He emphasised that it was planned to back-fill the revenue budget from 2010/11 and top up the general fund reserve by £1m so that it returned to its 2008/09 level.  He also indicated that the element of the Local Public Service Agreement reward grant that the Council had led on amounted to £712k and would also be used to assist the budget. This would be back-filled in 2010/11.

He referred to Directorate expenditure requirements and savings proposals as set out at Appendix B to the report.  He added that the MTFS as presented did not entail enforced budget cuts.  However, if a Council Tax increase of below 3.9% were to be proposed this would require difficult decisions to be made.

In the ensuing discussion the following principal points were made:

·         An assurance was sought that the savings expected from the Herefordshire  Connects project were as reported to Cabinet on 31 July 2008 and would not be affected by the recession.  The Cabinet Member (ICT, Education and Achievement) said that the expectation was that those savings would be achieved and this should not be affected by the economic situation.

·         A Member suggested that provision of an improved Broadband Service at Rotherwas was a priority in responding to the economic downturn.  The Leader of the Council acknowledged this point and said discussions were taking place with British Telecom.

·         In response to a question the Director of Resources confirmed that the revised MTFS proposed a 3.9% Council Tax increase for 2009/10 and for the further two years of the MTFS up to 2011/12.  He emphasised, however, that the Council would have to be mindful of Government pronouncements on Council Tax levels and monitor the situation.

·         The Leader of the Council stated his wish to reduce Council Tax levels but noted also the 3% efficiency savings the Council was required to make.

·         A Member reiterated that he considered monies from S106 agreements were outstanding.

·         Concerns were expressed over the cost to the Council of free bus travel for the over 60s.

·         That regard needed to be had to the extent to which roads had been damaged by the recent winter conditions.

RESOLVED: That the Committee’s observations be submitted to Cabinet.