To seek the committee’s views on the four year central government funding deal.

The Committee’s views were sought on the four year central government funding deal.

The Head of Management Accounting presented the report.  She commented that the Government was currently consulting on 100% business rates retention.  The impact of any change would become clearer by the end of 2016.  Some £28 million of savings remained to be delivered by 2019/20.  This was a challenging target, leaving to one side the uncertainty over business rate retention, noting that the Council currently received £6.9 million per year from the national redistribution of business rates through a top up grant.  The budget outturn was showing overspends for adult social care and children’s services in the current year but measures were in place to address the position.  Accepting the funding deal would offer certainty.  The risk of not accepting the deal was that the Council would receive a lesser financial settlement.

The Leader of the Council reinforced the point that the four year settlement did not take account of the proposals for 100% business rate retention.  He noted that funding considerations would need to be taken into account in considering the Council’s participation in the West Midlands Combined Authority.

The Director for Adults and Wellbeing commented that a number of grants relating to adults and wellbeing, such as the public health grant, were separate from the revenue support grant.  The proposed settlement did not have a significant impact for the service but did have some implications.

The Director of Children’s Services commented that the Council had been expecting to gain additional funding from the implementation of the national schools funding formula.  The implementation had now been delayed for a year.  In addition £1m of the Education Services Grant was to be withdrawn from the Council and academies, although the statutory duties which this grant is for have not changed.

In discussion the following principal points were made:

·        It was asked if the Government had indicated whether the current 1.9% cap on council increases would remain in place and whether the permission to levy an additional 2% for adult social care as for 2016/17 would be continued. The Head of Management Accounting commented that the government had given no indication as to its approach on either of these points.  She added that the concern was that if the Council did not accept the deal it could be subject to further budget cuts.

·        Concern was expressed as to what the benefits of accepting the deal actually were in practice.  Paragraph 10 of the report noted that although labelled as guaranteed minimum grant funding the Government had reserved the right to change the settlement due to unforeseen circumstances.  In addition it was remarked that the Government had a track record of changing what was included within various grants adding to the uncertainty about the grant figures quoted in the report.

·        It was clearly implied that a decision not to accept the deal risked the Council being disproportionately penalised in its funding settlement.  However, conversely it was asked whether accepting the offer would prevent the Council from making the case for additional funding to meet the additional costs of delivering services in a rural area.

·        The Government was in contravention of the Council of Europe Charter for Local Government by providing insufficient funding.  It was asked whether rural authorities in particular had considered challenging the government on this point.

·        The outcome of the Government’s consultation on business rate retention did not have a direct bearing on deciding whether or not to accept the funding deal.  The deal did offer some certainty.   Accepting the deal did not preclude the council from pursuing every avenue to secure the funding it required to deliver a balanced budget.

·        In response to a question about the approach being taken by other authorities the Director – economy, communities and corporate commented that his understanding was that a significant proportion were proposing to accept the government’s offer.

·        The Leader of the Council acknowledged that the deal was not particularly palatable.  There were areas of expenditure specifically excluded from the deal.  However, it did provide a level of certainty.  He was due to meet ministers the following week and assured the Committee that he would do everything he could to seek to reduce uncertainty and seek the best funding settlement possible for the County.  Accepting the deal was the best option.  It would not prohibit the council form lobbying for additional funding.

·        It was proposed that in order to make a considered recommendation to Cabinet a task and finish group should be formed to consider the matter in more detail. 

·        The Director – economy, communities and corporate drew attention to the timetable set out in the report at paragraph 15 requiring Council to consider recommendations from Cabinet on 30 September in order to decide whether to accept the government’s offer by the deadline of 14 October.

·        It was suggested that further information should be provided to the Committee on the following points and it should be recommended that Cabinet should also consider these points in making its recommendation to Council:

·      The scope to make representations based on the fact that the UK was in breach of Charter of local government

·      Information on Business rates and the Business rate consultation paper, the numbers of small businesses and the impact of business rate proposals on them.

·      Information on views of other local authorities, in particular comparator authorities.

·      Information on lobbying opportunities including what the LGA is doing and the work of the Rural Services Network Sparsity Group.

·      Further clarification on Council tax capping and whether flexibility to raise an additional 2% for adult social care will remain?

·      More analysis of options open to the Council.

RESOLVED:

That  (a)     in order to make a recommendation on whether or not to accept the 4 year funding settlement a further meeting should be convened to consider alternative options including information from comparator authorities; and

         (b)     Cabinet be recommended to consider the points made by the Committee and the further information the Committee considered was required in order to make a recommendation to full Council on whether or not to accept the four year funding deal.