To consider acceptance and implications of the four year funding settlement offered by central government.

The Leader presented the report.

A councillor noted that, following consideration of the 2016/17 budget and medium term financial strategy (MTFS) by Council on 5 February 2016, central government funding had unexpectedly awarded Herefordshire additional funding within the rural services delivery grant. However, the council’s savings plans appeared to be unchanged from the MTFS which contained proposals to withdraw funding from services such as the rural subsidised bus network and the lengthsman scheme. The councillor considered that reducing funding to these services would have an impact on the quality of life and infrastructure within rural areas, placing additional pressures on parish council precepts. He added that recent briefings had made it clear that parish councils would be expected to contribute further it they wanted to maintain essential services; parish clerks and volunteer parish councillors were described as being ‘at breaking point’. Therefore, assurance was sought that the additional windfall funding within the rural services delivery grant would be discussed fully, with the intention of mitigating proposed cuts to essential rural services.

In response, the Leader said that he shared concerns about the pressures that parish councils found themselves under and the additional grant had not at the moment been earmarked for a particular purpose given the uncertainties about aspects of central government funding, including other grants. He commented that the level of reserves was still a small part of the total budget when expressed as a percentage. He considered that it would be inappropriate to make decisions until the council had a clearer picture of its general financial state.

Points made by other councillors during the discussion included:

1.         The approach of the Department for Communities and Local Government had left local authorities little option but to accept the settlement and rural counties were at a significant disadvantage compared to central London authorities in terms of business rates. A concern was expressed about a proposal to cap town and parish council precepts; another councillor later said that he understood that the cap would apply to the larger local councils.

2.         It was commented that the efficiency statement gave the impression that the authority was flourishing but it was actually facing difficult times. It was suggested that the additional rural services delivery grant could be used to improve rural roads.

3.         It was becoming more difficult for parish councils to recruit and retain parish councillors which could have a significant impact on future viability.

The Leader reiterated that he shared this concern and urged members to make representations to the government.

4.         It was noted that the Local Government Association had campaigned for a four year settlement but this was considered a bare minimum offer which was not guaranteed, with the government reserving the right to change the settlement due to unforeseen events, and it did not offer the financial security needed.

5.         Returning to the matter of the rural services delivery grant, a councillor said that the authority should be able to use the funding to reduce the rate at which services were withdrawn or reduced in rural areas. It was considered that adding the allocation to reserves would continue to allow services to degrade and in some cases disappear. With reference made to discussions at the general overview and scrutiny committee, an assurance was sought that, if the settlement was agreed, the council would not be constraining itself in terms of making a case on an annual basis for the special circumstances in Herefordshire, particularly in view of rural sparsity issues.

The Leader said that the council would continue to press for everything it needed at regular intervals. He reiterated the need for certainty about the financial position before any decisions could be made.

6.         It was noted that the majority of local authorities had accepted the settlement and there were risks associated with not signing it.

The decision was carried unanimously.

RESOLVED: That

(a)       Council accept the four year central government funding settlement for 2016-17 through to 2019-20; and

(b)     the efficiency statement (appendix 3 to the report) be approved.