To approve the 2018/19 budget and updated medium term financial strategy (MTFS).

Council considered a report by the Cabinet Member Finance, Housing and Corporate Services; Setting the 2018/19 Budget and Updating the Medium Term Financial Strategy. The cabinet member introduced the report and moved the budget as set out in the papers. He made the following points:

·           The budget had taken account of the social care precept of 2%;

·           The savings proposed in the budget ensured that a balanced budget would be achieved;

·           The budget included arrangements for an increase in the level of reserves;

·           The concerns of the auditors were raised and the opinion that small authorities were at greater risk from poor local economic performance;

·           It was confirmed that the final effect of the Business Rates Retention Scheme on the county was not yet know;

·           An additional £2million had been allocated to the budget of the Children’s Wellbeing Directorate which would help support looked after children;

·           Road improvements in Herefordshire were a priority in the budget;

·           The supplement published after the despatch of full Council papers was raised which provided a corrected version of the graph concerning the base budget position in the Medium Term Financial Strategy;

·           The budget had been considered through the General Scrutiny Committee and at Cabinet; and

·           The final detail concerning the settlement from government was awaited. The Section 151 Officer had a proposed delegation in the budget to make changes in accordance with the final settlement. 

The Leader seconded the budget as set out in the papers and explained that deliberations over the precept had been prolonged. It was felt that the proposed precept was correct to meet the pressures of social care on the county. It was acknowledged that 76% of the budget would be spent on care costs.

The leader of the Its Our County (IOC) Group made the following observations:

·         Herefordshire was suffering as a consequence of austerity and city-focused government policies;

·         The difficulties faced by the county were outlined in a recent report from the County Council Network; and

·         Health and social care integration; support for small and medium sized enterprises (SMEs); recognition of creativity; and 21^st century transport solutions and sustainability were raised as priorities for the IOC group.

The leader of the Independent Group made the following observations:

·         The budget proposed contained significant risk: borrowing was becoming unmanageable and there were few assets to rely upon in future. Significant savings had been achieved but mismanagement of contracts had been wasteful and costly;

·         Increases in council tax and car parking charges were significant burdens for people at a time when wages were virtually frozen; and

·         The investment in the enterprise zone needed to realise well-paid jobs in the county but there was no evidence this was happening.

The leader of the Green Group made the following observations:

·         Withdrawal of central government funding and the ideology of the current administration at the Council had compounded problems in the county;

·         The budgets that were set by Council would balance on paper but in reality often became overspent;

·         Increasing parish precepts to provide for withdrawn council services placed a further financial pressure on local residents;

·         The prioritisation of road building ahead of maintenance was an example of outmoded thinking at the Council;

·         Herefordshire as an agricultural county relied upon SMEs involved in food and tourism industries which should be supported; and

·         It was hoped that the new university students would provide an impetus to the local economy.

The leader of the Liberal Democrat Group made the following observations:

·         The increase in the precept would place an additional financial burden on the residents of Herefordshire but it must be recognised that the need for the increase had resulted from a lack of investment in social care from central government; and

·         Concerns were expressed about the level of borrowing proposed.

Members made the following comments in the debate that followed:

·         In future years the draft budget should be considered by each of the scrutiny committees rather than General Scrutiny Committee alone;

·         It was noted that the reserves had been depleted and subsequently built-up through the sale of assets. There was concern that the disposal of assets could affect the ability to borrow in the future. Greater risk management monitoring of the reserves was urged to ensure adherence to the principle of maintaining a minimum level of 3-5%. The Leader confirmed that £11 million existed in the reserves and the receipts from the sale of the small holdings had not been added to revenue reserves, the receipts were included in the capital programme allocated to the development partner activities;

·         The prospect of a precept of 5.9% was raised which would increase the core funding for statutory services. This was in accordance with the outcomes of the budget consultation;

·         To respond to the pressures faced by the county improvements to support growth were highlighted including improvements to infrastructure in the form of new highways and to broadband provision. The Leader confirmed that future settlements from Amey would be dedicated to capital spending on roads.  

·         The increase in the precept would be a pressure on local residents and detail of what the Cabinet was doing to lobby central government to support local councils was requested. Regular discussions and conversations took place with government ministers and local MPs to promote the cause of the county. This had recently contributed towards the Midlands Engine decision.  

·         The precept of 4.9% was reasonable; it was a balance between what people could afford and meeting the cost of council services;

·         The impact of the collapse of Carillion on the Council was raised. The Leader confirmed that there was no exposure to the Council from Carillion entering administration.

·         Future pressure for the county and the Council included the withdrawal of farm subsidies after Brexit and health and social care costs. The current pressures on the budget from social care were significant and the proportion of the budget dedicated to care costs was substantial.

·         Parish Councils were likely to increase precepts and the Council precept had been proposed without an understanding of the police precept for 2018/19.

·         A full break down of the spending on the new City Link Road was requested. The Leader confirmed that this would be provided.

·         It was queried how poverty would be alleviated in rural areas. The Leader outlined how growth in the county through developing infrastructure and supporting economic development would seek to increase prosperity.

The Cabinet Member for Finance, Housing and Corporate Services closed the debate and stated that there had been a number of good points made and that it was appropriate and reasonable to propose an increase to the precept of 4.9%

A named vote was then held on the motion proposing the budget set out in the papers.

The 2018/19 Budget and The Medium Term Financial Strategy was approved 41 votes in favour, 1 vote against and 6 votes to abstain.

For (41): Councillors SP Anderson, PA Andrews, BA Baker, WLS Bowen, TL Bowes, H Bramer, CR Butler, ACR Chappell, MJK Cooper, P Cutter, BA Durkin, PJ Edwards, CA Gandy, KS Guthrie, DG Harlow, EPJ Harvey, EL Holton, JA Hyde, TM James, PC Jinman, AW Johnson, JF Johnson, J Kenyon, JG Lester, PP Marsh, RL Mayo, SM Michael,  PD Newman, CA North, RJ Phillips, PD Price, P Rone, AR Round, A Seldon, NE Shaw, J Stone, D Summers, EJ Swinglehurst, A Warmington, DB Wilcox, SD Williams.

Against (1): AJW Powers.

Abstentions (6): JM Bartlett, EE Chowns, PE Crockett, J Hardwick, RI Matthews, FM Norman.

Resolved - that:

a)   the following is approved:

                      i.        the council tax base of 68,177.57 Band D equivalents;

                     ii.        an increase in core council tax in 2018/19 of 2.9%

                    iii.        an additional precept in respect of adult social care costs of 2% applied to council tax in 2018/19 resulting in  a total council tax increase of 4.9%; increasing the band D charge from £1,376.50 to £1,443.95 for Herefordshire Council in 2018/19;

                    iv.        a balanced 2018/19 revenue budget of £144.1m which includes 

1.    net spending limits for each directorate as at Appendix 3

2.    a gross revenue budget of £241.2m (this excludes the dedicated school grant of £79m, after academies)

a.    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;

                     v.        the treasury management strategy at appendix 5;

                    vi.         the medium term financial strategy (MTFS) at appendix 1 which incorporates the reserves policy, as determined by the section 151 officer as a prudent level of reserves; and

b)   the section 151 officer is authorised to make necessary changes to the budget arising from any variations in central government funding allocations via general reserves.