Setting the 2019/20 budget and updating the medium term financial strategy and treasury management strategy
- Meeting of Budget Meeting, Cabinet, Thursday 31 January 2019 10.00 am (Item 49.)
- View the background to item 49.
To agree the draft 2019/20 budget and associated medium term financial strategy and treasury management strategy for recommendation to Council on 15 February.
The chair of the meeting introduced the 2019/20 budget, medium term financial strategy and treasury management strategy. The council’s gross annual revenue expenditure of around £340m was funded by a combination of council tax, business rates, specific grants and other sources. Approximately £80m was ring-fenced to schools. There had been a reduction in central government Revenue Support Grant of 99% since 2011. An increase in council tax was proposed of 2.9% plus a further 2% ring fenced social care precept. The council was felt to be in an improved financial position.
In discussion of the proposed budget cabinet members noted the following key points:
· the investment referenced in paragraph 17 of the report had since been returned to the council and was available to be reinvested;
· the S151 officer reported that the pension scheme was currently fully funded and had insurance measures in place against a short or medium term drop in investment returns, the council was expecting a modest improvement in its position at the next tri-annual valuation;
· the cost pressures arising from the restructure of Deprivation of Liberty Safeguards were complex and covered a number of threads, the funding would allow the council to change how it dealt with individuals in these circumstances;
· the significant reduction in the central grant had been met by savings, cuts in services and by generating more local income;
· the additional sparsity funding was welcomed and it was important to give a clear narrative regarding why that money was needed and what was done with it, for example highlighting the higher than average number of c and u classified roads and additional costs of providing services such as domiciliary care and refuse collections in sparsely populated areas;
· the council had seen an increase in demand for support for children with special educational needs but had a strong track record of working with schools through the schools forum to manage these pressures, the council was in a better position on this than many other councils;
· the confirmed settlement from government included an unexpected EU exit preparation grant of £105k for both 2018/19 and 2019/20;
· the council did provide some IT equipment for looked after children and care leavers, depending on what was most appropriate for their needs, and this could include consideration of reuse of council equipment when it was no longer needed.
Each of the three scrutiny committees had considered the draft budget. All of the recommendations made had been supported. The chairs of the committees highlighted the following points from their discussion:
· the additional funding planned for the children and families directorate was welcomed and responded to the feedback from the public consultation in which 78% agreed that employing more social workers and providing more support for children and families at an early stage was a priority;
· consideration should be given to putting a percentage of s106 funding towards providing housing for older people;
· the council should lobby government to ensure that funding settlements were fair on rural authorities.
Group leaders were invited to present the views of their groups. The key points noted were:
· the rural sparsity funding was welcomed and the plan for spending it should be clearly set out;
· there were concerns regarding the impact of proposed cuts in transport and community transport on rural communities;
· concerns were expressed regarding the pressures set out in the MTFS and whether the budget and savings targets for the children and families directorate were realistic, also that the ring fenced funding for adult social care from previous years would continue to go towards this function;
· it was requested that further information on cost pressures and the potential impact of savings proposals be provided in the papers for full council’s consideration of the budget;
· concern was expressed regarding withdrawal of subsidies to parish councils for lengthsman and parish paths and the message that this gave to the parishes, the council should continue to meet its statutory responsibilities for footpaths.
(a) the additional funding announced in the provisional settlement of £1.5m (£1.0m Rural Services Delivery Grant and £0.5m business rate levy account surplus) is added as a budget line for expenditure in 2019/20 as indicated in the table at paragraph 24, to support rural service delivery across the county;
(b) the following be recommended to Council;
a. the council tax base of 68,826.03 Band D equivalents
b. an increase in core council tax in 2019/20 of 2.9%
c. an additional precept in respect of adult social care costs of 2% applied to council tax in 2019/20 resulting in a total council tax increase of 4.9%;increasing the band D charge from £1,443.95 to £1,514.70 for Herefordshire Council in 2019/20;
d. the balanced 2019/20 revenue budget proposal totalling £151.0m, subject to any amendments approved at the meeting, specifically:
e. the net spending limits for each directorate as at appendix 3
f. 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;
g. the medium term financial strategy (MTFS) 2019/2022 at appendix 1 be approved; and
h. the treasury management strategy at appendix 4 be approved, this includes ratifying including the top five UK building societies as approved investment counterparties.
(c) To establish a financial resilience reserve (as shown in paragraph 31), previously titled the minimum revenue provision reserve; and
(d) Approve responses to scrutiny committee’s recommendations as provided in paragraph 63.
- Setting the 2019/20 budget, capital investment and updating the medium term financial strategy, item 49. PDF 185 KB
- Appendix 1 draft MTFS 2019/20 - 2021/22, item 49. PDF 938 KB
- Appendix 2 savings, item 49. PDF 467 KB
- Appendix 3 detailed 1920 budget, item 49. PDF 617 KB
- Appendix 4 TMS, item 49. PDF 280 KB
- Appendix 5 consultation, item 49. PDF 7 MB