To approve the 2019/20 budget and associated medium term financial strategy and treasury management strategy.

Council considered the report setting the 2019/20 budget and updating the medium term financial strategy (MTFS) and treasury management strategy.

 

The Chairman outlined the procedure to be followed during the budget debate and the time limits for speaking.

 

Councillor EPJ Harvey raised a point of order. The administration’s budget that Council was considering had not been approved by cabinet. Appendix 7 to the budget report had not be considered or approved at the cabinet meeting on 31 January. The proposals contained in appendix 7 were an amendment to the cabinet’s budget and not clarifications. The changes should follow the process for amendments set out in the budget and policy framework rules. The chief finance officer had explained to the It’s Our County group that it could not change its alternative budget after consideration by the scrutiny committees and for the administration to make changes to its budget following the cabinet meeting on 31 January was unconstitutional and undermined the authority of cabinet to make recommendations to Council. The Chairman was asked to withdraw appendix 7 and require that it be submitted as an amendment. 

 

The Chairman explained that the detail in appendix 7 was clarification provided by the cabinet concerning the allocation of the £2 million additional funding sources in the 2019/20 budget, and followed a request made by a group leader at the cabinet meeting for additional detail. The Chairman was content with the manner in which the budget had been submitted; the £2 million had been in the budget agreed by cabinet and appendix 7 provided detail regarding its allocation.

 

The deputy leader introduced the budget and made the principal points below:

 

·       Over the previous 10 years the Council had achieved significant savings which stood at £90 million since 2010. Over this period of time the revenue support grant from central government had decreased from 60.1 million to 0.6 million.

·       The budget included savings of £3.9 million and a council tax increase of 4.9% which included 2% to address adult social care pressures. The band D charge was above the CPI but below RPI measures.

·       The budget setting process had rebased the entire budget and had taken into account policy changes and population growth. The process had taken into account those funding pressures faced by the Council and the savings required over the period of the MTFS.

·       The recommendation in the report was to approve the MTFS and the treasury management strategy, the chief finance officer had confirmed that he was content that the approach of the Council was robust.

·       The future fair funding review and the business rates retention scheme were two elements of uncertainty in the MTFS. The rural nature of the county and the relatively low business rate levels meant that help would be required to meet obligations such as public health and lobbying of the local MPs was taking place to ensure that government expedited the review of local government funding.

·       Appendix 7 set out details of the allocation of additional funding for 2019/20.

·       Under the economy and place directorate the budget reflected the comments from the parish summit including investment in community transport and lengthsman schemes to assist local communities with issues such as drainage and rural road networks.

·       In the children and families directorate the budget supported early intervention priorities.

·       In the adults and communities directorate the budget had been dedicated to spend on the roll out of the community hubs.

·       It was confirmed that all projects proposed in the budget would be subject to detailed project business cases.

·       The scrutiny committees were thanked for their role in considering the draft budget.

·       Thanks were offered to the finance officers who had helped compile the budget.

 

The Leader seconded the budget and raised the principal points below in his speech:

 

·         Tribute was paid to the work of the deputy leader over the course of a number of years to ensure that the council had emerged from a period of cuts with a balanced budget and a financially strong position.

·         The budget invested in future partnerships, supported higher education in Herefordshire and invested in schools.

·         The budget invested in the Herefordshire economy and protected frontline services.

·         The achievements of the council included the energy from waste facility, increasing investment in children services, improved delivery of adult social care and providing key infrastructure.

·         The executive had engaged with the community and had a focus on the wellbeing of communities and local residents.

·         The additional funding would be targeted on outcomes and tangible projects not on consultancy or feasibility studies.

 

Councillor RI Matthews explained that the financial position of the council had improved but it could be in a better position if issues with capital projects had been addressed when first raised. The achievements of the administration were questioned: the new retail centre at the old livestock market had required £15 million of borrowing; slow progress with the bypass which had not been delivered; the new city link road and its financing; and the enterprise zone which had not realised the level of jobs that had been anticipated. The waste plant partnership with Worcestershire was noted as a success. The Fastershire programme in partnership with Gloucestershire was raised as a project with an expanding budget. £58 million of assets had been disposed of but the council could be in a healthier financial position with better levels of reserves.   

 

Councillor EPJ Harvey explained that the budget contained some good and some bad elements. The budget did not contain fresh thinking, examples of learning from others or ambition. The current administration was felt to be tired and was disregarding decision-making processes and the council’s constitution. The It’s Our County group was welcoming of new ideas and was learning from others. The council should seek to learn from other authorities involved in development partnerships, implementing new models of care, delivery of 21^st century council-owned housing and changing care in the home arrangements. Some of the ideas in the alternative budget highlighted the gaps in the administration’s budget. The detail in appendix 7 was raised including the way in which funding for libraries and museums was a method to delay cuts to the service; the It’s Our County group was talking to local town councils about how to share the costs of the service in future. Community transport was very important and the allocation of funding by the administration replicated one of It’s Our County’s proposals. The parish lengthsman grant should be provided from revenue derived from car parking as proposed by It’s Our County. The early help programme was seen as the administration’s attempt to repair cuts to preventative services. The expansion of wellbeing hubs were also a proposal for which It’s Our County was pressing and it was noted that there was no strategic intervention to limit social care costs. Development targets were not met which caused opportunistic development and job creation figures were not positive. The administration’s budget was not felt to tackle the strategic challenges that the council faces.

 

Councillor PP Marsh explained that the Council used to have a vision with all combining for the benefit of the county. Central government had ground down the council with requirements for savings. The administration was tired nationally and locally. The revenue support grant now represented a very small proportion of the income for the Council with a reduction of 99%. Local services that had been valued had been significantly diminished. There was uncertainty with the funding settlement not announced until the spring, rural sparsity levels in doubt and Brexit. The budget was therefore guess work as outlined in the MTFS with limited sources of income. It was difficult to state that the council had a growth budget with the likely additional responsibilities that would be placed on the authority. Other financial risks including the savings of £8 million required over the medium term were contained in the budget but impacts of these cuts were not specified. Concern was expressed regarding the allocation of the £2 million funding in the administration budget which had not been scrutinised. The alternative budget was felt to be a more convincing document with proper scrutiny. A new approach was required to work in partnership with local communities and the third sector. Best practice models also needed to be considered.

 

Councillor TM James spoke on the budget and explained that what was of concern to the public was the increase in council tax and this should be the subject of discussion. The increase of 4.9% would cause difficulties for people in the county. It was the responsibility of Council to determine the level of council tax which was high because of the reduction in funding from central government. The administration blamed the government which they supported for the cuts. There was overwhelming support for the council tax increase and all that was being discussed was the strategy that could be changed. The Council only had a short period of time before the elections and a new Council may decide a new strategy. A lot of talk about costed programmes would take place but it needed to be understood that the rise in council tax would harm a lot of people.

 

In discussion the following principal points were raised:

 

·         There were good elements to both budgets and political groups should work together to produce proposals.

·         The impact on individuals of Council Tax increases needed to be considered. There had been a series of increases in council tax, the sum of which was 15.6% over the previous four years. It was necessary to look at different ways of providing services.

·         The challenge was recognised in Herefordshire in terms of the economies of scale and geography. These issues had been addressed whilst producing a balanced budget that protected the vulnerable, supported the economy and supported the environment. The administration’s budget clearly set out a future for the county. Work was undertaken with the SPARSE Rural funding group which allocated money to rural areas and evidence was provided to government of the challenges in these areas. The extra money provided on care costs was an appropriate use of rural funding and a good example of how it could be used. The budget addressed the unique problems that faced the county.

 

Councillor RJ Phillips declared a other interest as a representative of the council on SPARSE Rural – special interest group of the LGA.

 

The discussion continued as below:

 

·     The work being undertaken in adult social care in the county was being looked at by other areas and social housing targets were being met.

·     With respect to criticism of the council tax increase it was noted that under a previous Liberal Democrat administration there had been significant increases.

 

Councillor TM James made a personal explanation to confirm that council tax increases under liberal democrat administrations were undertaken at a time when real incomes were also increasing.

 

The discussion continued as below:

 

·     It was commented that the differences between the administration’s budget and the alternative budget were quite small and concerned the spending of £2 million in additional funding sources for 2019/20.

·     The proposals presented in appendix 7 to the administration’s budget were felt to be hastily conceived whereas the alternative budget had clearer and more detailed plans for the use of the funding. 

 

The meeting adjourned at 12:45 p.m. and reconvened at 1.05 p.m.

 

Apologies for the afternoon session of Council were received from Councillors TM James, EL Holton, MT McEvilly and LC Tawn.

 

Amendment 1 – An Alternative Budget proposed by Councillor EPJ Harvey and seconded by Councillor AJW Powers.

 

Councillor EPJ Harvey proposed the amendment and explained that this was the first alternative budget proposed in a generation. The ideas in the alternative budget had come from individuals and organisations throughout Herefordshire and other areas. The alternative budget welcomed other ideas and it built resilience and delivered affordable and social housing. It proposed investment in measures to transform social care delivery, address climate change, increase council income and reinvest in preventatives service. It proposed the creation of new council houses, 21^st century transport solutions and greater engagement with parish and town councils. It had gained the support of individuals, groups and the scrutiny committees. Hereford City Council had implemented progressive procurement practices and the council was encouraged to procure from local businesses. It proposed solutions to traffic issues in the city, investment in mass transport options and investment in sustainable modes of travel. The alternative budget took models of transformation for children’s care service, in particular the Hertfordshire model of care services which had realised very positive results and was scalable and transferrable to other areas. There was a need to reverse the trend in social care where 2% of those requiring care were consuming a large proportion of the care budget. The alternative budget provided options to make clear strategic investment decisions.

 

In discussion the following principal points were raised:

 

·         The alternative budget was welcome and opened up thinking and possibilities. The family-centred approach, early intervention proposals, the wellbeing hubs and community transport proposals were particularly welcomed. The alternative budget recognised sustainability and would meet environmental needs. The long term planning contained in the alternative budget in partnerships with communities was supported.

·         The standing orders of the Council should be amended in the next term to enable an alternative budget to be properly considered.     

·         The notion that the proposals were an alternative budget was questioned as it concerned the alternative allocation of £2 million of additional funding in 2019/20. It was recognised that the Its Our County budget acknowledged and incorporated elements of the administration’s budget. Clarity was sought regarding the status of the alternative budget following the chief finance officer’s statement of robustness. The chief finance officer referred to section 1.2 of the alternative budget proposal 2019/20 which explained where the proposals were consistent with the administration’s budget.

·         Some elements of the county were deprived where people were unable to afford cars and had to walk as their only form of travel. The notion contained in the alternative budget that could result in traffic lights being turned off was felt to be flawed. It was felt that the focus should be on removing tractors and lorries from roads in urban areas. The turning off of traffic lights was felt to be an irresponsible suggestion.

·         A number of members congratulated and commended the It’s Our County group on compiling an alternative budget. It was a valued and worthwhile exercise to ensure a range of approaches and ideas were considered during the setting of the budget.

·         The alternative budget contained innovative ideas which were proposed for investigation and further exploration, including traffic management. Forward thinking and fresh ideas in the proposals were welcomed and they had been scrutinised in depth. A careful process had been followed to allocate the additional £2 million funding for 2019/20 and proposals had been properly developed. The proposals in the alternative budget represented fresh thinking which had been scrutinised and were proposed for addition to the revenue budget proposed by the executive.

·         The executive had the benefit of officer support in compiling the budget. Some elements of the alternative budget were exploratory but the potential benefits attached to the proposals meant they were worth investigating. 

·         The discussion over an alternative budget had been made possible because the council had achieved a balanced budget, was not in deficit and had an executive which was responsive and alert to pressures and challenges faced by the county. It was difficult to support proposals for exploratory activities or intentions to engage with partners and agencies because they were not felt to offer value for money to residents of the county.

·         The alternative budget had been fully costed and recognised the need to invest in investigating potential initiatives to improve services in the county. The example of the introduction of the Hertfordshire family-centred model was proposed as an approach which could be introduced in the county to realise significant improvements. The money proposed in the alternative budget to be dedicated to arts funding would be beneficial if it resulted in one young person being diverted from care. It was necessary to spend to assess initiatives to make improvements to services before changes could be implemented.

·         The alternative budget presented a number of proposals to think about but not what to do. The administration’s budget was fully costed, planned and outcome focused.

·         The notion that the administration’s budget had not been subject to detailed planning and preparation was not felt to be accurate or fair. The revenue budget was supported by the capital budget; any re-profiling of the capital budget following changes to the revenue budget was felt to be a significant risk.

·         The Hertfordshire family centred model would represent a very significant change to arrangements in Herefordshire and it was not felt that current circumstances in the county warranted the introduction of the new model. The statistics from Hertfordshire concerning the number of children on child protection plans were encouraging but Herefordshire was introducing an edge of care service which sought to reduce admissions to care arrangements and trends in the county were positive particularly the reduction of children on child protection plans. Spending £150,000 on investigations of an alternative model was not felt to be justifiable. Grant funding should be sought for investigations if the project was taken forward.

 

Councillor NE Shaw, as proposer of the original motion, responded to the amendment and explained his doubt over a number of investments outlined in the amendment but welcomed the support for the administrations substantive budget including its targets for carbon reduction and adults wellbeing hubs. It was doubted that the social housing proposals in the alternative budget could be achieved with a reluctance on the part of Its Our County members to approve applications for a development, incorporating affordable housing, in Bromyard. Request halts were felt to be excessively costly and it would be difficult to ensure sufficient usage to justify the investment. The procurement process of the council already encouraged the use of local suppliers and currently 47% of procurement was from local sources.

 

Councillor Seldon made a personal explanation and explained that additional developments in Bromyard would require infrastructure and facilities to be in place before applications should be approved.   

 

The discussion continued as below:

 

·         The use of the revenue raised from car parking charges did not benefit Hereford or the market towns and the proposals in the alternative budget would ensure a better allocation of this income.

·         It was noted that the public had fed into consultations over the Its Our County alternative budget proposals.

·         Investment in highways in Hereford was prioritised in consultation and agreement with town and parish councils in the county.

·         The allocation of additional 2019/20 funding source had taken account of the outcomes of the parish council symposium.

·         The proposals for rail request stops were not felt to be practical and were unlikely to attract the interest of providers.

·         There was doubt as to how the proposed building of social housing in the alternative budget would impact on house building targets in the county. It was felt that more detail was required over the implications of right to buy legislation on the proposal. 

·         The alternative budget had been fully scrutinised but the administration’s proposals contained in appendix 7 to its budget had not been properly examined. The proposals for use of the funding set out in the alternative budget were more far-reaching and were better proposed than the allocations identified in appendix 7. It was felt that the executive spent considerable money on consultants fees and feasibility studies. The alternative budget represented a better allocation of available funding.

·         A Core Strategy review was proposed for 2019 and would enable a strategy to be in place until 2041 with house building targets. The alternative budget concerned the allocation of additional funding of £2 million and it was not felt that such a detailed discussion would occur over a reduction in budget of £2 million. The Hereford bypass would be taken forward Highways England.

 

Councillor AJW Powers spoke as the seconder of the alternative budget amendment. The entirety of the alternative budget had been endorsed by senior officers and directors. Proposals in the alternative budget allocated money to investigate new models or initiatives. Funding was required for initial investigations and it was noted that the administration had spent significant sums on a range of projects. Investment had been allocated to road building projects with no evidence of benefit to local residents. The allocations of funding in the alternative budget for new thinking had been informed through discussions with senior officers and directors. The allocations of funding in appendix 7 appeared to have been taken from proposals in the alternative budget.

 

The alternative budget amendment was put to the recorded vote and was lost by a simple majority.

 

For (15): JM Bartlett, TL Bowes, EE Chowns, J Hardwick, EPJ Harvey, PC Jinman, JLV Kenyon, MD Lloyd-Hayes, PP Marsh, SM Michael, FM Norman, AJW Powers, A Seldon, D Summers, A Warmington.

Against (27): BA Baker, WLS Bowen, H Bramer, CR Butler, MJK Cooper, P Cutter, BA Durkin, PJ Edwards, DW Greenow, KS Guthrie, DG Harlow, AW Johnson, JF Johnson, JG Lester, RL Mayo, PD Newman, CA North, RJ Phillips, PD Price, P Rone, AR Round, NE Shaw, WC Skelton, J Stone, EJ Swinglehurst, DB Wilcox, SD Williams.

Abstentions (2): ACR Chappell, RI Matthews.

 

Amendment 2 – Proposed by Councillor RI Matthews and seconded by WLS Bowen: The Cabinets approved budget recommends £225,000 in savings in regard to reduced costs of school, college and public transport and the removal of subsidy for community transport. We move an amendment to the effect that spending of these projects remain as at present and that to balance the budget the figure of £225,000  to be taken from the community transport vehicle grant, reducing the grant from £500,000 to £275,000.

 

Councillor RI Matthews proposed the amendment and explained that cabinet had recommended £225,000 in savings relating to community transport. It was noted that there had been repeated savings against the service and there was concern that any further reductions would render it unviable. The removal of the service was not acceptable therefore there was a need to maintain the subsidy and provide an ongoing service for vulnerable residents.

 

Councillor WLS Bowen seconded the amendment and explained that there was a need to maintain public transport in rural areas. The service was valued locally and was beneficial to the social and economic wellbeing of the county.

 

The deputy leader, as the proposer of the original motion, and the Leader as the seconder of the original motion, indicated their acceptance of the amendment.

 

Councillor A Seldon declared a other interest as the chair of directors of Bromyard Community Transport.

 

A member commented that there were concerns regarding the withdrawal of permits for the operation of the community transport scheme. If this occurred the amendment would be redundant.

 

The amendment was put to the recorded vote and was carried by a simple majority.

 

For (37): BA Baker, WLS Bowen, TL Bowes, H Bramer, CR Butler, ACR Chappell, EE Chowns, MJK Cooper, P Cutter, BA Durkin, PJ Edwards, DW Greenow, KS Guthrie, J Hardwick, DG Harlow, EPJ Harvey, PC Jinman,  AW Johnson, JLV Kenyon, JG Lester, PP Marsh, RI Matthews, SM Michael, PD Newman, FM Norman, CA North, RJ Phillips, AJW Powers, PD Price, AR Round, A Seldon, NE Shaw, WC Skelton, J Stone, EJ Swinglehurst, DB Wilcox, SD Williams.

Against (0)

Abstentions (4): JM Bartlett, MD Lloyd-Hayes, P Rone, D Summers.

 

RESOLVED: that - the Cabinets approved budget recommends £225,000 in savings in regard to reduced costs of school, college and public transport and the removal of subsidy for community transport. An amendment is approved to the effect that spending of these projects remain as at present and that to balance the budget the figure of £225,000  to be taken from the community transport vehicle grant, reducing the grant from £500,000 to £275,000.

 

 

The deputy leader was invited to close the debate and explained he would explore concerns over support provided to minority groups with the group leader of the Greens after the meeting. It was important that members had an awareness of relevant questions to raise during the budget debate and training would be investigated. The deputy leader thanked Its Our County for the work undertaken on the alternative budget, and drew attention to the references made in paragraph 20 of the report to achievement of the council’s vision.

 

The substantive motion, as amended by amendment 2 above, was put to the recorded vote and carried by a simple majority.

 

For (29): BA Baker, WLS Bowen, H Bramer, CR Butler, MJK Cooper, P Cutter, BA Durkin, PJ Edwards, DW Greenow, KS Guthrie, J Hardwick, DG Harlow, PC Jinman, AW Johnson, JLV Kenyon, JG Lester, RI Matthews, PD Newman, CA North, RJ Phillips, PD Price, P Rone, AR Round, NE Shaw, WC Skelton, J Stone, EJ Swinglehurst, DB Wilcox, SD Williams.

 

Against (7): TL Bowes, EPJ Harvey, SM Michael, FM Norman, AJW Powers, A Seldon, D Summers.

Abstentions (4): JM Bartlett, ACR Chappell, EE Chowns, PP Marsh.

 

RESOLVED: that, subject to amendment 2, the following is approved:

(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 £151.1m, subject to any amendments approved at the meeting, specifically:

(e)  the net spending limits for each directorate as at appendix 3

(f)   the medium term financial strategy (MTFS) 2019/2022 at appendix 1 be approved; and

(g)  the treasury management strategy at appendix 4 be approved, this includes ratifying including the top five UK building societies as approved investment  counterparties.