For Cabinet to make its final recommendations to Council on the budget, Council Tax and treasury management strategy for 2008/09.  The draft financial strategy for 2008/11 encompasses these issues.  Approval of the budget, Council Tax and treasury management strategy for 2008/09 and the financial strategy for 2008/11 is a decision reserved to Council.

The Leader informed Cabinet that Agenda items four and five, the Draft Financial Strategy 2008/11 and the Draft Capital Programme 2008/09 would be dealt with together.

The Cabinet Member Resources advised Cabinet that the draft Financial Strategy needed to be taken in context with the draft Captial Programme.  He stated that it provided for a balanced budget even though Herefordshire was one of the lowest funded authorities in the country.  He reminded Members of the closer partnership working being carried out with the Primary Care Trust (PCT) and the need to provide value for money.  He added that the budget continued to address the issue of support for the vulnerable with some capital for the continued improvement of services.  He stated that it was proposed that an additional £356,000 be added to the base budget for 2007/08 rising to £750,000 for 2008/09 for the funding of prudential borrowing.

The Director of Resources stated that Agenda item four reflected the decisions of the Cabinet meeting of 24 January and that the report had outlined how the financial capacity had changed.  The Director referred to the table of figures on the estimated financial capacity and stated that the figures outlined would reduce with the addition of funding to the base budget for further prudential borrowing as outlined by the Cabinet Member.

In referring to the Draft Financial Strategy 2008/11 the Director stated the priority was for the improving of services for the vulnerable.  The financial framework had been strengthened by the inclusion of efficiency targets whilst being careful not to disadvantage vulnerable services.  To this end the Adult and Community Services budget had a much lower efficiency target in order to avoid cuts in services to the vulnerable.  Cabinet was advised that corporate funding for modernising social care services was to be reallocated to the directorate budgets to provide clarity on budget management, with the Director of Resources working closely with the directorates to ensure deployment of those resources represented improvement and better value for money. 

The Director advised Cabinet of the approach to the general reserves and balances strategy recommending a £4.5 million general reserves balance from 1 April 2008.  This was in recognition of pressures and risks identified and for those unquantified.  The Leader added that a further £6 million was available earmarked reserves for specific financial risks and stated that £7.5 million in the school reserves belonged to individual schools and was not for Council use.

A Member in attendance welcomed the clarity of the report and added that Strategic Monitoring Committee (SMC) was in agreement with the Executive on the proposals for the next three years and that the key issues were still around accommodation and property and the Council’s forecast on the way forward.  He went on to refer to the school review and requested that any funds set aside for the closure of schools should be outlined in the report.  He added his surprise at the proposals for further prudential borrowing and was concerned the long term cost this could have on a Band D Council taxpayer.  He advised Cabinet of two key points on the Capital Programme that he felt Cabinet should reconsider, which were in relation to the Master’s House scheme at Ledbury and the costs to be borne by the Council in relation to the Bailey Bridge at Colwall.

The Leader stated that the prudential borrowing was clearly within the capacity of the Medium Term Financial Management Strategy and would not directly impact on Council Tax particularly with the extra capacity put into the base budget.  He added that with regard to the schools review no funds had been set aside in the budget.  Cabinet agreed the extra funding in the base budget to fund prudential borrowing and reiterated the need to invest in the infrastructure of the county, hence the modest increase in Council Tax.  Cabinet noted the concerns of opposition Members on further borrowing.  It was stated that it was most unlikely that the Bailey Bridge for Colwall would be progressed.  Discussion had been held with Network Rail and it was proposed to replace the bridge in 2009 and the authority would need to make a contribution at that time.  Cabinet was advised that Network Rail had a legal responsibility for the railway part of the bridge, with the Council having responsibility for the road across it and any strengthening required to take the highway across it.

With regard to Council tax rises the Leader advised of the proposed rates in neighbouring authorities stating that Shropshire would be 4.4%, Telford 4.3% and Worcester 4.3 – 4.4%.  Therefore Herefordshire was in line with neighbouring authorities.  He added that consultation would be carried out with Strategic Monitoring Committee and the Unions and advised that the Police had put in a figure of 4.95% (as advised by the Member representative on the Police Authority). 

RESOLVED

DRAFT FINANCIAL STRATEGY 2008/11

THAT:

(a)      Cabinet agrees that £356K be added to the base budget in 2008/09 rising to £750K in 2009/10 to fund prudential borrowing; and

(b)      Cabinet agrees the draft financial strategy 2008/2011 attached to the report and recommends its approval to Council on 7 March 2008.

DRAFT CAPITAL PROGRAMME 2008/09

RESOLVED

THAT Cabinet recommends to Council that:

(a)               the funding available be noted;

(b)               the funding allocations to capital bids be endorsed;

(c)               the impact of capital spend on the replacement Social Care system (Corelogic) in 2008/09 be noted; and

(d)       the position on the capital receipts reserve be noted.