FINANCIAL STRATEGY 2010-2013 (INCLUDING BUDGET 2010/11)

Members were reminded that any debate on the Budget and Council Tax would be held during consideration of agenda item 10(a) Financial Strategy 2010-2013 (including Budget 2010/11) and that there would be no further debate under agenda item 10(b) Council Tax Resolution 2010/11.

The three year financial strategy for 2010/2013, which included the 2010/11 budget previously approved at Council on 5 February 2010, was proposed and seconded.

Several Members stated that they would not support the Cabinet’s recommendations, the reasons included:

• Vital information remained lacking (including capital projects, superannuation funds, and seven areas of specific grants) which undermined the budget through omissions and assumptions.
• The MTFS as the framework within which cash resources follow corporate priorities had not appeared to allocate budget to take account of the major consultation on Placeshaping and Local transport Planning.
• In recognising the challenges ahead, many parish councils had increased their precepts in order to progress agreed actions.
• Any increase in council tax would be a strain on household finances; the council should look to deliver additional efficiencies especially as an additional 89-100 staff (costing in excess of £1million) had been recruited in the last year.  Further concerns were raised in relation to capital assets, a reduction in reserves to 50% and proposed borrowing increase to £169million by 2010.
• The proposed council tax rise of 2.54% was still too high; potential sources of savings could be cutting the cost of the cattle market, and rationalisation of buses to faith schools.
• The £6million savings initially proposed from the original connects project would now deliver £1million.  This did not demonstrate good value for money to the public.

Several Members supported the Cabinet’s recommendations and the following statements were made:

• Those Members who would not support the recommendations were challenged as to why no alternative budget had been prepared and proposed.  This course of action had been undertaken during a previous administration.  All Members had the opportunity to discuss alternative costing with officers and Cabinet Members following the February 2010 Council meeting.
• Herefordshire Council was underfunded at a time when service demand and delivery was growing.  Given the situation 2.54% was an acceptable increase when compared with other local and police authorities.
• The proposed council tax of 2.9% considered in February 2010 had been reduced to 2.54%.  No service delivery would be affected and additional funding would be given to services which support the most vulnerable in the community.  This was the lowest council tax rise in the county’s history.
• The budget was balanced and this was confirmed in the signed statutory statement by the Council’s Chief Finance Officer.
• Whilst it was appreciated that difficult times would be ahead, it was essential for the Council to work within a three year strategy.
• It was prudent to review capital programmes, their timescales and project spend to ensure the best outcomes for both the Council and public.
• The borrowing requirements outlined in the budget were sound and were well within the criteria set by CIPFA guidance.
• Reducing spend required more efficient working or the cutting of non statutory functions, Members would need to make harder decisions in future years.
• Officers were thanked for their work in producing a balanced budget.

In responding to the comments raised in discussion, the Leader stated:

• That the pension fund valuation would be addressed during 2010/11
• The importance of retaining flexibility with capital projects funding to ensure best results (e.g match funding), especially given the certainty of a cut in public funding.  Serious consideration would need to be given to the consequences of a possible cut in the Area Based Grant
• The budget proposed was as fair as possible with levels of borrowing well within the scope of CIPFS guidance.
• That should Members not support the budget, it could be assumed that they did not support projects such as school buildings, children centres etc.  The purchasing of Plough Lane, associated land and access for £4million was a great deal with the borrowing payments lower than the rent previously paid.
• That there was a need to prepare for future years in order to consider increases and changes in service delivery such as the number of intensive home care clients had increased by 25% in recent years; the number of children with Child Protection Plans had doubled in the last year.
• Savings of £4.5milllion had been budgeted for and additional funding would be available for highways, children’s services and adult services; the previous debate acknowledged potential future strain.
• Budget in future years will be tougher and difficult decisions would need to be made by elected members.  The budget for 2010/11 set out a programme for difficult times ahead.

A vote was taken and the recommendations carried.

REOLVED that the Council approve:

(a)                                             The Medium Term Financial Strategy (MTFS) shown in Appendix A of the report, which includes the 2010/11 budget at section 7 of the MTFS and the 2010/11 to 2012/13 revenue overview summarised in the Finance Resource Model (FRM); 

(b)               A council tax increase of 2.54%;

(c)                The Treasury Management Strategy in Appendix B of the report, including:

·               the Prudential Indicators detailed in Appendix 1 of the Treasury Management Strategy, which includes the draft Capital Programme,

·               the council’s Minimum Revenue Provision Policy for 2010/11,

·               and formal adoption of the revised Treasury Management Policy Statement as per Appendix 4 of the Treasury Management Strategy.

The Council was requested to set the council tax amounts for each category of dwelling in Herefordshire for 2010/11 and to calculate the Council’s budget requirements.

A vote was taken and the recommendations carried.

(1)   In respect of the Council’s 2010/11 Budget a council tax of £1,205.09 be levied (at Band D);

And

(2)     in respect of council tax for 2010/11 that the following amounts be approved by the Council for the year 2010/11 in accordance with Sections 32 to 36 of the Local Government Finance Act 1992:

(a)     £347,362,467  being the estimated aggregate expenditure of the Council in accordance with Section 32(2)(a) to (e) of the Act;

(b)    £202,029,904  being the estimated aggregate income of the Council for the items set out in Section 32(3)(a) to (c) of the Act;

(c)     £145,332,563  being the amount by which the aggregate at (a) above exceeds the aggregate at (b) calculated by the Council in accordance with Section 32(4) of the Act, as its total net budget requirement for the year;

(d)    £57,583,866 being the aggregate of the sums which the Council estimated will be payable for the year into its general fund in respect of redistributed non-domestic rates, revenue support grant, additional grant or relevant special grant, increased by the transfer from the Collection Fund;

(e)    £1,240.26 being the amount at (c) above less the amount at (d) above all divided by the amount of the Council Tax base calculated by the Council, in accordance with Section 33(1) of the Act, as the basic amount of its Council Tax for the year;

(f)     £ 2,488,463 being the aggregate amount of all special items referred to in Section 34(1) of the Act;

(g)    £1,205.09 being the amount at (e) above less the result given by dividing the amount at (f) above by the amount of the Council Tax base calculated by the Council, in accordance with Section 34(2) of the Act, as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no special item relates;

(h)    that the precepting authority details incorporated in Annex 1 (i-v), relating to Special Items, West Mercia Police and Hereford and Worcester Combined Fire Authority be approved in accordance with Sections 30(2), 34(3), 36(1) and Section 40 of the Local Government Finance Act 1992.

(3)         Pursuant to the requirements of the Local Government (Functions and Responsibility) (England) Regulations 2000, any decisions on the application of reserves and balances as required from time to time during the financial year be taken by Cabinet.