To receive the report and to consider any recommendations to Council arising from the meeting held on 23rd February, 2006.

Before calling on the Leader of the Council, to present the report of Cabinet, the Chairman advised that the Revenue Budget and Council Tax for 2006/07 would be debated at page 17 of the agenda.  If any Member wished to move an amendment, they should do so once the Leader had proposed the Council Tax and Budget.  Once the Council had agreed the whole of the Cabinet report, it would move to item 10 of the agenda to set the Council Tax and Revenue Budget for 2006/07, formally, in accordance with the legislation.

Councillor Fleet was reminded that his question about the Service Level Agreement with Hereford City Council would be dealt with under this item

The Leader of the Council, Councillor R.J. Phillips, presented the report of the meetings of Cabinet held on 23rd February, 2006

In relation to Item 1.1 Corporate Plan 2006/09 - Councillor Phillips reminded Council that the Corporate Plan covers a three year period and sets out the Council's intentions for its contribution to the Herefordshire Plan and its own organisational improvement.  It includes performance measures and targets for 2006 to 2009, actions to achieve them, associated risks and their mitigation and the resources to be allocated.

In relation to Item 1.2 - Revenue Budget 2006/07 - Councillor Phillips presented the Corporate Management Board's proposals for the Revenue Budget for 2006/07.  The proposals had been endorsed by the Budget Panel,  Strategic Monitoring Committee and Cabinet and commented on by Union representatives.  He reminded Council that the Government had introduced a new approach to calculating Formula Grant allocations known as the "Four Block Model" that deals in cash grant rather than assumptions about spending.  He said that the new system was less transparent than the previous system and thought it would be unsustainable beyond two years.  He was concerned that the new system shifted the council tax burden from urban to rural authorities and felt that central government needed to carry out a spending review to address the situation.

He spoke of the devolved budgets for schools (4.3% in 2006/07 and 4% in 2007/08) which would be useful for medium term financial planning but was concerned about a rise in the non-schools budget of only 2.4% which would not meet the previously agreed salary increase of 2.9% or the expected strain on pension costs over the next two year.  He said that the predicted rise in fuel and vehicle running costs would have a serious impact on providing services in Herefordshire.

He spoke of the rising demand for essential services, such as safeguarding children, care of the elderly, the disabled, those with learning difficulties and the mentally ill.

He said that the proposed increase in Council Tax was 4.7%, which was below the Government's recommended maximum level of 5% and was comparable to other local authorities and with the Fire and Police Authorities (4.9%).  However, he understood that this would still be a burden for the large numbers of people in Herefordshire who were on a low or fixed income.

He reminded Council that despite Herefordshire's budget being 8% below the average for all Unitary authorities in the Country it had achieved a good CPA score for value for money and use of resources.  He confirmed that the Council had achieved £3 million efficiency savings last year and had pledged to realise another £1.65 million next year.

He proposed that the overspends in the Social Care budget and in the Property budget be written off.  He said that the biggest challenge for the County continued to be in Social Care, and that this was the same across the country with many other authorities having large overspends on the Social Care Budget.  Nationally, there has been a shift, over the past few years, of patients from NHS to local government services.  There were many reasons for this, but Herefordshire was likely to be particularly hard hit due to a rapidly increasing older generation.  There would also be continuing pressures on the learning disabilities budget, as parents and carers grew older and Primary Care Trust contracts were reduced or withdrawn.  He asked the Scrutiny Committees to consider recent trends in provision of services as a model for future delivery.

Councillor D.W. Rule, MBE, Deputy Leader of the Council, spoke in support of the proposals and said the Council had a duty to provide services in the most cost-effective way possible.

Councillor T.M. James, Leader of the Liberal Democrat Group, said that the Council had a painful, but not difficult, decision to make on the level of council tax because of the restrictions imposed by central government.  He said that he had abstained from voting the previous year because of concerns over the level of the social care budget particularly in those areas which did eventually overspend such as care of the elderly and for children.  He said that council tax was a bad tax that fell on those least able to pay and that central government needed to think about how vital local services could be better funded.

Councillor R.I. Matthews, Leader of the Independent Group fully supported the proposals but  was concerned about the impact of a 4.7% increase on those least able to pay.  He said the Council should be making every effort to save money where possible and provide good value for money.

Councillor Phillips agreed with the comments and said that central government needed to engage with local authorities on the best way of providing funding for local services.

Councillor Phillips, then responded to the following question previously submitted as a written question by Councillor D.J. Fleet

"Has the assessment been made yet on the impact to future services provided in the City resulting from the change to Hereford City SLA.  If so what services are affected and to what extent?"

Councillor Phillips replied that there had been a series of discussions through the course of the current financial year about the extent of the Service Level Agreement for grounds maintenance within the Hereford City area.  The Council was eventually advised that the City Council would seek to reduce their contribution to the Service Level Agreement by £80,000 for the financial year 2006/07.  That advice came too late for the Council to review the specification for the forthcoming year, although no funding was included to meet inflationary or budget overspend pressures.  He said there would be no adverse impact on this year's Three Choirs Festival.  This will need to be examined in future years, but it was hoped there would be minimal impact on the Three Choirs Festival.

Councillor Fleet said the City Council needed to know where the money was being spent.  He was grateful that there would be no impact on the city during the forthcoming year and that works on parks and gardens, the refurbishment of High Town and repairs to the Victoria Bridge and works at Green Street would be continuing.  He advised that the money may still be available if the grants criteria could be met.

Councillor Phillips said that the Council would continue to have frank discussions with the City Council on this matter.

In relation to Item 1.3 - Proposals for 2006/07 Capital Programme - The Leader stated that the council's Capital Strategy needs to be integrated with the Medium Term Financial Plan and consequently the Corporate Plan.  He highlighted some of the schemes that the Council was already committed to, and recommended a number of new schemes: the Museum Resource and Learning Centre phase 3, redevelopment of Pembridge Travellers' site, improvements to public toilet facilities, Disability Discrimination Act compliance work and the replacement of schools at Hunderton.  A number of other schemes were identified should any of the proposed schemes be delayed.  He advised that the capital programme would be monitored with reports back to Cabinet and Strategic Monitoring Committee on a regular basis throughout the year.

In relation to Item 4.i(i) - Joint Area Review - Improvement Plan - In response to a query the Leader confirmed that a report was expected from the relevant Minister by mid-March, but that work had already started on implementing improvements.

RESOLVED:  That the reports from the meetings of Cabinet held on 23rd February, 2006 be received and the recommendations set out below be adopted:

That    (a)        the Corporate Plan 2006/09 be approved, subject to any changes being made to reflect the new Herefordshire Plan, (depending on its timing) the Local Area Agreement with Government and budget decisions;

            (b) the budget strategy as outlined in the report (paragraphs 1 - 3 of the report refer) be confirmed;

(c)               the Council’s responsibilities under Sections 25 - 29 of the Local Government and Finance Act 2003 as outlined in the report (paragraphs 4 - 9 of the report refer) be noted;

(d)               the position on financial standing and risk as outlined in the report (paragraphs 10 - 13 of the report refer) be endorsed;

(e)               the financial context to the preparation of the budget strategy and detailed budget plans for 2006/07 (paragraphs 14 - 33 of the report refer) be noted;

(f)                 the assumptions for funding the revenue budget outlined in the report (paragraphs 34 - 36 of the report refer) be noted;

(g)               the revenue budget proposals for 2006/07 be approved for Council Tax setting purposes, (paragraphs 37 - 40 of the report refer);

(h)               the efficiency plans outlined in the report (paragraphs 41 - 43 of the report refer) be approved;

(i)                 the need to develop a robust Service Improvement Programme and deliver the benefits as part of the medium-term financial strategy of using reserves flexibly to deliver a soft landing in planned spending (paragraphs 44 - 46 of the report refer) be endorsed;

(j)         the Supported Capital Expenditure (Revenue) awarded for Children’s Services, Transport and Housing provisionally be ringfenced to those areas;

(k)        a minimum level of Prudential Borrowing of £5,843,000 for 2006/07 be approved as set out below:

(l)         £5,000,000 Prudential Borrowing be approved for each year 2007/08 and 2008/09 to enable commitments from previous years Prudential Borrowing allocations to be funded and to enable future bids to be considered; and

(m)       the capital strategy permits the ability to re-profile schemes should slippage occur in projects funded by Prudential Borrowing. This flexibility is retained to ensure projects can be brought forward should any Prudential Borrowing become available through slippage.

(n)       the Prudential Indicators detailed in Appendix 3 of the report , which include the projected Capital Programme, be endorsed;

(o)       the Treasury Management Strategy in Appendix 4 of the report be endorsed;

(p)              the borrowing limits outlined in Appendix 4 of the report be approved;

(q)              the Treasury Management Policy Statement at Appendix 5 of the report be approved;

(r)        the Local Transport Plan 2006/07 to 2010/11 be approved for submission to Government with any subsequent editorial changes being delegated to officers, subject to the approval of the Director of Environment following consultation with the Cabinet Member (Highways and Transportation); and

(s)        further representations be made to Government regarding the adverse impact on the Council’s future level of funding for integrated transport improvements resulting from the adoption of the new formulaic allocation of Integrated Transport block funding.