Report of the County Treasurer (CT/19/5) on the Council’s Budget for 2019/2020, attached.
The Cabinet will accordingly consider:
· Cabinet Service Budgets 2019/2020, attached separately.
· Scrutiny Budget Recommendations, (CSO/19/8), attached.
· Budget Consultation Meetings (CSO/19/7), attached.
(Councillors Connett, Dewhirst, Hannaford, Hodgson and Whitton attended in accordance with Standing Order 25(2) and spoke to this item).
The Cabinet considered and had regard to:
(i) the Report of the Chief Executive (CSO/19/7) summarising the outcomes of and comments/observations made at consultation meetings with representatives of Devon’s Business Community, Trades Unions, representatives of Older People and the Voluntary Sector;
(ii) the discussions of the Council’s Scrutiny Committees held on 21st, 24th and 29th January 2019, the recommendations being summarised and attached to this agenda (CSO/19/8);
(iii) a revised 2019/20 Budget Impact Assessment, circulated to all Members of the Council prior to the meeting and available at https://new.devon.gov.uk/impact/budget-2019-2020/ alongside specific quality impact assessments referred to therein and undertaken as part of the budget’s preparation;
(iv) the Report of the County Treasurer (CT/19/5) (also circulated prior to the meeting in line with Regulation 7(4) of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012)) on the Revenue Budget for 2019/20, Medium Term Financial Strategy to 2022/23 and Capital Strategy 2019/20 to 2023/24, including an assessment of the adequacy of reserves, a range of prudential indicators concerning the financial implications of the capital programme and an assessment that identified risks associated with the budget strategy, together with how the risks would be managed. This year, for the first time, there was a requirement to prepare a Capital Strategy in line with the CIPFA Prudential Code for Capital Finance in Local Authorities 2017 and this was also included.
The Cabinet noted the role of the Corporate Infrastructure and Regulatory Services Scrutiny Committee on 29th January 2019 (Minute *108) in reviewing and endorsing the Report of the County Treasurer (CT/19/7) on the Treasury Management and Investment Strategy for 2019/20, which had outlined the Council’s policies in relation to: the management of the Council’s cashflows, its banking, money market and capital market transactions; borrowing and investment strategies; monitoring of the level of debt and funding of the capital programme, noting that it had been prepared in line with the CIPFA Code of Practice and reviewed in light of the revised code and revised Treasury Management Practices (TMPs).
The Corporate Infrastructure and Regulatory Services Scrutiny Committee further reviewed the Capital Strategy 2019/20 – 2023/24 (Minute *107) in view of the new requirement to prepare such a document in line with the CIPFA prudential Code for Capital Finance in Local Authorities 2017. The Committee endorsed the Report of the County Treasurer (CT/19/8) subject to the concerns raised by the County Treasurer regarding the revenue budget and the lack of any long-term financing from Government, the identification of external funding sources being included within the Report; and options appraisals being carried out prior to capital investment.
The budget book contained details of the County Council’s revenue and capital budgets together with associated financial and operational information. The Council’s financial plans were drawn up with reference to the Council’s major policies and objectives, performance frameworks, demographic changes, consultation with local residents, businesses and other stakeholders.
2019/20 was the final year of the Government's four-year Local Government financial settlement and although core funding had been reduced by £13.5 millions (11.7%), to £101.5 millions, this was in line with expectations. The reduction had been offset to some extent by additional grants for Winter Pressures of £3.6 millions and Social Care Support of £6.1 millions. However, the overall picture was a significant reduction to funding at a time when there were huge pressures on Social Care services.
The New Homes Bonus grant figures had been announced and the sum for the Council was £192,000 more than anticipated, at £3.66 millions (but still represented a reduction of £149,000 on the previous year).
There was uncertainty about the level of future funding from Government after 2019/20. As well as the Government's new Comprehensive Spending Review (CSR 2019), the planned Business Rates funding reset and the uncertainty of 'Brexit', the Government was also consulting on significant reforms to local government funding.
The Report of the County Treasurer (CT/19/5) comprised in detail:
· Revenue Budget Overview;
· Statement on the Robustness of the Budget Estimates, Adequacy of Reserves and Affordability of the Capital Strategy;
· Capital Strategy and Programme Overview 2019/20 - 2023/24;
· Service Budgets;
· Medium Term Financial Strategy 2019/20 - 2022/23;
· County Fund Balance and Earmarked Reserves 2019/20;
· Treasury Management Strategy 2019/20 - 2021/22 and Prudential Indicators 2019/20 - 2023/24;
· Risk Analysis of Volatile Budgets;
· Fees & Charges; and
The Cabinet Member for Resources Management commented that this was a balanced budget, with increases for Children’s Services, Adult Social Care and Highways, ensuring that the vulnerable were protected. He also paid tribute to the County Treasurer and her staff.
Members attending under Standing Order 25 recognised the difficulties faced by the Council in setting a budget and commented on the welcome increase to budgets for Children’s Services, the achievability of savings plans, the robustness of the Budget Scrutiny process and welcomed the 1% precept for Adult Social Care.
The Report outlined that detailed budgets had been produced within the Targets set by Cabinet in December 2018; shown on pages 39 to 90. The service budgets totalled £493.850 millions. These had been reviewed by the Council’s three Scrutiny Committees, and were subject to different pressures and influences.
The Children’s Services base budget was £135.153 millions (an increase of 9.4% from 2018/19), and included inflation, pressures and national living wage (NLW) of £13.229 millions and required savings and income initiatives of £1.645 millions.
The Adult Care and Health base budget was £232.599 millions (an increase of 2% from 2018/19), and included inflation, pressures and NLW of £13.517 millions and required savings and income initiatives of £3.866 millions.
The Communities, Public Health, Environment and Prosperity Services base budget was £38.577 millions (an increase of 0.7% from 2018/19) and included inflation, pressures and NLW of £1.431 millions and required savings and income initiatives of £762,000.
The Corporate Services base budget was £32.974 millions (a decrease of 6.6% from 2018/19) and included inflation, pressures and NLW of £1.476 millions and required savings and income initiatives of £3.808 millions.
The Highways, Infrastructure Development and Waste Services base budget was £54.547 millions (an increase of 0.7% from 2018/19) and included inflation, pressures and NLW of £3.700 millions and required savings and income initiatives of £3.317 millions.
The Council not only received Core Funding but specific grants, detailed in Key Table 5 (page 12). The most significant specific grant was the Dedicated Schools Grant which for 2019/20 had increased to £507.1 millions from £499.1 millions in 2018/19. Despite this increase, Devon's schools remained some of the most poorly funded by Government.
The Capital Strategy and Programme Overview 2019/20 - 2023/24 was outlined at pages 19 onwards, detailing the policy framework for the development, management and monitoring of capital investment, including Governance arrangements. The Medium-Term Capital Programme (MTCP) 2019/20 – 2023/24 summary on page 20 showed that the Authority would be investing over £481 millions in Devon over the next 5 years. The MTCP analysed by funding source was shown in Table A, notwithstanding the funding available in future years might change as Government policies and grant allocations were published.
The preparation of the budget for 2019/20 had been set by the detailed assessment of the risks associated with each budget and the goals and objectives of the County Council. A number of budgets could be classified as high risk because they were subject to external demands which were difficult to manage. Other budgets were affected by above average inflation, strong market forces or other factors not easy to predict. Details of these budgets, the level of risk they presented and the action taken to mitigate the risk could be found on pages 123 to 136 of the Report.
The settlement had set the Council Tax increase that would trigger the need for a referendum, excluding the Social Care Precept, at 3% for 2019/20; the same level as 2018/19. The Adult Social Care Precept regulations also remained unchanged. In 2016/17, the Social Care Precept was capped at 2% per annum for the period 2016/17 to 2019/20. Government then changed the regulations in 2017/18 and allowed Authorities to increase the precept to a maximum of 3% per annum over the period 2017/18 to 2019/20 as long as the total increase over the three years did not exceed 6%.
The Council increased the Adult Social Care Precept by 3% in 2017/18 and 2% in 2018/19 leaving 1% available for 2019/20.
A Band D Council Tax would, if the proposed budget was approved, increase by 3.99% to £1,384.29. The Council Tax requirement for the Council was £401,663,454.61.
The Cabinet acknowledged that a Budget 2019/20 Impact Assessment had been prepared previously and taken into account by Scrutiny Committees as part of their earlier deliberations together with those specific impact assessments undertaken as part of the budget’s preparation or in relation to service reviews arising therefrom: to ensure all Members had all relevant information in having regard to the responsibilities placed upon the Council to exercise its Public Sector Equality Duty under s149 of the Equality Act 2010 when considering the proposed budget, its impact and any mitigating action required, prior to making a decision. The preparation of Impact Assessments was necessarily a dynamic process and that individual assessments for specific proposals may necessarily have to be developed and updated with time. The Impact Assessment had been made available to all Members of the Council for the purpose of the Scrutiny meetings, this Cabinet meeting and the County Council on 21 February 2019. However, a revised version was circulated to all Members on 13th February 2019.
The County Treasurer also confirmed that, in her view, the proposed budget represented a sound and achievable finance plan for 2019/20. The total level of reserves and balances of £104.7 millions had been based on a comprehensive risk assessment and was judged adequate. It was also her view that the Capital Strategy and associated capital programme was affordable and the risks associated had been appropriately assessed.
The Cabinet was therefore assured that the budget before it was an effective and balanced budget, which could be commended to the Council.
The matter having been debated and the options and/or alternatives and other relevant factors set out in the County Treasurer’s Report and/or referred to above, including the separate risk analyses set out therein:
It was MOVED by Councillor Barker, SECONDED by Councillor Hart and
RESOLVED that the County Council be recommended to:
(a) have full regard to the responsibilities placed upon the Council in the exercise of its Public Sector Equality Duty under s149 of the Equality Act 2010 (as set out in the ‘Budget 2019/20 Impact Assessment’ circulated previously for the purposes of this meeting, and specific impact assessments undertaken as part of the budget’s preparation) in considering the proposals and their impact, before making a decision;
(b) have regard to the views of the Council's Scrutiny Committees, the Devon Education Forum, the Business Community, the Voluntary Sector, and the Trades Unions and other consultees on the budget (set out elsewhere on the agenda);
(c) note the Final Settlement Funding of £101.542 millions;
(d) approve the budgets (pages 39 to 89) within the targets set;
(e) approve the Net budget of £509.988 millions as set out in Key Table 1 on page 8;
(f) approve that a 1% Adult Social Care Precept is set, as set out in Key Table 2 page 9;
(g) approve that the Council Tax requirement be set at £401,663,454.61 as set out in Key Table 2 page 9;
(h) approve the precepts required from each District Council and the levels of County Council Tax for each of the eight property valuation bands consequent upon the budget as amended by adjustments in collection in the current year, as set out in Key Table 2 on page 9;
(i) note the Medium Term Financial Strategy 2019/20 - 2022/23 as set out on pages 91 to 104;
(j) note the risk assessments set out on pages 123 to 136 and in particular, the risks associated with containing costs and maintaining service provision against a background of significant budget reductions;
(k) take account of the risks outlined on pages 123 to 136 in determining the final service budgets, levels of reserves and Council Tax figure being recommended to the Council;
(l) note the County Fund Balance and Earmarked Reserves 2019/20 as set out on pages 105 to 108;
(m) approve the Capital Strategy and Programme Overview 2019/20 - 2023/24 set out on pages 19 to 37;
(n) approve the Capital Programme for 2019/20 of £110.9 million and its financing as shown in Summary Table A on page 20;
(o) approve, for planning purposes, the indicative Capital Programmes for 2020/21, 2021/22, 2022/23 and 2023/24 shown in summary Table A on page 20. These levels will be reviewed in light of the overall level of revenue and capital resources available to the Council for each year;
(p) approve the adoption of the Treasury Management Strategy 2019/20 - 2021/22 as set out on pages 109 to 122;
(q) approve the Prudential Indicators for 2019/20 to 2023/2024 contained pages 109 to 122;
(r) approve the amendment to the Minimum Revenue Provision Strategy for 2018/19 as set out on pages 109 to 122;
(s) approve the minimum Revenue Provision Strategy for 2019/20 as set out on pages 109 to 122;
(t) delegate to the County Treasurer the authority to effect movements between the separately agreed limits for borrowing and other long-term liabilities;
(u) approve that changes to existing charges be agreed by the appropriate Cabinet Member in consultation with the County Treasurer; and
(v) approve the introduction of the new charge in Highways, as set out on page 137.
[NB: All Members of the Council had been granted a dispensation to allow them to speak and vote in any debate on the setting of the Council Tax or Precept or any fees and charges arising therefrom as a consequence of simply being a resident of or by virtue of being a resident of or a land, business or property owner in the administrative County of Devon, or by being a parent or guardian of a child in a school on any matter relating to school meals and school transport or in relation to the setting of members’ allowances or by being a parent or guardian of a child in a care or in receipt of a state pension. The Impact Assessments referred to above are available at:https://new.devon.gov.uk/impact/budget-2019-2020/