Agenda item

Report of the County Treasurer (CT/20/19) on the Council’s Budget and Cabinet Service Budgets for 2020/2021, will follow.

 

The Cabinet will accordingly also consider the outcome of the Budget Consultation Meetings (CSO/20/04) and the Scrutiny Budget Recommendations (CSO/20/05).

(Councillors Biederman, Dewhirst, Greenslade and Hannaford 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/20/04) 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 20^th, 23^rd and 28^th January 2020, the recommendations being summarised and attached to the agenda (CSO/20/05);

 

(iii) a revised 2020/21 Budget Impact Assessment, which had been circulated to all Members of the Council prior to the meeting and available at https://www.devon.gov.uk/impact/budget-2020-2021/ undertaken as part of the budget’s preparation;

    

(iv) the Report of the County Treasurer (CT/20/19) (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 2020/21, Medium Term Financial Strategy to 2023/24 and Capital Strategy 2020/21 to 2024/25, 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. The budget book contained details of the County Council’s revenue and capital budgets together with associated financial and operational information. 

 

The Cabinet noted the role of the Corporate Infrastructure and Regulatory Services Scrutiny Committee on 28^th January 2020 (Minute *171) in reviewing and endorsing the Report of the County Treasurer (CT/20/18) on the Treasury Management and Investment Strategy for 2020/21, prepared in accordance with the revised Treasury Management Policy Statement and revised CIPFA Code of Practice for Treasury Management. The Treasury Management and Investment Strategy set out the minimum revenue provision (MRP) policy, capital expenditure funding, prudential indicators, the current treasury position, debt and investments; prospects for interest rates; the borrowing strategy; and the investment strategy.

 

The Committee had commended the Treasury Management Strategy 2020/21 to the Cabinet.

 

The Cabinet noted that the Council’s financial plans had been drawn up with reference to the County Council’s major policies and objectives, the County Council’s performance framework, demographic changes occurring within the County; and consultation with local residents, businesses and other stakeholders.

 

The final Local Government financial settlement for 2020/21 represented an increase on 2019/20 of 1.6%. The Final Settlement had been confirmed at £103.2 millions which was an increase of £1.7 millions on 2019/20. 2020/21 was expected to be the start of a new multi-year funding settlement that incorporated the outcome of a new Comprehensive Spending Review, Fairer Funding Review and Business Rate Changes - this had not happened and the settlement for 2020/21 was for one year only and there was no information on what the authority's funding would be for 2021/22 and beyond.

 

The authority was experiencing significant demand and cost pressures within Social Care services, but the most significant concern was within the Dedicated Schools Grant (DSG) Special Educational Needs (SEND).

 

The Report of the County Treasurer (CT/20/19) comprised in detail:

 

·         Revenue Budget Overview;

·         Statement on the Robustness of the Budget Estimates, the Adequacy of Reserves and Affordability of the Capital Strategy;

·         Capital Strategy and Programme Overview 2020/21 - 2024/25;

·         Service Budgets;

·         Fees & Charges;

·         Medium Term Financial Strategy 2020/21 - 2023/24;

·         County Fund Balance and Earmarked Reserves 2020/21;

·         Treasury Management Strategy 2020/21 - 2022/23 and Prudential Indicators 2020/21 - 2024/25;

·         Risk Analysis of Volatile Budgets; and

·         Abbreviations.

 

The Cabinet Member for Resources Management additionally commented on the uncertainty faced by Local Government in the absence of a four year settlement and the lack of clarity for financial planning which in turn meant more risk for Local Government finances. In that respect, reserves of £100 millions (minimum) should be kept, a balance that was in line with other like Councils.

 

Both the Cabinet Member and those attending under Standing Order 25 paid tribute to the work of the finance staff both in terms of the budget setting process and the monitoring activities that took place throughout the year.

 

The Report outlined that detailed budgets had been produced within the Targets set by Cabinet on 15^th January 2020 and were shown on pages 35 to 85. These budgets on pages 35 to 85 complied with the targets set by Cabinet which totalled £541.2 millions, including funding for budget pressures of £50.6 millions that mainly related to additional expenditure to allow for service growth to cater for demographic changes such as increased children and adult service users and unavoidable cost pressures. Savings and income initiatives of £7.5 millions were required to set a balanced budget.

 

The targets set for each service area had been subject to different pressures and influences.  Cabinet had noted in January that the target for Adult Care & Health had increased by £7.7 millions, for Children’s Services an increase of £2.5 millions. The increased targets also included £60,000 for additional legal support within Corporate Services and £1 million within Highways, Infrastructure and Waste to help with drainage issues on the Highway network.

 

The budget for Adult Care & Health was £260,258 millions, a net change of £23,714 millions or 10.0%. For Children’s Services, this was £146,845 millions, the net change being £11,538 millions (8.5%). Community, Public Health, Environment & Prosperity was £39,713 millions, with the net change of £925,000 or 2.4%. For Corporate Services £37,160 millions, a net increase of £2,479 millions (7.1%) and in relation to Highways, Infrastructure Development & Waste £57,508 millions, an increase of £2,790 millions (5.1%).

 

The Council not only received Core Funding but also specific grants that related to particular activities and these were detailed in Key Table 5 on pages 12 and 13. The most significant specific one being the Dedicated Schools Grant which had to be spent on schools and related expenditure. For 2020/21 the Dedicated Schools Grant had increased to £539.4 millions from £510.2 millions in 2019/20. In spite of this increase Devon's schools remained some of the most poorly funded by Government.

 

The Capital Programme Overview 2020/21 - 2024/25 was outlined at pages 18 onwards, the aim of the five year programme (£493 millions) being to strike a balance between investment in the infrastructure needed to support service delivery, and affordability. For 2020/21, the capital programme showed an increase of £34.4 millions (£26.4millions net increase after reductions) and this increase was detailed in Table A. The Cabinet Member for Resources Management added there was no additional borrowing to deliver the schemes.

 

As part of the budget-setting process, the Council had to consider the risks inherent in the budgets set and the adequacy of the measures put in place to manage those pressures. A risk assessment had been undertaken of the main volatile budget areas, the most significant high-risk areas arising where increased demand for services provided cost pressures and the scale of budget required significant management action.  Service management teams had, however, identified a number of strategies aimed at mitigating the pressures as set out in the Report. It was also important that active budget monitoring and management remained in place.

 

The settlement had set the Council Tax increase that would trigger the need for a referendum at 2% for 2020/21, with social care authorities allowed a 2% social care precept. A Band D Council Tax would, if the proposed budget was approved, increase by 3.99% to £1,439.46. The Council Tax requirement for the Council was £423,095,396.52.

 

The Cabinet acknowledged that a Budget 2020/21 Impact Assessment had been prepared previously and taken into account by Scrutiny Committees as part of their earlier deliberations together with any specific impact assessments undertaken as part of the budget’s preparation or in relation to service reviews: 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 a dynamic process and individual assessments for specific proposals may 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 14 January 2020. A revised version was provided to all Members of the Council on 5 February 2020.

 

The County Treasurer felt that the budget proposed by the Cabinet represented a sound and achievable financial plan for 2020/21. The total level of reserves and balances had been based on a comprehensive risk assessment and were judged as adequate to meet all reasonable forecasts of future liabilities. In addition, the Capital Strategy and associated capital programme was affordable and the risks associated had been assessed appropriately.

 

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 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 Cabinet be recommended to:

 

1) 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 2020/21 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;

 

2) 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);

 

3) Note the Final Settlement Funding of £103.197 millions;

 

4) Approve the budgets (pages 35 to 85) within the targets set;

 

5) Recommend to Council the Net budget of £530.054 millions as set out in Key Table 1 on page 8;

 

6) Recommend to Council that a 2% Adult Social Care Precept is set as set out in Key Table 2 page 9;

 

7) Recommend to Council that the Council Tax requirement be set at £423,095,396.52 as set out in Key Table 2 page 9;

 

8) Recommend to Council 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;

 

9) Approve that changes to existing charges be agreed by the appropriate Cabinet Member in consultation with the Treasurer;

 

10) Approve the introduction of the new charge in Highways, as set out on page 86;

 

11) Note the Medium Term Financial Strategy 2020/21 - 2023/24 as set out on pages 87 to 100;

 

12) Note the risk assessments set out on pages 137 to 149 and in particular, the risks associated with containing costs and maintaining service provision against a background of significant budget reductions;

 

13) Take account of the risks outlined on pages 137 to 149 in determining the final service budgets, levels of reserves and Council Tax figure to be recommended to the Council;

 

14) Note the County Fund Balance and Earmarked Reserves 2020/21 as set out on pages 101 to 107;

 

15) Recommend to the Council the Capital Strategy and Programme Overview 2020/21 - 2024/25 set out on pages 18 to 33;

 

16) Recommend to the Council the Capital Programme for 2020/21 of £114.5 million and its financing as shown in Summary Table C on page 24;

 

17) Approve, for planning purposes, the indicative Capital Programmes for 2021/22, 2022/23, 2023/24 and 2024/25 shown in summary Table C on page 24. These levels will be reviewed in the light of the overall level of revenue and capital resources available to the Council for each year;

 

18) Recommend to the Council that it adopts the Treasury Management Strategy 2020/21 - 2022/23 as set out on pages 109 to 125;

 

19) Recommend to the Council the Prudential Indicators for 2020/21 to 2024/2025 contained pages 109 to 125;

 

20) Recommend to the Council the Minimum Revenue Provision Strategy for 2019/20 as set out on pages 109 to 125; and

 

21) Delegate to the County Treasurer the authority to effect movements between the separately agreed limits for borrowing and other long-term liabilities;

 

[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://www.devon.gov.uk/impact/budget-2020-2021/