Agenda item

Report of the County Treasurer (CT/18/09) on the Council’s Budget for 2018/2019 which will be circulated as soon as available, in expectation of the final local government settlement for 2018/19 being received in time allowing for proper analysis of that statement.

 

The Cabinet will accordingly consider:

(Councillors Atkinson, Brazil, Connett, Dewhirst, Edgell and Hannaford attended in accordance with Standing Order 25(2) and spoke to this item).

 

1. Treasury Management and Investment Strategy

 

The Cabinet noted that, at its meeting on 31 January 2018, the Corporate Infrastructure and Regulatory Services Scrutiny Committee (Minute *49) had reviewed and endorsed the Report of the County Treasurer (CT/18/08) on the Treasury Management and Investment Strategy for 2018/19 which 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.

 

It had been prepared in line with the CIPFA Code of Practice and the policies had been reviewed for 2018/19 in the light of the revised code and revised Treasury Management Practices (TMPs). The Strategy would inform the preparation and presentation of the Budget for 2018/19 and consequently:   

 

It was MOVED by Councillor Clatworthy, SECONDED by Councillor Hart and

 

RESOLVED that the Treasury Management Strategy for 2018/19 previously considered and endorsed by the Corporate Infrastructure and Regulatory Services Scrutiny Committee be approved and incorporated in the 2018/19 budget. 

 

2. Revenue Budget, Capital Programme & Medium Term Financial Strategy

 

The Cabinet also considered and had regard to:

 

(i) the Report of the Chief Executive (CS/18/8) 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 and also through the Leaders consultation meetings with Town and Parish Councils which took place between October 2017 and December 2017;

 

(ii) the Minutes of the Council’s Scrutiny Committees held on 23^rd, 25^th and 31^st January 2018, the recommendations being summarised at item 7c on the agenda;

 

(iii) Minute 62 of the Devon Education (Schools) Forum, held on 15 January 2018, relating to the budget;

 

(iv) a 2018/19 Budget Impact Assessment, circulated to all Members of the Council prior to the meeting and available at https://new.devon.gov.uk/impact/published/budget-impact-assessment-201819/ alongside specific quality impact assessments referred to therein and undertaken as part of the budget’s preparation;

     

(v) the Report of the County Treasurer (CT/18/9) (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 and Medium Term Financial Strategy for the period 2018/19–2021/22 and the Capital Programme for 2018/19-2022/23, including an assessment of the adequacy of reserves, a range of prudential indicators concerning the financial implications of the capital programme and an assessment of the risks associated with the budget strategy and how those would be managed, comprising in detail:

           

Introduction

Appendix A       -           Specimen Statement on Robustness of Budget Estimates &

adequacy of the County Council Reserves

Appendix B       -           Revenue Budget 2018/19

Appendix C       -           Summary Revenue Budget 2018/19

Appendix D       -           Medium Term Financial Strategy 2018/19 -2021/22

Appendix E       -           Risk Analysis of Volatile Budgets

Appendix F       -           County Fund Balance and Earmarked Reserves for 2018/19

Appendix G       -           Capital Programme 2018/19 - 2022/23

Appendix H       -           Treasury Management Strategy & Prudential Indicators 2018/19 –

2022/23

Appendix I        -           Fees and Charges

 

The preparation of the budget for 2018/19 had been set by the detailed assessment of the risks associated with each budget and the goals and objectives of the 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 those budgets, the level of risk presented and action taken to mitigate the risk could be found in Appendix E of the Report.

 

The Cabinet was assured that the budget before it was an effective and balanced budget, which could be commended to the Council.

 

Cabinet noted that 2018/19 was the third year of the Government's four-year Local Government financial settlement. The Settlement was £122.492 millions, which was in line with expectations, despite reductions. However, there were other changes, as set out in the Report, including the Rural Services Delivery Grant in 2018/19 (which would remain at the current level), that proposed changes to the New Homes Bonus Scheme would not go ahead and a change in the annual Business Rates inflationary increase from Retail Price Index (RPI) to Consumer Price Index (CPI), effective from 2018/19.

 

The Report outlined that the Authority, in partnership with the eight Devon District Councils and two Unitary Councils, had been selected to become a Business Rates Pilot in 2018/19. The success of the Devon wide bid brought opportunity to help inform future local government finance reform and also a potential financial benefit of just under £17 millions to geographic Devon of which nearly £10 millions could come to the County Council. The importance of working with partners and District colleagues was emphasised.

 

Members attending under Standing Order 25 recognised the difficulties faced by the Council in setting a budget, particularly with the late settlement figures. The Cabinet also acknowledged concerns expressed previously that the underlying position remained fundamentally the same and that, overall, Devon’s settlement still reflected historic low levels of funding with inadequate funding levels in a number of areas; between urban and rural areas, in public health and also education funding.

 

The Cabinet Member for Resources & Asset Management outlined the total revenue budget of £511.841 millions and service budgets totalling £477.391 millions.

 

The Public Health grant remained ring fenced and for 2018/19 was £27.512 millions which represented a reduction of £726,000 (2.6%) on 2017/18. A letter from Public Health England (21.12.17) gave an indicative further grant reduction by 2.6% for 2019/20, but suggested the ring-fencing should be removed beyond 2020 subject to relevant assurance arrangements.

 

The Dedicated Schools Grant had increased to £499.1millions (from £481.7millions), however, Devon’s schools remained among the most poorly funded in the Country.

 

The indicative Capital Programmes for 2019/20, 2020/21, 2021/22 and 2022/23 were shown   in summary Table B Appendix G and Cabinet noted that the levels would be reviewed in the light of the overall level of revenue and capital resources available to the Council for each year. The overall capital programme for 2018/2019 was £105.640 million and its financing shown in summary Tables A and B of Appendix G.

 

The targets and draft budgets for each service area, as set by Cabinet and subsequently reviewed by the Council’s Scrutiny Committees, were subject to different pressures and influences. The Children’s Services base budget was £125.487 millions (an increase of 5.5% from 2017/18), and included inflation and pressures of £10.038 millions and required savings and income initiatives of £3.515 millions.

 

The Adult Care and Health base budget was £227.851 millions (an increase of £13.082 millions or 6.1% from 2017/18), and included inflation and pressures of £11.337 millions and required savings and income initiatives of £8.403 millions.

 

The Communities, Public Health, Environment and Prosperity Services base budget was £34.727 millions (a reduction of 2.3% from 2017/18) and included inflation and pressures of £1.034 millions and required savings and income initiatives of £1.837 millions. 

 

The Corporate Services base budget was £34.618 millions (an increase of 1.7% from 2017/18) and included inflation and pressures of £2.957 millions and required savings and income initiatives of £2.364 millions. 

 

The Highways, Infrastructure Development and Waste Services base budget was £54.708 millions (a reduction of 2.7% from 2017/18) and included inflation and pressures of £3.227 millions and required savings and income initiatives of £4.723 millions.

 

The Cabinet Member for Resources & Asset Management further outlined £10,000 for each Member in respect of locality budgets, a further £10,000 for capital schemes and also the continuation of the Town and Parish (TAP) fund, to be renamed ‘Communities Together.

 

He further confirmed the budget included a 2% increase in the Social Care precept for 2018/19.  Authorities were allowed to increase the Social Care precept by no more than 3% per annum (but no more than 6% over the period 2017/18 to 2019/20). The Council increased the Adult Social Care Precept by 3% in 2017/18. If the Adult Social Care Precept is increased by 2% in 2018/19 then there can only be a 1% increase in 2019/20. The settlement had set the Council Tax increase that would trigger a referendum, excluding the Social Care Precept, at 3% for 2018/19; an increase of 1%, therefore the proposal was for a 2.99% rise as well as the Social Care Precept of 2%.

 

A Band D Council Tax would, if the proposed budget was approved, increase by 4.99% to £1,331.19p. The Council Tax requirement for the Council was £382,118,036.26.

 

In formulating the proposed budget, as now submitted, the Leader acknowledged the suggestions arising from the various consultations and to those issues raised by individual Scrutiny Committees; as referred to above, and confirmed an additional £6.5 million for highways and also £2.2 million for adult social care support.

 

The Cabinet acknowledged that a Budget 2018/19 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 this meeting and the County Council on 15 February 2018.

 

The County Treasurer also confirmed that, in her view, the proposed budget represented a sound and achievable finance plan for 2018/19.

 

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 Hart, SECONDED by Councillor Clatworthy 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 2018/19 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 £122.492 millions;

 

(d) approve the budgets (detailed booklet circulated) within the targets set;

 

(e) approve the Net budget of £511.841 millions as set out in Appendix C

 

(f) approve that a 2% Adult Social Care Precept is set;

 

(g) approve that the Council Tax requirement be set at £382,118,036.26;

 

(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 Annex 1 of Appendix B;

 

(i) note the Medium Term Financial Strategy for 2018/19 to 2021/22, as set out in Appendix D;

 

(j) note the risk assessments set out in Appendix E 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 in Appendix E in determining the final service budgets, levels of reserves and Council Tax figure to be recommended to the Council;

 

(l) note the report on balances and earmarked reserves for 2018/19, as set out in Appendix F; 

 

(m) approve the Capital Programme for 2018/19 of £105.640 million and its financing as shown in Summary Tables A and B of Appendix G;

 

(n) approve, for planning purposes, the indicative Capital Programmes for 2019/20, 2020/21, 2021/22 and 2022/23 shown in summary Table B Appendix G. These levels will be reviewed in the light of the overall level of revenue and capital resources available to the Council for each year;

 

(o) approve the adoption of the Treasury Management and Investment Strategy for 2018/19, as set out in Annex 1 of Appendix H;

 

(p) approve the Prudential Indicators for 2018/19 to 2022/2023 contained in Appendix H;

 

(q) approve the amendment to the Minimum Revenue Provision Strategy for 2017/18 set out in Appendix H;

 

(r) approve the Minimum Revenue Provision Strategy for 2018/19 set out in Appendix H;

 

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

 

(t) approve that changes to charges in relation to inflationary increases be agreed by the appropriate Cabinet Member in consultation with the Treasurer; and

 

(u) approve that changes to charges within Communities, Public Health, Environment and Prosperity services and Highways Infrastructure and Waste be agreed by the appropriate Cabinet Member in consultation with the Treasurer. 

 

[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/published/budget-impact-assessment-201819