Agenda item

To consider the report of the Cabinet on decisions required. This report is on yellow pages (to follow).

The Council had before it a detailed report on the Budget for 2016-2017 which the Cabinet had considered on 4 February 2016 and which the Leader of the Council and the Cabinet were recommending formally for adoption by the Council.

 

All Councillors had received a copy of the full report and Appendices considered by the Cabinet on 4 February 2016 and had been requested to bring those to the meeting to allow full consideration of all the issues.  Members were reminded that the Appendices referred to were those presented to 4 February Cabinet.

 

2016/17 Local Government Finance Settlement

 

The final report set out that the figures for the 2016/17 Local Government Finance Settlement were unknown at the time the 4 February 2016 Budget report to Cabinet was drafted and therefore the report to Cabinet was on the basis of the provisional settlement. 

 

Cabinet Report – 4 February 2016

 

The Cabinet had considered the report of the Cabinet Member with Responsibility for Finance which included details of:

 

• those recommendations made by the Cabinet on 17 December 2015 on the draft budget for 2016/17

 

• the budget 2016/17 consultation and engagement.  The Council had engaged with a wide range of individuals and organisations through various channels.  The draft budget proposals were also considered by the Overview and Scrutiny Performance Board and its response had been before the Cabinet on 4 February

 

• confirmation of areas of investment in the Corporate Plan priorities of Open for Business, Children and Families, Health & Well-being and The Environment in 2016/17 and across the Medium Term Financial Plan (MTFP)

 

• revenue budget monitoring for 2015/16.  The outturn forecast to 30 November 2015 indicated a cost pressure of £2.3m against authorised cash limits or 0.7% of the overall budget.  It was anticipated that this variance would be reduced to ensure services were delivered within the Council's cash limited budget for 2016/17.  With this breakeven forecast there still remained, in common with a number of other local authorities, a significant adverse variance and financial pressure with regard to Children's Social Care Placements.  The FutureFit transformational programme continued to make good progress and the 2015/16 target of £27.5m was forecast to be achieved.  General balances were likely to remain at £13m at the end of the 2015/16 financial year

 

• the proposal for the virement and transfer of £0.6m to earmarked reserves with regard to the Councillor's Divisional Funds Scheme as part of the December 2015 forecast reporting.  This did not require alteration of the net cash limits approved by Full Council

 

• the work needed to close the provisional financial gap.  The requirement to achieve an average annual level of budget reductions, efficiencies and income generation opportunities of £25m remained.  However, due to the profile of the Government's proposals for reductions in Revenue Support Grant (RSG) there would be an increased level of budget reductions, efficiencies and income generation required in the 2017/18 financial year

 

• the budget requirement of £327.8m against funding from the Government and Council Tax of £325.8m leaving an initial funding gap of £2m

 

• developments since the December 2015 Cabinet report.  This included details of the Leader's response to the Government's Local Government Finance Settlement.  The Government had at that point still to confirm the final figures for the 2016/17 settlement.  The provisional settlement published on 17 December 2015 indicated a £11.4m reduction in Council funding compared with that forecast in the December 2015 Cabinet report and the Spending Review

 

• the proposed Council Tax increase and the Government's Council Tax Referendum Limit.  Central Government announced within the Spending Review that for the rest of the current Parliament, local authorities responsible for adult social care would be given an additional 2% flexibility on their current Council Tax referendum threshold to be used entirely for adult social care.  In anticipation of the core referendum limit being 2% in 2016/17 (as it was in 2015/16), the draft budget considered by Cabinet in December 2015 included a proposal to increase Council Tax by 3.94% (1.94% within the anticipated core 2% referendum limit and 2% ring-fenced for Adult Social Care)

 

• the changes to Council Tax, Business Rates income and expenditure budgets which had enabled the provisional funding gap 2016/17 of £2m to be fully recovered

 

Summary of changes since December 2015 Cabinet

 

£m	December 2015	February 2016	Change
Council Tax	223.4	225.0	1.6
Collection Fund Surplus	0.0	3.1	3.1
Revenue Support Grant	43.5	36.3	-7.2
Business Rates Retention	58.9	58.1	-0.8
Better Care Fund	33.5	33.9	0.4
Total Funding Available	359.3	356.4	-2.9
Total Net Expenditure	383.9	381.2	-2.7
Future Fit Programme	-22.6	-24.8	-2.2
Earmarked Reserves Contribution	0.0	0.0	0.0
Funding Shortfall	2.0	0.0	2.0

 

 

• the spending requirements which were proposed to become cash limits for each Directorate in 2016/17

 

• the arrangements for the renewal of the County Council's Section 75 partnership arrangements with Health for the commissioning of services.  The Cabinet had authorised the Director of Adult Services and Health and the Director of Children, Families and Communities to finalise the details in respect of their Directorates and formally execute the Section 75 agreement for commissioning arrangements with Health for 2016/17

 

• the Dedicated Schools Grant allocation for Worcestershire which totalled £368.9m and the Education Service Grant.  The provisional allocation of the latter to Worcestershire for 2016/17 was £4.2m

 

• the Pay Policy Statement for approval which specified the Council's policies relating to the pay of its workforce.  The Statement had to be published on the Council's public website by 31 March each year

 

• details of the allocations made under the New Homes Bonus (NHB).  The County Council received a 20% NHB share, currently for a period of 6 years, on the basis of New Homes built in Worcestershire (the remaining 80% was received by District Councils).  £2.0m would be allocated to the County Council's Driving Home initiative.  A contribution of £0.4m was also proposed to support investment in Bromsgrove Parkside as well as £1.4m for the Worcester Carrington Bridge and £0.3m for the A38 in Bromsgrove

 

• the Council's Capital Programme 2015/16 to 2018/19.  The Capital Budget for 2015/16 totalled £183.7m.  Capital expenditure as at 30 November 2015 was forecast to be £177.4m.  In terms of the Local Transport Plan, the Council expected to receive funding of around £93m covering 2015/16 and 2020/21.  This included indicative allocations of £14m per year from 2018/19 totalling £42m.    With regard to the capital programme for schools the Council was still awaiting details of the funding allocation.  Council would be updated when these figures were known.  Work had been undertaken on the financial provision within the MTFP for additional prudential borrowing of £5m per year.  Further investment was recommended for footways, and Public Realm works.  As a result of updates to capital investment allocations, the forecast capital investment over the period 2015/16 to 2018/19 was £430m

 

• the latest assessment of the Council's MTFP prospects.  Over the medium term, an average annual level of budget reductions, efficiencies and income generation opportunities of £25m remained.  However, due to the profile of the Government's proposals for RSG this requirement would need to be increased for 2017/18.  Further work would be needed to consider the impact of this and for future years. There were also a number of risks and sensitivities that might have a significant impact on the MTFP such as Government funding, Looked After Children placements, demographic growth and demand pressures, the medium term implications of the Care Act, inflation, the current Business Rates Retention Scheme and reform of the Scheme, the NHB and pensions

 

• the Council's Treasury Management Strategy for 2016/17 and the Prudential Code for Capital Finance in Local Authorities Statement for 2016/17

 

• the County Council's Public Sector Equality Duty in relation to setting the budget.  An overarching strategic equality relevance assessment had been undertaken in respect of budget proposals for key transformational change programmes.  As many programmes were as yet at an early stage of development it was not yet possible to carry out more detailed equality impact analysis.  Where necessary equality analysis would be undertaken and findings reported to Cabinet where key decisions were required

 

• a personal assurance statement from the Chief Financial Officer as Section 151 officer on the robustness of the budget calculations.

 

The Leader of the Council gave an introduction to the Budget and moved the recommendation as set out in paragraph 1 of the report; this was seconded by Mr A N Blagg. The mover announced that in the last few days the Government had confirmed a £2.5m pa transition grant for the next two years and it was proposed that such monies be placed in reserves. The mover believed that the rise in Council Tax (an average of £42 for a Band D property) was necessary to safeguard services.

 

An amendment was then moved by Mr P M McDonald and seconded by Mr R C Lunn:

 

Council February 2016 - Proposed Labour Group Budget Amendment:

 

Increases in expenditure/ Reductions on funding	2016/17 (Part Year)	2017/18 (Full Year)
	£000	£000
Increased investment into Positive Activities	1,000	1,000
Increased investment into Domestic Abuse and Violence services	65	65
Remove the proposed Council Tax Increase	8,500	8,500
Total	9,565	9,565
Expenditure reductions
Withdrawal of one-off monies in 2016/17 from Earmarked Reserves	4,550	-
An additional target of 4% reduction in all the Council's significant Contracts excluding Transport, Joint Partnerships with NHS and Social Care	3,420	3,420
Better use of County's Assets and Facilities	100	100
Release of part of the FutureFit Reserve	1,000	-
Accelerating transfer from Private Fostering to the Internal Fostering Service	155	1,000
Reductions in Pay Budgets to reflect reductions in the Use of Consultants	300	300
Reductions in Non-Pay Budgets to reflect reductions in Hospitality expenditure	40	40
Further Withdrawal of Earmarked Reserves in 2017/18 and replaced by other savings from 2018/19 onwards	-	4,705
Total	9,565	9,565

 

The mover and seconder of the amendment spoke in favour of its adoption.  The key points of the debate in favour of the amendment included:

 

·         that there were workable alternatives to the harsh economics of austerity put forward by the controlling group

 

·         that the amendment was an attempt to protect some of the most vulnerable people in the county and maintain some of the essential services they required

 

·         the amendment's aim was protecting those least able to pay from an increase in Council Tax and at the same time making prudent use of reserves to remove this burden

 

·         the amendment built on the work done by the OSPB without imposing an additional burden on hard-working people.

 

Members also spoke against the amendment:

 

·         the amendment was unrealistic and was based on the economics of imprudence

 

·         the amendment did not set out to put forward genuine alternatives but was part of an annual political posturing process

 

·         the proposal being put forward did not adhere to the sound principles of local government finance and it was reckless to make suggestions of this kind knowing they had no realistic prospect of success

 

·         that a prudent yet ambitious budget had already been proposed and the amendment should be voted down.

 

At the conclusion of the debate and on a named vote this amendment was lost.

 

Those voting in favour of the amendment were:  Ms P Agar, Mr J Baker, Mr P Denham, Mr A Fry, Ms P A Hill, Mr R C Lunn, Mr L C R Mallett, Mr P M McDonald, Mr R M Udall and Mr G J Vickery (10).

 

Those voting against the amendment were:  Mr I Hopwood, Mr A A J Adams, Mr R C Adams, Mr A T Amos, Mrs S Askin, Mr R W Banks, Mr M L Bayliss, Mr A N Blagg, Mrs S L Blagg, Mr P J Bridle, Mr J P Campion, Mr S J M Clee, Mr S C Cross, Mrs P E Davey, Mr N Desmond, Mrs E A Eyre, Mr S E Geraghty, Mrs J M L A Griffiths, Mr P Grove, Mr A I Hardman, Mr M J Hart, Mrs A T Hingley, Mrs L C Hodgson, Mr C G Holt, Ms R E Jenkins, Mr A P Miller, Mr T A Muir, Mrs F M Oborski, Mr S R Peters, Dr K A Pollock, Mr D W Prodger, Mrs M A Rayner, Mr A C Roberts, Mr J H Smith, Mr R J Sutton, Mr C B Taylor, Mr J W R Thomas, Mrs E B Tucker, Mr P A Tuthill, Mr T A L Wells and Mr G C Yarranton (41).

 

Mr M E Jenkins and Prof J W Raine abstained (2).

 

An amendment was then moved by Mrs E B Tucker and seconded by Mrs F M Oborski:

 

"The 2013 Group are proposing the following amendments that will not affect the Revenue Budget as set out in the February 2016 Cabinet Report.

 

1)         An allocation of £100,000 to support the Council's Self Sufficient Council strategic theme.  The intention is to provide an investment pot to generate new income generation ideas that will support closing the financial planning gap over the medium term.

 

2)         An allocation of £500,000 to increase the investments set out in Paragraphs 73 and 118 of the February 2016 Cabinet Report to create a £1 million investment for 2016/17 in Footways.

 

            The additional Capital Expenditure would not be incurred until the later part of the 2016/17 financial year, given the existing allocations and therefore the interest charge of debt funding would be minimal in 2016/17.

 

            The funding for this and the repayment of debt would be drawn from the unallocated headroom that remains in the Capital Programme for 2017/18 (when MRP will be charged against this expenditure) and therefore does not require a change to the Revenue Budget as set out for 2016/17.

 

Increase in expenditure	2016/17 (Part Year)	2017/18 (Full Year
	£000	£000
Creation of an investment pot to support further income generation	100	-
Allocation of the existing Financing Transactions budget in 2017/18 to an increased Capital Investment of £0.5 million in Footways	-	100
Total	100	-
To be met by
Transformation Grant	100	-
Reduction in Headroom for new Capital Investment included in the Medium Term Financial Plan	-	100
Total	100	100

 

The mover and seconder of the amendment spoke in favour of its adoption.  The key points of the debate in favour of the amendment included:

 

·         the difficulties imposed by the late announcement of the Council's settlement for 2016/17 and how limited were the opportunities to influence the Budget in any meaningful way

 

·         the proposals in the amendment were at least an attempt to explore alternative ways of working

 

·         some attempts had to be made to address the shortfalls in some budget headings and although limited the amendment sought to do this

 

·         despite the bleak economic outlook for local government the Council had to still maintain a constructive stance.

 

Members also spoke against the amendment:

 

·         the amendment failed to challenge the budget as proposed and was too limited to provide a useful alternative way of moving forward

 

·         the Cabinet had listened to the results of consultations and increased the budget as far as was prudent for footway improvements.  A Scrutiny Task and Finish Group was about to report and it was suggested that any further spending proposed at this time was premature.  The amendment could not be supported as a result

 

·         there was no real appetite to agree the amendment and in fact it was a lacklustre attempt to be critical of a well-presented and closely crafted budget.

 

At the conclusion of the debate and on a named vote this amendment was lost.

 

Those voting for the amendment were:  

 

Mrs S Askin, Mr P J Bridle, Mr S C Cross, Mr M E Jenkins, Ms R E Jenkins, Mrs F M Oborski, Mr S R Peters, Prof J W Raine, Mrs M A Rayner, Mr R J Sutton, Mr J W R Thomas, Mrs E B Tucker and Mr T A L Wells (13).

 

Those voting against the amendment were:

 

Mr I Hopwood, Mr A A J Adams, Mr R C Adams, Mr A T Amos, Mr R W Banks, Mr M L Bayliss, Mr A N Blagg, Mrs S L Blagg, Mr J P Campion, Mr S J M Clee, Mrs P E Davey, Mr N Desmond, Mrs E A Eyre, Mr S E Geraghty, Mrs J M L A Griffiths, Mr P Grove, Mr A I Hardman, Mr M J Hart, Mrs A T Hingley, Mrs L C Hodgson, Mr C G Holt, Mr A P Miller, Mr T A Muir, Dr K A Pollock, Mr D W Prodger, Mr A C Roberts, Mr J H Smith, Mr C B Taylor, Mr P A Tuthill and Mr G C Yarranton (30).

 

Ms P Agar, Mr J Baker, Mr P Denham, Mr A Fry, Ms P A Hill, Mr R C Lunn, Mr L C R Mallett, Mr P M McDonald and Mr G J Vickery (9) abstained.

 

In debating the Budget, as originally moved and seconded, the following principal points were made:

 

·         the Budget followed a steady and well thought-out process and was the result of a long and challenging creative cycle which had involved wide consultation within the county.  The Budget process had been through the Scrutiny process and had given all members the chance to comment at the earliest stage as and when information was available

 

·         the Budget contained a rise in Council Tax which would deal with the most pressing issues facing the Council.  This rise was considered to be a prudent measure to continue to protect the county and maintain services

 

·         the Budget was a planned, proportionate and rational response by the Council to meet the constraints imposed by a tight financial envelope, it was also sustainable and provided longer term stability

 

·         as always the Council was delivering value for money whilst maintaining and sustaining services and outcomes for the people of Worcestershire.

 

On a named vote RESOLVED that

 

(a)   the conclusions concerning revenue budget monitoring up to 31 December 2015 be endorsed;

 

(b)  the virement and transfers to Earmarked Reserves as detailed  in paragraph 4 of the report be approved;

 

(c)   the budget requirement for 2016/17 be approved at £322.468 million;

 

(d)  the Council Tax band D equivalent for 2016/17 be set at £1,122.31 and the Council Tax Requirement (precept) be set at £224.968 million;

 

(e)   consistent with the provisional Local Government Finance Settlement that revenue cash limits be set for each Directorate:

  

                                                                                                  £m

(i)      Adult Services and Health	132.746
(ii)     Children, Families and Communities	84.797
(iii)    Economy and Infrastructure	64.484
(iv)    Commercial and Change / Finance	40.441
	322.468

 

(f)   that the County Council continues to engage with residents and businesses in shaping the Corporate Plan and spending profile in line with their priorities;

 

(g)  the Council's Pay Policy Statement as set out in Appendix 8 be approved;

 

(h)  the conclusions concerning capital budget monitoring up to 31 December 2015 be endorsed;

 

(i)    the Capital Programme as set out in Appendix 9 be approved;

 

(j)    the Medium Term Financial Plan as set out in Appendix 10 be approved;

 

(k)   delegated authority be provided to the Chief Financial Officer in consultation with the Leader of the Council to respond to Central Government and accept the offer of a four-year settlement;

 

(l)    the Treasury Management Strategy set out in Appendix 11 be adopted; and

 

(m)the Statement of Prudential Indicators and Minimum Revenue Statement as set out in Appendix 12 be approved.

 

[NB Appendices referred to in these Minutes are those presented to 4 February 2016 Cabinet]

 

Those voting in favour were:

 

Mr I Hopwood, Mr A A J Adams, Mr R C Adams, Mr A T Amos, Mr R W Banks, Mr M L Bayliss, Mr A N Blagg, Mrs S L Blagg, Mr J-P Campion, Mr S J M Clee, Mrs P E Davey, Mr N Desmond, Mrs E A Eyre, Mr S E Geraghty, Mrs J M L A Griffiths, Mr P Grove, Mr A I Hardman, Mr M J Hart, Mr A T Hingley, Mrs L C Hodgson, Mr C G Holt, Mr A P Miller, Mr T A Muir, Mr S R Peters, Dr K A Pollock, Mr D W Prodger, Mr A C Roberts, Mr J H Smith, Mr R J Sutton, Mr C B Taylor, Mr J W R Thomas, Mr P A Tuthill and Mr G C Yarranton (33).

 

Those voting against were:

 

Ms P Agar, Mrs S Askin, Mr J Baker, Mr P Denham, Mr A Fry, Ms P A Hill, Ms R E Jenkins, Mr R C Lunn, Mr L C R Mallett, Mr P M McDonald, Mrs F M Oborski, Prof J W Raine, Mrs M A Rayner, Mrs E B Tucker, Mr R M Udall, Mr G J Vickery and Mr T A L Wells (17).

 

Mr P J Bridle and Mr S C Cross abstained (2).