Agenda item

Report of the Deputy Chief Executive.

Scrutiny considered the report of the Deputy Chief Executive setting out the general fund revenue budget proposals for 2015/16 and a rolling 3-year capital programme 2014/18. The medium term financial strategy (MTFS) had been revised in July 2014 and the Cabinet had agreed a draft 2015/16 budget proposal last December. The MTFS and resulting draft budget had been subject to extensive consultation and previously reported to Cabinet and the Scrutiny Committee.

The budget proposals included:

·         No increase in the Council Tax in 2015/16

·         Overall savings/new income totalling £1.5m (9% of the net budget)

·         Efficiency savings of £1m (6% of the net budget)

·         Inflation of £0.6m (4% of the net budget)

·         Other recurring service growth of £0.4m

·         Non recurring service investments £0.5m

·         General Reserves averaging in excess of £4m (against a minimum recommended of £2m)

·         Capital resources of £0.8m invested in new capital schemes

The budget represented management of financial risks which were highlighted within the report.

The committee was advised that the headline figures of the Government settlement were;

•        A reduction in revenue support grant of £1.2m (30%)

•        Partially offset by new homes bonus (additional £0.2m in 2015/16)  

The NNDR business rate base had increased slightly (£0.2m) largely as a result of the inflationary increase which had been capped at 2%.  In addition to the formula grant the Government was financing the cost of a 1% increase in council tax (£86,000) which it had confirmed would be put in the base for 2016/17 and beyond.

Members noted that the Government had announced that Eastbourne would receive £1.1m in total of new homes bonus due to the growth in housing in the area and the further reduction in empty properties. The grant would be paid in tranches for six years.  The 2015/16 figure included five tranches.

The committee was further advised that the funding was not guaranteed beyond a six year horizon for each tranche and that the projected award for 2016/17 was £1.3m.

The Government was financing the additional NHB from reductions in RSG, therefore, whilst volatile, it is currently the preferred method of distribution of resources.

Members noted that no increase to council tax for 2015/16 had been proposed and this would result in an unchanged band D rate of £224.19 (14% of the total council tax bill).

A summary of the resources available was given within the report.  In order to achieve a balanced budget without using reserves, the Council would need to set a net expenditure budget for 2015/16 of £15.2m.

In addition to the general grant distributed through the new formula grant system, given towards financing the Council’s net expenditure, the Government also provided some specific grants.  These specific grants would fund in part or in full, service costs.

National Benefit Subsidy - as part of a national scheme delivered locally, this grant was intended to reimburse the Council for the awards of benefit made to eligible tenants in both the private and public rented sector.  Not only was this by far the largest single specific grant that the Council received, but it was performance related.  A new system of universal credits was due to be completed in October 2017 which would see the caseload moved to the Department for Work and Pensions. Responsibility for council tax benefit had now devolved to a local level.

Housing Benefit / Council Tax reduction scheme administration - This was to fund the cost to Eastbourne of administering the National Housing Benefit and local Council Tax Support schemes.  This represented a reduction of around 15% from the 2013/14 funding.

Homelessness - This was intended to assist with prevention and to find alternative accommodation other than bed and breakfast, this grant had now been subsumed into the main grant system.

New Homes Bonus - This began in 2011/12 (£187,000) and was guaranteed for six years.  A further £190,000 was been awarded for 2012/13 and £180,000 in 2013/14 making a total payable of £557,000 in 2013/14. Further increases would take this source of funding to approximately £1.3m per annum by 2016/17. The Council’s policy as outlined in the MTFS was to utilise surplus grant for economic regeneration initiatives. Therefore the proposed budget included an increase in the capital financing budget.

In December the Cabinet put forward their draft budget proposals, the main movements since then were detailed in appendix 1 to the report.

Details of proposed growth and savings were given in full in appendix 2 to the report. The proposals set out in the report would allow full Council on 18 February 2015 to approve a balanced budget in line with available resources and without the need to use reserves.  The report also detailed the principal financial risks the Council was likely to face.

A corporate contingency budget of £152,000 for unbudgeted expenditure or reductions in income had been allowed. This was in addition to the known inflation that had been built into service budgets. 

Further, the Council’s general fund reserves were anticipated to amount to £4m in March 2016 as compared with the Chief Finance Officer’s minimum recommended level of £2m.

The principles for formulating the capital programme were set out in the budget report to Cabinet last December and the updated programme was given in appendix 3 to the report (proposed new schemes were shown in bold text) and showed a projected outturn for 2014/15 of £7.394m; a total budget for 2015/16 of £16.548m; £13.089m for 2016/17; and £4.271m for 2017/18. The Council had a policy of only using borrowing for schemes that were ‘invest to save’ and could generate enough savings or additional income to service the financing costs. In addition to schemes that qualified for borrowing, the Council had a further £800,000 of capital receipts to apply to the programme.

RESOLVED: That Scrutiny note:

(1) General Fund budget for 2014/15 (Revised) and 2015/16 (original) (Appendix 1) including growth and savings proposals for 2015/16 as set out in Appendix 2.

(2) No increase in the Council Tax for Eastbourne Borough Council resulting in an unaltered Band D charge of £224.19 for 2015/16.

(3) General Fund capital programme and financing 2014/18 as set out in Appendix 3.