Agenda item

Report of the Chief Finance Officer

Scrutiny considered the report of the Chief Finance Officer setting out the general fund revenue budget proposals for 2014/15 and a 3-year capital programme 2013/17. The medium term financial strategy (MTFS) had been revised in July 2013 and the Cabinet had agreed a draft 2014/15 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 2014/15.
• Overall savings totalling £0.808m (5% of the net budget).
• Efficiency savings of £0.608 (2.6% of the net budget).
• Inflation of £0.430m (2.6%).
• Other recurring service growth of £0.421m.
• Non recurring service investments of £0.446m.
• General reserves averaging in excess of £3.8m (against a minimum recommended of £2m).
• Capital receipts of £0.8m invested in new capital schemes.  Available earmarked reserves in addition to the budget:
• Strategic change fund £0.7m.
• Economic regeneration reserve of £0.5m.

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

The headline figures of the 2-year government settlement were detailed within the report.

The national non-domestic business rate base had reduced slightly

(£50,000) largely as a result of additional appeals, this was a provisional

figure that would not be finalised until 31 January as the government

had only just released the form used to calculate the base. In addition

to the formula grant, the government was financing the cost of a 1%

increase in council tax (£81,000) which it had confirmed would be put in

the base for 2015/16 and beyond. The government had announced that

Eastbourne would receive £897,000 in total of new homes bonus due to

the growth in housing in the area and the further reduction in empty

properties. Of this £500,000 would be transferred to the regeneration

reserve to fund economic initiatives in line with the MTFS. The grant was

paid in tranches for six years. The funding was not guaranteed beyond a

6 year horizon for each tranche. The projected award for 2015/15 was

£1.3m. The Council’s policy as outlined in the MTFS was to utilise any

surplus grant for economic regeneration initiatives. A separate reserve

had been set aside for that purpose. The government was financing the

additional new homes bonus from reductions in revenue support grant,

therefore, whilst volatile, it was becoming the preferred method of

distribution of resources.

Members noted that there would be no increase in council tax for 2014/15 was 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 wither in the report.  In order to achieve a balanced budget without using reserves, the Council would need to set a net expenditure budget for 2014/15 of £16.665m.

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 19 February 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 £178,000 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.  The Government had announced a 1% cap on pay rises in 2014/15 therefore £120,000 had been included in the contingency. Further, the Council’s general fund reserves were anticipated to amount to £3.8m in March 2015 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 2013/14 of £6.072m; a total budget for 2014/15 of £15.348m; £14.438 for 2015/16; and £6.880m for 2016/17. 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.

The committee further discussed the Devonshire Park proposals, levels of General reserves, assistance for small businesses, Cross Levels Way BMX track and the Hampden Park Skate Park.

RESOLVED:  That Scrutiny Committee note 1) the General Fund budget for 2013/14 (Revised) and 2014/15 (original) (Appendix 1) including growth and savings proposals for 2014/15 as set out in Appendix 2, and General Fund capital programme and financing 2013/17 as set out in Appendix 3. 2) that there was no increase in the Council Tax for Eastbourne Borough Council resulting in a Band D charge of £224.19 for 2014/15.