Agenda item

Overall General Fund Revised Financial Position 2015/16 and Draft Budget 2016/17


The Committee gave consideration to the report and appendices (at pages 47 - 63) as delivered by the Interim Chief Financial Officer (Section 151 Officer) which should be read together with these minutes as a composite document.


The Interim Chief Financial Officer directed Members’ attention to particularly significant and noteworthy sections and paragraphs contained in the report (at pages 47 - 55) that would in turn be brought before the next meeting of the Council on 18 February 2016 for resolution, namely:


4.2       It was said that owing to the non-availability of the Council Tax Freeze Grant from 2016, an increase in Council Tax of the maximum rate of 1.99% (short of triggering a Local Council Tax Referendum) was to be proposed to Council. This increase was said to be in line with that of the other District and Borough Council’s in Leicestershire, while the County Council was likely to approve an increase of 3.99% (including 2% which had to be spent on adult social care).

4.1       It was said that despite the aforesaid increase of 1.99%, local authorities were still likely to experience economic difficulties due to an increase in service-demands vis-a-vis a reduction in local governments’ financial settlements that will see the phasing out of the Local Government Revenue Support Grant (RSG) by 2020. The implications for this Council was said to be a year-on-year reduction of approximately £400,000 per annum. He noted that the intended devolution of powers from central to local government by 2020 allowing local authorities to retain100% of local business rates was unlikely to raise sufficient additional revenue to offset the loss of RSG because the Borough would not be able to stimulate sufficient economic growth commensurate to what is needed to offset the RSG revenue losses.

5.2.      It was reiterated that given the consequential impact on local government resourcing, the Council would need to reassess future-funding levels in line with the Council’s strategic objectives and focus on the delivery of front-line services and to make these, and other service areas, more efficient as part of cost-consolidating exercise: the resolution by Council on the 08 December 2015 in respect of suspecting parts of the HR Policy was cited as an example of means to deliver an approximate saving of between £120,000 - £150,000.

16.       It was said in view of the aforesaid budgetary-constraints, an amount of £145,000 to be applied from the Council’s General Fund Reserves (GRF) was needed to bridge the financial gap. It was added that although the Council’s GRF sat at a healthy c. £800,000, Members should be mindful that any sum borrowed from the same would not mitigate the need for this Council to find further savings.


The Interim Chief Financial Officer acknowledged the challenges ahead faced by this Council although stated that he was confident that the necessary efficiency-savings could be achieved in accordance with the proposals outlined in the report. He assured Members that given the government’s recent announcement(s) as to the medium-term financial settlement for local authorities for the next five years, prudent and forward-thinking plans could now be prepared and implemented in advance to provide for greater resilience in the years to ahead.


With reference to Appendix 1 - ‘General Fund Budget Summary 2016/17’ (at page 56), Councillor B Dave enquired as to whether the level of the Council's financial reserves in respect of Capital Financing was 10% of the Council’s net-budget and whether this percentile represented the norm.


The Interim Chief Financial Officer advised that the increase in the same was a result of the Council’s recent renewing of its refuse vehicles fleet, for which the borrowing costs would need to be carried for the next 6-7 years before a decrease is realised.


With reference to Appendix 5 - ‘Movement Between Original and Revised Budget 2015/16’ (at page 57), Councillor B Dave requested that the format in which the figures are presented be simplified to render the information more accessible. With reference to ‘Council Reserves at 21 March 2016’ (at page 62), the Member further enquired as to whether the GRF of +£1 million was included in the Reserve or was an addition.


The Interim Chief Financial Officer advised Appendix 5 outlined a list of reserves identified for special purposes, and that the approximate figure of £1 million was in effect unallocated. He stated that, in accordance with government guidelines, it was not advisable to have too-high reserves and therefore the application of £145,000 to help bridge the funding gap for 2016/17 was prudent.


With reference to Appendix 3 - ‘Changes in Budget Between 2015/16 and 2016/17’ (at page 59), Councillor B Dave enquired as to whether any risk analysis has been undertaken if the efficiency targets as outlined in the appendix cannot be met.


The Interim Chief Financial Officer advised the ‘Stage 1’ was currently being delivered and removed from the base-salary structure considering the normal turnover of staff. ‘Stage 2’ was said to be underway in respect of costs associated with agency, placement or contract workers. ‘Stage 3’ was said to be under current evaluation in respect of consolidating service-costs whilst retaining good service-delivery across front-line services. It was acknowledged that although the restructuring scheme outlined may not be possible before 01 April 2016, in order to manage the risks involved, the use of the Equilibrium Reserve could be used but upon the understanding and obligation that the Council repay any sum borrowed the following financial year: to do otherwise was said to expose the Council to the risk of service failure. The prudent course of action, therefore, reported to achieve restructuring aims was through natural wastage, the aversion of dislocating services and incurring redundancy costs.


Councillor J W Boyce opined that the Council’s 25-year record of strong financial management would allow Members to deal with a difficult financial settlement and manage the delivery of a balanced budget.


Councillor J W Boyce moved the recommendations contained in the report.




(i)        The content of the progress report for 2015/16 be noted by Members;

(ii)       The overall revised General Fund revenues budget position for 2015/16 (Appendices 1 and 2) be approved;

(iii)      The overall draft General Fund revenue budget for 2016/17, subject of a further and full report to the Council on 18 February 2016 (Appendix 1 and 3), be recommend in principle to the Council;

(iv)      The overall draft Capital programme for 2016/17, subject of a further and full report to the Council on 18 February 2016 (Appendix 5), be recommend in principle to the Council and the forward programme to 2018/19 be noted by Members;

(v)       The use of reserves as outlined in Appendix 1 be approved; and

(vi)      The Council to remain in the Business Rate Pool for 2016/17 be agreed.


Votes For                   10

Votes Against            0

Abstentions               3


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