Your Councillors


COMMUNITIES, HOUSING AND ENVIRONMENT COMMITTEE

15 January 2019

 

Medium Term Financial Strategy and Budget Proposals

 

Final Decision-Maker

Council

Lead Head of Service/Lead Director

Mark Green, Director of Finance and Business Improvement

Lead Officer and Report Author

Mark Green, Director of Finance and Business Improvement

Classification

Public

Wards affected

All

 

Executive Summary

This report forms part of the process of agreeing a budget for 2019/20 and setting next year’s Council Tax.  Following agreement by Council of the Medium Term Finance Strategy at its meeting on 12 December 2018, this report sets out budget proposals for services within the remit of this Committee.  These proposals will then be considered by Policy & Resources Committee at its meeting on 13 February with a view to determining a budget for submission to Council.

 

 

This report makes the following recommendations to this Committee:

1.   That the revenue budget proposals for services within the remit of this Committee, as set out in Appendix A, be agreed for submission to Policy and Resources Committee.

2.   That the capital budget proposals for services within the remit of this Committee, as set out in Appendix B, be agreed for submission to Policy and Resources Committee.

 

 

Timetable

Meeting

Date

Communities, Housing and Environment Committee

15 January 2019

Policy and Resources Committee

13 February 2019

Council

27 February 2019



Medium Term Financial Strategy and Budget Proposals

 

 

1.        INTRODUCTION AND BACKGROUND

 

Medium Term Financial Strategy

 

1.1     At its meeting on 12 December 2018, Council agreed a Medium Term Financial Strategy (MTFS) for the next five years. The MTFS sets out in financial terms how the Strategic Plan will be delivered, given the resources available.  A new Strategic Plan was adopted by Council on 12 December 2018 and the MTFS reflects this.

 

1.2     There is considerable uncertainty about the resources which will be available to deliver the Strategic Plan, for a number of reasons.  Outcomes for the national economy could vary widely depending on how the UK’s planned exit from the EU is managed.  These wider economic factors will affect the level of public expenditure generally.  The framework for local government expenditure in particular is anyway subject to uncertainty, with the four year local government funding settlement 2016/17 to 2019/20 coming to an end next year, and no definitive information about the what subsequent arrangements will mean in practice for the Council.

 

1.3     Given these multiple layers of uncertainty, the financial projections underlying the MTFS have been prepared under three different scenarios – adverse, neutral and favourable.  All three scenarios assume that budget proposals for future years which have already been agreed by Council will be delivered, and that Council Tax is increased by 3% in 2019/20.  Existing budget savings proposals within the remit of this Committee are shown in Appendix A and total £424,000 over the MTFS period.

 

1.4     The outcomes for the Council’s budget gap, before allowing for any further growth or savings, are set out below.

 

 

19/20

20/21

21/22

22/23

23/24

 

£m

£m

£m

£m

£m

 

 

 

 

 

 

Scenario 1 – Favourable

 

 

 

 

 

Budget surplus

-0.8

-0.9

-1.6

-3.3

-4.8

 

 

 

 

 

 

Scenario 2 – Neutral

 

 

 

 

 

Budget gap

0.1

1.1

1.7

1.5

1.7

 

 

 

 

 

 

Scenario 3 – Adverse

 

 

 

 

 

Budget gap

0.7

2.4

3.9

4.7

6.1

  

1.5     It can be seen that next year’s budget is close to being balanced in the neutral scenario, given the various assumptions underlying the projections.  However, in 2020/21 the budget gap will be significant under both the neutral and adverse scenarios.  It is essential that the Council starts planning now for 2020/21.

 

1.6     Budget proposals have been developed which seek to deliver the Council’s strategic priorities and achieve a balanced budget, using the ‘neutral’ scenario as the basis for planning.  The proposals now being submitted to Service Committees will deliver a balanced budget in 2019/20 and will achieve a substantial reduction in the projected budget gap in 2020/21. 

 

1.7     It is recognised that delivering the strategic priorities will require budget growth.  Of particular relevance to this Committee are the strategic priorities ‘Safe, Clean and Green’ and ‘Homes and Communities’.  It is proposed that, to facilitate the ‘Safe, Clean and Green’ objective, £30,000 is provided for additional street cleaning in the Town Centre following completion of the Public Realm Phase 3 project.

 

1.8     The approach taken in developing budget savings proposals has followed the principles set out in the MTFS, ie:

 

-      Revenue savings will be sought in:

 

-   Discretionary services which are not strategic priorities.

-   Statutory services which are not strategic priorities, where there is scope for reconfiguring services to reduce costs.

-   Improved efficiency in delivering strategic priorities.

-   New income generation and identification of external funding.

 

     These principles will be applied both to service expenditure and to corporate overheads.

 

-      Revenue growth will be built into the budget where strategic priorities cannot be delivered within existing revenue budgets, provided this can be accommodated by making savings elsewhere.

 

-      Capital schemes will be reviewed and developed so that investment is focused on strategic priorities.

 

1.9     The new revenue budget savings proposals for services within the remit of this Committee are set out in Appendix A and reflect the principles above. 

 

-      Improved efficiency – it is considered that efficiencies can be achieved within the Community Partnerships and Resilience team by streamlining the back office function (£50,000).  A further minor efficiency can be achieved by buying, rather than leasing, air quality monitoring equipment (£2,000).

-      New income generation – There is scope for additional income through greater volumes of business from grounds maintenance (£50,000), houses in multiple occupation licensing (£6,000) and bringing forward a planned increase in charges for collection of green waste (£22,000).

-      Reconfiguring services – A saving can be made from transferring the two Gypsy and Caravan sites that we operate to Kent County Council.  KCC operate a number of sites across the county, and therefore have relevant experience and enjoy economies of scale that we do not have.  There may be one-off costs to be incurred at the sites prior to transfer and this is recognised in the capital budget proposals.

-      Discretionary services – The CCTV service, which is a discretionary service, has been subject to extensive discussion by this Committee.  Based on the limited benefits and poor value for money offered by real time monitoring of cameras, it is proposed that the contract for this service is not renewed at the end of 2019/20.  We are seeking to negotiate an earlier exit from this contract, but if this is not achieved, then an existing saving of £75,000 in 2019/20 will have to be reversed.  However, the entire contract cost will be saved on an annual basis with effect from 2020/21.  We will continue to maintain a budget that will allow the CCTV network to be used for recording, and we will make CCTV footage available to the police and other authorised users on request.

        An existing budget saving of £125,000 in relation to environmental enforcement, which was predicated on consolidating all enforcement activity, is not now considered to be deliverable.  This has therefore been reversed out of the projections.  Growth of £20,000 for environmental enforcement, agreed at last year’s budget Council meeting, was a one-off item and is likewise reversed out of the budget.

 

The net new revenue budget savings proposals total £108,000.

 

1.10 The capital budget proposals for services within the remit of this Committee are set out in Appendix B.  The capital proposals update the existing capital programme and meet the strategic priorities as follows:

 

Homes and Communities

 

-      A further investment of £3 million is proposed for acquisition of property for temporary accommodation.

-      The Union Street and Brunswick Street schemes will be completed over the next two years.  Further investment is planned and indicative amounts are included in the capital programme.

-      A preliminary estimate has been included for investment in the Housing Delivery Partnership, proposals for which were set out in a report to the Committee on 13 November 2018.

-      The rolling programmes to provide Disabled Facilities Grants and Housing Incentives have been extended.

Safe, Clean and Green

 

-      The existing capital programme items for Street Scene Investment and the Flood Action Plan are retained.

 

 

 

2.        AVAILABLE OPTIONS

 

2.1     Agree the budget proposals relating to this Committee as set out in Appendices A and B for onward submission to the Policy and Resources Committee.

 

2.2     Propose changes to the budget proposals for consideration by the Policy and Resources Committee.

 

2.3     Make no comment on the budget proposals.

 

 

3.        PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS

 

3.1     The Policy and Resources Committee must recommend to Council at its meeting on 13 February 2019 a balanced budget and a proposed level of Council Tax for the coming year. The budget proposals included in this report will allow the Policy and Resources Committee to do this.  Accordingly, the preferred option is that this Committee agrees the budget proposals at Appendices A and B.

 

 

4.       RISK

4.1     The Council's MTFS is subject to a high degree of risk and certainty. In order to address this in a structured way and to ensure that appropriate mitigations are developed, the Council has developed a budget risk register.  This seeks to capture all known budget risks and to present them in a readily comprehensible way. The budget risk register is updated regularly and is reviewed by the Audit, Governance and Standards Committee at each of its meetings.

 

 

 

5.       CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK

 

5.1     Policy and Resources Committee received an initial report on the MTFS at its meeting on 27 June 2018 and it agreed the approach set out in that report to development of an MTFS for 2019/20 - 2023/24 and a budget for 2019/20.

 

5.2     Service Committees and Policy and Resources Committee then considered a draft MTFS at their meetings in November 2018, and this was agreed for submission to Council. The MTFS included descriptions of the different scenarios facing the Council and described how budget proposals would be sought for all scenarios, so that the Council might be suitably prepared for the adverse scenario, as defined.   Council agreed the MTFS at its meeting on 12 December 2018.

 

5.3     Public consultation on the Council’s budget priorities was carried out in parallel with consultation on the Strategic Plan.  Details are set out in Appendix C.  Note that the public were consulted on eight expenditure priorities, in line with the eight priorities included in the first draft of the Strategic Plan.

 

 

6.       NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION

 

6.1     The timetable for developing the budget for 2019/20 is set out below.

 

Date

Meeting

Action

January 2019

All Service Committees

Consider 19/20 budget proposals

13 February 2019

Policy and Resources Committee

Agree 19/20 budget proposals for recommendation to Council

27 February 2019

Council

Approve 19/20 budget

 

 

 

7.       CROSS-CUTTING ISSUES AND IMPLICATIONS

 

 

Issue

Implications

Sign-off

Impact on Corporate Priorities

The Medium Term Financial Strategy and the budget are a re-statement in financial terms of the priorities set out in the strategic plan. They reflect the Council’s decisions on the allocation of resources to all objectives of the strategic plan.

Section 151 Officer & Finance Team

Risk Management

This has been addressed in section 4 of the report.

Section 151 Officer & Finance Team

Financial

The budget strategy and the MTFS impact upon all activities of the Council. The future availability of resources to address specific issues is planned through this process. It is important that the committee gives consideration to the strategic financial consequences of the recommendations in this report.

Section 151 Officer & Finance Team

Staffing

The process of developing the budget strategy will identify the level of resources available for staffing over the medium term.

Section 151 Officer & Finance Team

Legal

Under Section 151 of the Local Government Act 1972 (LGA 1972) the Section 151 Officer has statutory duties in relation to the financial administration and stewardship of the authority, including securing effective arrangements for treasury management.  The Medium Term Financial Strategy demonstrates the Council’s commitment to fulfilling it’s duties under the Act. The Council has a statutory obligation to set a balanced budget and development of the MTFS and the strategic revenue projection in the ways set out in this report supports achievement of a balanced budget.

Team Leader (Corporate Governance), MKLS

Equalities

The overall approach to the MTFS is to direct resources into areas of need as identified in the Council’s strategic  priorities.  The equalities impact of individual budget decisions will be determined when setting the budget.

Section 151 Officer & Finance Team

Crime and Disorder

The resources to achieve the Council’s objectives are allocated through the development of the Medium term Financial Strategy.

Section 151 Officer & Finance Team

Procurement

The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy.

Section 151 Officer & Finance Team

 

8.        REPORT APPENDICES

 

The following documents are to be published with this report and form part of the report:

·         Appendix A: Revenue Budget Proposals 2019/20 – 2023/24

·         Appendix B: Capital Budget Proposals 2019/20 – 2023/24

·         Appendix C: Residents’ Survey

 

 

9.        BACKGROUND PAPERS

 

There are no background papers.