Agenda item

Budget Strategy - Risk Assessment Update

Minutes:

The Committee considered the report of the Director of Finance and Business Improvement updating the risk assessment of the Budget Strategy.

 

It was noted that:

 

·  Since the last meeting of the Committee, the General Election and its outcome had resulted in greater uncertainty at a national level.  Locally, the final outturn for the Council’s financial year 2016/17 was now known and an assessment of the risks of failing to deliver against the 2017/18 budget had been carried out.  The risks included in the Budget Risk Register had been reviewed in light of these developments, and there were two risks which had moved from the “yellow zone” to the “red zone” as follows:

 

  B – Fees and Charges Fail to Deliver Sufficient Income

 

The previous Government had indicated that it would allow local authorities to increase planning fees by 20%, which would have helped to offset financial pressures.  Unfortunately, the legislation which would have allowed the Council to implement these planning fee increases was not enacted before the General Election.  Whilst the Government still seemed to be committed to this initiative it was unlikely that it would occur before the autumn.

 

H – Adverse Impact from Changes in Local Government Funding

 

2017/18 was the second year of the four year funding settlement for local government announced in 2016.  It was intended that the four year settlement would provide certainty for the remaining period of the Government’s five year term.  From 2020 there would be a new local government funding regime incorporating 100% business rates retention.  The early General Election had created uncertainty in the short term.  The new Government might not consider it bound to adhere to the pre-announced settlement figures for years three and four of the Funding Settlement.  Further, the introduction of 100% business rates retention might be affected as it depended on enabling legislation, the Local Government Finance Bill, which did not complete its passage through Parliament in the final session before the General Election.

 

·  Other risks had reduced slightly; for example, the revenue outturn for 2016/17 was better than expected, with an underspend of £89,000 against the budget, and the initial assessment of the potential for delivering the savings due in 2017/18 was positive.

 

In response to questions, the Director of Finance and Business Improvement explained that:

 

·  In terms of the risk that the inflation rate predictions underlying the Medium Term Financial Strategy are inaccurate, whilst the Consumer Price Index increase was 2.9% for the year to May 2017 compared to a budget projection of 1.6%, the overall impact for the risk profile was no change.

 

·  It was possible that changes in the Government’s priorities could have adverse implications for Local Government funding arrangements.

 

·  Whilst the projected benefit from the Kent Business Rates Pool was set to increase from £5.1m to £7.5m in 2017/18, this was a county-wide shared benefit.

 

RESOLVED:  That the updated risk assessment of the Budget Strategy, attached as Appendix A to the report of the Director of Finance and Business Improvement, be noted.

 

Supporting documents: