Amendments proposed to the budget added 14.2.17

The Director of Corporate Services outlined the procedure for the debate on the budget and that there was a need for an additional recommendation, due to the lateness of the final Local Government Finance Settlement.  He also advised that amendment no. 2, as tabled at the meeting, had been withdrawn.

The Cabinet Member for Finance and Performance introduced his report by paying tribute to those who ensured that the Council maintained its sound financial position.  In particular, he referred to the Members who had attended the finance meeting held in April 2016 and their sensible suggestions, some of which had been included in the budget; the work of the Budget Task Force and officers who attended those meetings.  He also thanked officers and staff for ensuring efficiencies, and gave special thanks to Mr Kara, Mr Radford, Miss Wiggins, Mr Vickers and his finance team; his Deputy Cabinet Member and his Cabinet and Deputy Cabinet colleagues. 

The Cabinet Member said that every penny that was spent as a local authority was someone else’s money, whether it came from Council tax, rent, business rates or fees and charges.  He was pleased to advise that Swale Borough Council was in a sound and secure financial position, which had been confirmed by the External Auditors.  He referred to the nationwide issue of homelessness, and welcomed the presentation of any project that would help with this and allow repayment of the principal, interest and expenditure.  He referred to the requirement for the Chief Financial Officer to report on the adequacy of reserves, which were at a reasonable level, and the key principles for the management of reserves moving forward.  The Council was efficient and had been for some time; referring to the fact that Council Tax had been frozen for six years.  Assuming that Council Tax would have increased by 2% per year, this represented a real term tax cut of £140k per year amounting to £840k over six years.

The Cabinet Member referred to the Medium Term Financial Plan, which in the words of the External Auditors, demonstrated sound financial management, and enabled the Council to plan for the future and to identify and to meet the challenges faced as a result of, for example, the reduction in the Revenue Support Grant.  He was pleased to present a balanced budget for 2017/18, which offered the same high quality service.  For the first time in seven years, an increase in Council Tax of £4.95 in Band D was proposed.  This increased tax to £164.88 per annum just £3.17 per week, which he considered to be excellent value for the range of services provided, and would help towards securing this council’s immediate future.

The Cabinet Member warned, however, that there were dark days ahead.  In recent years, the Council had benefited from increased income in its major income streams such as new homes bonus (NHB), National Non Domestic Rates (business rates), and, local fees and charges.  The reduction without consultation in the total funding for NHB was disadvantageous to the Council, and strong representations had been made back to Government on the change. This was compounded by the longer term changes to the NHB which significantly reduced its incentive effect.  Due to the volatility of business rates, and outstanding appeals, the Council had set aside a financial provision of £8m in the likelihood of them being successful.  He also expressed caution that the Government might change the benefits that the Council should receive in making the Borough an attractive place for businesses.  Furthermore, the amount of revenue support grant that the Council received from central government was being cut from £2.08m in 2016/17 to £1.24m in 2017/18, and to nothing by 2020/21.

The Cabinet Member advised that the Council could stop providing discretionary services in 2019/ 20 and make redundancies to enable the provision, in the short term, of statutory services only. Alternatively, the Council could invest to have an income to provide services the public needed, and to become less dependent on Government funding.  Whilst investing was not without risk, he considered that the Council had the skills and determination to succeed and to manage risk in the same way as it had done during the recession.  It would also make every effort to keep Council Tax at the lowest level possible.By planning ahead, the Council would not be forced to make knee-jerk reactions, as had been the case elsewhere.

The Cabinet Member advised that this was not an easy task.  The Council was efficient, but there was always more that could be done, referring to ongoing work to identify areas where further efficiencies could be made, but acknowledging that this became more difficult where the base budget was reduced.  However, the digital agenda had opened-up new possibilities and he referred to the changing way in which people wished to access services.  He referred to the work of the Transformation Programme which was investigating options available, as well as identifying ways to improve performance.  The Council had a good track record of managing income and expenditure, but to protect both statutory and non-statutory services and become financially self-sufficient, the Council must enhance its income streams and explore new ways and new opportunities of generating income.

The Cabinet Member then spoke about the proposals for borrowing.  He clarified that they were only undertaking long-term borrowing to finance an asset base with a significant proportion of it being related to revenue generating assets. This was not saddling future generations with borrowing, but providing for their future.  It was sensible and prudent management of resources which placed a fair burden on those that benefited from the improved service outcomes both now and in the future.  If the Council did not borrow for investment purposes, there would need to be curtailment in delivery of some of the aims and objectives of this Council.  This was why he considered it important for the Council to agree to the possibility of borrowing an additional £30m on top of the previous amount agreed.  He further clarified that the Council undertook long-term borrowing for capital purposes only, which meant that the expenditure which was to be financed by borrowing needed to be of a long-term nature and related to a tangible asset.He gave the example of property acquisition to demonstrate this, referring to revenue to "service the borrowing" (i.e. to repay the loan and to pay interest) being obtained from the asset itself, e.g. car park charges, service user charges, rent from property, or from Council Tax and business rates.

The Cabinet Member explained that the ability for the Council to raise additional borrowing to finance capital expenditure was severely constrained by its lack of ability to raise Council Tax. There was the capping regime and the "affordability" level determined by the Council. The latter constraint was the most significant, in that Council Tax levels should be kept to within reasonable bounds, having regard to the community's ability to pay.  He confirmed that current planned borrowing was within the revenue affordability limit set by the Council.  The focus in recent months had been on investment in revenue generating assets, to assist the Council in securing the long-term sustainability of the Borough in accordance with its approved strategies. The Section 151 Officer would not have given advice to proceed if he had felt it would be detrimental to the Council.  

The Cabinet Member advised that the Council would work with partners,  for example, Mid-Kent Services and Public Sector PLC, because it gave an additional tool and resources, and possibly additional funding, whilst carrying no risk to our objectives of achieving self-sufficiency thereby not completely relying on government funding. He referred to the briefing on this topic the previous year.

The Cabinet Member said it was a robust, yettough budget. It built on the Council’s ambitions and pioneering approach to delivering services. It would help to ensure that the Council could continue to make Swale an even better place to live, work in, and visit; and most importantly a place that knew and remained focused on its vision and priorities.  He reiterated that income generation would help sustain serviceswithout relying on central government funding and could help, for example, towards tackling the homeless.  All Members had the responsibility to ensure the future of the Council by directing its own destiny.  Decisions would be taken that were not only in the best interest of residents and businesses, but to encourage new businesses, investment, support tourism and secure the financial security of our borough.

The Cabinet Member referred to the fact that the Government would not make the final announcement on the Local Government Finance Settlement until the week beginning 20 February 2017. Therefore all the proposals in this budget were based upon the Provisional Settlement and whilst no changes were expected, he drew this to Members’ attention. 

In summing-up, the Cabinet Member advised that he would hold a meeting later in the year to give all Members an opportunity to put forward ideas to achieve self-sufficiency and proposals to find an additional £1m of income, which must be independent from unreliable government funding.  He referred to a quote from Amelia Earhart and encouraged Members to support the budget.  He proposed the following recommendations

(1) That the Head of Finance’s opinion on the robustness of the budget estimates and the adequacy of reserves be noted.

(2) That Minute No. 1162/02/17 of the Cabinet Meeting held on 1 February 2017 on the report on the Medium Term Financial Plan and the 2017/18 Revenue and Capital Budgets be approved.

(3) That the resolutions contained in Appendix I of the report be approved.

(4) That a delegation be given to the Chief Financial Officer, in consultation with the Cabinet Member for Finance and Performance, to deal with the implications of any changes in the final Local Government Finance Settlement for the 2017/18 budget.

This was seconded by the Leader.

Amendment No. 1

The Leader of the Independent Group proposed, and the Leader of the Labour Group seconded, “that expenditure be increased by £295,000 on the following areas:

1.    Homelessness increase by £50,000.  This is prudent given the heavy pressures in this area.

2.    Grounds Maintenance increase by £50,000.  There does not appear to be any clarity as to where the £50,000 savings proposed in the budget can be achieved.

3.    Tourism increase by £75,000.  No allowance has been made in the budget for the proposals arising from the Scrutiny review, the proposals of which are clearly needed.

4.    Economic Development increase work with employers to promote apprenticeships £10,000.  This will restore the reduction in expenditure during 2016/17 in this vital area for learning and skills.

5.    Play area maintenance and updating increase by £100,000.  The requirement for this work has been widely agreed but not implemented.

6.    AQMA increase by £10,000.  The worsening pollution is not adequately addressed and action should not have to rely on Councillor grants.

And reductions in expenditure and increases in income of £175,000 on the following areas:

1.    Planning fees increased income £100,000.  This is prudent given that every year for at least the past four years, income has exceeded the budget.  Again in 2016/17 there will be substantial income above the budget and housing pressures will promote major planning applications in 2017/18.

2.    Parking charges increased income £75,000.  The increased income in 2016/17 already covers the whole of the increase at present proposed for 2017/18.

The overall increase to the budget of £120,000 is to be met from reserves.  These proposals are made for the year 2017/18.  It will no doubt be considered next year whether they should be carried forward.”

The Leader advised that he would be accepting the professional advice of officers and therefore, whilst he congratulated the Member on putting forward an amendment, he would not support it.  Members then debated the amendment, during which the following points were made:

The use of reserves for a one-year change, would place more demand on officers; the reason for the reduction in spending in the grounds maintenance contract, which the Cabinet Member offered to discuss outside of the meeting; an in-depth review of play areas was underway and an application could be made to the performance fund for additional resources, as well as using Section 106 monies; an AQMA strategy was being developed; disappointment that only one amendment had been put forward; the suggestion to increase spending on Tourism and the Scrutiny Committee’s review; the reason for the underspend in apprenticeships due to a change in government policy; homelessness was a top priority, in particular prevention of use of Bed and Breakfast accommodation; the difficulty in anticipating expenditure on planning appeals etc and the Housing White Paper; and the forthcoming White Paper regarding pollution control.

The proposer of the original motion did not wish to speak on this.

In accordance with SI 2014 No. 165, a recorded vote was taken on the amendment and voting was as follows:

For: Councillors Richard Darby, Mark Ellen, Paul Fleming, James Hall, Mike Henderson, Roger Truelove and Ghlin Whelan.  Total equals 7

Against: Councillors Sarah Aldridge, Cameron Beart, George Bobbin, Andy Booth, Tina Booth, Lloyd Bowen, Bowles, Katy Coleman, Mike Cosgrove, Mike Dendor, Duncan Dewar-Whalley, Mick Galvin, Sue Gent, Nicholas Hampshire, Alan Horton, James Hunt, Lesley Ingham, Ken Ingleton, Nigel Kay, Samuel Koffie-Williams, Gerry Lewin, Bryan Mulhern, Padmini Nissanga, Prescott, Ken Pugh, George Samuel, David Simmons, Ben Stokes, Anita Walker, Ted Wilcox and John Wright.  Total equals 31

Abstain: 0

After discussing the amendment, debate returned to the substantive motion.

The Leader of the Labour Group referred to the proposed increase in the borrowing facility from £30m to £60m, referring to examples of other Councils that had borrowed money to invest in profitable projects.  He referred to the level of risk involved, the lack of officer skills in this area, and the potential for Council Tax Payers to foot the bill if it went wrong, and asked what the Council was planning to do with the additional £30m?  Discussions at Scrutiny Committee meetings on this topic had failed to placate their concerns, in particular around long-term defaults and the commercial viability of a multi-screen cinema, and he asked for more serious thought to be given to the risks of investing in Sittingbourne Town Centre.

The Leader of the Independent Group disagreed that there had been no cuts in service, and considered that it was wrong that the Council had frozen Council Tax for so long. If Council Tax had been increased over the last seven years, the Council would be £840k ‘better off’.  Given that Swale had the second lowest Council Tax in Kent, it was not unreasonable to increase the Council Tax.  He also commented that had the Council decided to invest in projects five years ago the Council would also be in a better position.  It was difficult for him to support the proposed budget.

A debate ensued, during which the following comments were made:  congratulating the Cabinet Member for Finance and Performance for holding a finance meeting with all Members to discuss ideas for the budget; thanking the Cabinet Member for Finance and Performance, the Head of Finance and his team on the proposed budget; questioning the reduction outlined on page 29 regarding A249 litter picking, which the Cabinet Member for Environment and Rural Affairs responded to; the proposed increase in the borrowing facility was good house-keeping should the right opportunity arise; and the level of risk in borrowing £30m.

The Leader, as seconder of the original motion (who had reserved the right to speak), also paid tribute to the Cabinet Member for Finance and Performance, the Deputy Cabinet Member, the Head of Finance and his team.  He would have liked to have kept the Council Tax frozen for another year, but an increase was necessary due to increased charges from the Lower Medway Internal Drainage Board (LMIDB) of £442k.  He suggested that the LMIDB should be a precepting authority.   Whilst he was disappointed that Council Tax could not be frozen, he was pleased with the proposed budget which was a solid base to move forward on.  He did not agree with the Leader of the Independent Group that cuts had been made and suggested that they discussed this outside of the meeting.  He referred to the need for the Council to invest for the future, and the integrity of the Section 151 Officer and External Auditors.  The Council was set fair, due to the way in which the budget had been managed.  He was proud of the budget and was confident that it provided for good quality services at an affordable cost.

The Cabinet Member summed-up by thanking Councillor Mick Galvin for his question, that he would discuss outside of the meeting.  He referred to comments made by the Leader of the Labour Group and said that sound investment was the right and only way forward.  He thanked Members for their contributions at the finance meeting held last April, some of which had been taken on-board, and advised this would continue.

In accordance with SI 2014 No. 165, a recorded vote was taken and voting was as follows:

For: Councillors Sarah Aldridge, Cameron Beart, George Bobbin, Andy Booth, Tina Booth, Lloyd Bowen, Bowles, Katy Coleman, Mike Cosgrove, Mike Dendor, Duncan Dewar-Whalley, Mick Galvin, Sue Gent, James Hall, Nicholas Hampshire, Alan Horton, James Hunt, Lesley Ingham, Ken Ingleton, Nigel Kay, Samuel Koffie-Williams, Gerry Lewin, Bryan Mulhern, Prescott, Ken Pugh, George Samuel, David Simmons, Ben Stokes, Anita Walker, Ted Wilcox and John Wright. Total equals 31

Against: Councillors Richard Darby, Mark Ellen, Paul Fleming, Mike Henderson, Padmini Nissanga, Roger Truelove and Ghlin Whelan. Total equals 7

Abstain: 0

Resolved:

(1) That the Head of Finance’s opinion on the robustness of the budget estimates and the adequacy of reserves be noted.

(2) That Minute No. 1162/02/17 of the Cabinet Meeting held on 1 February 2017 on the report on the Medium Term Financial Plan and the 2017/18 Revenue and Capital Budgets be approved.

(3) That the resolutions contained in Appendix I of the report be approved.

(4) That a delegation be given to the Chief Financial Officer, in consultation with the Cabinet Member for Finance and Performance, to deal with the implications of any changes in the final Local Government Finance Settlement for the 2017/18 budget.