To review the draft Medium Term Financial Plan and Draft Budget 2018/19 and make the necessary recommendations to the Cabinet on 7 February 2018. 

Cabinet Members, Strategic Management Team and Heads of Service have been invited to attend, as have all Members.  The Business Rate Pilot Proposal, Medium Term Financial Plan and Budget Variations have been attached as appendices to the report.

The Chairman invited the Committee to consider the proposals for the Council’s Medium Term Financial Plan (MTFP) and the draft 2018/19 revenue budget.

The Deputy Cabinet Member for Finance and Performance thanked the Chief Financial Officer, the Financial Services Manager and their team for their work.  He introduced the report, referring to the difficulties faced with the reducing Revenue Support Grant (RSG) and the positive impact of the Business Rate Pilot in Kent.

The Chief Financial Officer advised that the draft budget had been considered by the Cabinet at its meeting on 7 December 2017.  Since that time, the Local Government Finance Settlement had been announced, and work had been focussed on how to close the budget gap.  This would be considered by the Cabinet at its next meeting on 7 February 2018. 

The Chief Financial Officer referred to the update report that had been circulated to all Members in advance of the meeting, and drew attention to the paper copies at the meeting.  He apologised that it had not been possible to produce a draft budget book at this stage due to the sequencing, but that this would be available for the February Cabinet meeting.  He drew attention to the table in paragraph 3.2 of the update report, and explained that the Cabinet was being asked to use £316k of the £677k previously set aside, to balance the budget for 2018/19.  In 2019/20, there was a forecasted gap of £550k.

The Chairman congratulated the Chief Financial Officer and his team for their work on the draft budget, and confirmed with Members that they had read the update report that had been circulated.

In response to a question as to whether the Cabinet would be recommending a balanced budget without an increase in the Council Tax, the Chief Financial Officer advised that this would be considered by the Cabinet at its meeting on 7 February 2018; there was an assumption that there would be an increase in Council Tax but no decision had been made.

Members were then invited to consider the report page by page.

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Capital Programme: in response to a question as to whether there would be additional projects included in the programme for 2018/19, the Chief Financial Officer advised that this would be considered at the Cabinet meeting on 7 February 2018.  In response to a further question, the Cabinet Member for Environment and Rural Affairs confirmed that they were proposing to include £500k in the programme for a project to renovate children’s play areas, and this would be referred to in the Open Spaces Strategy report that would be considered by the Policy Development and Review Committee on 13 February 2018.

Transformation Scheme – A Member commented that the Transformation Project Team was costing £100k per year but no information had been given as to what savings they had made as a result of their work. 

Councillor Mike Henderson proposed that the Cabinet be requested to look at the Transformation Project and include commentary or figures on the financial impact of the project when considering the budget.  This was seconded by Councillor Roger Truelove. 

Discussion ensued, during which the Deputy Cabinet Member for Finance and Performance advised that the work of the Transformation Project was wide ranging and that some parts had already been implemented, such as work on the new website which would improve communications and would save money.  The Chief Executive clarified that the work of the team had moved in a different direction under his leadership, and they were now adopting a holistic approach which meant that the reviews would take longer to do to draw-out efficiencies, and he was confident that this would be achieved.  Further comments were made in that the work of the team was also about increasing resilience and improving services, and the different ways of measuring savings. The proposal was put to the vote and agreed.

Staff Pay: in response to questions, the Chief Financial Officer referred to his update report and advised that provision for a 2% increase in staff pay was included in the draft budget, however, the process for agreeing the pay award was a separate process to the budget.

Page 39:  Medium Term Financial Plan (replaced by version in update report)

In response to a question regarding the reducing RSG, the Chief Financial Officer advised that the Council had known for a long time that the RSG would eventually reduce to zero, and that the Council would need to become self financing.  There would be reliance on income from business rates, and Swale was projected to have the highest growth in business rates in the County.  He clarified that the rate was set by the Government, but that Swale would benefit from growth in businesses.  The Financial Services Manager further clarified the detail of the Business Rate Pilot which meant that Swale would keep more of the business rates than previously.

In response to a question about the Base Budget figure in the MTFP, the Deputy Cabinet Member for Finance and Performance explained that there was a difference between the figure in the original report and the update report, due to the way in which the Lower Medway Internal Drainage Board figure was presented.  The Chief Financial Officer undertook to speak to a Member direct regarding any queries around referencing in the reports.

Further discussion ensued regarding the Business Rate Pilot; what the projected income would be in future years; and whether the £350k included in the budget was the correct figure to use.  The Chief Financial Officer advised that this had been put through a modelling exercise; the future was unknown, therefore half of the amount anticipated had been included for 2018/19, but this could be different in 2019/20.  There was judgement involved in reaching this conclusion.

In response to a question as to where the growth in business rates was coming from, the Cabinet Member for Regeneration advised that business rates would come from anywhere where new business started or via development of an existing business.  There were a number of factors to consider such as the type and size, giving Aldi as an example, however, there were difficulties in predicting the amount. The Deputy Cabinet Member for Finance and Performance further clarified that there would be lower rental income predicted in 2019/20 and 2020/21 from the Sittingbourne Town Centre Regeneration Investment as some tenants had rent free periods.  Further comments were made regarding where the growth would be; whether the growth would be from lots of new small businesses, or growth in a few large businesses, and the need to consider the infrastructure implications of this.

In response to a question regarding the Lower Medway Internal Drainage Board (LMIDB), it was confirmed that LMIDB set the amount themselves.

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In response to a question as to how the figure for the homelessness temporary accommodation budget had been arrived at, and a comment that the revised figure was not enough, the Chief Financial Officer explained that a lot of work had been undertaken to understand this better, and that the figure was the best judgement at the current time. In response to a further question regarding the policy of housing associations in respect of shared ownership, the Cabinet Member for Housing and Wellbeing confirmed that Optivo had confirmed that they could provide up to 100 properties for bed and breakfast accommodation at a good rate, and were keen to work with the Council.  The Council was actively seeking ways to partner with them to enable affordable houses to be built.

A Member suggested that the Council should look further into the increased water charges at Swale House, referring to the experience of Faversham Pools.  Other Members gave similar examples where bills had been challenged. The Chief Financial Officer agreed to ask officers to look at this further.

In response to a question about the backfunding element of the Pension Fund, the Chief Financial Officer advised that the next valuation was due in April 2019 which would be for three years.  He drew attention to the update report, which suggested this should be taken out of reserves.

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In response to a question as to why the income for sports facilities had not been achieved over a period of time, the Cabinet Member for Environment and Rural Affairs advised that this was mainly due to a reduction in demand for adult football pitches and an increase in demand for youth football pitches, which attracted a different charge.  There had also been a number of asset transfers around football pitches.

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In response to a question regarding the income from Citizens Advice Bureau (CAB) for the occupation of Swale House, the Deputy Cabinet Member for Finance and Performance confirmed that this was new income as the CAB had recently moved in to Swale House.

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A Member referred to the additional income projected for Planning, and asked that this was looked at again as he did not consider, with all the expenditure forecast, that the Council would earn more than budgeted for.  He asked why the budget for the Transport Planner had not been taken from the reserve for Local Development Plan activities?  The Head of Planning Services advised that the increase in costs had been balanced by an increase in the planning fees.  There was additional workload, and so additional officers were needed to deal with this, and there were many significant planning applications to be considered over and above normal workloads.  He gave examples of the major applications that were being dealt with or were due to be submitted.  He also drew attention to the Planning Performance Agreement  which had seen an increase in income from £60k to £90k.

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In respect of the savings made in Residents Services, a Member asked for information about how much funding had been provided from the Performance Fund. The Chief Financial Officer agreed to provide an answer.

A Member referred to the work of the Policy Development and Review Committee on the Tourism Visitor Economy Strategy/Framework, which had recommended that additional budget was made available, and asked whether this would be included in the budget proposals to the Cabinet.  It was confirmed that this would be considered by the Cabinet on 7 February 2018 as part of the budget proposals.

The Chairman thanked all those present for attending the meeting.

Resolved:

(1) That the Cabinet be requested to include commentary/figures on the financial impact of the work of the Transformation Team when it considers the budget.