Agenda item

To consider a report by Councillor Julian Thompson-Hill, Lead Member for Finance, Corporate Plan and Performance (copy enclosed) setting out the implications of the Draft Local Government Settlement 2016/17 and proposals to finalise the budget for 2016/17.

RESOLVED that Cabinet  –

(a)       notes the impact of the Provisional Local Government Settlement and that no further savings beyond the £5.2m already approved are required from services for 2016/17, and

(b)       supports the following proposals and accordingly recommends them to the full Council in order to finalise the 2016/17 budget:

1.    to increase funding to schools to meet the national level of protection of +1.85%

2.    to set aside a one-year budget delivery contingency of £480k for 2016/17 to mitigate the risks to the delivery of the budget set out in the report

3.    to recommend to Council the resulting average increase in Council Tax of 1.5%.

Councillor Julian Thompson-Hill presented the report setting out the implications of the Draft Local Government Settlement 2016/17 and proposals to finalise the budget for 2016/17, including the level of Council Tax.

Councillor Thompson-Hill provided an overview of the budget process and latest budget position and elaborated upon the proposals for consideration and recommendation to full Council in order to set the budget for 2016/17.  The draft settlement had been much better than expected with an overall cash reduction of 1.2% to Denbighshire which meant a funding reduction of £3.9m less than anticipated.  Consequently the latest proposals required no further savings from services in 2016/17 (savings of £5.2m had already been identified) and would allow for a lower level of Council Tax rise from 2.75% to an average of 1.5%.  The proposed budget had also taken into account an increase in funding to schools to meet the national level of protection at 1.85% and to set aside £480k to mitigate risks to delivering the budget.

Cabinet discussed the budget proposals at length and the main areas of debate focused on the following –

·         members considered the adequacy of the proposed budget contingency of £480k and discussed the risks associated with delivering the budget given that councils were having to set budgets and Council Tax based on a provisional settlement.  A number of revenue grants had not yet been confirmed and some of the savings agreed for 2016/17 may require a longer lead-in time to deliver.  There was also scope for the final settlement to change, particularly in light of lobbying from rural councils who had been subject to greater reductions.  The role of the Welsh Local Government Association in that process was discussed together with the possibility of councils with more favourable settlements providing subsidies for those worse off.  The Chief Executive reported that such an approach was possible but unlikely and it was expected that the funding shortfall for rural councils would more likely be subsidised through other grant funding streams rather than a review of the draft settlements.  Based on current assumptions the proposed budget contingency of £480k to mitigate risk was considered appropriate.  Any greater shortfall in the budget would lead to further scrutiny of individual budgets and/or the use of corporate reserves.  Councillor Barbara Smith felt the council should make it clear that it would not be reversing any previous budgetary decisions in light of the better than expected settlement

·         Councillor Eryl Williams felt it would be prudent to consider an average Council Tax increase of 2% in order to protect against future cuts and mitigate financial risks.  He noted there had been consensus for a 1.5% average increase at the last budget workshop but due to the low attendance he felt that view may not be truly representative.  There was some debate around the pros and cons of such an approach and balancing the need for prudency and contingency over the impact on residents.  The majority of members believed that, given the better than expected settlement and affordability of the Council’s budget with a 1.5% increase, and given that Denbighshire’s Council Tax level was still high compared to other Welsh authorities, a 1.5% increase would be prudent and appropriate.  There were also reservations that a contingency reserve would be built up for no specific purpose.  It was acknowledged that the issue would likely be subject to further debate at full Council and it was suggested there may be merit in providing a further breakdown of figures for a 2% average increase for consideration at that meeting to put the actual amount for each band into context.  It was noted that the council had no control over other elements making up the Council Tax – the Fire Service levy or Police and City/Town/Community Council precepts

·         reference was made to the 1.85% increase in funding to schools to meet the national level of protection and members considered whether there would be any merit in seeking a breakdown of the amounts given to individual schools together with evidence of outcomes as a result of the additional funding.  Mention was made to the role of the Schools Budget Forum within that process and as the amounts to individual schools would vary, and given that any additional funding would likely address existing school budget pressures, it was agreed there would be little merit in such an analysis but that the Schools Standards Monitoring Group would be best placed to look into the matter.  It was also noted that the impact on schools was unclear in terms of Welsh Government funding, particularly for the foundation phase and Post 16 education.  Councillor Eryl Williams advocated a more open and transparent process with regard to schools funding allocations.  He felt that more could be done to highlight the funding increase for schools and the fact that spend per pupil in Denbighshire was higher than other local authorities together with the significant investment in schools via the 21st Century Schools Programme

·         in terms of the possibility of a further direction from Welsh Government to financially protect social care it was noted that there was an expectation that councils did not cut social care budgets but no clarification given as to how they should meet that expectation in terms of specific care services.  Councillor Bobby Feeley elaborated upon the reasoning for re-designing social care services in order to respond to changing needs and demographics and not just as a response to budget pressures, citing in-house care services as an example

·         clarity was sought over the impact of the budget on the council’s general reserves and members were reminded that last year full Council had approved the use of £500k general balances to support the revenue budget for the next three financial years.  The decision had been made following an assessment of balances and it was considered that a managed reduction over three years was an acceptable approach.

The Leader was pleased to acknowledge the better than expected draft settlement.  He referred to the open and transparent budget setting process and paid tribute to the work of officers and services involved in that regard.  Assurance could be taken from Denbighshire’s robust financial planning and the fact that the Cutting Our Cloth Task and Finish Working Group had not found any outstanding issues when reviewing the impact of budget decisions.  The Leader was pleased to support the budget proposals in order to deliver a budget which also allowed for investment in the council’s priorities.  The Chief Finance Officer highlighted the difficulties in financial planning due to the uncertainty over the level of financial settlements and provided some context in terms of budget assumptions going forward.

RESOLVED that Cabinet  –

(a)       notes the impact of the Provisional Local Government Settlement and that no further savings beyond the £5.2m already approved are required from services for 2016/17, and

(b)       supports the following proposals and accordingly recommends them to the full Council in order to finalise the 2016/17 budget:

1.    to increase funding to schools to meet the national level of protection of +1.85%

2.    to set aside a one-year budget delivery contingency of £480k for 2016/17 to mitigate the risks to the delivery of the budget set out in the report

3.    to recommend to Council the resulting average increase in Council Tax of 1.5%.

At this juncture (12 noon) the meeting adjourned for a refreshment break.