Agenda item

Report of the Head of Finance

The Head of Finance presented the report to Members.  He stated that the report provided an opportunity to comment to Cabinet on the strategy following a request at the last meeting.  He advised that there would be a further report to Cabinet on next year’s budget proposals in November, and these proposals would be considered by Policy Development Group at its next meeting.  He highlighted the estimated shortfall set out in the Cabinet report at Appendix 1, and the ongoing savings proposed to address this.  He advised that the shortfall was not as high as it might have been, due to the year on year efficiencies which had been made.  He added that nevertheless it would be a challenge.  He advised that in preparing the MTFS, it was necessary to be mindful of the budget proposals of the Council’s partners.  He referred to the possibility of the withdrawal of recycling credits as proposed by Leicestershire County Council.  He advised that if these proposals were to go ahead, this could lead to a shortfall, and therefore a contingency amount had been set aside in the MTFS.  He outlined the assumptions that had been made in preparing the MTFS.

Councillor S Sheahan stated that he was disappointed that no Member of Cabinet was present to answer questions, and felt that it was a matter for the Committee to decide whether it wanted a Member of Cabinet present for this purpose.  He asked if there was any reason why this had not been arranged.  He asked the Head of Finance if he was confident that there would be no need for further cuts.

The Head of Finance advised that the Council operated a Planning for the Future programme, and was therefore constantly undertaking service reviews.  He commented that targets could increase or decrease.  He added that efficiencies had been made in the current year which would continue in subsequent years.  He advised that this was reflected in the budget monitoring report and there would be further modest savings coming forward as part of the report to Cabinet in November. 

Councillor V Richichi commented that the Council would be receiving an increase in new homes bonus, yet was still required to make £1.4 million in savings. 

The Head of Finance responded that this was possibly a case of central Government giving with one hand and taking away with the other.  He explained that the Council had seen very significant reductions in revenue support grants and funding had been reduced by £3 to £4 million over the last few years.  He added that the increase in the new homes bonus did not cover the shortfall in funding from central Government, and the Council had been required to make the additional savings.

In response to a question from Councillor V Richichi, the Head of Finance stated that the Council had a good track record of making efficiencies without impacting upon frontline services, however this would be a challenge in the coming years and there could be no guarantees that frontline services would remain unaffected.

Councillor S Sheahan commented that if this amount of money had been identified at the start of the year, the budget could have been planned better and the funding allocated accordingly.  He added that better planning and being more honest about resources had to be the way forward.  He also commented that the increase in new homes bonus meant an increase in the council tax base and therefore an increased demand on services.  He asked the Head of Finance to comment on this.  He also asked what impact a 1% increase in council tax would have upon the budget.

The Head of Finance advised that a 1% increase would raise an additional £50,000, which at present was matched by the Government with the council tax freeze grant.  He added that increases were capped by central Government and the Council would also be required to pay council tax support.

In response to comments made by Councillor S Sheahan regarding increasing council tax, the Head of Finance explained that the Council retained approximately 15% of income from council tax, whereas it retained 80% of the new homes bonus, and as such, the new homes bonus was much more significant to the Council in terms of the budget than it was to unitary authorities.  He acknowledged that an increase in the council tax base would result in an increase in demand for services.

It was moved by Councillor M Specht, seconded by Councillor J G Coxon and

RESOLVED THAT:

The comments made by the Policy Development Group be noted.