Agenda item

Report of the Chief Finance Officer

Approval granted to start the budget consultation process on the proposals contained within the report and noted in particular:

·         That Council Tax be increased by 2.99% in 2018/19, equivalent of a £5 increase per year for an average band D property or about 10p per week. In addition that the Council will bring into its budget forecasts a 2.99% increase in 2019/20 and 2% increase in 201/21

·         The resourcing of corporate priorities for 2018/19

·         The forecasted budget for 2018/19

·         The forecast budget position in 2019/20 and 2020/21

At the request of the Chair this item was considered first. 

The Executive Member (Resources) presented the report of the Chief Finance Officer which set out the budget position for 2018/19 including the forecast for the following two years to 2020/21, the relevant proposals in respect of the use of forecast resources identified in 2018/19 and budget consultation. 

The budget forecasts over the next three years have been updated to take account of council tax to be increased by 2.99% in 2018/19, this is the equivalent of a £5 increase per year for an average band D property or about 10p per week.  In addition, the council will bring into its budget forecasts a 2.99% increase in 2019/20 and 2% increase in 2020/21. The final decisions on Council Tax increases will be made as part of the annual budget setting process. Additional investment of £673k will deliver corporate strategy priorities. Progress against the current Medium Term Financial Strategy (MTFS) budget efficiency objectives including staffing reviews, contract savings and base budget reviews.  Budget forecasts also take account of policy decisions taken to reduce the budget deficit and the movement to specific reserves to help the council manage change and invest in future income generation and strategies to reduce the budget deficit in the medium term. 

The report set out the budget pressures and funding cuts that the council face in bridging the budget gap over the next 3 years, including the reduction in Revenue Support Grant from the Government and income from the New Homes Bonus and Lancashire County Council.  The council has experienced expansion of the council tax base, but the additional income is insufficient to meet the inflationary pressures placed on the council’s budget.  In addition, the expansion of the council tax base has resulted in a faster reduction in the council’s grant funding.  Unfortunately, there is no further clarity on how the reforms to the business rates regime will affect Chorley Council in 18/19 to 20/21.

A key influencing factor on the forthcoming budget is the effective management of the budget in the preceding financial year.  The council recognised that reductions in funding and ongoing expenditure budget pressures have resulted in a budget gap of £0.870m in 2018/19.  To bridge this immediate budget gap the Executive Cabinet has achieved and identified proposals for immediate budget savings in preparation for 2018/19.  This is in addition to a total of £3.229m savings already achieved in previous years, and includes productivity savings, a review of contracts and the base budget.  A review of income streams and financing and Lancashire Business Rates Retention Pooling have also been undertaken. 

The report set out that through savings achieved to date, additional income identified, a review of net financing, the use of unutilised reserves and increases in council tax the council is able to set a balanced budget in 2018/19 with some resources available to invest. 

Consideration was given to the estimated Medium Term Financial Strategy cumulative budget deficit and cumulative savings, which included the renegotiation of contracts, productivity gains and shared services, and income generation, via delivering the Market Walk extension, council owned housing stock and council owned employment land. 

Through setting this budget and utilising underspends in 2017/18 the council has achieved, a year earlier than budgeted, its MTFS target of having £4m set aside in general balances.  A part of the budget strategy is to ensure that the council maintains robust reserves to cater for uncertainties it faces.

Members noted that potential incomes streams, including the delivery of the Market Walk Extension, are based on assumptions. 

Members discussed that the council is exploring the strategy of delivering and managing its own housing stock with the view to increasing and improving the quality of housing within Chorley Borough whilst generating a sustainable net income stream for the council.  The council is also modelling a potential approach to entering the energy industry through setting up an energy supply company.  The proposal requires huge investments with subsequent large rewards and potential large risks.  To deliver the energy supply company the council will require a collaborative approach with investments from other councils.  Further modelling is being undertaken as to how this collaborative approach would work and what the returns to Chorley Council could potentially be.

Members highlighted that savings through the renegotiation of contracts, such as the waste contract are assumed and higher savings are possible.

Decision:

Approval granted to start the budget consultation process on the proposals contained within the report and noted in particular:

·         That council tax be increased by 2.99% in 2018/19, equivalent of a £5 increase per year for an average band D property or about 10p per week. In addition that the council will bring into its budget forecasts a 2.99% increase in 2019/20 and 2% increase in 201/21

·         The resourcing of corporate priorities for 2018/19

·         The forecasted budget for 2018/19

·         The forecast budget position in 2019/20 and 2020/21

Reasons for recommendation(s):

To progress the council’s 2018/19 budget setting process to achieve an approved and balanced budget.

Alternative options considered and rejected:

Setting the budget is a statutory responsibility.