Agenda item

To consider the development of the Medium Term Financial Plan for 2017 onwards and to be advised of the factors that will influence its delivery and that of the annual budget strategy for 2017/18.

RESOLVED:

(a)     That the emerging draft Medium Term Financial Plan 2017-2019, as set out in Report Item 4 considered by the Cabinet, be approved to form the basis of the Council’s 2017/18 General fund Budget that will be reported in February 2017; and

(b)     That the commencement of the initial preparatory works with regards to the 2017/18 Asset Maintenance and Replacement and Capital programmes be approved.

The Cabinet was advised that the Government’s Autumn Financial Statement had significant implications for the Council’s budgets.  Although the 4 year guarantee for formula funding had been honoured there had been a significant reduction in the amount of New Homes Bonus that the Council would receive in 2017/18, with £726,000 being diverted to pay for adult social care.  The amount of New Homes Bonus received by the Council had been projected to decrease from 2018/19, but in addition to bringing that reduction forward by one year, the bonus payment would also be reduced in each succeeding year.

The 3 yearly actuarial review of the Hampshire Pension Fund had identified that, in addition to the already budgeted increase in the fixed element, there was also a need to increase the employer rate by 1% per annum over the next 4 years.  A summary of the additional budget requirement was set out in paragraph 4.4 of Report Item 4 considered by the Cabinet and had been built into the latest budget assumptions.

The Cabinet was updated on the revised funding and budget assumptions that had been incorporated in the Medium Term Plan, as set out in sections 5 and 6 of Report Item 4.

Despite the significant last minute reduction in New Homes Bonus, sufficient adjustments had been possible to achieve a balanced budget for 2017/18, as set out in Appendix 2 to Report Item 4 considered by the Cabinet.

Members were reminded that, in order to achieve the savings necessary over the last 3 years there had been a significant reduction in the number of employees, by around 50 full time equivalents (6% of the workforce).  A full summary of the financial implications of the decisions taken was set out in the Council’s Annual Financial Report.  Work was continuing on a number of service reviews, in addition to the budget stabilisation strategy, with the emphasis remaining on achieving efficiencies while protecting front line services.

The proposed Asset Maintenance and Replacement programmes and capital programme were set out in Appendices 3 and 4 of Report Item 4 considered by the Cabinet.  The programme had been supported by the Corporate Overview and Scrutiny Panel (minute 35, 16 December 2016 refers) and the Cabinet was also requested to indicate their support in order that preparatory work could start.  It was noted that General Fund Reserves would be used to support the Capital and Asset Maintenance and Replacement Programmes, as set out in section 9 of the report.

In response to concerns raised by Members, they were advised that representations would be made to Government about the difficulties faced by local authorities when significant elements of funding were removed, as had been the case this year, even though there had been a promise of greater stability through entering into the guaranteed deal for formula funding.  In addition, this area faced significant additional difficulties in attracting New Homes Bonus as a result of the constraints on development imposed by the National Park, which covered a significant proportion of the area.  This was one factor which led to this area receiving less funding support per head of population than others.

RESOLVED:

(a)     That the emerging draft Medium Term Financial Plan 2017-2019, as set out in Report Item 4 considered by the Cabinet, be approved to form the basis of the Council’s 2017/18 General fund Budget that will be reported in February 2017; and

(b)     That the commencement of the initial preparatory works with regards to the 2017/18 Asset Maintenance and Replacement and Capital programmes be approved.