Interview with Paul Riley, Head of Finance and Customer Services

The Chairman introduced Paul Riley, Head of Finance and Customer Service. 

Mr Riley took the Committee through the most likely forecast for the Council’s Medium Term Financial Strategy (appendix B).  The Cabinet had made their decision on the Budget Strategy on 14 September 2011. The forecast showed the Committee the Council’s current position and the next 5 years.

The first calculation ‘Available Finance’ showed the revenue support grant received from government, the loss incurred and the collection fund adjustment for Council Tax.  Members were informed that the revenue support grant would be confirmed in January 2012 and that a 2.5% rise in council tax was included in the projection each year.  The Officer explained that a correlation was made with the Consumer Price Index (CPI), and reflected rises in fuel and other utilities with the cost totalling £410,000 for 2012/13.  Under the various headings, Inflation Increase, Contractual Commitments, National Initiatives, Local Priorities and Minor Initiatives, Various Priorities and Council Assets, incomes and losses were accounted for.  Single Voter Registration scheduled for 2014 /15 was incorporated into the outgoing costs for 2014/15.

The Officer made reference to the £1.1 million deficit forecast as a result of the changes to Council Tax Benefit and collections.  The Officer explained that from a financial perspective this shortfall would be shared with the other precepts for whom Maidstone collect on behalf of including the Police, Fire and Parishes.  The government suggestion for 12 monthly payments for Council Tax, rather than 10 was highlighted to the Committee as this would prevent reinvestment.  Although the Officer explained that payments could be changed to the 1^st of the month.

Another Financial consideration highlighted was in relation to Welfare Reform, discussed under the previous item on the agenda, and the ‘transitional costs’ faced as Universal Credit was introduced. The loss of grant combined with the retention of staff as the scheme was phased in until 2017 would have a negative impact on the council’s financial affairs.

The Officer informed Members that there were still £700,000 to £800,000 of savings still to find for 2012/13.  He explained that Senior Officers would be aligning their decision making process with the council’s priorities and the strategic plan rather than taking a ‘salami slice’ approach.  Mr Riley highlighted areas where future changes to Council Tax and Benefits could affect services currently provided such as the Gateway and the Contact Centre.

The retention of Business Rates was explained to the Committee.  It was explained that there would be a focus on incentivised business growth but that disproportionate success in this area would be levied which could impact negatively on Maidstone with only 10% being retained by MBC and the rest to go to Kent County Council (KCC). Concern was raised that Maidstone’s structure had not been considered.  The effect of this would mean that more Money would leave Maidstone for other areas in Kent. He explained that he hoped the consultation process taking place would reveal that there were still two tier authorities in place like Maidstone and not just unitary authorities to consider.

The Capital Programme was discussed.  Members were informed that the Hazlitt Theatre’s heating had been replaced and there was funding set aside to assist the Museum.

Mr Riley moved affairs on to the future including the council’s Core Strategy and the Infrastructure Delivery plan that would follow He explained that a great deal of funding was needed to deliver the core strategy and he informed the Committee that changes to capital funding would include section 106 agreements and the introduction of a Community Infrastructure Levy (CIL).  This was something that MBC would not have to give to KCC until they reached an agreement with KCC on changes they required to their infrastructure.  It was discussed that the Leader of the Council, Councillor Garland had confirmed that the general principle would be to work with KCC on infrastructure and agreement would most likely take place once the Infrastructure Delivery Plan was in place from the Core Strategy which would demonstrate where needs were to be met.

Members were informed that a project was underway to address fees and charges.  This would look across the whole council and provide comprehensive analysis of where there would be an ability to make an income.

Finally, Leader of the Council, Councillor Garland, updated the Committee on three main areas that he felt required further consideration.  Members were informed that Cabinet would have to reconsider a saving that had been identified. The proposal would be not to reduce the funding for Concurrent Functions for 2012/13 (the grant scheme for Parishes in the borough) which would result in a need to find an additional £100,000 in savings. Councillor Garland informed the Committee that Parishes Members had been informed that in principle an agreement had been reached by the Cabinet Member for an interim period of 12 months which would result in the grant being maintained at its current level.  He told Members that he was in support of this.

The last area discussed was the Council Tax Grant and the government proposal to keep council tax at 0% and replace it with a grant of 2.5%.  Councillor Garland told the Committee that this would result in a loss of £375,000 year on year for the Council with a continued loss of 7m in total due to the accumulative loss of interest.  Members considered whether Council tax should be frozen following the governments lead of a 0% rise against a 2.5% year on year increase which would result in a approximately £5 a year for a band D council Tax Payer.  The Committee felt that it would be beneficially to investigate the opinions of other local authorities on the matter.

It was resolved:

a)  That Committee should investigate other authorities’ opinions on the Government’s decision to freeze council tax and replace this with a grant; and

b)  That the Head of finance should provide the Committee with a timetable for setting the budget for 2012/13.