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MAIDSTONE BOROUGH COUNCIL
RECORD OF RECOMMENDATION OF THE CABINET
TO COUNCIL
Recommendation Made: 10 February 2010
BUDGET STRATEGY – CORPORATE REVENUE & CAPITAL BUDGET 2010/11 ONWARDS
Issue for Decision
To consider the proposed Revenue and Capital Budgets for all portfolios for 2010/11, including service savings and growth previously agreed, in accordance with the agreed budget strategy and to consider the proposals for 2010/11 in the context of the draft Medium Term Financial Strategy and the Medium Term Financial Projection.
Recommendations Made
1.
That the revised
revenue estimates be agreed as set out in Appendix A (circulated
separately).
2.
That the minimum
level of General Fund Balances be set at £2m for 2010/11.
3.
That the
proposed Council Tax of £222.39 at Band D for 2010/11 (an increase of 2.49%) be
agreed.
4.
That the revenue
estimates for 2010/11 incorporating the growth and savings items as set out in Appendix
A be agreed.
5.
That the minor
amendment to the provision for the annual cost of living increase following the
recent settlement be added to the Leaders Contingency Budget.
6.
That the
Statement of Reserves and Balances as set out in Appendix A be agreed.
7.
That the medium
term Capital Programme as set out in Appendix A be agreed.
8.
That the funding
of the Capital Programme as set out in Appendix A, noting that the
funding is dependent upon the delivery of an assumed level of additional
capital resource, be agreed.
9.
That the
Treasury Management Strategy include a contingency for Prudential Borrowing of
up to £4m, subject to the prior agreement of the Cabinet, during 2010/11 be
agreed.
10.
That the Medium
Term Financial Strategy as set out in Appendix A be agreed.
11.
That the Medium
Term Financial Projection as set out in Appendix A as the basis for
future financial planning be endorsed.
12.
That it be noted
that, at the meeting of the General Purposes Group on 27th January
2010, the Council calculated its Council Tax base for the year 2010/11 in
accordance with regulations made under Section 33 (5) of the Local Government
Finance Act 1992, as 59,765.2 being the amount calculated by the Council in
accordance with Regulation 3 of the Local Authorities (Calculation of Council
Tax Base) regulations 1992.
13.
That it be noted
that, as detailed in Appendix B, the Council Tax Base for each of the
Parish Areas, calculated in accordance with Regulation 6 of the Regulations,
are the amounts of its Council Tax Base for the year for dwellings in those
parts of its area to which a special item relates (Parish precepts).
14.
That the
following amounts now be calculated by the Council for the year 2010/11 in
accordance with Section 32-36 of the Local Government Finance Act 1992:-
(a) £87,668,186 being the aggregate of the amounts which the Council estimates
for its items set out in Section 32 (2) (a) to (e) of the Act;
(b) £63,889,949 being the aggregate of the amounts which the Council estimates
for the items set out in Section 32 (3) (a) to (c) of the Act;
(c) £23,778,337 being the amount by which the aggregate at (a) above
exceeds the aggregate at (b) above, calculated by the Council, in accordance
with Section 32 (4) of the Act as its budget requirement for year;
(d) £9,521,064 being the aggregate of the sums which the Council estimates
will be payable for the year into its General Fund in respect of
redistributed Non Domestic Rates and Revenue Support Grant, increased by
the amount which the Council estimates will be transferred in the year
from its Collection Fund to its General Fund in accordance with Section 97
(3) of the Local Government Finance Act 1988 (Council Tax Surplus) and
increased by the amount which the Council estimates will be transferred
from its Collection Fund to its General Fund, pursuant to the Collection
Fund (Community Charges) directions under Section 98(4) of the Local
Government Finance Act 1988 (Community Charge Surplus) and reduced by
the amount representing the authority’s contribution to Council Tax benefit
resulting from an increase in its Council Tax calculated in accordance with
the Collection Fund (General) (England) Directions 2000, the Collection Fund
(Council Tax Benefit) (England) Directions 2000 and the Local Authorities
(Alteration of Requisite Calculations) (England) Regulations 2000;
(e) £238.55 being the amount at (c) above, less the amount at (d) above,
all divided by the amount at 12 above, calculated by the Council, in
accordance with Section 33 (1) of the Act, as the basic amount of its
Council Tax for the year;
(f) £966,097 being the aggregate amount of all special items referred to
in Section 34 (1) of the Act as detailed in Appendix B;
(g) £222.39 being the amount at (e) above, less the result given by dividing
the amount at (f) above by the amount at 12 above, calculated by the Council,
in accordance with Section 34(2) of the Act, as the basic amount of
its Council Tax for the year for dwellings in those parts of its area
to which no special item relates;
(h) As detailed in Appendix C, being the amounts given by adding to the
amounts at (g) above, the amounts of the special item (s) relating to
dwellings in those parts of the Council’s area mentioned in Appendix
B, divided in each case by the amount at 12 above, calculated by
the Council, in accordance with Section 34(3) of the Act, as the basic
amounts of its Council Tax (detailed in Band D) for the year for dwellings
in those parts of its area to which one or more special items relates;
(i) As detailed in Appendix C, being the amounts given by
multiplying the amounts at (g) and (h) above, by the number which, in the proportion
set out in Section (5) (1) of the Act, is applicable to dwellings listed in a
particular valuation band ‘D’, calculated by the Council, in accordance
with Section 36 (1) of the Act, as the amounts to be taken into account for
the year in respect of categories of dwellings listed in different
valuation bands.
15.
That it be noted
that for the year 2010/11 Kent County Council, the Kent Police Authority and
the Kent and Medway Towns Fire Authority have stated the following amounts in
precepts issued to the Council, in accordance with Section 40 of the Local
Government Finance Act 1992, for each of the categories of dwellings shown
below:-
|
Variation Bands
|
KCC £ |
KPA £ |
KMTFA £ |
|
A |
698.52 |
92.45 |
45.30 |
|
B |
814.94 |
107.86 |
52.85 |
|
C |
931.36 |
123.27 |
60.40 |
|
D |
1047.78 |
138.68 |
67.95 |
|
E |
1280.62 |
169.50 |
83.05 |
|
F |
1513.46 |
200.32 |
98.15 |
|
G |
1746.30 |
231.13 |
113.25 |
|
H |
2095.56 |
277.36 |
135.90 |
16. That, having calculated the aggregate in each case of the amounts at 14 (i), and 15 above, the Council, in accordance with Section 30 (2) of the Local Government Finance Act 1992, hereby sets out in Appendix D, the amounts of Council Tax for the year 2010/11 for each of the categories of dwellings shown.
Reasons for Recommendation
At the July meeting,
Cabinet considered the initial projection for 2010/11 onwards and agreed the
following:
a) That the current Medium Term Financial Strategy as set out in Appendix
B of the report of Management Team be noted and that it be updated in line with
best practice to integrate service and financial planning for the next 3 year
planning period.
b) That the levels of council tax set out in Appendix F of the report of Management
Team be used for budget planning purposes but the final council tax level
will be set as low as possible.
c) That the “Most Likely” scenario set out in Appendix F(ii) of the report
of Management Team forms the basis of the need to identify savings of
£1.4 million in 2010/11 and that officer’s work with Cabinet Members to present
proposals for savings at the December Cabinet meeting.
d) That the current Capital Programme be noted.
e) That the use of public consultation to inform the budget strategy be supported
and that officers bring a report setting out the most effective consultation
methods to the next Cabinet meeting.
f) That the timetable for the 2010/11 Budget Strategy, as set out below
[in the July 2009 report], be approved.
The initial financial
projection was selected by Cabinet as the most likely of three scenarios. The
key assumptions from that scenario were: -
a) An overall inflation rate of 2.5% per annum over the period;
b) Anticipated grant based on the indicative figures provided by Government
in 2007. This allowed for a 0.5% cash increase in the grant received
over the level received in 2009/10 followed by 0% increases in future
years;
c) Additional resources for the completion of the new recycling contracts
and for resolution of other budget pressures following changes
to disposal arrangements;
d) A continuation of the annual increase in the national concessionary
fares scheme, based on previous trends in take up of the scheme;
e) The use of all available capital receipts to fund the capital programme,
reducing the level of investment income. The investment income is
also affected by the rate of interest on the current investments, estimated
at an average rate of 1.5%;
f) A need to borrow up to £2.0m to finance capital expenditure, creating
a need for revenue resources to service the debt;
g) That the current policy to maintain a minimum balance of 10% of net revenue
spend is maintained;
h) That Council Tax increase be equivalent to the 2009/10 increase for the
purpose of developing the strategy;
i) That no increase in the Council Tax Base be assumed.
A number of risks were
identified as part of the initial projection as follows:
a) The uncertainty surrounding the costs of the national concessionary
fares scheme and the future proposals to transfer the function to upper tier authorities
in two tier regions;
b) The potential non-delivery of the capital receipts from sale of assets assumed
during the programme period, leading to the possible need for borrowing
to finance the programme.
c) The potential future loss of HCA grant aid to the Council’s capital programme
following the intensive investment programme in 2008/09 and 2009/10.
d) The continuing risk of income shortfall on the revenue budget due to
the recession.
At its meeting on 16 December 2009, the Cabinet considered the latest
information relating to the budget strategy for 2009/10 onwards and agreed the
following:-
a) That a provisional spending level based upon
the revised strategic projection set out in Appendix B of the report of
Management Team, incorporating the revisions to growth items as identified
in Appendix A of the report of Management Team and the savings as
identified in Appendix C of the report of Management Team be agreed;
b) That updates, as soon as available, on progress to achieving the savings
targets from staffing as outlined in the report of Management Team be requested;
c) That the updated Capital Programme detailed in Appendix D of the report
of Management Team, along with the budget set out therein for 2012/13, be
agreed;
d) That the outcome of the budget consultation exercise set out in section
1.11 and Appendix G of the report of Management Team be noted and Cabinet’s
gratitude be expressed to all those who participated;
e) That the updated medium term financial strategy as set out in Appendix
H of the report of Management Team and its stronger connection to the strategic
plan be agreed;
f) That a continued Council Tax strategy which is materially within the Government’s
Council Tax capping strategy as outlined in the report of the report of
Management Team be agreed;
g) That the Corporate Services Overview and Scrutiny committee be consulted
on the budget strategy based on the above decisions.
The other key risks were considered but did not require any further budget provision.
The Budget Strategy
has been developed in parallel with the Cabinet’s consideration of a number of
other plans. It is the intention of the Budget Strategy to address the
financial consequences of the economic downturn and credit crunch in a sustainable
manner to allow the Authority to continue to deliver on its key priorities and
position itself to move forward once the current economic position has
stabilised and improved. In particular the Budget Strategy incorporates the
following:-
a) The Strategic Plan/The Sustainable Community Strategy – the budget strategy
has been developed in parallel with the revisions to the strategic plan. The
medium term financial strategy has been produced to ensure the
efficient use of the Council’s resources in delivering the strategic objectives.
b) The People Strategy – budget provision is included for the annual cost
of living increase, all other costs that form part of the total reward
package has been previously included in the budget.
c) The Asset Management Strategy – the budget requirements identified in the
strategy have been previously included within the budget strategy and have
been maintained for 2010/11 onwards. The asset management strategy
recognises the pressure on the capital programme from the need for future
funding and assesses options for the appropriate utilisation of assets.
d) ICT Strategy – the development of this strategy has been supported
by the work carried out this year to combine development of the
strategic plan and medium term financial strategy. Resources for
this strategy are limited due to available funding however resources for
invest to save developments in ICT remain available and the ICT
steering group promote projects of this nature.
e) Strategic Risk Register – the strategic risks are reviewed regularly by
Audit Committee and Cabinet. The responses to the risks are, where appropriate,
incorporated into the budget strategy. A risk considering the economic
downturn was introduced during 2008/09 and this risk is central to the
budget strategy.
f) Other Strategies – appropriate resources to aid various other
strategies are incorporated into the budget strategy. These include strategies
such as Climate Change, Equalities, Regeneration and Integrated
Transport.
During January 2010
all Cabinet Members have received reports outlining their individual portfolio
budgets, incorporating both revenue and capital proposals. The decisions of
each Cabinet Member have been included in this report to Cabinet. Cabinet’s
decision, on this report, will form the basis of the report to Council on 3
March 2010.
Since Cabinet
considered the Budget Strategy in December 2009, economic factors have moved on
and the following is the latest information, compared to that in April 2009 and
the information for October 2009 which was included in the December 2009
report.
|
Factors |
April 2009 |
October 2009 (December Report) |
December 2009 |
|
Target Inflation - CPI |
2.5 |
1.5 |
2.9 |
|
Headline Inflation – RPI |
-1.2 |
-0.8 |
2.4 |
|
Underlying Inflation – RPI (x) |
1.7 |
1.9 |
3.8 |
|
Base Rate |
0.5 |
0.5 |
0.5 |
The
dramatic increase in these rates for December 2009 is a product of the
situation in December 2008. One major example is that the rate of VAT reduced
in December 2008 along with a number of other factors significantly reducing
the inflation index. When this is compared to the more balanced index for
December 2009, the result is an out of the ordinary annual inflation rate.
The level of deflation reached its lowest point in June 2009 and is projected
to rise over the coming year. Sector, the Council’s treasury management
advisors suggest that there is, in fact, a risk that inflation will be
consistently above 2%, requiring controlling action by the Bank of England,
within two years.
Issues around this risk of increased inflation, the reducing estimates of the
peak level of unemployment and the possibility that the economy will in fact
drop into recession again before making a full recovery all make predictions of
the influence of the economy on the budget strategy 2010/11 difficult. Cabinet
must be aware of the risks implied by this uncertainty including the
influential part the public sector will play in the Governments recovery plans.
The expectation is that the public sector will be affected by this role and see
the recovery in its own resources and abilities much later in the process than
other sectors or the general public.
That risk is further enhanced, for this Council, by the predicted level of
balances as at 31st March 2011. Due to the use of balances to
protect services from the effects of the recession in 2008/09 and 2009/10,
coupled with the requirement to resource the Council’s work on the Kent
International Gateway, balances will be reduced to the acceptable level of
working balances as set by Cabinet. This is only £0.28 million above the
minimum balance set by Council of £2 million.
Revenue Estimates
Appendix A of the report of Management Team was an overall summary of
the revised revenue estimates for the current financial year, compared to the
original estimates, and proposals for 2010/11 which have been agreed by
individual Cabinet Members. Appendix B of the report of Management Team set
out the budget summaries agreed by Cabinet Members for the delivery of their
services. This information, along with the detailed estimate breakdown and
commentaries on budget changes, are set out in Appendix A (circulated
separately).
Revised Estimate 2009/10
The revised revenue estimate was shown in Appendix A of the report of Management Team and gives a value of £25.74 million which compared to an original estimate of £23.22 million. This will require additional contributions from balances of £2.52 million. The major reasons for this increase are:
a) The decision in June 2009 to carry forward resources from 2008/09 of £1.34 million.
b) The decision in January 2010 to fund, from balances, part of the Council’s costs in relation to the Kent International Gateway, including coming to a position on the application, dealing with the public enquiry and representations on the draft core strategy for the LDF.
c) Amended funding from balances earmarked for the local development framework and asset replacement.
Estimate
2010/11
The estimate proposed for 2010/11 was summarised at Appendix A of the report of
Management Team and given in detail at Appendix B of the report of Management
Team. This estimate shows a budgeted cost of services of £23.39 million.
After planned use of balances totalling £0.58 million the budget requirement
for 2010/11 will be £22.81 million.
The budget, as proposed in this recommendation, has been based upon a number of
initiatives completed during the year. These include:-
a) A joint focus on the development of the medium term financial strategy
and the update to the strategic plan. This helped to ensure that the focus
of growth and savings proposals match to the next steps on key objectives
in the strategic plan.
b) The budget consultation exercise which identified those areas where the
public felt the focus for savings should be made. In addition the consultation
reviewed the public reaction to direct payment for fee charging
services compared to subsidy through the Council Tax.
c) A revised policy on the development of fees and charges which requires
a focus on the objectives of the service, business practice, economics and the
customer.
d) An in-depth evaluation of each portfolio budget in a top-down review by
Members, coupled with a bottom-up review by Heads of Service. Combined,
these reviews have identified resources that can be saved without
impacting on service quality.
Appendix C of the report of Management Team were the confirmed items of
growth that are incorporated in the proposed estimate. Appendix D of the
report of Management Team were the approved savings also incorporated in the
proposed estimate.
The budget includes provision for an annual cost of living pay increase of 1%.
Since the report considered by Cabinet in December 2009 the negotiations
between the Council and the staff side have been concluded and the finally
agreed award is 0.5%. It is recommended that the variation in the proposed
estimate be added to the Leader’s contingency in the context of the risks
embedded in the future financial projection contained in the medium term
financial strategy.
The work carried out to complete the proposed estimate for 2010/11 and the
agreement, during January 2010, of individual portfolio estimates by Cabinet
Members helps to confirm that the resources are available to deliver the next
steps of the key objectives outlined for 2010/11 in the strategic plan.
Statement of Reserves and Balances
Appendix E of the report of Management Team is a statement of the General Fund
Balances. This statement identifies unallocated general balance and those
balances that relate to previous Cabinet decisions to allocate funds to address
specific concerns separately.
Council will note that, based on decisions made during the year, the projected
balance at 31st March 2011 is £3.07 million. Of this balance £2.45
million remains unallocated. Cabinet set a working balance level of 10% of net
revenue spend and this will be £2.28 million for 2010/11 leaving a usable
balance of £0.17 million.
Cabinet had previously agreed to hold usable balances to mitigate budget
pressures in 2009/10. The £0.17 million identified is projected to be required
to mitigate budget pressure but a final decision on its use and the use of
certain budgets held in the Leader’s contingency have been deferred until the
outturn report for 2009/10.
Due to the fact that these actions will ensure balances remain at the working
level set by Cabinet, the medium term financial strategy makes no provision for
a contribution to balances over the five year period from 2010/11.
It is not considered best practice to utilise balances to ensure a balanced
budget. Due to this fact, balances have only been utilised to provide one time
financial support, such as the cost of the Council’s work on the Kent
International Gateway, and not for ongoing revenue commitments.
At the meeting in January 2010, when considering the funding
position for the costs incurred in relation to the Kent International Gateway,
Cabinet agreed to consider modest replenishment of balances, over and above the
working level, due to the nature of the public enquiry on the Kent
International Gateway and the risks associated with future economic
difficulties. Although no direct action has yet been taken, approaches like the
clawback of year end underspend and control of vacancy and temporary staff
costs are possible options.
It is necessary to quantify the minimum level of General Fund Balances, below
which Cabinet cannot go without the authority of Council. For 2008/09 and
2009/10 the level was set at £2 million by Council. It is recommended that
this minimum level be retained for a further year.
Cabinet also sets a minimum working balance for its own day to day
activities. This has previously been set at 10% of net revenue spend. This
would mean minimum working balances of £2.28 million in 2010/11. This would provide
a balance of £280,000 between the proposed level of working balance and
Council’s absolute minimum. It would be suitable for Cabinet to utilise this
balance, providing appropriate mechanisms are put in place to adequately
restore the balance in the future.
Government Grant
The report for Cabinet in December 2009 incorporated Government Grant at £9.5
million. This was a 0.5% increase over the 2009/10 settlement and formed the
final year of a three year indicative arrangement with Central Government.
On 20th January 2010 final confirmation of the grant was received
from the DCLG and is at the previously stated level.
Future Government Grant is not covered by an indicative agreement. Currently
the Government is not expected to make any firm announcement regarding the
likely arrangements until after the Comprehensive Spending Review for 2010.
The expectation is that this will occur in July 2010.
Notwithstanding the fact that there is no firm announcement, indications
in professional journals suggest a government expectation of a 20% reduction in
grant over the forthcoming four years. The research behind these predictions
is credited to the Institute of Fiscal Studies. The medium term financial
strategy therefore includes the assumption of a 5% annual reduction in grant
over the four years from 2011/12.
A number of indictors also suggest the possibility of an in year adjustment to
the grant during the 2010/11 financial year. This may come as a result of the same
comprehensive spending review and will be dealt with, if necessary, as part of
the budget monitoring process for the forthcoming year or the budget strategy
for 2011/12.
Capital Programme
The budget strategy incorporates both revenue and capital expenditure and Appendix
F of the report of Management Team detailed the current proposals for capital
expenditure and financing for 2010/11 onwards.
The programme at Appendix F of the report of Management Team incorporated the
current budgets for capital expenditure in 2009/10. This included approved
adjustments and slippage but not the amendments proposed in the third quarter’s
budget monitoring report.
The schemes included in the programme have been subject to priority review and
are all assessed for match to Council priorities, affordability and
deliverability.
Appendix G of the report of Management Team was a summary of capital
receipts and capital grants. Receipts available as at today are sufficient to
finance the capital programme for 2009/10. It is expected that four large
asset sales will occur two in each of 2010/11 and 2011/12. The value of
capital receipts not yet delivered, but assumed in the development of this
capital programme is £6.8 million.
Capital grants currently available are also sufficient to finance
the capital programme for 2009/10. All grants in future years are assumed and,
in most cases, subject to annual approval by central government. The grants
from the heritage lottery fund for the Museum extension and Mote Park are assumed
to be firm and guaranteed. Other grants not yet received but assumed in the
development of this programme total £3.2 million.
In addition to these
two risks to the funding of the future capital programme there remains a
requirement to fund part of the Museum Redevelopment through voluntary
contribution. The maximum assumed value of these contributions in the capital
programme is £1.3 million.
Due to the significant
value of the funding that is assumed, rather than available, the capital
programme makes no provision for slippage. This allows for a small amount of
flexibility over delivery of funding as it is the usual practice to assume 10%
slippage in capital expenditure from year to year.
The balance of the
programme that requires funding is met from:-
a) Revenue resources that have been specifically set aside for this purpose,
such as the resources available for the Leisure Centre;
b) Prudential borrowing.
In view of the
uncertainty over the level of capital receipts and capital grants, it is
prudent to consider an element of borrowing in the programme. At this stage a
maximum borrowing of £4 million is proposed in the Treasury Management Strategy
elsewhere on this agenda and the use of £2 million of this borrowing is
included in the medium term financial strategy for 2010/11.
The situation will
require careful monitoring as part of the budget monitoring activity for
2010/11. This work is presented quarterly to Cabinet and includes an analysis
of both the capital programme and the position of resources to finance the
programme.
Medium Term
Financial Strategy
Appendix H of the
report of Management Team was the medium term financial strategy (MTFS). The
strategy has been broadened for the current period and links to the strategic
plan have been made more explicit.
The MTFS is focused on
delivery over the period of the strategic plan but incorporates financial
projections for a five year period. This enables consideration of the longer
term consequences of the actions proposed in the strategic plan. As the
strategic plan is to be adopted in parallel with this budget strategy and the
MTFS, this document was in draft format for Cabinet but is presented to Council
as part of the final budget within Appendix A (circulated separately).
The MTFS includes the
data used to develop the financial projection. In the final version of the
document the financial projection will be an appendix of the MTFS. The
projection is for five years and details all quantifiable growth and budget
pressures. The projection also uses the best estimates for a number of
strategic issues such as inflation, government grant levels and uses a
consistent council tax increase. This provides a mechanism to estimate the
level of future savings. Members should bear in mind that the further into the
future the projection goes, the wider the margin of error in the projection
becomes.
Officers are aware of one potentially major issue that cannot, at this time, be
quantified. The triennial revaluation of the pension fund is due to be
completed during 2010 and this will provide information on the level of
contribution required from employers for the following three years. Average
Kent wide data is expected in March 2010 and this may provide predicted values
for 2011/12.
The financial
projection uses the following key assumptions:-
a) A rising level of inflation. In 2010/11 inflation is set at zero for
all non- contractual items. In 2011/12 it is predicted at 1% rising over
the remaining three years as follows 2%; 2.5%; 2.5%.
b) Council tax increases of 2.5% plus a 0.5% increase in the tax base.
c) A reduction in government grant of 5% per annum from 2011/12. For 2010/11
the government provided the 0.5% increase that was proposed as
part of the comprehensive spending review of 2007.
d) An annual provision for new initiatives or legislative changes.
e) A series of budget pressures that are detailed in the appendix that
have been identified through the strategic planning process.
The financial
projection identifies the need for savings to ensure the delivery of a balanced
budget and for 2010/11 this is £1.6 million. In July 2009 the financial
projection indicated a need for savings of £1.9 million. The movement is a
consequence of carefully review and updating of key factors such as inflation
rates, and the need to borrow to finance the capital programme along with a
higher than predicted increase in the tax base.
Savings of £1.6
million have been achieved and were detailed in section 1.5.3.3 of this
report. The savings are in the main attributable to improved efficiency as
defined by the Government’s efficiency agenda. For 2009/10 the Council
submitted an overall projection for efficiency in the current year of £1.03
million. At this time, due to the effect of the recession, the savings
attributable to efficiency have reduced to £0.95 million. It is currently
projected that the Council will achieve £0.98 million in efficiency gains
during 2010/11.
The assumptions in the
MTFS, the financial projection and the efficiency projection will need to be
adequately monitored during 2010/11. The mechanisms in place for this
monitoring are the Value for Money Working Group, which is chaired by the Chief
Executive and includes the Leader as a member, and the quarterly budget monitoring
reports to Cabinet.
Strategic
Assessment of 2010/11 Revenue Estimate
The revenue estimate
2010/11 has been developed in line with the MTFS in order to produce a balanced
budget that includes a level of increase in the Council Tax that is below the
Government’s declared expectation for the national average increase of 3%.
The revenue estimate
produces a budget requirement of £22.812 million. This can be balanced by a
Council Tax increase of 2.49% on a tax base of 39,765.2 as agreed by the General
Purposes Group in January 2010, and a minor contribution from the collection
fund as approved by Cabinet in December 2010.
|
|
£000 |
|
Council Tax at £222.39 (an increase of 2.49% on £216.99) |
13,291 |
|
Government Grant |
9,510 |
|
Collection Fund Adjustment |
10 |
|
Total Income |
22,812 |
Council will be aware that the Government made special mention of the reduction
in the average council tax increase in recent years. The average increase for
2009/10 was 3% and central government expectations are an average increase below
this level for 2010/11.
Should the Council
wish to set an increase at the level assumed to represent the government’s
capping limit of 3% the additional increase would be £65,000 from an additional
Band D cost of £1.08. This would create a Band D Council Tax of £223.47.
Based on the
information contained in Appendices A and B, and subject to the information
contained in this report, the provisional estimate for 2010/11 is £22,812
million. As shown in the table above, this equates to a Council Tax increase
of 2.49% and a Band D council tax for the borough of £222.39.
Consultation with
Non-Domestic Rate Payers
In accordance with
statutory requirements the authority is required to consult Non-Domestic Rate
Payers on budget proposals for the following financial year. This requirement
has been fulfilled by an exchange of correspondence with the local Chamber of
Commerce and Industry.
Consultation with
Overview & Scrutiny
The budget proposals
agreed by Cabinet in December 2009 were reported to Corporate Services Overview
& Scrutiny Committee on the 5th January 2010 in accordance with
the Constitution. Overview & Scrutiny Committee noted the strategy and
made no comments or proposals.
Council Tax 2010/11
As Members will be
aware, it is a requirement of this Authority to resolve the level of Council
Tax for the area. To achieve this objective, the recommendations highlighted
in this recommendation need to be addressed. In addition the precepts of Kent
County Council, the Police Authority, the Kent Fire Brigade and Parishes are
also required.
Council are
recommended, for this Authority, to resolve the following:-
a) Agree gross revenue expenditure, including Parish Precepts.
b) Agree gross revenue income.
c) Agree net revenue expenditure including Parish Precepts.
d) Identify Parish Precepts as “special items” to be levied on the tax
base as set out in Appendix B attached.
e) Agree the level of Formula Grant (RSG and NNDR) to be received and
the level of the Collection Fund adjustment.
f) Declare this Authority’s basic Council Tax rate i.e. c) above less e)
above divided by the tax base previously agreed.
g) Declare this Authority’s tax rates for the urban and rural areas.
h) After receipt of the Precepts from Kent County Council, the Police Authority
and the Kent and Medway Towns Fire Authority, declare the overall tax
rate for all parts of the area.
In addition, it is
necessary, under Section 25 and 26 of Part 2 of the Local Government Act 2003,
for the Section 151 Finance Officer to give her opinion to Council, when
setting the above requirements that the budget calculations are based on robust
estimates and that the level of reserves is sufficient for the purposes of the
budget exercise. Based on the process undertaken this year and the information
contained in this recommendation, it is not anticipated that this opinion will
include any adverse comments.
Alternative Action
and why not Recommended
The major alternatives
are included in the report for consideration.
Council could agree a Council Tax increase above 3%. This would attract the attention of central government who have the ability to enforce an adjustment to the Council Tax level at a cost to the Council.
The setting of a balanced budget is a statutory obligation for the Council and to choose not to set the budget and Council Tax level for 2010/11 is not an option.
Background Documents
Budget working papers held in Corporate Finance
Correspondence from Central Government dated 28 January 2010 regarding financial support for 2010/11.