Agenda item

This report outlines the latest Medium Term Financial Plan Projection and seeks Councillors’ approval for the draft General Fund Budget for 2019/20. The Financial Plan sets out the key areas to target to address the significant budget shortfall in the medium term which is estimated to be £3.8million or 36% of the total net service cost by 2022/23.

Recommendation

The Value for Money and Customer Service Overview and Scrutiny Committee is asked to review the report and recommendations from Executive to Council as set out in the report, and agree comments to be forwarded to the Executive.

Graeme Clark, Strategic Director (s.151 Officer) introduced the report on the Medium Term Financial Plan (MTFP) 2019/20 – 2021/22 and General Fund Budget 2019/20. He explained that the MTFP set the context for next year’s budget and beyond. The report highlighted a number of expected financial pressures, resulting in a projected £3.8m shortfall over the next three years; these included inflation, reduction in waste funding from SCC and the forecast removal of business rates funding. The report also outlined several measures that would help to address this shortfall, including Council Tax increases, procurement savings, property investment income, and other service income/efficiency savings. Peter Vickers, Head of Finance, also highlighted the input of the Budget Strategy Working Group, which had worked alongside officers to go through the detail of the MTFP and look ahead to the changes that would be coming over the next few years.

Focussing on 2019/20, the Committee was pleased to hear that a balanced budget could be put forward with no proposed cuts to services or reductions in funding for community organisations. There would also be no car park charge increases in 2019/20. A Council Tax increase of 2.99% was proposed for 2019/20, but the Council Tax Support Scheme which provided discretionary support to households on low income would remain unchanged.

The Chairman, Cllr David Beaman, expressed his disappointment at the tapering out of business rates retention, highlighting that Waverley currently collected £37m of business rates and retained only £2m, and that this funding could be completely removed by 2023.

Some Members felt that allocating New Homes Bonus (NHB) income specifically to the Property Investment Fund was too narrow and suggested that other investment opportunities for this money could also be considered. Officers emphasised the importance of the Council’s policy of not relying on NHB to balance the revenue budget as there was no certainty around this income stream; the Government could change the threshold or stop it completely at any point.

Cllr Andy MacLeod was in attendance at the meeting and asked for some further clarification about how the NHB figure was calculated. He noted that the income from NHB had decreased, while the number of houses being built had gone up. Officers responded that the declining figure was due to the Government changing the formula for calculating NHB, as well as the introduction of a ‘growth threshold’ below which NHB is not payable.

Cllr Paul Follows was in attendance at the meeting and spoke on this item. He was pleased that the funding for community grants had not been cut, but highlighted their increasing workload, particularly following the introduction of Universal Credit, and asked whether it would be possible to help them further. In relation to investments, he asked whether there were any other opportunities, aside from commercial property, that might carry less risk. Officers responded that in the past, this money had been spent on ‘invest to save’ projects such as recycling improvements, however the Council had now committed to its approved policy of using NHB to fund property investment.

There were some further queries in relation to borrowing for investment, however overall the Committee was satisfied that the Council had very clear investment criteria and generally took a cautious approach to property investment, turning down opportunities which were not appropriate.

The Committee heard that the majority of fees and charges would be increased by inflation. Members commented that without knowing the demand for each service, it was difficult to understand the relevant value for each item. The Committee therefore agreed to suggest that a table showing the revenue from the individual fees and charges should be included with the Budget papers.

Additionally, Cllr Richard Seaborne commented that he felt that by repeatedly increasing fees by inflation rates, the Council was losing touch with the commercial context for its services. It was suggested that further work be done on benchmarking fees and charges with other Local Authorities as well as commercial providers to gain a better understanding of the market value for each service. The Committee proposed that scrutiny of the basis for individual fees and charges should be a work stream for the Value for Money and Customer Service O&S Committee in the next Council year.

Cllr Jerry Hyman was in attendance at the meeting and spoke on this item. In light of the £3.8m shortfall, he asked if the MTFP was realistic and whether more dramatic action needed to be taken sooner. The Committee, however, felt that a lot of work had been done throughout the year by both Members and officers in order to close a significant funding gap for 2019/20.

The Committee agreed, subject to the observations noted above, to endorse recommendations 1 – 2 and 4 – 5 as set out in the report. In relation to recommendation 3, the Committee suggested that this recommendation be expanded to include that a schedule be added to the fees and charges document in future, showing the volume of demand for each service, and that a comprehensive review of fees and charges be undertaken over the coming year to ensure that these appropriately reflected the market.