REVENUE BUDGET, CAPITAL PROGRAMME and COUNCIL Subject) TAX 2020/21
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A6 Executive Decision Report Decision maker(s) at Leadership Team: 12 February 2020 each authority and Council: 4 March 2020 date of Cabinet meeting, Cabinet Forward Plan reference: 05562/20/K/A Member meeting or Portfolio: Cllr Mary Weale, Lead Member for (in the case of Finance individual Cabinet Member decisions) the earliest date the decision will be taken Report title (decision REVENUE BUDGET, CAPITAL PROGRAMME AND COUNCIL subject) TAX 2020/21 Reporting officer Executive Director Resources and Assets Key decision YES Access to Public information classification 1 1 SUMMARY 1.1 This report is a key part of the strategic financial planning process for the Council. It builds on the reports considered by Leadership Team on 13 November 2019 and 15 January 2020. It sets out the latest position on the revenue budget proposals for 2020/21 before Full Council set the Council Tax and Budget for 2020/21 at the meeting on 4 March 2020. 1.2 This report concerns the General Fund budget and Capital Programme. The Housing Revenue Account (HRA) is “ring-fenced” from the general fund. The proposed budget for the HRA is therefore considered by a separate report. 1.3 In July 2019, the Council published its Medium-Term Financial Strategy which set out the financial position for the next three years. At that time, it was identified that based on current assumptions, expected spending plans over the next three years exceeded income levels by around £40m. All Local Authorities have a statutory requirement to set a balanced budget and since this date, work has been underway to close the £20m budget gap for 2020/21. This report is for Leadership Team to make recommendations to Council on 4 March 2020. The balanced budget position for 2020/21 is based upon: Providing for growth and investment of £10.283m in key services and the implementation of budget savings of £9.276m across directorates. Spending plans of £624m on the day to day running of services for the 160,000 people who live in the borough, 15,000 businesses and 56,000 who visit each year. A capital programme for the next three years of £714m which includes new investment of £47.2m, in line with the priorities set out in the capital strategy. A Council Tax increase of 1.99 per cent for 2020/21 plus an additional 2 per cent increase in respect of the adult social care precept – a total increase in Council Tax of 3.90% including Garden Squares and 3.99% excluding garden squares, reflecting the referendum thresholds outlined by the Government at the time of the Spending Review and in the provisional settlement. An increase in the council tax requirement of £3.442 million. Maintaining a general fund working balance of £10m, in line with the Councils’ agreed policy and maintaining a prudent but appropriate level of earmarked reserves. Maintaining a central contingency budget of £5.2m to provide a resource to deal with in-year budget risks and unforeseen pressures. 1.4 In 2020/21, the Council will spend £486m on the day to day running of core services, which includes £117m on Housing Benefit which the Council administers on behalf of Government. Full details of these spending plans is set out from Section 5. 2 1.5 Over the next three years, the Council will also invest £714m in the boroughs roads, infrastructure, the environment and buildings. This includes £250m towards the New Homes Programme and £197m for the Housing Revenue Account to invest in the Council’s existing housing stock. Of the remaining £267m, this includes £6.2m investment into community day care opportunities across the borough to reduce isolation and support people living independently and at home in their local community; A £7.1m investment into children and early years provision to improve the six children centres across the borough and ensure support is in the areas of greatest need; A £36.5m investment into the Barlby School to provide support for children with special educational needs and ensure they have access to their education in the borough; An £8.3m investment into additional secondary schools places which will be partly funded through a capital grant for DfE and a £4.7m investment into Latimer Academy, Oxford Gardens and Park Walk Primary Schools; An almost £20m investment into street and highway improvements and the borough’s parks and open spaces; £9m on the purchase of new housing for temporary accommodation to manage the high numbers of homeless households; and An £11.8m investment into the refurbishment of Pembroke Road to consolidate staff in a smaller number of buildings and £9.8m into the maintenance of the Council’s 180 operational buildings. 2 RECOMMENDATIONS 2.1 The Leadership team is recommended to: (1) Approve the revenue budget estimates for submission to Council as summarised in Appendix 1 and Appendix 3 of this report; (2) Note the findings of the budget consultation with residents, local businesses and Overview and Scrutiny Committee a set out in Appendix 7 and Appendix 8; (3) Note the risks and uncertainties relating to the 2020/21 budget as set out in Section 31; (4) Approve the increase in fees and charges as set out in Section 23, with the full schedule available on the website; (5) Approve the revised Capital Programme for the period 2019/20 to 2022/23. Full details are set out in Appendix 13; (6) Note the allocation of the Dedicated Schools Grant to the schools, High Needs and Early Years Budget as set out in the Financial Plans report to Leadership Team on 15 January and the update in Section 35.1 and 35.2; (7) Agree the planned use of reserves as set out in Section 32.4. (8) Note the advice of the Executive Director (Resources and Assets) (Section 151 Officer) on the level of reserves and robustness of estimates in setting the 3 budget as required by Section 25 of the Local Government Act 2003 (Section 40 of the report). (9) Agree that the Executive Director (Resources and Assets) be given delegated authority, following consultation with the Lead Member for Finance and Modernisation, to make transfers to and from earmarked reserves up to £250,000 in each instance. (10) Agree the Council Tax resolution as set out in Appendix 9 for submission to Council. (11) Agree that delegated authority be given to the Executive Director Resources and Assets to make any necessary amendments to the budget, following consultation with the Leader and the Lead Member for Finance and Modernisation, to take account of final levies and precepts including Garden Square special expenses, and to make any necessary amendments to the statutory determinations and council tax bands to take account of those changes and for these amendments to be submitted and therefore recommended to Council at its meeting on 4 March 2020. 2.2 The Leadership team is asked to recommend to Council: (1) A Council Tax requirement for 2020-21 of £89.895 million including Garden Squares special expenses. (2) A basic amount of Council Tax for 2020/21 at Band D of £904.76 excluding Garden Square special expenses as set out in Table 5. The headline figure including Garden Square special expenses is £921.94 (3) Garden Square special expenses of £1,675,263 as set out in Appendix 10. (4) Royal Borough Council Taxes for all Bands in all areas for 2020/21 as set out in Table 5 and Appendix 11. (5) Total Council Tax including the Greater London Authority precept for all Bands in all areas for 2020/21 as set out in Appendix 12. (6) The Council’s medium-term financial position for the next three years as set out in Appendix 1. (7) The Capital Programme as set out in Appendix 13 3 REASONS FOR DECISION 3.1 The Council is legally required to set a balanced budget and a Council Tax for each financial year. 4 BACKGROUND 4.1 The budget proposals in this report have been developed within the framework of the financial strategy agreed by Council in July 2019, the aims and ambitions of the Council Plan published in March 2019 and the Council’s desire to minimise the call on the Council Tax payer by maintaining the position of a council tax within the lowest quartile. 4 4.2 The Council, like all other local authorities, continues to operate within a wider financial climate of risks and uncertainty. Despite the recognition of additional funding in the Government’s 2020/21 settlement to help councils tackle some of the immediate social care pressures they face, the current financial climate for local government continues to present significant risks. The draft Budget presented in this report has therefore been prepared against a background of uncertainty with regard to the Government’s spending plans from April 2021. The aim is to ensure a sustainable medium-term budget position. 4.3 The recommendations made in this paper: Are in line with the Council’s approach to setting the budget for 2020/21 as set out in the Medium-Term Financial Strategy published in July 2019 and the further update on 13 November 2019. Formalise and confirm the proposals set out in the Council’s budget proposals for 2020/21 (first reported to Leadership Team on 13 November 2019); Are consistent with the Council’s policy on reserves (Appendix 2); Takes into account consultation with residents, local businesses and Overview and Scrutiny Committee on the proposed 2020/21 Council and service budgets (set out in Appendices 7 and 8); Takes into account the budget for next year’s spending and income pressures that have been estimated as part of the budget process; and Takes into account final figures on the Council Tax base, the Collection Fund and London Wide levies from outside bodies.