Agenda item

The Leader and the Deputy Leader have been invited for this item.

 

The Panel considered a report of the Director of Corporate Resources setting out the context and background to the preparation of the Medium Term Financial Strategy (MTFS) for the period 2012/13 to 2015/16.   A copy of the report, which was circulated to all members of the County Council via the Members’ Information Service, is filed with these minutes.

 

The Commission also considered supplementary reports setting out the comments of the Overview and Scrutiny bodies on the MTFS relating to their respective service areas. A copy of the supplementary report marked ‘BB’ is filed with these minutes.

 

The Chairman welcomed to the meeting the Leader of the Council, Mr D. R. Parsons CBE CC, and the Deputy Leader of the Council, Mr N. J. Rushton CC who were attending for this item.

 

MTFS Context and Overall Position

 

The Director of Corporate Resources advised the Commission of the following significant risks:-

 

i)              The County Council was facing significant financial pressures and it was likely those pressures would continue in the medium term. Savings of the order of £74 million were required over the period of the MTFS: whilst there was a degree of confidence in the ability of the Council to deliver most of the savings in the first and second years, there was less certainty about years 3 and 4, as proposals for delivering such savings were at an early stage of development.

 

ii)            The proposal by the Government to pass responsibility for the administration of Council Tax Benefit (CTB) from April 2013 to Councils to achieve a saving of 10% was a concern. This coupled with the view of most major software companies that the software packages would not be available to implement by April 2013 meant that the Councils in Leicestershire could potentially face a shortfall of up to £4 million: the County Council’s share of this being a little over £3 million.

 

iii)          The localisation of business rates and the recently announced split thereof between County and District Councils also impacted on the County Council.

Given these risks it was necessary and prudent to maintain the level of balances now outlined in the report to ensure that the Director could discharge his responsibility and provide the necessary assurance to the Council about the robustness of the proposed budget.

 

The Leader of the Council advised that a significant proportion of the savings requirement, £49 million, was being delivered through efficiencies and he paid tribute to the officers for achieving this. The Administration was committed to freezing Council Tax for the next four years.

 

The Leader reported back on a constructive meeting he had had with the Business Council. The issues they had raised with him included trade waste, tourism and procurement changes. They had expressed strong support for the Council’s broadband strategy.

 

With regard to Academies, the Leader reported on a meeting with Leicestershire’s MPs and their support for a meeting with the Secretary of State for Education, to discuss the implications for the County Council of the Government’s proposals for funding academies, which it was estimated would cost the Council around £10 million.

 

The Leader concluded by saying that the challenges facing the public sector now and for the foreseeable future would mean the County Council having to manage and even suppress demand for services. It would also require greater co-operation and joint working within the public sector to deliver the savings required.

 

The Deputy Leader echoed the comments of the Leader and strongly supported the views expressed by the Director of Corporate Resources regarding the need to hold an adequate level of balances. He highlighted the significant risk of wage inflation given that public sector pay was frozen whilst inflation was over 4% per annum. In addition, the savings requirement would result in significant job losses and associated redundancy costs.

 

In response to questions the Commission was advised as follows:

 

Academies

 

i)              The County Council hoped to persuade the Secretary of State for Education to reconsider his proposals for funding of Academies. With regard to referring the matter to independent arbitration, the Leader indicated he would not rule this out as an option but he was hopeful that the dialogue with the Secretary of State would be constructive;

 

ii)            The County Council recognised that a significant number of schools would become academies and to that end had decided to set up a “trading unit” which would be led by the Director of Corporate Resources. Such a unit would be business focused and the aim was to market the excellent services Leicestershire provided to its schools with a view to becoming the provider of choice to academies in the East Midlands and elsewhere.

Economic Impact of the MTFS

 

iii)          The proposed MTFS would result in a significant loss of public sector jobs which would impact on the economy. The County Council was working closely with businesses, through the Leicester and Leicestershire Economic Partnership and other bodies to attract investment and create jobs.

Benefit Cap

 

iv)          The Leader indicated that he supported the proposed benefit cap of £26,000. He had not been advised of any significant impact this may have in the County but gave assurances that the impact would be monitored.

Business Rates and Joint Working

 

v)            The localisation of business rates would require the County and District Councils to work closely to ensure that Leicestershire was a net beneficiary. Similar consideration applied to the New Homes Bonus. The Leader indicated that he was pleased with the co-operation to date and the Commission was informed of discussions between Finance Officers of all Councils with a view to developing and agreeing a local framework on business rates.

 

vi)          Joint working and particularly joint commissioning of services was key to delivering significant savings, particularly in Health and Social Care. Leicestershire had made good progress with close working at a senior level between the County Council, the Clinical Commissioning Groups and local NHS bodies. This, together with greater focus on preventative measures, thereby reducing demand, was critical.

Reserves and Contingencies

 

vii)        The Director of Corporate Resources stated that direct comparisons between the total level of resources forecast last year and this year were misleading. He indicated that he would prepare a schedule setting out in detail the level of reserves, movements between years and the purpose of holding these reserves. This would be made available to the Cabinet and County Council.

 

viii)            As with the previous year, the Director reported that he proposed to ask the Auditors, PwC, to undertake a review of the robustness of the MTFS and would report thereon to the Corporate Governance Committee.

Council Tax

 

ix)          Responding to a question as to whether there would be no increase in Council Tax even if there were no additional resources provided by Central Government as was the case this year, the Leader reminded the Commission that a freeze in Council Tax was a manifesto commitment of his Administration which he was determined to honour.

 

Comments of Scrutiny Bodies

 

a)     Children and Young People’s Service

In response to questions regarding home to school transport and transport for +16 year olds and those attending denominational schools, the Leader advised that these were difficult choices and were necessary as a consequence of the difficult financial position facing the Council. The proposals were being consulted upon and the Leader noted the concerns now expressed about the impact on parents, children and the environment. These concerns, together with the responses to the consultation, would inform the decision of the Cabinet on this matter.

 

b)     Adults and Communities

There had been some progress on the issue of supported housing but much more remained to be done and the Leader indicated that he would work with District Councils on this including asking them to ensure that provision for supported accommodation was included in Local Development Frameworks. The Commission’s attention was drawn to the recent work by Blaby District Council on this issue.

 

c)      Budget and Performance Panel

 

·        With regard to the funding of Police Community Support Officers (PCSOs) the Commission was advised that 50% of the additional income from the reduction in second home discounts, together with growth of £315,000, was used by the County Council to fund PCSOs. Districts were able to use their share of the income from the discounts to fund PCSOs if they so wished and some had done so in the past but none did now. The proposals now put forward reflected the new realities of funding reductions and the introduction of elected Police Commissioners.

 

·        With regard to the savings to be achieved by reducing the cost of democracy, these were to be mainly achieved from 2013/2014 and details had yet to be worked out. The Leader noted the comments now made and indicated he would reflect on them.

 

·        Following representation made to him, the Leader indicated that he was minded not to proceed with the proposed savings to be achieved by reducing the IMPACT programme. Details of how this was to be funded would be reported to the Cabinet.

The Chairman thanked the Leader and Deputy Leader for their attendance.

 

RESOLVED:-

 

That the comments now made together with the comments of Scrutiny bodies be forwarded to the Cabinet for consideration at its meeting on 10^th February.