Agenda item

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

 

The Chief Executive and Director of Corporate Resources will be present for this item.

 

 

The Commission 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 2013/14 to 2016/17.  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 a supplementary report 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 ‘C1’ is filed with these minutes.

 

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

 

MTFS Context and Overall Position

 

The Director of Corporate Resources advised the Commission as follows:-

 

(i)    The draft MTFS, which had been approved by the Cabinet on 16 January, had been the subject of consultation.  The consultation closed on 27 January and the outcome would be reported to the Cabinet on 6 February.  An Information Item would be sent to all members of the Council summarising consultation responses.  The late notification of the settlement had meant that the consultation process was somewhat truncated.

 

(ii)  The County Council was facing significant financial pressures and it was likely that these pressures would continue for the next seven to ten years.

 

The Director of Corporate Resources then outlined the key changes to the MTFS since the report had been submitted on 16 January, as follows:-

 

(i)        The Council Tax Collection Fund surplus had decreased by £0.12m reflecting information from District Councils.

 

(ii)       The Council Tax base had been confirmed following receipt of figures from District Councils.  This was higher than anticipated; however, there were significant risks arising from the localisation of Council Tax Benefit and it was being suggested that additional resource be allocated to a contingency.

 

(iii)      An additional £350,000 had been included to meet the cost of supporting the Educational Excellence Board.

 

(iv)      An additional £1.2m had been allocated for investment in Loughborough University Science and Enterprise Park.

 

(v)       The Public Health Settlement had been received late in the day and the report to the Cabinet on 6 February would set out proposals for how this ringfenced grant was to be used.

 

(vi)      With regard to reserves and balances, the Commission was advised that the earmarked reserves and balances stood at £99m.  The MTFS proposed using reserves and balances totalling £56m over the next four years.

 

(vii)    There were unidentified savings of £30m in the final years of the MTFS and decisions would need to be taken in the coming year as to how these were to be achieved.

 

The Chairman then invited the Leader and Deputy Leader of the Council to make comments. 

 

The Leader of the Council endorsed the comments made by the Director of Corporate Resources and, in particular, highlighted the need to set aside a contingency of £1.2m to offset the significant risk to Council revenues from the localisation of Council Tax Benefit.  The County Council would be facing considerable financial pressures and the Leader acknowledged the need for the County Council to play its role in the country’s deficit reduction programme.  However, he expressed concern that the Government’s funding allocations disadvantaged the County Council and highlighted in particular the adverse impact on the County Council’s finances from reductions made in the Early Intervention Grant and the arrangements for funding academies.  He also expressed concern regarding the tone of comments being made by Ministers about local government and councillors.  He believed that the County Council, together with other local authorities, had risen to the challenge and made significant efficiencies whilst protecting vital frontline services.  He had written to the Leader of the Conservative Group of the Local Government Association expressing his disappointment on this matter and asked the Local Government Association Chairman to take this matter up with the Prime Minister.

 

The Deputy Leader of the Council reported that finding the £30m unidentified savings in the latter half of the MTFS would pose a significant challenge given that the County Council had already achieved efficiency savings of £48m over the last four years.  To do so would require the County Council to explore all options including fundamental changes to the way the Council currently operated.  The Deputy Leader was of the view that, if there was to be such a fundamental reappraisal of how the Council operated, it would be essential that this was done on a cross party basis.  To that end, he proposed establishing a Transformation Board, which would be modelled to some extent on the former Change Programme Board, to deal with the challenges ahead.

 

With regard to the reserves, the Deputy Leader cautioned against the use of reserves to meet in-year deficits as this would exacerbate problems in later years.  The reserves needed were earmarked for potential liabilities or to fund specific invest to save projects where the business case had demonstrated such investments would deliver long term revenue benefits.

 

In response to questions, the Commission was advised as follows:-

 

New Homes Bonus

 

(i)        The County Council had decided to allocate its New Homes Bonus grant for affordable housing and extra care.

 

Local Authority Mortgage Scheme

 

(ii)       The County Council had agreed to utilise reserves to support first time buyers through its Local Authority Mortgage Scheme.  It was anticipated that repayments on mortgages would flow back into the County Council reserves and these would be reallocated accordingly.

 

Public Health

 

(iii)      The funding allocation received in respect of Public Health had been better than anticipated.  With effect from 1 April the County Council would assume responsibilities for Public Health and this offered opportunities for more joint working across departments to promote and improve health and wellbeing.  Within the County Council, Public Health would be a freestanding department in its own right.

 

Council Tax

 

(iv)      The proposal was for no increase in Council Tax in 2013/14 and for increases of 1.5% thereafter.  The Council had not increased Council Tax for three years.  The proposed increases from 2014/15 onwards were modest but recognised that the County Council would find it increasingly difficult to continue to identify sufficient savings. 

 

Staffing

 

(v)       The County Council recognised the need to engage in an open and honest way with staff about the financial challenges ahead.  Staff had played a significant role in helping the Council to achieve significant financial savings whilst continuing to deliver high quality services to the people of Leicestershire.  The proposed Transformation Board would need to have regard to engaging with staff to ensure that they were aware of the future direction and shape of the Council and could contribute to that agenda.

 

Joint Working

 

(vi)      The County Council was looking to work with a range of partners, both within Leicestershire and neighbouring authorities, in order to share services and reduce costs.  The County Council recognised that this approach would need to recognise the independence of each partner.  Good progress had been made to date and an example cited was the reduced cost arising from shared office accommodation.  This not only achieved savings arising from facilities management but also improved joint working between County and District staff and ensured more joined up service provision, including with other agencies.

 

Early Intervention Grant

 

(vii)    The Government’s reduction in the Early Intervention Grant was regrettable.  The County Council had decided that it would provide resources to offset this reduction because the investment in early intervention and preventative services was necessary to reduce future demand on County Council services.  In this regard the Children’s Centres had played an important role and it was hoped that, despite the reduction in funding, such services could be maintained going forward.

 

Funding of Capital Schemes

 

(viii)   The County Council’s approach to the funding of capital schemes was to utilise grants made available by the Government and through the generation of capital receipts.  Where a clear business case had been made out, the Council would look to prudential borrowing to fund such schemes.

 

Comments of Scrutiny Bodies

 

(a)       Children and Young People’s Service (CYPS)

 

·                The Deputy Leader shared the concerns expressed regarding the unidentified savings requirement of £3.4m.  He advised the Commission that he had had discussions with the Director and Cabinet Lead Member with a view to identifying, early in the financial year, how these savings were to be met.  It was recognised that it would be wrong to impose a disproportionate requirement on CYPS.

 

·                The County Council currently had a trading relationship with schools and academies which amounted to approximately £20m per year.  The County Council had good relationships with its schools, including those schools that had converted to academies, and would be looking to trade with them.  It was acknowledged that there would be pressures as new competitors entered the market and the County Council would need to ensure that its offer to schools was not only competitive but also of a high quality.

 

(b)       Adults and Communities

 

·                The challenges faced by the Adults and Communities Department, particularly around demand management, were acknowledged.

 

·                With regard to the projected underspend in the current financial year, any decision on carry forwards would be made at the end of the financial year and would need approval from the Cabinet or the Director of Corporate Resources exercising delegated powers.

 

·                It was not possible at the meeting to say what income had been or could be generated from sales from the Beaumanor Arts Collection.  Some artworks had been sold and the intention was to reinvest some funds on improving the Richard III exhibition at Bosworth Battlefield.

 

(c)       Budget and Performance Monitoring Scrutiny Panel: Environment and Transport

 

·                Rural Bus Services

 

The savings requirement had been reduced as it had become clear that it would be difficult to achieve the original savings requirement of £750k without having a serious impact on rural bus service provision.  The Scrutiny Review Panel would be asked to look at options to achieve this reduced level of savings.

 

·                Home to School Transport

 

The County Council was seeking discussions with the Department for Education and the Local Government Association on this matter.  The move to academies and the freedom given to academies to set their own catchment areas and age ranges would cause significant problems in terms of the transportation of pupils.  The current policy was to retain existing catchment areas but it was likely that this would not be sustainable and might be open to challenge.  It was recognised that a resolution of these issues could take some time to achieve as progress should be dependent upon responses received from the Department for Education on this matter.

 

·                Concessionary Travel

 

The savings proposals envisaged funding the statutory national scheme and removing existing discretions.  The concern expressed by some members regarding some bus companies’ understanding of the current position was noted.  The Director of Environment and Transport would be requested to write to bus companies reminding them of the current policy.

 

·                Highways Maintenance

 

The additional investment in highways maintenance was particularly welcomed.

 

·                Waste Collection and Recycling

 

The County Council had allocated a one off increase of £100k as a number of District Councils had made changes to their waste collection regimes and there was some uncertainty as to how this would impact.  It was disappointing that the County Council had not been consulted on these changes and it was hoped that any future changes in collection regimes could be discussed beforehand at the Environment Board.

 

The Chairman thanked the Leader and Deputy Leader of the Council 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 6 February.