The
Director of Corporate Resources will provide an oral update under this item.
Mr.
N. J. Rushton CC, the Leader of the Council, and Mr. J. B. Rhodes CC, the
Deputy Leader and Cabinet Lead Member for Finance and Resources, have been
invited to attend for the Medium Term Financial Strategy (MTFS) items.
A
copy of the full MTFS Report and appendices considered by the Cabinet on 12
January is attached for Commission members only on PINK paper.
Minutes:
The Committee considered an oral report of the Director of Corporate Resources concerning the context and overall position with respect to the Council’s Medium Term Financial Strategy (MTFS) 2016/17 to 2019/20.
The Chairman welcomed to the meeting the Leader of the Council, Mr. N. J. Rushton CC and the Deputy Leader and Cabinet Lead Member for Finance and Resources, Mr. J. B. Rhodes CC.
The Director reported the following matters:
·
As referenced in the MTFS report to the Cabinet
(paragraph 39), the Council’s Revenue Support Grant (RSG) would be reduced to
zero by 2019/20. This had been anticipated, though it had not been expected
that it would come as sharply as had proven to be the case. It was noted that
the Government’s new methodology for calculating RSG took no account for the
low funding position which Leicestershire was known to have;
·
Implementation of the Living Wage was expected
to cost the Authority in the region of £20 million, particularly as a result of
the expected rise in payments to commissioned care services which would be
required to increase their costs to cover this additional expenditure;
·
There were a number of risks and challenges
around funding for Adult’s and Children’s Social Care (CSC) which were expected
to rise significantly partly as a result of people living longer. Growth for
CSC was set at £8 million in the next year of the MTFS. The success of the MTFS
was heavily reliant on achievement of savings and containing demand for
services;
·
The Social Care Levy (a precept of 2% for each
year of the Spending Review specifically for spending on adult social care)
made this MTFS achievable. It was suggested that without it, the Council would
have been placed in an even more invidious position.
The Cabinet Lead Member for Resources and Finance reported
the following matters:
·
The £19.3 million budget shortfall by the end of
the MTFS was of significant concern, though some savings had yet to be
identified which would have some impact on this figure going forward. Though
further efficiencies could doubtless be made, it was emphasised that services
reductions had already begun to hit the public and this would worsen over the
next four years;
·
The Funding Settlement for the Council was the
second worst for a county council. It was noted that were it to receive a
similar settlement to Sussex it would have an extra £100 million with which to
protect services. It was the Lead Member’s view that a decision had been made
at DCLG to protect inner-London borough authorities at the expense of county
and district authorities;
·
The Leader had made well publicised
representations to MPs, who were thought now to be in agreement that the
funding formula was wrong and unfairly disadvantaged Leicestershire. The
Authority was aiming to form a group with other similarly poorly funded
authorities as a means for further lobbying of the Government.
Arising from questions from members, the following points were noted:
·
It was a legal requirement for billing
authorities to include specific information on council tax bill as to where
precepts were allocated and this would be the case for the Social Care Levy.
The possibility of including further detail about this Levy in the associated
materials would be considered;
·
Though the increase in spending power (3.4% over
4 years) as a result of the Social Care Levy was welcome, demand for social
care costs was expected to increase hugely and this was expected to lead to
rising costs of over £50 million in this area over the next 4 years which would
not be covered entirely by the Levy;
·
The Government’s announcement that local
authorities could retain business rates was not expected to have a wholly
positive impact on the Council’s funding position. This was attributed in part
due to the fact that business rates would reduce after RSG reduced to zero in
2019/20;
· It was acknowledged that the public could become confused by the message the Council was delivering on fairer funding at a time when the Government was suggesting that Leicestershire’s funding had increased. It was important that the public were reminded of the fact that Leicestershire was a traditionally lower council tax authority and that this meant it had a low council tax income when compared to others.
RESOLVED:
(a)
That the information provided be noted;
(b)
That the comments of the Commission be forwarded
to the Cabinet for consideration at its meeting on 5 February 2016.