Agenda item

The Commission considered a report of the Director of Corporate Resources which explained the overall financial position faced by the County Council. The approach to updating the current Medium Term Financial Strategy (MTFS) and advised members of a recent announcement by the Government with regard to 100% business rates retention pilots for 2018/19.  A copy of the report marked ‘Agenda Item 9’ is filed with these minutes.

Arising from discussion the following points were raised:-

(i)    In response to a query regarding the level of reliance on the fair funding campaign and the implications of an unsuccessful outcome, the Commission was advised that officers had exercised caution and were not assuming a successful outcome when undertaking financial forecasting.  However, the campaign was going well and if successful would significantly reduce the funding gap.

(ii)   Members requested data showing additional income generated for the Council through the development of new homes in Leicestershire, along with additional expenditure incurred.  It would be useful to see this as an average per new home per year.  Officers undertook to provide this information and advised that, in the context of the whole budget, there was generally a circa two percent increase to the annual tax base each year but the County Council was still required to make significant savings.

(iii)  Concern was expressed that, whilst the report stated that district councils would not review council tax collection, this was not accurate as district councils continually reviewed their arrangements.  However, the Commission was advised that this referred to a full, external review, which had been requested and would be paid for by the County Council and would include forecasting, collection and policy.  District Treasurers had rejected that.  With regard to forecasting, it had been identified that for some districts this did not reflect housing growth and could be inaccurate.  This had a significant effect on the County Council’s ability to set an accurate budget.  Department of Communities and Local Government performance data showed collection rates were average but it was expected that, for a fairly affluent county such as Leicestershire, performance would be in the top quartile.  Policy issues related to the need to have tighter controls over council tax discounts.  It was acknowledged that some of these issues had been accepted by district councils but disappointing that they had rejected the proposal to undertake an external review. 

(iv) The proposal to undertake an external review of council tax collection was also supported by the Police and Fire services, as precepting authorities.  The advantages to an external review were the breadth of knowledge that such reviewers had, their understanding of the system and examples of best practice.  Some members of the Commission supported the proposal for an external review and requested that the issue be raised again with district councils, with the offer of a member panel including representation from both the County and district councils to oversee the review.

(v)  With regard to council tax discounts, it was confirmed that individual district councils each set their own policy.  It was acknowledged that this enabled each council to reflect local circumstances but it would be useful for the County Council to understand how each policy was applied and enforced, due to the effect that it had on the County Council’s budget.

(vi) Members welcomed the intention to submit a bid to pilot 100% business rates retention in 2018/19, noting that as a one year pilot it could not be used to address ongoing revenue pressures.  Some concern was expressed that it would not be possible to support both the fair funding campaign and the 100% business rates retention pilot; however, members were advised that the 100% business rates retention pilot was intended to be an incentive to develop growth and did not preclude some redistribution of funding in a fairer way.  It would be important for a discussion to take place with the Government to clarify the intention behind the pilots and how they were expected to work.

RESOLVED:

(a)  That the significant financial challenge faced by the County Council be noted;

(b)  That the approach outlined in the report to updating the Medium Term Financial Strategy be noted;

(c)  That the opportunity for the County Council to submit an application to pilot 100% Business Rates Retention in 2018/19 be noted;

(d)  That the comments now made be submitted to the meeting of the Cabinet on 15 September 2017.