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 December
2017 is attached for Commission members only on PINK paper.
Minutes:
The Director of Finance outlined the context and overall position in respect of the Council’s Medium Term Financial Strategy (MTFS) 2018/19 to 2021/22. In doing so, he highlighted the following matters:-
· The Council’s financial outlook was challenging. The MTFS included £40 million growth, of which £17 million was for children’s social care. There was also a savings requirement of £36 million over the four year period. Approximately £18 million worth of savings had not yet been identified.
· The Capital Programme equated to £290 million over the lifetime of the MTFS and was the largest programme the Council had ever put forward. Despite this, a number of capital development proposals remained unfunded.
· The Local Government Finance Settlement had been disappointing as the Council’s bid for the 100% business rates retention pilot had been unsuccessful. This would have resulted in an extra £19 million. The financial pressures facing children’s social care had also not been acknowledged in the Settlement. Positive elements of the Settlement included greater flexibility around council tax rates and the adult social care precept.
The Deputy Leader and Cabinet Lead Member for Finance and Resources, Mr J B Rhodes CC, echoed the Director’s disappointment regarding the business rates pilot. He reminded the Commission that the Government was currently undertaking a consultation on fair funding for local authorities, and referred to the County Council’s own fair funding campaign. The Leicestershire model was widely supported by upper tier authorities and the County Councils’ Network, but more work was needed to promote the model to the Government. He also advised members that, through his role on the Local Government Association Resources Board, he was making the case for fair funding.
Arising from discussion, the following points were raised:-
(i) Consideration was currently being given to a number of options in response to the Government announcement that council tax could be raised by a further one percent. The public consultation on the MTFS, which had closed on 21 January, had sought views on the level of council tax. This issue and other adjustments required following the Local Government Finance Settlement would be addressed in the revised MTFS which would be considered by the Cabinet on 9 February. One of the adjustments would reflect a greater than expected increase in the council tax base.
(ii) The MTFS included provision for the Revenue Support Grant to end at the beginning of the 2019/20 financial year and for there to be a reduction in the level of Business Rates Top-Up/Tariff to achieve the Government’s target funding level for the Council. It was assumed that this reduction in funding would continue to 2021/22. Members commented on the unfairness of the situation.
(iii) Members agreed that it was important to improve the prosperity of Leicestershire with housing and business development in order to boost the council tax base. It was felt that economic growth was best delivered through local planning and partnerships. However, some caution was expressed with regard to the risk of unrestrained growth.
(iv) It was felt that the West Midlands Combined Authority and elected mayor placed the East Midlands at a disadvantage in terms of attracting economic growth and funding. The Leader of the Council assured members that he had developed good working relationships with other strategic council leaders in the East Midlands and that regular meetings took place. They were aware of the need for the East Midlands to demonstrate strong leadership.
(v) Some reservations were expressed over the Council’s ability to support both the fair funding campaign and the proposal to retain 100 percent of business rates. However, it was felt that the current disparity in council funding across England could not be resolved by economic growth alone; it would also require the better off councils to reduce their costs over time so that funding could be redistributed.
(vi) Members welcomed the intention in the MTFS to repay debt and to invest capital in income streams. Total borrowing had reduced by nearly £100m since 2009 and as a result there had been a significant reduction in the revenue cost of serving debt. Some loan terms prevented the Council from the early repayment of debt. Despite the size of the Capital Programme, it would be funded through Government grant, capital receipts and other discretionary funding. It was expected that some of the currently unfunded projects would be funded through underspends, capital receipts and maximising the value of the County Council’s assets, for example through applying for planning permission on Council owned properties. Income was also generated through the investment fund.
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 9 February 2018.