Decision details

To make recommendations to the County Council on the revenue and capital budgets for 2016/17 to 2020/21 and the level of council precept for 2016/17

That the following recommendations be made to the Full County Council on 9 February 2016:

To note the following important features of the revenue and capital budget:

1.         The Director of Finance’s statutory report says the budget for 2016/17 is only sustainable and robust if the council uses substantial reserves and capital receipts from the sale of assets, and crucially, receives significant transitional relief while an unprecedented scale of service transformation is developed and delivered going forward. (Annex 1 of the submitted report).

2.         The Council will require transitional funding from Government of £20m to balance the 2016/17 budget in respect of the late announcement of a change to the distribution of the Revenue Support Grant, and a further £37m in 2017/18.

3.         If the Council receives no transitional relief in the final settlement, the Leader will arrange an emergency Cabinet meeting to determine how to balance the 2016/17 budget. This is not expected to affect the council tax precept for 2016/17.

4.         It is expected that the Final Settlement will set out requirements for reporting use of the adult social care precept.

5.         At a date yet to be determined by Government, there will be an opportunity for the Council to accept the Government’s offer of a four year funding settlement as set out in paragraphs 15 to 19 of this report.

Cabinet recommendations to Full County Council on the revenue and capital budget:

6.         Increase the level of the general council tax by 1.99%.

7.         Increase council tax by a further 2% for the adult social care precept.

8.         Set the County Council precept for band D council tax at £1,268.28 which represents a 3.99% up-lift.

9.         Agree to maintain the council tax rate set above after the Final Settlement.

10.      Support the 2016/17 budget by using £17.2m from reserves as set out in paragraph 72.

11.      Delegate powers to the Leader of the Council and the Director of Finance to finalise budget proposals and recommendations to full County Council updated to take into account new information in the Final Settlement.

12.      Require the Chief Executive and the Director of Finance to continue their work to track and monitor existing MTFP efficiencies and to lead and oversee a Public Value Transformation programme of all service delivery to ensure the county council’s revenue budget becomes sustainable and to develop robust plans for further savings for the remaining years of this MTFP.

13.      Approves the set up of a Public Value Transformation (PVT) Fund of £30m to meet the revenue costs of a transformation programme, to be funded by capital receipts from asset sales.

14.      Approves the County Council’s £1681m gross revenue expenditure budget for 2016/17.

15.      Agrees the capital programme specifically to:

·      fund essential schemes over the five year period (schools and non-schools) to the value of £635m including ring-fenced grants;

·      make adequate provision in the revenue budget to fund the revenue costs of the capital programme, including a borrowing requirement of £187m over the five years.

16.      Require a robust business case to be prepared (and taken to the Investment Panel for review) before committing expenditure for the use of:

·        the Public Value Transformation Fund,

·        all revenue ‘invest to save’ proposals, and

·        capital schemes.

Cabinet recommendations to Full County Council on treasury management and borrowing:

17.      Approves, with immediate effect, the Treasury Management Strategy for 2016?21, which includes:

·        the investment strategy for short term cash balances;

·        introducing three new investment categories: corporate bonds, covered bonds and pool investment property funds which will generate additional returns within controlled credit risk (paragraph 108);

·        increasing the maximum term for high quality longer dated investments to two years for supranational institutions, local authorities, UK Government, corporate bonds and five years for covered bonds, earning additional interest income without compromising liquidity risk (paragraph 108);

·        setting the maximum amount in respect of any one counterparty to £20m with the exception of money market funds which should remain at £25m (paragraph 108 of the submitted report);

·        the treasury management policy (Appendix 8 to the submitted report);

·        the prudential indicators (Appendix 9 to the submitted report);

·        the schedule of delegation (Appendix 11 to the submitted report);

·        the minimum revenue provision policy (Appendix 14 to the submitted report).

The following decisions have been approved:

18.      That services will develop budgets and savings proposed ahead of approval by Cabinet on 22 March 2016 when the final MTFP (2016?21) will be presented.

19.      The draft MTFP for the financial years 2016?21 be agreed, which includes:

·        to approve the Total Schools Budget of £551.5m (paragraphs 37 to 43 of the submitted report);

·        to support the 2016/17 budget by using £17.2m from reserves as set out in paragraph 72 of the submitted report;

·        to approve overall cash limits for individual services.

Reasons for Decisions:

Full County Council will meet on 9 February 2016 to agree the summary budget and set the council tax precept for 2016/17. Cabinet will advise the full County Council how to balance the budget for 2016/17, subject to the receipt of transitional relief from Government and use of reserves and capital receipts as well as the set up of an unprecedented Public Value Transformation programme required to protect the Council’s long term financial position.