Agenda item

1.         The following recommendations be made to the meeting of the County Council on 12 February 2013:

On the revenue and capital budget:

                         i.    Note the Chief Finance Officer’s statutory report on the robustness and sustainability of the estimates and the adequacy of the proposed financial reserves (Annex 2).

                        ii.    Note that dispensation has been sought for all county councillors to ensure their eligibility to vote on the recommendations in this report without any risk of non-compliance with the Localism Act 2011.

                      iii.    Set the County Council precept for band D council tax at £1,172.52, which represents a 1.99% increase.

                      iv.    Agree to maintain the Council Tax rate set above and delegate powers to the Leader and the Chief Finance Officer to finalise detailed budget proposals following receipt of the Final Financial Settlement.

                       v.    Approve the County Council budget for 2013/14.

                      vi.    Agree the capital programme proposals specifically to:

·     fund essential schemes over the five year period, schools and non-schools, to the value of £695m including ring-fenced grants;

·     seek to secure capital receipts over the five year period to 2017/18 of £50m; and

·     make adequate provision in the revenue budget to fund the capital programme.

                     vii.    Require Strategic Directors and Senior Officers to maintain robust budget monitoring procedures that enable Cabinet to monitor the achievement of efficiencies & service reductions through the monthly budget monitoring Cabinet reports, the quarterly Cabinet Member accountability meetings and the monthly scrutiny at the Council’s Overview & Scrutiny Committee.

                   viii.    Require an approved business case for all revenue invest to save proposals and capital schemes before committing expenditure.

On treasury management and borrowing:

                      ix.    Approve the Treasury Management Strategy for 2013/14 and approve that their provisions have immediate effect. This strategy includes:

a.   the investment strategy for short term cash balances;

b.   the prudential indicators (Annex 1, section B, Appendix B1);

c.   the treasury management policy (Annex 1, section B, Appendix B8);

d.   the minimum revenue provision policy (Annex 1, section B, Appendix B7).

2.         The medium term financial plan (MTFP) for the financial years 2013-18 be approved, including the following:

·     the total Schools Budget of £621.5m be approved(Annex 1, section A, paragraphs A32 to A34).

·     the revenue risk contingency be set at £13m to mitigate against the risk of non-delivery of service reductions & efficiencies.

·     earmarked reserves (as in Annex 1, section A, Appendix A7) be amended and £12m of general balances be applied to support the 2013/14 budget.

·     £11m of the approved carry forward revenue budget from 2012/13 be applied to support the 2013/14 revenue budget.

3.         The process of reviewing the revenue budget and capital programme set out in the MTFP (2013-18) begin immediately after the first quarter of 2013/14.

4.         It be noted that the final detailed MTFP (2013-18) will be presented to Cabinet on 27 March 2013 for approval following scrutiny by Select Committees.

5.         That the recommendations of the Council Overview and Scrutiny Committee be noted and the Chief Finance Officer be requested to provide a response to the points made, in consultation with the Leader of the Council, prior to the Budget Council meeting. 

Reasons for Decisions

To advise the County Council how best to meet the challenges the Council faces when it meets on 12 February 2013 to agree the summary budget and set the council tax increase for 2013/14. The reasons underpinning the recommendations include:

·        to ensure the Council maintains its financial resilience and protects its long term financial position;

·        to enable the Council to meet the expectations of Surrey’s residents as confirmed in their responses to the in depth consultation exercise;

·        to provide adequate finances for key services such as school places, highways, adults social care and protecting vulnerable people.

[The decisions on this item, with the exception of resolution 1, can be called in by the Council Overview and Scrutiny Committee]

The Cabinet considered proposals for the draft budget to be recommended to the meeting of the County Council on 12 February 2013. This included the draft revenue and capital budget for the five years 2013-18 and the level of the council tax precept for 2013/14. Cabinet Members also considered the revised treasury management strategy, including the borrowing and operation limits (prudential indicators) for 2013-18, the policy for the provision of the repayment of debt (minimum revenue provision (MRP)) and the treasury management policy.

The Chairman noted that drawing up the budget proposals had involved difficult decisions under the current economic climate. The administration had listened to what residents had been telling them was important. This included schools, investment in roads, care for the vulnerable, elderly and children and young adults’ concerns about how they would get a job in Surrey. Now was the time to make decisions. Now was the time to invest.

Surrey remains one of the councils which receive the lowest level of funding from central government. The Government offer of a one off grant to freeze council tax for a year would have had long term implications for Surrey. Accepting this offer would cripple the Council’s finances and create a £50m black hole within five years. Whilst it might be seen as an easy option to park the problem until after the election, this would be morally indefensible. The Chairman noted that people had given their trust and the issue had to be faced. It was for this reason that a council tax increase of 1.99% would be recommended to Council.

The budget being recommended to Council would enable:

·       £10 million to be invested in raising education standards over 5 years and £45 million for additional school places. This would bring investment to a further £261 million and help provide the extra 12,000 places needed.

·       An extra £25 million to be invested in the county’s roads. The five year plan would mean that residents could have confidence in knowing that their road will be improved.

·       An additional £11million to be invested in adult social care. Surrey has the highest number of people aged over 80 and 85 in the country. The social care budget had increased by 25% over 3.5 years and further investment would address important concerns such as enabling people to be cared for in their own homes.

·       A £750,000 investment in young people, the economy and local businesses, creating further apprenticeships as part of what would be one of the largest apprenticeship programmes in the country.

·       An increase in the Community Improvement Fund to £1 million to continue investment in local projects, making a huge difference to community and voluntary groups.

·       £5 million as a risk contingency fund to ensure that the efficiency agenda was not compromised.

·       The use of £18m of reserves and carry forwards in 2013/4.

It was noted that the final detail on the budget settlement was expected before the Budget Council meeting. An update would be provided to Council to confirm the final figures.

Cabinet Members discussed key points from the budget papers including:

·       The Council had saved £195 million in 3 years and £435 million over 8 years.

·       The Chief Finance Officer had stated that the budget proposals were ‘robust and sustainable’ and financial controls were sufficient and robust to maintain adequate and effective control of the budget.

·       The Council’s success was being recognised nationally. In addition to being shortlisted for two ‘Council of the Year’ awards, it had been shortlisted for its corporate governance arrangements and won an award for transparency.

·       The budget proposals were in line with the views and priorities expressed by residents in the public survey, including investment in roads and care for the elderly.

·       The policy statement on reserves and balances demonstrated that the Council had been right to think ahead with prudent long term financial planning.

·       The Council was successfully delivering on the expansion of primary school places to time and cost, noting that the demand for places would also drive the expansion of secondary provision over the course of the financial plan.

·       The investment and business strategies being pursued were thought to be second to none within local government.

RESOLVED that:

1.         The following recommendations be made to the meeting of the County Council on 12 February 2013:

On the revenue and capital budget:

                         i.    Note the Chief Finance Officer’s statutory report on the robustness and sustainability of the estimates and the adequacy of the proposed financial reserves (Annex 2 to the report).

                        ii.    Note that dispensation has been sought for all county councillors to ensure their eligibility to vote on the recommendations in this report without any risk of non-compliance with the Localism Act 2011.

                      iii.    Set the County Council precept for band D council tax at £1,172.52, which represents a 1.99% increase.

                      iv.    Agree to maintain the Council Tax rate set above and delegate powers to the Leader and the Chief Finance Officer to finalise detailed budget proposals following receipt of the Final Financial Settlement.

                       v.    Approve the County Council budget for 2013/14.

                      vi.    Agree the capital programme proposals specifically to:

·     fund essential schemes over the five year period, schools and non-schools, to the value of £695m including ring-fenced grants;

·     seek to secure capital receipts over the five year period to 2017/18 of £50m; and

·     make adequate provision in the revenue budget to fund the capital programme.

                     vii.    Require Strategic Directors and Senior Officers to maintain robust budget monitoring procedures that enable Cabinet to monitor the achievement of efficiencies & service reductions through the monthly budget monitoring Cabinet reports, the quarterly Cabinet Member accountability meetings and the monthly scrutiny at the Council’s Overview & Scrutiny Committee.

                   viii.    Require an approved business case for all revenue invest to save proposals and capital schemes before committing expenditure.

On treasury management and borrowing:

                      ix.    Approve the Treasury Management Strategy for 2013/14 and approve that their provisions have immediate effect. This strategy includes:

a.   the investment strategy for short term cash balances;

b.   the prudential indicators (Annex 1, section B, Appendix B1 to the report);

c.   the treasury management policy (Annex 1, section B, Appendix B8 to the report);

d.   the minimum revenue provision policy (Annex 1, section B, Appendix B7 to the report).

2.         The medium term financial plan (MTFP) for the financial years 2013-18 be approved, including the following:

·     the total Schools Budget of £621.5m be approved(Annex 1, section A, paragraphs A32 to A34 of the report).

·     the revenue risk contingency be set at £13m to mitigate against the risk of non-delivery of service reductions & efficiencies.

·     earmarked reserves (as in Annex 1, section A, Appendix A7 to the report) be amended and £12m of general balances be applied to support the 2013/14 budget.

·     £11m of the approved carry forward revenue budget from 2012/13 be applied to support the 2013/14 revenue budget.

3.         The process of reviewing the revenue budget and capital programme set out in the MTFP (2013-18) begin immediately after the first quarter of 2013/14.

4.         It be noted that the final detailed MTFP (2013-18) will be presented to Cabinet on 26 March 2013 for approval following scrutiny by Select Committees.

5.         That the recommendations of the Council Overview and Scrutiny Committee be noted and the Chief Finance Officer be requested to provide a response to the points made, in consultation with the Leader of the Council, prior to the Budget Council meeting. 

Reasons for Decisions

To recommend to the County Council how best to meet the challenges the Council faces when it meets on 12 February 2013, agree the summary budget and set the council tax increase for 2013/14. The reasons underpinning the recommendations include:

·        to ensure the Council maintains its financial resilience and protects its long term financial position;

·        to enable the Council to meet the expectations of Surrey’s residents as confirmed in their responses to the in depth consultation exercise;

·        to provide adequate finances for key services such as school places, highways, adults social care and protecting vulnerable people.