Agenda item

RESOLVED (as amended):

1.         That the context and background to the County Council’s financial prospects over the medium term, as set out in paragraphs 15 to 22 of the submitted report, be noted.

2.         The achievement of £329m efficiency savings over the last five years and the further planned savings of £361m over the next five years be noted.

3.         The impact of additional funding on the Council’s financial sustainability, as set out in paragraph 35 of the submitted report, be noted.

4.            The revised cash limit budgets for each service in the absence of additional funding from government grants, council tax, or business rates; or further savings, as detailed in paragraph 33 and annex 1of the submitted report be approved.

5.            That Cabinet Members and officers develop proposals on delivering services within the revised cash limits for a future Cabinet meeting, as set out in paragraph 33 of the submitted report.

6.            The development of proposals to the Government for additional funding through the adult social care precept, business rates retention and for school places, as set out in paragraph 35 of the submitted report, be approved.

7.            That Cabinet would welcome a County Council view before a decision is taken on the Government’s four year settlement offer, and that an item seeking that view be included (in accordance with Article 8.2(c) of the Constitution) in Cabinet’s report to Council on 11 October 2016.

8.            That the executive decision to accept or decline the Government’s four year settlement offer, as set out in paragraph 41 of the submitted report, be delegated to the Leader of the Council, for decision as soon as possible after the full Council meeting of 11 October 2016.

9.            Subject to further minor adjustments agreed by the Chief Executive in consultation with the Leader of the Council, the Council’s own response to the 100% Business Rates Retention consultation be approved, and the joint response from the 3SC local authorities, as detailed in paragraph 48 of the submitted report, be endorsed.

10.       That Scrutiny Boards examine the key budget proposals and report back to Cabinet, as detailed in paragraph 34 of the submitted report.

Reasons for Decisions:

The Council is required to produce a balanced budget each year. Surrey County Council also prepares a Medium Term Financial Plan (MTFP) that sets out its financial plans over a rolling five year period. The efficiency savings the Council has had to achieve over the last five years and the efficiency plans it has had to make for the coming five years illustrate the unprecedented and continuing length of the Government’s austerity programme, the simultaneous rise in service demand and the impact of additional spending pressures on the Council’s financial sustainability. Given the confluence of these challenges, Cabinet’s decisions need to ensure the Council plans and implements coherent and robust measures to achieve a balanced financial plan in MTFP 2017?22.

A key step in achieving a balanced and sustainable MTFP 2017?22 is for Cabinet to approve a suitable framework for developing proposals to deliver the Council’s Corporate Strategy within the available budget envelope. A critical element of this is a set of revised cash limits for each service that officers will use to develop proposals for Cabinet to approve at a future meeting.

The Government has not announced detailed changes to its spending plans, austerity is set to continue and the Council needs to maintain a prudent approach. However, the recent changes in the Government’s policy developments and economic forecasts mean there is increased continuing uncertainty over the level of future fundraising.

In March 2016, the Secretary of State for Communities and Local Government wrote to all Councils offering a four year settlement. The offer guarantees (subject to unforeseen significant economic events) each Council its Revenue Support Grant (RSG), Rural Services Delivery Grant and Transitional Grant over the period 2016/17 to 2019/20 as set out in the Final Local Government Settlement. To accept the offer, a Council must prepare and submit an efficiency plan to the Department for Communities and Local Government (DCLG) by 14 October 2016. A significant feature of the Council’s proposed four year settlement is that it is set to receive -£17.3m negative RSG in 2019/20 (the Government will deduct £17.3m from the Council’s other grants). To maximise the time available to consider this issue Cabinet is asked to delegate this decision to the Leader, which will be reported to Full County Council.

The Government is consulting on 100% Business Rates retention by local government and a fairer funding review. These will have a fundamental and strategic impact on the Council’s financial sustainability. The Council’s consultation responses, in conjunction with partner organisations’, seeks to safeguard and advance Surrey residents’ wellbeing and experience and Surrey businesses’ prosperity.

[The decisions on this item can be called in by the Council Overview Board]

The Deputy Leader said that, since 2010 Local Authorities in England had been faced with a year on year reduction in funding from Central Government as a part of the deficit reduction policy. This reduction had included Surrey County Council, which had traditionally been one of the lowest funded local authorities from Government grants. At the same time, the demand for Surrey County Council’s services had been increasing, especially in looking after an increasingly aged population, a high level of people with learning disabilities and providing school places for a record number of children. The County Council had met this challenge through a financial strategy that included: managing demand, efficiency savings and increases in the level of council tax.

In February 2016 the Council’s Section 151 Officer highlighted that the 2016/17 budget was balanced through the use of substantial one-off funding and the Medium Term Financial Plan for 2016/17 to 2020/21 (MTFP 2016?21) required significant actions to become sustainable. The Council agreed to a Public Value Transformation programme to investigate whether sustainability could be achieved through further significant transformation and this report presented an update on the Council’s financial prospects and the key strategies to respond to the challenge presented in the next five year Medium Term Financial Plan (MTFP 2017?22).

Referring to the recommendations, firstly he drew attention to recommendation (7):

‘delegation to the Leader of the decision to accept or decline the Government’s four year settlement offer’

He said that currently, he was minded not to accept the offer, due to the negative Revenue Support Grant of £17.3m in year 4. However, before the Leader takes a decision on the four year settlement, the Deputy Leader said that he would welcome the views of the wider Council. He said that the Council’s Constitution made provision for this (Standing Order 8.2(c)) and that the issue would be discussed at the full County Council meeting on 11 October, as part of the Report of the Cabinet, which would then still allow time for a decision to be taken before the Government deadline of 14 October 2016.

Secondly, he proposed amending recommendation (8) to include:

‘Subject to minor adjustment agreed by the Chief Executive, in consultation with the Leader of the Council....’ because there may still be some minor changes to be made to Annex 2 and 3 (tabled at the meeting), and which were Surrey County Council’s and Three Southern Counties responses to DCLG’s consultation papers on 100% Business Rates Retention.

Other Cabinet Members made the following points:

·         The importance of continuing to work to influence Government policy and to lobby for funding based on need for some services

·         Demand led pressures for services, particularly in Adult Social Care and Children’s Services.

·         The Adult Social Care precept of 2% this year had been welcome and had provided £12m extra funding. However, with demand-led provision driving up   the service’s costs by £24m.

·         The negative Revenue Support Grant for Surrey County Council in year 4 of the settlement and whether other counties had similar issues – it appeared that Surrey’s position was unique.

·         The impact of the near zero contribution of the ‘second generation’ Better Care Fund.

·         The importance of asking all Members for their views at full Council on 11 October 2016.

·         The risks to the Council, as set out in paragraph 40 of the submitted report.

·         Annex 2 should include more detail in relation to unfunded pressures.

·         Annex 2 – the response to question 3 should perhaps also include more detail on Surrey’s pioneering unit cost approach.

 RESOLVED (as amended):

1.         That the context and background to the County Council’s financial prospects over the medium term, as set out in paragraphs 15 to 22 of the submitted report, be noted.

2.         The achievement of £329m efficiency savings over the last five years and the further planned savings of £361m over the next five years be noted.

3.         The impact of additional funding on the Council’s financial sustainability, as set out in paragraph 35 of the submitted report, be noted.

4.            The revised cash limit budgets for each service in the absence of additional funding from government grants, council tax, or business rates; or further savings, as detailed in paragraph 33 and annex 1of the submitted report be approved.

5.            That Cabinet Members and officers develop proposals on delivering services within the revised cash limits for a future Cabinet meeting, as set out in paragraph 33 of the submitted report.

6.            The development of proposals to the Government for additional funding through the adult social care precept, business rates retention and for school places, as set out in paragraph 35 of the submitted report, be approved.

7.            That Cabinet would welcome a County Council view before a decision is taken on the Government’s four year settlement offer, and that an item seeking that view be included (in accordance with Article 8.2(c) of the Constitution) in Cabinet’s report to Council on 11 October 2016.

8.            That the executive decision to accept or decline the Government’s four year settlement offer, as set out in paragraph 41 of the submitted report, be delegated to the Leader of the Council, for decision as soon as possible after the full Council meeting of 11 October 2016.

9.            Subject to further minor adjustments agreed by the Chief Executive in consultation with the Leader of the Council, the Council’s own response to the 100% Business Rates Retention consultation be approved, and the joint response from the 3SC local authorities, as detailed in paragraph 48 of the submitted report, be endorsed.

10.       That Scrutiny Boards examine the key budget proposals and report back to Cabinet, as detailed in paragraph 34 of the submitted report.

Reasons for Decisions:

The Council is required to produce a balanced budget each year. Surrey County Council also prepares a Medium Term Financial Plan (MTFP) that sets out its financial plans over a rolling five year period. The efficiency savings the Council has had to achieve over the last five years and the efficiency plans it has had to make for the coming five years illustrate the unprecedented and continuing length of the Government’s austerity programme, the simultaneous rise in service demand and the impact of additional spending pressures on the Council’s financial sustainability. Given the confluence of these challenges, Cabinet’s decisions need to ensure the Council plans and implements coherent and robust measures to achieve a balanced financial plan in MTFP 2017?22.

A key step in achieving a balanced and sustainable MTFP 2017?22 is for Cabinet to approve a suitable framework for developing proposals to deliver the Council’s Corporate Strategy within the available budget envelope. A critical element of this is a set of revised cash limits for each service that officers will use to develop proposals for Cabinet to approve at a future meeting.

The Government has not announced detailed changes to its spending plans, austerity is set to continue and the Council needs to maintain a prudent approach. However, the recent changes in the Government’s policy developments and economic forecasts mean there is increased continuing uncertainty over the level of future fundraising.

In March 2016, the Secretary of State for Communities and Local Government wrote to all Councils offering a four year settlement. The offer guarantees (subject to unforeseen significant economic events) each Council its Revenue Support Grant (RSG), Rural Services Delivery Grant and Transitional Grant over the period 2016/17 to 2019/20 as set out in the Final Local Government Settlement. To accept the offer, a Council must prepare and submit an efficiency plan to the Department for Communities and Local Government (DCLG) by 14 October 2016. A significant feature of the Council’s proposed four year settlement is that it is set to receive -£17.3m negative RSG in 2019/20 (the Government will deduct £17.3m from the Council’s other grants). To maximise the time available to consider this issue Cabinet is asked to delegate this decision to the Leader, which will be reported to Full County Council.

The Government is consulting on 100% Business Rates retention by local government and a fairer funding review. These will have a fundamental and strategic impact on the Council’s financial sustainability. The Council’s consultation responses, in conjunction with partner organisations’, seeks to safeguard and advance Surrey residents’ wellbeing and experience and Surrey businesses’ prosperity.