Agenda item

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

1.         The Director of Finance has produced two statutory conclusions as follows.

a.   For the proposed budget: that the council’s budget is balanced and sustainable over the long term, although still requiring significant service transformation and efficiencies.

b.   For the substitute budget: that the budget can only be balanced and become sustainable through the identification of substantial and permanent further service reductions for implementation in 2017/18 and subsequent years.

2.         The requirement for the council to approve a substitute budget, with a council tax rise of 4.99% that will be implemented if the proposed budget in not supported in a referendum.

3.         The findings of the Financial Resilience Review completed in November 2016.

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

 

4.         Increase the level of the general council tax by 1.99% and an additional 10% (35p per day) as a result mainly of social care pressures, making a total general council tax increase of 11.99%.

5.         Increase council tax by a further 3% for the adult social care precept, which will provide £18m to support the growth in demand for services.

6.         Set the County Council precept for band D council tax at £1,458.45 which represents a 14.99% up-lift.

7.         Agree to maintain the council tax rate set above after the Final Local Government Financial Settlement.

8.         Delegate powers to the Leader and the Director of Finance to finalise budget proposals and recommendations to Full County Council updated to take into account new information.

9.         Require the Chief Executive and the Director of Finance to continue their work to ensure delivery of planned efficiencies and service reductions.

10.       Approve the County Council’s £1,696m gross revenue expenditure budget for 2017/18 for the proposed budget.

11.       Note that the existing revenue costs of funding past capital spending decisions is £30m for 2017/18.

12.       Agree up to a total of £408m funding for capital schemes that funds essential schemes over the next three year period (schools and non-schools), including ring-fenced grants and a borrowing requirement of £94m over the three years.

13.       Note that the detailed programme of schemes will be agreed at the March 2017 Cabinet as part of the Medium Term Financial Plan.

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

·       all revenue ‘invest to save’ proposals, and

·       capital schemes.

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

 

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

16.       Increase council tax by a further 3% for the adult social care precept, which will provide £18m to support the growth in demand for services.

17.       Set the County Council precept for band D council tax at £1,331.55 which represents a 4.99% up-lift.

18.       Approve the County Council’s £1,666m gross revenue expenditure budget for 2017/18 for the substitute budget.

19.       Require the Chief Executive and the Director of Finance to continue their work to ensure delivery of planned efficiencies and service reductions.

20.       Agree to support only capital schemes which are funded without requiring borrowing, unless a sustainable basis for funding borrowing costs is identified and a compelling business case developed that demonstrates best value in progressing a particular scheme.

21.       Note that the detailed programme of schemes will be agreed ahead of implementation of the substitute budget (if necessary).

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

·       all revenue ‘invest to save’ proposals, and

·       capital schemes.

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

 

23.       Approve, with immediate effect, the Treasury Management Strategy for 2017/18, which includes:

·       the investment strategy for short term cash balances;

·       the borrowing strategy for funding the capital programme;

·       the treasury management policy (Appendix 8);

·       the prudential indicators (Appendix 9);

·       the schedule of delegation (Appendix 11);

·       the minimum revenue provision policy (Appendix 12).

The following decisions have been approved:

 

24.       Note that services will develop detailed budgets and savings ahead of approval by Cabinet on 28 March 2017 when the final MTFP 2017?20 will be presented.

25.       Approve the draft MTFP for the financial years 2017?20, which includes:

·       to approve the Total Schools Budget of £545.2m (paragraphs 66 to 71);

·       to approve overall cash limits for individual services for the proposed budget and the substitute budget.

 

26.       A) Agree to establish a Sustainability Review Board comprising of three cross party Members, the Strategic Director for Adult Social Care and Public Health, the Deputy Chief Executive and the Director of Finance.

 

B) Require this board to bring back an initial report to the Cabinet meeting on 28 March 2017 on progress towards identifying £30m permanent service reductions and up to a further £22m one-off reductions required to achieve a balanced budget in 2017/18.

Reason for decision:

 

Full County Council will meet on 7 February 2017 to agree a  budget and set the council tax precept for 2017/18. Cabinet’s role is to recommend  a budget to Full County Council. Council must also agree substitute calculations in the event that its proposed budget would result in a council tax increase above that set out in principles laid down by the Secretary of State. The published draft principles for 2017/2018indicate that the council tax increase proposed by Cabinet would exceed that set by Government and substitute calculations are therefore also put forward to Council.

 

 

The Chairman of the Council Overview Board (COB) introduced the COB recommendations to Cabinet and made the following points:

·         He welcomed the scrutiny contributions to the budget process

·         Arrangements put in place this year had helped the budget position

·         He thanked key officers and the Cabinet Member for Business Services and Resident Experience as well as the Vice Chair of COB for their attendance at meetings and their input.

·         COB made no recommendation to reduce spending on social care and most of the savings were focussed on back office/support functions rather than front line services.

·         He hoped that all proposals put forward by COB would be given serious consideration and looked forward to awaiting the proposals for the alternative budget.

 

The Chairman of the Economic Prosperity, Environment and Highways Board (EPEH) supported the proposals and welcomed the referendum.  He explained the underestimation of the budget shortfall in Learning Disabilities services due to increasing numbers of users.  He went on to explain the importance of the Surrey countryside for economic prosperity for the county and asked that it not be used as an easy target for cuts.

 

The Leader of the Council highlighted the changes made to the recommendations which had been tabled.  He opened the debate by making the following points:

·         There was a lack of fairness in the amount of money it gave to Government and the level of cuts

·         Cabinet Members had met many times over the last five months to discuss how to deal with the funding issue and made several representations to Government and MPs

·         He explained that it was a councillor’s first duty to look after the residents who did not deserve what was happening with the funding issues.  That there was still £30m worth of savings to be found in the proposed budget and £93m of cuts proposed to services.

·         It was irresponsible to use the last of the reserves as they were considered to be too low.  Last year the reserves had been used to cover costs of widespread flooding which was not fully funded by Government.

·         He highlighted the S151 Officer’s and Legal Officer’s annexes to the report.

·         The people of Surrey must decide to protect services or for the council to implement the substitute budget.

·         The substitute budget would not provide sustainability to the Council and £50m of borrowing for capital items would not be possible if substitute  budget was implemented.

·         There was much sadness from Members that these decisions needed to be taken.

 

Members raised the following points during the debate:

 

·         The proposals were counter-intuitive as Conservative members

·         If the Government were to provided more funding this would be discussed with the Chief Executive and S151 Officer and if necessary call an emergency meeting of full Council

·         All councillors had signed up to work under the 7 Nolan Principles which were at the forefront of decisions and discussions.

·         The Conservative Group were 100% behind the Leader and it must be stressed to residents that the extra Council Tax proposed would go into social care.

·         65p in every £1 goes to social care, childrens’ and learning disabilities services.

·         The Government payout per child in comparison with London boroughs, just over the Surrey border, could be between £500 and £1,000 less per child.  The ESG grant was also being cut and there was an enormous cost to Surrey in providing extra school places.

·         It was pointed out that the Adult Social Care precept would stop in two years and the Better Care Fund drastically reduced as well.

·         The extra 15% Council Tax would mean and extra £3.66 for a band D property.  It is necessary for residents to understand the outcome of any vote.

·         That non statutory services would suffer if the referendum was lost.

·         Members questioned why the 11 MPs in the county were not more supportive in fighting for extra funding.

·         Reserves had been used as much as they could be to lighten the load and CIPFA had confirmed that the reserves were too low.

·         Project Horizon was cited a few times as one that would suffer going forward and the work it had done to improve roads was greatly appreciated by the residents.

 

A list of amended recommendations was tabled at the meeting (attached as annex 1).  It was agreed that the following recommendations be made to the Full County Council on 7 February 2017:

 

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

 

1.         The Director of Finance has produced two statutory conclusions as follows.

 

a.   For the proposed budget: that the council’s budget is balanced and sustainable over the long term, although still requiring significant service transformation and efficiencies.

b.   For the substitute budget: that the budget can only be balanced and become sustainable through the identification of substantial and permanent further service reductions for implementation in 2017/18 and subsequent years.

 

2.         The requirement for the council to approve a substitute budget, with a council tax rise of 4.99% that will be implemented if the proposed budget in not supported in a referendum.

 

3.         The findings of the Financial Resilience Review completed in November 2016.

 

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

 

4.         Increase the level of the general council tax by 1.99% and an additional 10% (35p per day) as a result mainly of social care pressures, making a total general council tax increase of 11.99%.

 

5.         Increase council tax by a further 3% for the adult social care precept, which will provide £18m to support the growth in demand for services.

 

6.         Set the County Council precept for band D council tax at £1,458.45 which represents a 14.99% up-lift.

 

7.         Agree to maintain the council tax rate set above after the Final Local Government Financial Settlement.

 

8.         Delegate powers to the Leader and the Director of Finance to finalise budget proposals and recommendations to Full County Council updated to take into account new information.

 

9.         Require the Chief Executive and the Director of Finance to continue their work to ensure delivery of planned efficiencies and service reductions.

 

10.      Approve the County Council’s £1,696m gross revenue expenditure budget for 2017/18 for the proposed budget.

 

11.      Note that the existing revenue costs of funding past capital spending decisions is £30m for 2017/18.

 

12.      Agree up to a total of £408m funding for capital schemes that funds essential schemes over the next three year period (schools and non-schools), including ring-fenced grants and a borrowing requirement of £94m over the three years.

 

13.      Note that the detailed programme of schemes will be agreed at the March 2017 Cabinet as part of the Medium Term Financial Plan.

 

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

·         all revenue ‘invest to save’ proposals, and

·         capital schemes.

 

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

 

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

 

16.  Increase council tax by a further 3% for the adult social care precept, which will provide £18m to support the growth in demand for services.

 

17.  Set the County Council precept for band D council tax at £1,331.55 which represents a 4.99% up-lift.

 

18.  Approve the County Council’s £1,666m gross revenue expenditure budget for 2017/18 for the substitute budget.

 

19.  Require the Chief Executive and the Director of Finance to continue their work to ensure delivery of planned efficiencies and service reductions.

 

20.  Agree to support only capital schemes which are funded without requiring borrowing, unless a sustainable basis for funding borrowing costs is identified and a compelling business case developed that demonstrates best value in progressing a particular scheme.

 

21.   Note that the detailed programme of schemes will be agreed ahead of implementation of the substitute budget (if necessary).

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

·      all revenue ‘invest to save’ proposals, and

·      capital schemes.

 

Treasury management and borrowing: Cabinet recommendations to Full County Council

 

23.  Approve, with immediate effect, the Treasury Management Strategy for 2017/18, which includes:

·      the investment strategy for short term cash balances;

·      the borrowing strategy for funding the capital programme;

·      the treasury management policy (Appendix 8);

·      the prudential indicators (Appendix 9);

·      the schedule of delegation (Appendix 11);

·      the minimum revenue provision policy (Appendix 12).

 

The following decisions have been approved:

 

24.  Note that services will develop detailed budgets and savings ahead of approval by Cabinet on 28 March 2017 when the final MTFP 2017?20 will be presented.

 

25.  Approve the draft MTFP for the financial years 2017?20, which includes:

·      to approve the Total Schools Budget of £545.2m (paragraphs 66 to 71);

·      to approve overall cash limits for individual services for the proposed budget and the substitute budget.

 

26.      A) Agree to establish a Sustainability Review Board comprising of three cross party Members, the Strategic Director for Adult Social Care and Public Health, the Deputy Chief Executive and the Director of Finance.

 

B) Require this board to bring back an initial report to the Cabinet meeting on 28 March 2017 on progress towards identifying £30m permanent service reductions and up to a further £22m one-off reductions required to achieve a balanced budget in 2017/18.

 

Reason for decision:

 

Full County Council will meet on 7 February 2017 to agree a  budget and set the council tax precept for 2017/18. Cabinet’s role is to recommend  a budget to Full County Council. Council must also agree substitute calculations in the event that its proposed budget would result in a council tax increase above that set out in principles laid down by the Secretary of State. The published draft principles for 2017/2018indicate that the council tax increase proposed by Cabinet would exceed that set by Government and substitute calculations are therefore also put forward to Council.