Agenda item

RESOLVED:

That the following be approved:

1.               £21.3m use of reserves in 2018/19, reduced from £23.6m due to receipt of additional funding announced in the Final Settlement on 7 February 2018 (paragraph 16 of the submitted report).

2.               Changes to the capital programme as outlined in paragraphs 28 and 29 of the submitted report, including £5m increase in 2018/19 for highways as a result of recent severe weather, funded by use of capital receipts. This brought the three year capital programme to £322m, with £144m in 2018/19.

3.               A savings programme over the three years of MTFP 2018?21 to build the council’s financial resilience (paragraph 17 of the submitted report).

4.               The 2018/19 service strategies (Annex 1 of the submitted report).

5.               The detailed service revenue and capital budgets for the year 2018/19 and indicative budgets for the years 2019-21 including amendments resulting from the Final Local Government Financial Settlement and other Government funding changes announced since 7 February 2018 (Annex 1 of the submitted report).

6.               The council‘s proactive and systematic engagement in: responding to proposed changes in local government funding to ensure these changes do not further disadvantage Surrey and seeking appropriate recognition by the Government of the costs of delivering services in Surrey.

7.               Publication of the service revenue and capital budgets as the Medium Term Financial Plan 2018?21 (MTFP 2018?21).

8.               Decisions related to the Early Years single funding formula (paragraphs 50 and 51 of the submitted report):

·      the local authority retained £3.4m of the Early Years Dedicated Schools Grant to manage the sector, support providers and secure the supply of places;

·      the SEN Inclusion Fund to provide additional funding to providers for 3-4 year olds with special educational needs was set at £1.4m (£1.2m in 2017/18)

·      fund individual Early Years providers at rates which were commensurate with the levels of funding in the Early Years DSG:
- £4.60 / hour for three and four year olds (£4.51 in 2017/18);
- £5.88 / hour for two year olds (unchanged); and
- £2.77 / hour additional deprivation funding based on eligibility for the early years pupil premium on economic grounds.

That the following be noted:

9.               The Director of Finance’s letter to the Ministry for Housing, Communities and Local Government confirming the council will spend the Adult Social Care Precept entirely on adult social care functions (Annex 2 of the submitted report);

10.             Fees & charges approved under delegated powers (Annex 3 of the submitted report).

11.             Equality Impact Assessments of the savings proposals within directorate and service budgets (Annex 4 of the submitted report).

Reasons for decisions:

The council has a legal duty to prepare a balanced and sustainable budget and to deliver statutory services to residents.

The Medium Term Financial Plan 2018?21 (MTFP 2018?21) is a three year budget that reflects assumptions about the current local and national financial, economic and political environment. Setting a three year budget is a key element of the council’s multi-year approach to financial management and its aim of achieving a sustainable financial position. Regular reporting through the year will enable effective tracking and management of progress with the strategy and the budget.

[The decisions on this item can be called in by the Overview and Budget Scrutiny Committee]

The Leader of the Council introduced the report and set out the main changes and highlights of the report and the Medium Term Financial Plan (MTFP).  He explained that the Minster for Housing, Communities and Local Government (MHCLG) had published its final local government finance settlement on 7 February this year – the day after Surrey County Council set its overall budget for 2018/19. The modest good news was an additional £2.5m for the Adult Social Care Grant. Although welcome, this was small compared to the cost and demand pressures the service was facing. The Council would use this to fund the cost pressures in the Learning Disabilities market that emerged around the time of setting the budget.

The Leader also reported that the final estimate of the growth gain from the Business Rate retention pilot in 2018/19 was issued by the MHCLG with a minimal change to Surrey’s figures. An official launch event for the Pilot areas was planned for 26 March 2018.  The impact on this additional funding was to reduce the use of reserves to support the budget to £21.3m for 2018/19.  As quoted in the Council Budget Report, the Council needed to deliver £66m of savings in 2018/19. These had been assessed on the risk of their achievement using a Red Amber Green approach and were as follows; Red £13m, Amber £27m and Green £26m.

The Leader further explained that the Chief Executive and the Director of Finance were planning to carry out an in-depth review on the plans for the 2018/19 savings to ensure these were delivered in full.  In the following two years, the Council had already identified a further £67m of spending reductions.  However, despite this, the funding shortfall would still be £86m in 2019/20, rising to £94m the following year. Under the Leadership of the new Chief Executive, working with the Executive and Cabinet Team, the Council was developing plans to transform its services to achieve a sustainable financial plan over the next three years and assure longer-term financial sustainability in the context of uncertain future funding.

On the capital budget, the Cabinet was proposing to increase the spending on highways by £5m in 2018/19 as a consequence of the recent severe weather. This would increase the total capital programme to £322m over the next three years.

The capital budget presented in the MTFP also included some re-profiling of spending, especially in regards to the residential refurbishment and an update to the capital programme relating to Environment & Planning Strategic Economic Plan Schemes (Local Growth Deal) and schemes funded by developers or as part of the cross directorate CIL (Community Infrastructure Levy) schemes. In addition, the IT and Digital projects budget had increased to include the network refresh spend which would be funded from the equipment replacement reserve.

Finally, the Leader reported that an amended report and annex 1 (MTFP) had been published as a supplement to the agenda and he explained the minor amendments made to the MTFP.  The amended cover report contained further information in the Legal Implications paragraphs 63 – 65.

The Leader of the Council asked each Cabinet Member to provide the financial context as well as the equality and diversity (E&D) aspects for their specific service and received the following updates:

The Cabinet Member for Adults reported that the adult precept of 3% would not be enough to cover costs. With regards to E&D he reported that there were ongoing discussions with the NHS around integration.

The Cabinet Member for Children reported on the year-on-year increasing need around looked after children and fostering.  This had meant a rise in staffing budgets.  The subsidy for asylum-seeking children was £4m in 2017 and was an area of risk.  Savings were being sought through the Early Help system.

The Cabinet Member for Education also explained the increasing need around the education service.  She explained the national issue around Education Health Plans and the challenge around Special Educational Need.  The Cabinet were being asked to agree the Early Years funding formula in recommendation eight of the report.  She also explained that a working group of schools had been set up to look at delivery and savings - £7m of the £10m savings identified had been achieved.

The Cabinet Member for Health reported that the grant for public health had always been low and despite increasing responsibilities the grant was reducing. The grant this year was £35m which would leave a £17m funding gap.  The Cabinet Member and the Leader of the Council agreed to write a joint letter to Parliament.

The Cabinet Member for Property and Business Services reported on the savings achieved by Orbis.  There were no E&D impacts except those around IT.

The Cabinet Member for Highways referred to recommendation two of the report and reported that there would be £0.5m extra funding for pot holes this year.  He also explained how he was engaging with Local Committees to spread understanding of highways spending. 

The Cabinet Member for Environment and Transport reported on the savings made in the waste service and the increase in spending on the Eco Park. 

The Cabinet Member for Communities reported that whilst challenging the savings targets had been met last year, further work was being undertaken on collaboration.  She thanked staff of all services for helping services to come in on budget.

RESOLVED:

That the following be approved:

1.    £21.3m use of reserves in 2018/19, reduced from £23.6m due to receipt of additional funding announced in the Final Settlement on 7 February 2018 (paragraph 16 of the submitted report).

2.    Changes to the capital programme as outlined in paragraphs 28 and 29 of the submitted report, including £5m increase in 2018/19 for highways as a result of recent severe weather, funded by use of capital receipts. This brought the three year capital programme to £322m, with £144m in 2018/19.

3.    A savings programme over the three years of MTFP 2018?21 to build the Council’s financial resilience (paragraph 17 of the submitted report).

4.    The 2018/19 service strategies (Annex 1 of the submitted report).

5.    The detailed service revenue and capital budgets for the year 2018/19 and indicative budgets for the years 2019-21, including amendments resulting from the Final Local Government Financial Settlement and other Government funding changes announced since 7 February 2018 (Annex 1 of the submitted report).

6.    The Council‘s proactive and systematic engagement in: responding to proposed changes in local government funding to ensure these changes do not further disadvantage Surrey, and seeking appropriate recognition by the Government of the costs of delivering services in Surrey.

7.    Publication of the service revenue and capital budgets as the Medium Term Financial Plan 2018?21 (MTFP 2018?21).

8.    Decisions related to the Early Years single funding formula (paragraphs 50 and 51 of the submitted report):

·      the local authority retained £3.4m of the Early Years Dedicated Schools Grant to manage the sector, support providers and secure the supply of places;

·      the SEN Inclusion Fund to provide additional funding to providers for 3-4 year olds with special educational needs was set at £1.4m (£1.2m in 2017/18)

·      fund individual Early Years providers at rates which were commensurate with the levels of funding in the Early Years DSG:
- £4.60 / hour for three and four year olds (£4.51 in 2017/18);
- £5.88 / hour for two year olds (unchanged); and
- £2.77 / hour additional deprivation funding based on eligibility for the early years pupil premium on economic grounds.

That the following be noted:

9.    The Director of Finance’s letter to the Ministry for Housing, Communities and Local Government confirming the Council would spend the Adult Social Care Precept entirely on adult social care functions (Annex 2 of the submitted report);

10.  Fees & charges approved under delegated powers (Annex 3 of the submitted report).

11.  Equality Impact Assessments of the savings proposals within directorate and service budgets (Annex 4 of the submitted report).

Reasons for decisions:

The Council has a legal duty to prepare a balanced and sustainable budget and to deliver statutory services to residents.

The Medium Term Financial Plan 2018?21 (MTFP 2018?21) is a three year budget that reflects assumptions about the current local and national financial, economic and political environment. Setting a three year budget is a key element of the Council’s multi-year approach to financial management and its aim of achieving a sustainable financial position. Regular reporting through the year will enable effective tracking and management of progress with the strategy and the budget.

The Leader left the room for one minute during Cabinet Member updates.