Agenda item

Joint report of the Chief Executive and the Head of Corporate Resources

The Committee considered the joint report of the Chief Executive and the Head of Corporate Resources that provided information on the following issues in connection with the Council’s forthcoming consideration and approval, on 28 February 2019, of the Budget Plan for 2019/20 and the level of Council Tax for 2019/20:

·       An assessment of the Council’s current financial position and approach to the 2019/20 Budget Plan and preparation for the new three-year budget period 2020/21 to 2022/23;

·       Progress that has been made during the last year within the Council’s Framework for Change programme;

·       An update on the Government’s announcement of resources that are available to the Council for 2019/20;

·       The Council’s current financial position and the assumptions built into the Medium Term Financial Plan;

·       The proposed Budget for 2019/20; and

·       The proposed Capital Programme for 2019/20.

As such, the report set out the financial strategy of the Council and the national and local financial context within which it was operating; indicated that the Council had a statutory requirement to remain financially sustainable and to balance its budget every year; that the Council’s Framework for Change Programme was a comprehensive and ambitious programme that sought to support the delivery of the Council’s core purpose; that as would be expected with a programme of this size and complexity that spanned a number of financial years, the detailed proposals had been and would continue to be the subject of change as they were developed and ultimately implemented; that within this context, a detailed assessment of the previously approved plans for 2019/20 had been undertaken to confirm their deliverability; and that in addition, a limited number of additional savings proposals had been identified to balance the budget and ensure long-term financial sustainability.

Regarding the national context and financial environment the report indicated that 2019/20 would be the tenth year of the Government’s programme of austerity that the impact of continuing central government funding reductions on local government since 2010 was stark and had been widely reported; that   the National Audit Office (NAO) had published a report into the financial sustainability of local authorities which summarised the legacy of funding reductions and outlined the main challenges facing councils over the short and medium term; that the NAO found that local authorities experienced an average 49.1% real terms reduction in central government funding between 2010/11 and 2017/18; but that for Sefton, central government funding had reduced by 51% compared to 2010 thus demonstrating the inequality in funding reductions across the country and the disproportionate impact on this Council. 

With regard to local factors and the approach to sustainable financial planning the report indicated that Sefton, like many local authorities, had found the last ten years challenging in terms of the national funding conditions and in light of significant and growing pressures across a range of council services; that the Council had a proven track record of effectively managing its finances, meeting its financial objectives and delivering financial sustainability, however this was becoming increasingly difficult particularly bearing in mind that the 10 year austerity budget reductions for Sefton had resulted in a £233 million funding gap by the end of 2019/20 with a direct loss of 51% of government funding which equated to £722 per Sefton household; however, that in the Council’s recent Peer Review the approach to sustainable financial management was a key strength in the management of the overall Council.

The report also provided information on the following matters:

·       Framework for Change Programme - The delivery vehicle for the Council’s core purpose, with financial sustainability at its heart, was the Framework for Change programme.  The key pillars of the programme were Growth, Public Sector Reform, Service / Corporate Savings Options and Strategic Investment

·       The 2018/19 budget position and impact on 2019/20 - the latest 2018/19 budget monitoring position for December 2018 reported a projected net service deficit of £6.760m.  Best estimates of the impact on the 2019/20 budget of the current cost associated with the demand for front line services was that it would mean full year equivalent pressure of £7.800m.  Provision would be made for this sum in the budget and Major Services Reviews would seek to reduce this pressure where possible.  This, together with the final outturn position, would determine the final budget allocation to these services with Cabinet being presented with recommendations at the appropriate time. 

·       Review of Public Sector Reform Projects (PSR) - the total savings planned for 2019/20 from the PSR programme was £12.882m.  However, the budget planning assumptions had now been revised to £9.517m, a reduction of £3.365m

·       Medium Term Financial Plan Update (MTFP) 2019/20 – relating to: the Local Government Settlement for 2019/20 in respect of funding changes, winter pressures funding, social care support grant and business rates retention – levy account surplus; Key MTFP updated assumptions in respect of the business rates and Council Tax base, highways maintenance capitalisation, provision for pay inflation and pension increases, supplies and services, investment strategy, other changes and contingency

·       Service Delivery Options - in order to support the revised funding gap, a number of additional Service Delivery Options were now proposed as specified in paragraph 6.3 of the report

·       Risk Management, Financial Monitoring and Sustainability - in order to reduce the risk of significant variance to the budget plan the Council had introduced a number of safeguards.  Risk management had been reviewed and an enhanced risk management process adopted with new operational and service risk registers in place that fed into the overall corporate risk register

·       Budget Planning 2020/21 to 2022/23 - 2019/20 was the final year of the Government’s four-year fixed settlement period.  This, coupled with the number of short term additional funding announcements over the past two years, meant that much was unknown regarding medium and long-term core funding from central government beyond 2019/20. The Council would develop a three-year budget from 2020/21 to 2022/23 and at present the estimated shortfall over the three-year period was £45m

·       Budget 2019/20 specific issues relating to charges in respect of levying bodies; the proposed overall Council Tax increase that would be reported to Council following any recommendations from Cabinet; Dedicated Schools Grants; and other Government Grant notifications    

The report concluded by detailing the summary of budget proposals for 2019/20; precepts; the Capital Programme 2019/20 to 2020/21; and seeking the Committee’s comments to Cabinet which can be considered as part of the formal approval of the Budget Plan for 2019/20 and the Council Tax for 2019/20.

The following appendices were attached to the report:

This report would also be considered by Cabinet and Council at their meetings to be held on 14 and 28 February 2019 respectively.

Members of the Committee asked questions/commented on the following issues:

·       The budget option to discontinue the food waste collection service and its impact on landfill; and whether an environmental impact assessment had been undertaken in respect of this option

·       The recent Government announcement of a further £1.3b cut to local authorities and its implication for the Council’s budget forecast position

·       The efficiencies that the Council had introduced since 2010, for example, agile working practices, to reduce pressures on the budget  

RESOLVED: That