Agenda item

The Executive Member for Finance submitted a report inviting Members of Corporate Business Scrutiny Committee to consider revisions to the Financial Strategy, including its policy on using reserves and the proposed planning assumptions to be used to update the Medium Term Financial Plan for 2014/15 to 2017/18, the detail of which was set out in the report now submitted and Essential Reference Papers.

The Director of Finance and Support Services explained how the various sections of the report had been broken down and drew Members’ attention to the announcements made in June 2013 around funding for Local Government in the Comprehensive Spending Review.  The key points were set out in the report now submitted.

The Director of Finance and Support Services reminded Members that savings would be achieved in relation to shared services for  ICT, Print and Design and Business Improvement,  and these had been included within the Medium Term Financial Plan as presented to this meeting.  Underlying assumptions had also been made around inflation, savings and growth.  Members noted that the budget would be set in January 2014.  Scrutiny would have an opportunity to consider the detailed budget setting at future meetings, prior to the final budget.  Officers are currently undertaking budget challenge sessions with budget holders and the outcome of these meetings would feed into the final budget process.

Councillor J Ranger supported the proposed £200,000 contingency to help meet any changes in funding.  He referred to the triennial review of pensions which would report in November 2013 and of the Council having to meet additional contributions.  This could be funded either through additional ongoing revenue funding or as a one off payment.  The Director of Finance and Support Services suggested that Members may wish to consider funding any one-off sums from the Council’s General Reserves if the financial implications of doing so were favourable.

Councillor J Ranger referred to the planning assumptions in relation to contract inflation and the different assumptions across contracts. The Director of Finance and Support Services explained the different factors that were included in the major contracts and stressed the importance of choosing the most appropriate inflation factor when procuring services.

Councillor J Wing sought clarification on the New Homes Bonus and how this was applied to parishes.  The Executive Member for Finance provided clarification.  He referred to the triennial review of Pension contributions and suggested that it might be prudent for the Council to make a one off payment to ease the burden going forward.  He sought Members views on the suggestion.

Councillor G Jones stated that it would be embarrassing for the Council to hold more in the general reserve pot than it should as this could be seen as having “taken from residents” more than was needed and that reserves should be used to assist the community and cut down pension deficit.

The Chairman stated that there was nothing embarrassing about achieving more with less and that there was merit in saving money by being able to make a contribution to the pension fund.  The Executive Member for Finance reminded Members that Council Tax last year had been reduced and that Members might also want to consider reducing fees and charges, and look initially to fund any financial implications from the general reserves.

The Director of Finance and Support Services referred to the Government’s new funding regime in terms of the Revenue Support Grant, and retention of business rates and that it was anticipated that this would be cut by 10% per year from 2015/16.  In response to a query from Councillor J Wing, the Director of Finance and Support Services explained the basis of “Invest to Save” and how this affected the Council.

Members supported the suggestion that the Council should reduce its level of general reserves and that they be applied particularly in relation to keeping car park charges down and reducing the pensions shortfall and that these be fully costed for further consideration.

The Committee received the report.

RESOLVED – that the Executive be advised that (A) the proposed financial strategy be recommended for approval;

(B)       the planning assumptions set out in this report should be adopted by the Council as the basis for framing the 2013/14 budget and Medium Term Financial Plan to 2014/15; and

(C)       the concept of reducing the Council’s General Reserves particularly in relation to keeping car parks charges down and reducing the pensions shortfall, be supported and that these be fully costed for further consideration.