Agenda item

This report provides an update on progress towards setting the Council’s draft capital and revenue budgets for 2019/20. In accordance with the Constitution, Cabinet is required to develop ‘initial budget proposals’ approximately three months before finalising the budget and setting council tax levels at the end of February 2019. The draft budget is based on the principles contained in the Medium Term Financial Strategy (MTFS) 2018-2023 approved by Cabinet in September and reflects the latest formula grant assumptions. 

Discussion

The report presented the Council’s draft 2019/20 budget. This built upon assumptions that had been presented to Cabinet in the Medium Term Financial Strategy in September 2018. The budget was due to be approved by Council on 21 February 2019. The draft budget presented a £4.408million deficit for 2019/20, which was bigger than the deficit that had been set out in the Medium Term Financial Strategy. There were overspends in a number of service areas, which included Children’s Social Care SEND related placements. The Government’s October 2018 Budget had outlined the additional provision of £650million of funding, across the country, for social care. Officers estimated that the Council would receive an additional £2.6 million as a result, which would help to address the gap in the budget but this income had not been included in the draft budget.

The Council had been unsuccessful in its bid for 2019/20 Business Rate retention. This would have allowed the Council to retain all Business Rates generated in Medway rather than being required to pass 50% of the revenue to the Government for reallocation. The Council had successfully taken part in a pilot for 2018/19, which had been a boost to the financial position and the draft budget had assumed that the 2019/20 bid would be unsuccessful. It was noted that Medway’s Revenue Support Grant from the Government had reduced from £65million in 2009 to £6.3million for the next year as the Government moved towards making councils reliant on locally generated funding. The Government had confirmed that there would be no change to the council tax referendum limit or the new homes bonus, both of which had been assumed in the draft budget. Some local authorities were projecting that they would have to pay the Government more than they would receive in Revenue Support Grant. This was not expected to apply to Medway in the short or medium term. Lead Members and officers were currently working to produce a final draft budget to present to Council. There was a statutory obligation for this to be a balanced budget.

A Committee Member asked what mitigation there could be to give confidence that essential services could be maintained in view of the budgetary pressures. The Head of Finance Strategy said that, in relation to the extra £2.6 million of funding for social care, there would be freedom for the Council to determine how to allocate this across children’s and adult social care. There was an ongoing process between Lead Members and Children and Adults to allocate funding. The Government had also announced that reductions in business rate relief would be cost neutral for local authorities.

In response to a further Member question, the Head of Finance Strategy said that the Chief Finance Officer and she would be available to attend scrutiny committee meetings when there was due to be discussion of budgets.

Decision

The Committee: 

i) Noted that Cabinet had instructed officers to continue to work with Portfolio Holders in formulating robust proposals to balance the budget for 2019/20 and beyond.

ii) Commented on the proposals outlined in the draft capital and revenue budgets in so far as they related to the services within the remit of the committee and agreed to feed this back to the Business Support Overview and Scrutiny Committee in January.