Agenda item

This report presents the Council’s draft budget for 2013/2014.  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 2013.

The draft budget is based on the principles contained in the Medium Term Financial Plan (MTFP) 2013/2016 approved by Cabinet in October and reflects the formula grant assumptions for 2013/2014 announced as part of the consultation on the Resource Review this year. 

Discussion:

The Chief Finance Officer introduced the report and advised that the government had made several announcements about future funding since the drafting of the Medium Term Financial Plan (MTFP) that were incorporated in the report and the provisional settlement made to each Local Authority would not be published until 19 December 2012. The final budget for 2013/2014 would be very different from that presented in this report, as the forecast budget gap was now significantly greater than the MTFP had predicted and currently stood at £11,950 million. Table 4 in the report summarised the movement from the MTFP deficit of £5.917 million to the £11.950 million now shown and Members were advised of the various changes.

The Chief Finance Officer informed Members that the recent funding announcements were further complicated by a re-distribution of business rates, as set out in Appendix 1. The outcome of the combination of formula funding grant changes, changes to school funding, the Council Tax freeze and business rates re-distribution would result in the council having, over its current three year programme, a deficit of £11.9 million in 2013/2014,
£18 million in 2014/2015 and £23.5 million in 2015/2016, as set out in Table 5 of the report.

The committee discussed the late changes being made by the government to funding arrangements for Local Authorities and the far-reaching problems this caused for setting a balanced budget within the required timescales for the forthcoming financial year.

Members asked if Home to School Transport funding could be delegated to the Academies but officers advised that this was a statutory function for the Local Education Authority to be financed from a central budget and was not within the schools budgets.

The committee also asked about future funding for the Medway Tunnel and whether officers continued to lobby the government about taking over the funding for this, as it remained the only tunnel in England not funded by central government and took a large part of the council’s resources to maintain. The committee was assured that officers continued to use every means possible to lobby the government about this. Members asked that the financing of the tunnel was included in the budget report due to be considered by the committee at its next meeting.

Members discussed the proposed zero increase on pay budgets, which was one of the key assumptions that underpinned the budget requirement for 2013/2014 (as set out in paragraph 4.5 of the report) and asked what the national pay increase was estimated to be. Officers responded that this was currently set at 1% increase but there was an on-going consultation with staff about the council coming out of the National Agreement and introducing local pay negotiations.

A Member gave details of an extensive debate held by the Regeneration, Community and Culture Overview and Scrutiny Committee on road maintenance which had concluded that if additional monies were not included in the budget, there would be worse deterioration of the roads that would cost more to replace in the longer term. He asked if this additional funding could be found from capital expenditure, rather than be used from the revenue budget. Officers responded that an additional £1 million had been included in the original revenue budget proposals for 2013/2014 but this could no longer be included due to the increased deficit in the next three years. These works could be taken from the capital budget but there was no funding available in that budget either.

Members also discussed a current consultation being held by Kent County Council, which asked the public for their opinion as to where reductions in spending and services should happen and suggested that Medway Council should consider holding a similar consultation in the future.

Decision:

The committee noted the draft capital and revenue budget for 2013/2014 and forwarded the programme to individual Overview and Scrutiny Committees.