Agenda item

Further to Minute 24 (21 July 2015), the Cabinet Member for Finance and Central Services presented a report on the Council’s projected financial position for 2016/17 and beyond, in light of the Local Government Finance Settlement (LGFS) announced by the Chancellor on 17 December 2015 and other issues which had impacted on the Council’s Medium Term Financial Strategy (MTFS).

The LGFS was slightly better than expected but still presented the Council with a circa £63m budget gap by 2020/21 based on current projections.  The position for the 2016/17 financial year had also improved and it was now anticipated that there would not need to be a call on reserves in order to set a balanced budget. 

The Cabinet Member referred to a number of the budget pressures that had arisen during 2015/16 which had impacted on the MTFS since the meeting of 21 July 2015, which included:

·  Review of Savings Proposals – The delay to the creation of a Leisure Trust had created a pressure of £1m in 2016/17, while the suspension of saving proposal ACS/SAV/12a in relation to commissioned advice and welfare rights advice services to residents would leave a further shortfall of £0.28m from 2016/17.  In respect of the latter, the Cabinet Member for Adult Social Care and Health confirmed that the full funding to enable the service to continue during 2015/16 and 2016/17 had been identified, with the position for 2017/18 and beyond to be considered as part of the Ambition 2020 programme. 

·  London Living Wage – It was noted that full details of the proposal to apply the London Living Wage with effect from 1 January 2016 would be presented to the next meeting of the Cabinet.

·  ELWA Levy – An increase of £0.626m for 2016/17, which was £0.45m above the projected increase.  Members commented on the year-on year increases to the ELWA levy and the constraints of ELWA’s 25-year waste disposal contract, which the Leader advised was also a matter of discussion amongst the Leaders of the four ELWA boroughs.  The Chief Executive advised that the issue was being considered under the Ambition 2020 programme but he stressed that the relative low level of recycling by Barking and Dagenham residents was also a significant factor and a change of behaviour was required if the Council’s waste disposal costs were to reduce in the future.

The Cabinet Member for Finance and Central Services outlined some of the key issues arising from the LGFS that affected the MTFS position, which included the change in methodology for distributing Revenue Support Grant, the level of New Homes Bonus for 2016/17 to 2018/19 and the potential top-slicing to support the London Enterprise Panel, changes to Care Act funding and arrangements regarding Better Care Fund grant monies. 

The MTFS also included provision for the Government’s social care precept on Council Tax bills of 2% from 2016/17, which would be on top of the Council’s planned 1.99% Council tax increase for 2016/17.  The Cabinet Member for Adult Social Care and Health commented that the introduction of the social care precept represented an abdication by the Government of its responsibilities to properly fund essential care services for the elderly and vulnerable.  She added that as well as setting a very dangerous precedent, the Government’s policy was discriminatory as the social care precept would be of greater benefit for those Tory-led Councils that had large Council Tax bases as opposed to boroughs like Barking and Dagenham that had higher levels of need but a lower Council Tax base.  To exemplify the disparity, the Cabinet Member explained that the 2% precept equated to only £890,000 additional revenue, which was the equivalent of just 30 new placements. 

Members also commented on the significant implications for working families as a consequence of the Government’s intended £40,000 cap on household income for those living in social housing and the need for the Government to re-think its Tax Credits scheme as well as its plans for the Universal Credit scheme, as evidence now suggested that the arrangements would not succeed in encouraging people back into work.

Cabinet resolved to:

(i)  Note that the Council had a projected balanced budget in respect of 2016/17;

(ii)  Note the additions and amendments to the Medium Term Financial Strategy, as set out in sections 2, 3, 4 and 5 of the report;

(iii)  Note that the Council’s budget strategy incorporated the 2% Council Tax charge in respect of the social care precept, as set out in paragraph 5.4 of the report;

(iv)  Note that the social care precept of 2% would be charged in addition to a 1.99% increase on Council Tax proposed for 2016/17;

(v)  Note that the Government had yet to announce whether the London Enterprise Panel (LEP) top slice would be applicable for 2016/17, which could reduce the Council’s overall funding by c£1m as set out in paragraphs 6.6 to 6.8 of the report, and that should a LEP top slice be applicable, Members would be requested to approve a drawdown equivalent to the level of the top slice from reserves to enable the Council to set a balanced budget for 2016/17;

(vi)  Agree to fund £2m from reserves to mobilise the Ambition 2020 programme from April 2016 onwards, as set out in section 9 of the report; and

(vii)  Agree to the Council’s capital bids for 2016/17 to 2019/20, as set out in section 10 and Appendix 2 to the report.