Agenda item

The purpose of the report was to provide Members with an update on progress with regard to Budget Setting for 2020/21, the latest Medium Term Financial Plan (MTFP) forecasts and the areas to be finalised.

The Council’s current MTFP projects a budget gap for 2020/21 of £686k. Following the proposed MTFP bids and savings identified the Budget Gap is a surplus of £39k for 2020/21, but rises to £1.514m by 2024/25.

There remain a number of areas where budget forecasts are to be finalised therefore there is potential for the estimated Gap to change, and this will be reported to Members as the budget process progresses. The Executive is due to recommend its final budget proposals to Full Council in February 2020.

The Financial Strategy for Somerset West and Taunton Council (SWT) was approved by the Executive on 18 September 2019. This report also provided Members with an update on the Medium Term Financial Position (MTFP).

A further update on any significant changes to the MTFP was provided to the Scrutiny Committee on 6 November 2019. This was showing a budget gap in 2020/21 of £358k rising to £2.699m by 2024/25.

There are still some items which are unknown at this stage of the budget process. These are covered in section 10.

There have been some changes to the budget gap to incorporate known unavoidable pressures and some savings identified. The table set out:-

The table set out a summary of the Medium Term Financial Plan for Somerset West and Taunton. This is based on the current estimate of costs and predicted funding before MTFP bids and savings proposals below

General Reserves were currently estimated to be at £2.756m at 31^st March 2020, which was below the minimum operational target set out within the financial strategy of £3m.

It was recommended that £300k is transferred from the NHB reserves to General reserves to bring these back up above the minimum level. The s151 Officer would review the minimum reserve requirement in February 2020 as part of the final budget recommendations.

If all of bids and savings proposed were agreed the Draft Budget Gap has an estimated surplus of £39k for 2020/21, but rises to £1.514m by 2024/25.

The assumptions used in the previous report have not changed for Council Tax Charge increases. For financial planning purposes it was assumed Council Tax Charges will increase by 1.99% each year from 2020/21. This is subject to consideration by the Executive through the budget process, which will formally recommend its Council Tax proposals to Council each February as part of the Budget report. It is not known at this stage whether the Secretary of State will continue the option for the ‘threshold for excessive council tax increases’ for shire districts to increase tax by up to £5 (on a Band D charge). This is subject to confirmation annually through the Finance Settlement.

The Council Tax Base has been approved by the s151 officer on 13^th December 2019, which has resulted in reduction in the assumptions included in the last update to Scrutiny on 6^th November. Therefore this reduction has increased the Budget Gap for 2020/21 by £174k (shown in Table 2 above). The reduction in the base is mainly due to slower housing growth and increased Council Tax Support Scheme costs.

The 75% business rates pooling pilot scheme was for one year only in 2019/20. The Somerset Business Rates Pool continues under the 50% retention scheme in 2020/21. Indicative estimates at this stage show a potential gain of between £1m and £1.4m. The budget proposal above prudently includes £1m towards funding services in 2020/21. There is an element of risk as the actual income will not be confirmed until the end of 2020/21. This will be monitored through the budget monitoring process and if the £1m is exceeded options for allocating additional funds can be considered at that time.

New Homes Bonus was a non-ring-fenced grant designed to incentivise housing growth. A contribution of £2.75m from NHB across 2020/21 and 2021/22 is recommended towards balancing the budget in order for the proposed spending plans to be affordable. Officers are currently reviewing commitments against the capital programme for which NHB funding was previously assumed. Therefore if these costs are still to be incurred the Council might need to borrow, which will have an impact on future revenue costs.

Debate

·         Further details were requested in relation to DLO vehicles and the potential for these to be electric vehicles.

·         Members requested that the climate change budget be explored at the Climate Change working Group with consideration for it to increase from £75k to £150k if the need for this could be evidenced through Climate Change Projects.

·         Ongoing IT project costs would be provided to members when available later this week.

·         The funding earmarked for the East Quay wall was welcomed.

·         Members were reminded that budget options aligned the funding available to the priorities of the Council.

·         Costs of the final fix to the East Quay Wall be reported to members.

The Scrutiny Committee recommended:-

1)    To note the latest Medium Term Financial Plan forecasts and the areas to be finalised.

2)    Requested The Executive consider increasing the climate change budget from £75,000 to £150,000 and consult with the Climate Change working Group on what projects could be explored.