Agenda item

The report set out the draft budget estimates for 2020/21, Medium Term Financial Plan (MTFP) forecasts, and 2020/21 Capital Programme and the proposed sources of funding.

The Provisional Finance Settlement was issued by Government on 20 December, and included details regarding general revenue grant funding, New Homes Bonus, and business rates retention baseline and tariff. The information arising is broadly in line with our previous expectations. The final Finance Settlement is expected to be published before Full Council meets on 19 February.

Executive is minded to implement a council tax increase of 3.17% (£5 on a Band D) in 2020/21, making the annual Band D charge £164.63. The increase in the tax rate provides an additional £282,249 income, however a reduction in the tax base equating to £27,299, results in a net additional council tax income of £254,950 compared to 2019/20.

Executive is also minded to precept £29,240 in special expenses for the Unparished Area of Taunton. This results in an annual council tax rate at £1.91 for a Band D for the Unparished Area of Taunton.

The 2020/21 draft budget also included a prior year net Collection Fund surplus of £250,191 (£63,877 council tax deficit and £314,068 business rates surplus).

On the advice of the S151 Officer, the Executive is minded to reallocate £3.5m from the Business Rates Retention Smoothing Reserve to a new Investment Risk Reserve to reflect a change in risk profiles across the two different funding streams.

The Provisional Settlement, provided the level of funding set by Government through business rates retention and general grants, was announced on 20 December 2019. The information arising is broadly in line with our previous expectations, with the main headlines being:

(a)   Council Tax – Government has confirmed district councils may increase council tax by up to the greater of £5 or 1.99% a year.

(b)   Revenue Support Grant – Confirmed as £6,444, slightly higher than our previous estimate of £6,340 due to an inflation factor being applied. Government has again mitigated the potential “negative RSG” which would have reduced our funding by £128,000.

(c)   Rural Services Delivery Grant – Confirmed as £241,506, no change to our previous estimates.

(d)   New Homes Bonus – provisional grant for 2020/21 confirmed as £3,253,289, which is £38,529 higher than previous estimates. Information included with the Settlement confirms the 2020/21 ‘increment’ within the NHB calculation will be for one year only – not four years as per previous years. It also indicates (but subject to future Finance Settlements) that the legacy payment from the 2018/19 and 2019/20 allocations will apply for four years, therefore the S151 Officer is minded to add the projected income back into the MTFP forecasts for 2021/22 and 2022/23, totalling £2.5m over the two years.

(e)   Business Rates Retention – Baseline and Tariff allocations in line with our previous estimates. Local estimates for total business rates income are due to be completed by the end of January 2020 which will determine the net income retained by SWT including growth above the baseline and potential Pooling gains.

Debate

·        Levels of funding in relation to Climate Change were criticised. As one of the Councils key objectives a request was made for increasing the funding.

·        It was considered if more funding could be considered for the unparished area. Through the Charter Trustees in the next financial year the unparished area would be able to precept.

·        Changes to Earmarked Reserves were considered.

·        Ideas had been put forward with the environment strategy development and community engagement around this.

·        Funding for tree planting and public conveniences were considered.

·        Income through the sale of assets had not been forecasted.

·        Further information was requested around CIL allocations and community development.

            The Scrutiny Committee:-

1.     Supported a recommendation to the Executive and Full Council to approve the Draft Revenue Budget expenditure, savings and income targets, subject to any final adjustments as may be required for new information prior to Full Council (such as the NNDR1 final estimates and the Final Finance Settlement).

2. Scrutiny supported a recommendation to the Executive and Full Council to approve the new capital schemes of the General Fund Capital Programme Budget of £12.015m for 2020/21, as set out in Appendix A and Table 10.

3.    Scrutiny supports a recommendation to the Executive to approve a virement from the Capital Project for Transformation and Office 365 to the project for the Change Programme in the 2019/20 budget of £774k.

4.     Scrutiny is recommended to support the reallocation of £3.5m from the BRR Smoothing Reserve to the Investment Risk Reserve.