Agenda item

Medium Term Financial Strategy (General Fund budget 2016/17 including Council Tax setting), Housing Revenue Account (including housing rents), Capital Programme 2016/17-2020/21 and Treasury Management Strategy (Revised 2015/16 and 2016/17)

Decision:

Cabinet RECOMMENDED to Council that:

(a) The General Fund Capital Programme and the associated funding up to the year ending 31 March 2021, as set out in Appendix A1 of the report is approved as submitted.

(b) The revenue estimates for 2016-17 are approved as submitted in the General Fund summary, as set out in Appendix B1 of the supplementary report.

(d) The Medium Term Financial Strategy for the General Fund, as set out in Appendix B3 of the report in the supplementary agenda, is approved based on the assumptions set out in the report.

(e) The fees and charges proposed for 2016-17, as set out in Appendix B4 of the report, are approved.

(f) The Executive Management Team be instructed to identify additional income/ savings of £300,000 in 2016-17, rising to £930,000 from 2017-18.

(g) The Council Tax requirement for 2016-17 is £7,852,090.

(h) The Council sets the amount of Council Tax for each of the relevant categories of dwelling in accordance with Section 30(2) of the Local Government Finance Act 1992 on the basis of a District Council Tax for general expenses on a Band D property of £130.31 plus the relevant amounts required by the precepts of Parish Councils, Cambridgeshire County Council, the Cambridgeshire Police and Crime Commissioner and the Cambridgeshire Fire Authority, details of those precepts and their effect to be circulated with the formal resolution required at the Council meeting.

(i) The Housing Revenue Account revenue budget, summarised in the Housing Revenue Account Summary Forecast 2015-16 to 2020-21, as set out in Appendix G of the Housing Revenue Account budget setting report, in the context of the updated 30 Year Housing Revenue Account Business Plan, is approved.

(j) Subject to paragraph (x) below, council dwellings rents for existing tenants be reduced by 1%, in line with legislative requirements, anticipated to be introduced as part of the Welfare Reform and Work Bill 2015, with effect from 4th April 2016.

(k) The inclusion of an ongoing savings target for Housing Revenue Account services for the period from 2017-18 to 2020-21, at the initial rate of £250,000 per annum, recognising the financial constraints placed upon the Housing Revenue Account by changes in national housing policy, is approved.

(l) Inflationary increases of 1.4% in garage rents for 2016-17, in line with the base rate of inflation for the year assumed in the Housing Revenue Account Budget Setting Report, is approved.

(m) Proposed service charges for Housing Revenue Account services and facilities provided to both tenants and leaseholders, as set out in Appendix B of the Housing Revenue Account budget setting report, is approved.

(n) The charge for the cost of the provision of the alarm service in sheltered housing is set at £3 a week.

(o) The latest budget, spend profile and funding mix for each of the schemes in the new build programme, as set out in Section 5 and Appendix E of the Housing Revenue Account budget setting report, is approved.

(p) The required level of additional funding for new build investment between 2016-17 and 2020-21 to ensure that commitments can be met in respect of the investment of all right to buy receipts retained by the authority, up to the end of December 2015, is approved to earmark.

(q) The revised Housing Capital Investment Plan, as set out in Appendix H of the Housing Revenue Account budget setting report, in the context of the updated 30 Year Housing Revenue Account Business Plan, is approved.

(r) Delegation is given to the Executive Director (Corporate Services) in consultation with the Leader, to allow the Self-Build Vanguard scheme to proceed during 2016-17, should the business case presented be financially viable for both the General Fund and the Housing Revenue Account.

(s) The borrowing and investment strategy for the year to 31 March 2017, as set out in Appendix D1 of the report, is approved.

(t) The prudential indicators required by the Prudential Code for Capital Finance in Local Authorities for the year to 31 March 2017, as set out in Appendix D2 of the report, are approved.

(u) The Capital Strategy 2016-17 to 2020-21 and Corporate Asset Management Plan 2016-17 to 2020-21, as set out in Appendices D4 and D5, is approved;

(v) Any unspent New Homes Bonus money allocated to the City Deal be approved to roll forward to 2017-18.

(w) The Executive Director, Corporate Services, be given delegated authority to issue the final version of the Estimates Book, incorporating the amendments required from Council’s decisions.

(x) The Government’s exemption of supported housing from the 1% rent cut is noted.

In respect of resolution (x) above, Cabinet REQUESTED that the Executive Director and the Director of Housing prepare an updated Housing Revenue Account budget setting report, Housing Revenue Account revenue budget and Housing Revenue Account capital programme for consideration at the Council meeting on 25 February 2016.

Minutes:

Cabinet considered a report which provided Cabinet with an opportunity to recommend the Medium Term Financial Strategy to Council. A supplementary report was also considered, which set out updated versions of Appendices B, B1, B3, B3(a) and B3(b) following revised information received by Cambridgeshire County Council as a result of setting its budget.

Councillor Simon Edwards, Deputy Leader and Portfolio Holder for Finance and Staffing, presented the report, together with the supplementary report, and said that the recommendations encompassed the significant outcomes of the Local Government Finance Settlement. In taking Members through both documents, the following points were noted:

· the Revenue Support Grant would reduce by 48.7% from 2015-16 to 2016-17, by a further 75.2% in 2017-18 and to nil in 2018-19. The reduction to nil had been anticipated, but not as early as 2018-19;

· the basic principles of retained business rates would remain, however, an adjustment to the tariff deduction imposed by the Government would be introduced in 2019-20;

· the Government was proposing changes to the New Homes Bonus scheme and modelling in the report outlined the scheme changing from a six year scheme to a four year scheme from 2017-18. The Government was consulting on other reforms to New Homes Bonus, including:

- withholding new New Homes Bonus allocations in areas where no Local Plan had been produced;

- reducing payments for homes built on appeal;

- only making payments for delivery above a baseline representing ‘deadweight’;

· beyond 2017-18 it was possible that some of these other reforms could have adverse implications for the amount of New Homes Bonus that the Council may receive;

· £5 million of New Homes Bonus funding as a contribution towards the A14 infrastructure improvement scheme was still allocated in the Council’s budget for 2020-2021;

· all Councils had the ability to raise Council Tax by £5 as apposed to increasing Council Tax by any amount up to 2% without triggering a referendum. Three options for the District Council in terms of Council Tax increases had been set out in paragraphs 19, 20 and 23 of the original report, with each having a different impact on the savings or additional income that the Council would be required to make. The table in paragraph 19 of the original report summarised the impact of the different options that had been modelled. The option proposed was an increase in Council Tax of £5 this year and for every year of this parliament, with an increase of 2% year on year thereafter;

· significant savings had already been achieved in some areas, such as those through the shared waste service;

· the successful pilot of Ermine Street Housing Ltd had seen the company provide an income stream for the Council, with other projects such as the commercialisation programme anticipated to provide other sources of income;

· the Rural Services Grant had been increased from £32,261 to £129,850 in 2016-17 and from £46,457 to £104,848 in 2017-18. A new Transition Grant would also be available of £75,842 in 2016-17 and £75,575 in 2017-18;

· of the precautionary items listed in Appendix B2 of the report, specific reference was made to an increase of £250,000 for homelessness for 2016-17. This was a particular risk for the Council and would be monitored to establish how this aspect of the budget could be modelled in the future;

· the Capital Programme showed a General Fund allocation for capital receipts but was essentially a loan to fund Ermine Street Housing Ltd;

· in terms of the Housing Revenue Account capital expenditure, this had reduced by a third as a result of the imposed reduction in rents.

Councillor Mark Howell, Portfolio Holder for Housing, took this opportunity to present the Housing Revenue Account. Cabinet noted the following highlights:

· local authority landlords and registered providers were now required to apply a 1% reduction in rent levels across each of the next four years. Legislation was still going through Parliament, but it was anticipated that the draft Housing and Planning Bill 2015 would be passed in March for implementation in April 2016;

· a policy announcement by Government had also said that those in existing social housing with a household income in excess of £30,000 (or £40,000 in London) would be charged up to market rent for living in their home. This had been subject to consultation which ended on 20 November 2015 and Councillor Howell said that it would be impossible to predict how much this legislative change would cost the Council until more information was available;

· the draft Housing and Planning Bill 2015 provided further detail as to a new policy suggesting that local authorities should be required to sell any property that was valued in the top third for the area on the open market at the point at which it became void. An initial assumption had been made that approximately 1.8% of South Cambridgeshire District Council’s housing stock would need to be sold each year, representative of just under 100 properties per annum at the outset;

· the introduction of Universal Credit for working age tenants was still anticipated to commence from 29 February 2016. For South Cambridgeshire residents this would start with new unemployed claimants claiming out of work benefits receiving Universal Credit with a housing costs element, rather than Housing Benefit. The full impact of this and other welfare benefit changes on the Housing Revenue Account remained uncertain at present;

· the authority remained subject to the agreement with the Department of Communities and Local Government that allowed the retention of right to buy receipts, subject to a set of specific conditions. Appendix D to the Housing Revenue Account report highlighted the last position in terms of receipts held for re-investment.

Councillor John Williams, Deputy Leader of the Opposition, highlighted some discrepancies in the report in respect of the Council’s housing stock. He acknowledged that assumptions had to be made on stock numbers and, anticipating that the Government’s changes would impact the Council’s three bedroomed properties in particular, asked the Portfolio Holder whether he felt that this was where the Council would be hit the hardest.

Councillor Howell agreed to provide clarification over the discrepancies ahead of the meeting of Council scheduled to be held on 25 February 2016. In terms of three bedroomed properties, Councillor Howell explained that the majority of the Council’s properties were three bedroomed properties, so expected these to be impacted significantly. He stated, however, that he would be more concerned if the Council lost some of its one or two bedroomed properties as a result of the policy changes.

Councillor Bridget Smith, Leader of the Opposition, questioned the list of precautionary items in terms of where they sat in the budget. She also sought clarity over the sum for the ICT Capital Programme as she had understood from initial discussions that the sum would be up to £200,000, whereas £230,000 had been allocated to it in the list of precautionary items. Councillor Edwards confirmed that the items included in the list were precautionary, over and above the budget. The amount agreed for the ICT Capital Programme was already included in the budget, with this precautionary amount having been allocated in addition to that to mitigate against any unforeseen circumstances. He explained that these items were areas of expenditure over which there was some element of doubt as to whether they would occur. If they did occur, the Council would be required to fund them so they were reviewed every year and set out as a precautionary list.

Councillor Anna Bradnam referred to the Autumn statement and reference to Councils being able to retain 100% of business rates. She asked whether any further clarity had been provided in that respect. Councillor Edwards confirmed that he had not received any further information on this issue, but he estimated that Local Government as a whole would retain 100% of business rates, rather than specific Councils, with funding being distributed across the Local Government sector through the tariff mechanism.

Councillor Bradnam also reflected on the very difficult decisions that had to be taken in response to relentless changes in national housing policy and took this opportunity to thank the Portfolio Holder and officers for the work they were doing as a result.

Councillor Simon Edwards closed by saying that the Medium Term Financial Strategy proposed in the report should see the Council being free of the reliance on Government grant funding by the end of the Strategy period, with its self-sufficient budget being completely in the Council’s own control.

Councillor Ray Manning took this opportunity to thank Councillor Edwards, Alex Colyer (Executive Director, Corporate Services) and his team for the excellent work they had done in producing these budget reports.