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) (Cabinet, 11 February 2016)

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.

(c) The precautionary items for the General Fund, as set out in Appendix B2 of the report, are approved.

(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.

Further to recommendation (g) above, Council is RECOMMENDED to agree the statutory resolution in respect of the Council Tax for 2016/17. This will be published separately as a supplementary document.

Further to recommendation (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. The options regarding supported (sheltered) housing are set out in the following sections of the updated Housing Revenue Account Budget Setting Report, attached at Appendix C:

(a) Section 2, Review of National Policy Context;

(b) Section 3, Rent Setting;

(c) Section 4, Overall Budget Position; and

(d) Appendices G (1) and G (2), HRA Summary 2015/16 to 2020/21.

Council is therefore RECOMMENDED to approve applying the Government’s exemption of supporting housing from the 1% rent cut.

Council:

(a) APPROVED 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 as submitted.

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

(c) APPROVED the precautionary items for the General Fund, as set out in Appendix B2 of the report.

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

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

(f) RESOLVED that 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) RESOLVED that the Council Tax requirement for 2016-17 is £7,852,090.

(h) RESOLVED that 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 as set out in the statutory resolution below.

(i) APPROVED 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(1) of the Housing Revenue Account budget setting report, in the context of the updated 30 Year Housing Revenue Account Business Plan.

(j) AGREED, subject to resolution (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) APPROVED 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.

(l) APPROVED 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.

(m) APPROVED 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.

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

(o) APPROVED 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.

(p) APPROVED to earmark 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.

(q) APPROVED 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.

(r) RESOLVED to grant delegation 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) APPROVED the borrowing and investment strategy for the year to 31 March 2017, as set out in Appendix D1 of the report.

(t) APPROVED 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.

(u) APPROVED 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.

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

(w) RESOLVED that 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) NOTED The Government’s exemption of supported housing from the 1% rent cut.

In addition to resolution (g) above, Council AGREED the following statutory resolution in respect of the Council Tax for 2016-17:

That the following amounts be now calculated by the Council for the year 2016-17 in accordance with Sections 31 to 36 of the Local Government Finance Act 1992:

(a) £91,936,833 being the aggregate of the amounts which the Council estimates for the items set out in Section 31A (2) (a) to (f) of the Act (gross expenditure including parish precepts, the Housing Revenue Account and additions to reserves)

(b) £79,309,268 being the aggregate of the amounts which the Council estimates for the items set out in Section 31A (3) (a) to (d) of the Act (gross income including the Housing Revenue Account and use of reserves)

(c) £12,627,565 being the amount by which the aggregate at (a) above exceeds the aggregate at (b) above, calculated by the Council, in accordance with Section 31A (4) of the Act, as its council tax requirement for the year (net expenditure to be met from council tax) being the district amount of £7,852,090 and the parish precepts of £4,775,475

(d) £209.56 being the amount calculated by the Council, in accordance with Section 31B of the Act, as the basic amount of its council tax for the year (average council tax for a band D property for the District including parishes)

(e) £4,775,475 being the aggregate amount of all special items referred to in Section 34(1) of the Act (parish precepts)

(f) £130.31 being the amount calculated by the Council, in accordance with Section 34(2) of the Act, as the basic amount of its council tax for the year for dwellings in those parts of its area to which no special item relates (average council tax for a Band D property for the District excluding parishes), the amounts being for each of the categories of dwellings shown below in Table 1

(h) In accordance with Section 34(3) of the Act, the basic amounts of council tax for the year for dwellings in those parts of its area to which a special item relates are shown by adding the amounts for band D for the District Council in Table 1 below and Appendix A of the revised supplement

(i) In accordance with Section 36(1) of the Act, the amounts to be taken into account for the year in respect of categories of dwellings listed in different valuation bands are shown by adding the amounts for each band in Table 1 below and Appendix A of the revised supplement.

That it be noted that for the year 2016-17 Cambridgeshire County Council, the Cambridgeshire Police and Crime Commissioner and Cambridgeshire and Peterborough Fire Authority have stated the following amounts in precepts issued to the Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings as shown in Table 1:

	Band	Band	Band	Band	Band	Band	Band	Band
Table 1	A	B	C	D	E	F	G	H
	£	£	£	£	£	£	£	£
County Council	778.08	907.76	1037.44	1,167.12	1,426.48	1,685.84	1,945.20	2,334.24
Police & Crime Commissioner	122.10	142.45	162.80	183.15	223.85	264.55	305.25	366.30
District Council	86.87	101.35	115.83	130.31	159.27	188.23	217.18	260.62
Fire Authority	43.68	50.96	58.24	65.52	80.08	94.64	109.20	131.04

and

j) that the Council, in accordance with Section 30(2) of the Local Government Finance Act 1992, hereby sets the amounts set out in Appendix B of the revised supplement as the amounts of council tax for the year 2016-17 for each of the categories of dwellings shown in Appendix B.

SUPPORTING INFORMATION IN RESPECT OF SETTING THE COUNCIL TAX

Including the precepts from the County Council, the Police and Crime Commissioner, Fire Authority and all of the parishes, the formal Council Resolution would produce a council tax for a band D property of:

£ p			%
District Council	General Expenses	130.31	+3.99%
	Special Expenses for Parish Precepts (average)	79.25	+3.87%
County Council		1,144.26	+0.00%
	Adult Social Care	22.86
Police Authority		183.15	+0.99%
Fire Authority		65.52	+1.96%
Total		1,625.35	+2.13%

On these figures the council tax would range from £1,030.73 for Band A to £3,351.52 for Band H before any discounts or benefits.

Appendix C of the revised supplementshows the General Fund summary including Parish precepts and the final Formula Grant figure.

Councillor Simon Edwards proposed recommendations (a) to (x) as set out in the agenda, subject to Appendix G in recommendation (i) referring to Appendix G(1), together with the wording of the statutory resolution in respect of the Council Tax for 2016/17 that had been circulated in the revised supplement.

Councillor Edwards highlighted the following aspects of the proposed budget to Members, which had been produced following significant changes announced as part of the Local Government Finance Settlement:

· 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 opposed 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;

· 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. This actually equated to a 4% reduction in view of the fact that 3% rent increase had originally been accounted for in the Housing Revenue Account Business Plan;

· Appendix G(1) set out a Housing Revenue Account based on those in sheltered housing also receiving a 1% rent reduction. This was the option proposed, to ensure equality for all Council tenants.

Councillor Mark Howell, Portfolio Holder for Housing, seconded the proposal.

Councillor Bridget Smith, Leader of the Opposition, was heartened that the proposal included a rise in Council Tax which would protect the services that residents and communities depended upon. She said that this was the right thing to do and that the proposal reflected a responsible budget which she would be able to support.

Councillor Tumi Hawkins highlighted the risks to the Council as a result of changes the Government was imposing with regards to social housing, which she said would be compounded by changes to private housing. Councillor Hawkins was particularly concerned about the pressure these changes would place on the authority’s budget and the impact on the welfare of residents.

Councillor Sebastian Kindersley was pleased to see that additional funding had been earmarked in the list of precautionary items in respect of homelessness. He referred to an increase in traveller pitches from £68 per week to £78 which he thought was a high percentage increase and felt it necessary to highlight. Councillor Kindersley also supported provision of the Robson Court scheme in Gamlingay included in the new built and redevelopment programme.

Councillor Mark Howell, Portfolio Holder for Housing, reiterated that the 1% reduction in rent actually equated to a 4% reduction year on year due to the fact that the original Housing Revenue Account business plan had factored in a 3% rent increase. In terms of homelessness, Councillor Howell explained that additional funding had been identified in the list of precautionary items in case it was needed and further consideration would be given to making more provision available for homelessness in the Council’s future budgets. He emphasised, however, that prevention work was key to addressing homelessness in the district and asked all Members to inform anyone who they thought may be at risk to contact the Council.

Voting on recommendations (a) to (x) as set out on the agenda, subject to Appendix G in recommendation (i) referring to Appendix G(1), with 48 votes in favour, 2 abstentions and 1 not voting Council: