Agenda item

The Finance and Staffing Portfolio Holder presented the Medium Term Financial Strategy and explained that the Committee were being asked to consider the financial strategies and budgets prior to the report going to Cabinet and then Council.

The Finance and Staffing Portfolio Holder explained that for 2017/18 there had been real surprises from the Government, as expected the Local Government Settlement was £0. In fact the Government was in effect taxing the Council. It was noted that the Council were spending less and would have to continue to find extra savings or more ways of increasing income in the years ahead.

Funding Greater Cambridge Partnership

The Finance and Staffing Portfolio Holder explained that the amount of funding to the Greater Cambridge Partnership had been reduced, as the number of new homes built was less than expected, which meant a decrease in New Homes Bonus.

Council Tax

It was proposed that Council Tax be increased by £5 for a Band D property. The Committee accepted this proposal. The Finance and Staffing Portfolio Holder warned that the underlying Council Tax showed how much savings or additional income still had to be found.

Reserves

The Executive were currently recommending that the minimum reserves should remain at £2.5 million. This figure had been increased years ago from £1.5 million due to the financial uncertainty nationally.

The Finance and Staffing Portfolio Holder explained that whilst the five year Medium Term Financial Strategy showed the Council reaching the limit of its reserves, history had shown that either additional savings or additional income would be found to push this date further back.

Ermine Street Housing Ltd

The Committee welcomed the funds that had been brought in through Ermine Street Housing Ltd, but expressed concern that the Council was relying on this. The Finance and Staffing Portfolio Holder explained that the funds brought in for 2017/18 were higher than expected, but the Executive recognised the risks such as fluctuating interest rates and assured the Committee that the Council was not complacent. Ermine Street Housing Ltd had its own risk register.

Business Rates

The Finance and Staffing Portfolio Holder explained that Business Rate appeals could be backdated to 2010 and so could adversely affect the Council’s finances. The Business Rates revaluation, which came into effect in April 2017 could also reduce receipts. The implications of the Government’s Fair Funding Review was not yet known but it was likely to mean extra funding to the County Council at the expense of the Districts.

Precautionary items

It was noted that none of the precautionary items for 2017/18 had yet been spent.

Cost of planning appeals

Whilst noting the costs of appeals, two members of the Committee stated it was money well spent as it defended local democracy and championed the views of local residents by forcing deeply unpopular proposed developments to appeal. The Finance and Staffing Portfolio Holder recognised the strength of feeling from councillors and local residents, but it was his duty to inform the Committee that planning appeals, on decisions made by the Planning Committee against the recommendation of the officer, had cost the Council £250,000. It was noted that the Planning Committee was made up of all parties and took non-political decisions.

Local Plan

The Finance and Staffing Portfolio Holder explained that the £750,000 cost of the Local Plan had been budgeted for. It was not known if this funding was sufficient to cover the entire cost of the Local Plan. It was noted that all planning authorities had to deal with changing definitions resulting from a Supreme Court ruling regarding the definition of sustainability and five year land supply.

Cambridge – Milton Keynes – Oxford corridor

The Finance and Staffing Portfolio Holder explained that the Leader had met with the Mayor of Cambridgeshire and Peterborough and the local MPs about this matter. Hope was expressed that the Council would ensure that it would be involved in discussions about the route. The committee hoped that the Council could influence the routing of the proposed rail line.

Treasury Management

The Finance and Staffing Portfolio Holder explained that the Council was enjoying a far higher level of return compared to other authorities and this was due to the loan to Ermine Street Housing Limited.

Housing Revenue Account (HRA)

The Housing Portfolio Holder provided the Committee with an overview of the challenges facing the HRA.

Right to buy receipts

It was expected that there would be a reduction in the number of right to buy completions over the next five years. The Housing Portfolio Holder explained that if receipts were not spent within a certain time limit the receipts had to be returned to Government with interest. It therefore made sense to ensure that right to buy receipts were appropriately invested within the required timescale.

Rent

The Housing Portfolio Holder explained that rent had to be decreased by 1% for the next two years, but then will be increased by the rate of inflation plus 1% for five years.

Self-build housing

The Housing Portfolio Holder shared the Committee’s disappointment with regard to the lack of take up of self-build housing and she expressed the hope that this situation would improve.

Re-financing of housing debt

The Housing Portfolio Holder explained that the Council was not attempting to pay off its £205,000,000 housing debt and so this would have to be re-financed in the future.

The Finance and Staffing Portfolio Holder expressed his thanks to the officers for their hard work in producing the reports and appendices.

The Committee NOTED and ENDORSED the recommendations to Cabinet as laid out in the report.