Consideration was given to the report of the Executive Directors on the Council’s Medium Term Financial Plan (MTFP) 2020/21 to 2024/25.  The MTFP set the financial framework for the next five years and would be modified as the financial situation of the Council changed during that period. It was important that the MTFP supported the delivery of the Council’s aims and objectives as set out in the Corporate Plan.  The report had also been scrutinised by the Overview and Scrutiny Committee on 25 November 2019; a copy of the minutes was tabled at the meeting.  The following points were noted:

·        Budget Process: The Council had introduced a new three phased budget process. The third phase would commence in January 2020, once the Government settlement had been announced.

·        Local Government Settlement 2020/21: The Council no longer received Revenue Support Grant and was budgeting for a net retained income from business rates for 2020/21 of £3.5m; a fall of £3.1m.  Members noted that the Spending Review and Business Rates reset had been delayed.  It was anticipated that the 2020/21 funding levels would rollover, including the Homelessness Support Grant.  The Government’s technical consultation proposed that the Council Tax Referendum limit be reduced from 3% to 2%.

·        Non Domestic Rates (Business Rates): The Council was currently part of the Government’s East Sussex 75% business rate retention pilot which was scheduled to conclude by the end of the financial year.  Delegated authority was required for the Assistant Director, Resources to finalise the Council’s participation in the reformed East Sussex Business Rate Pool.  The Council could retain up to 50% of business rates growth.

·        News Homes Bonus Grant (NHBG): The five year forecast assumed that the NHBG would be reduced so that by 2021/22 there would be no reliance on this funding.

·        Council Tax: The forecast currently assumed an annual increase of 2% which would generate additional income of £137,000.  An increase of £5 per annum would generate a further £54,000 of income.

·        Cost Pressures: It was predicted that the base Revenue Budget would increase as a result of the new waste collection contract, homelessness demands, staffing costs based on the current workforce.

·        Rother 2020 Programme – Income Generation and Cost Savings: The programme had broadly delivered or identified £1.8m of additional income and savings.

·        Five Year Forecast: Reserves of £4.8m would be required to support a balanced budget by 2024/25, as well as £2.5m to support the Capital Programme.

·        Cost Saving and Income Generation (Rother 2025): Additional savings would be required from the Council’s Lean and Demand Project.  Investment in technology would be required to improve Council efficiencies. Officers would be reviewing service provision, priorities and devolvement opportunities.  Approximately £2.2m additional income by 2024/25 was anticipated from the Council’s Property Investment Strategy.  A reduction in staff would be required through voluntary or compulsory redundancies or the deletion of vacant posts.  Increased shared services across local authorities would be explored.

·        Revenue Reserves and General Fund Balance: The Council’s usable reserves were expected to be £14.8m by the end of the financial year. The current MTFP estimated that £4.8m of reserves would be needed to support the Revenue Budget over the next five years. Due to estimated inflated costs, the latest five year forecast showed an increased use of reserves of between £5.3m and £6.5m between 2020/21 and 2024/25.

·        Budget Consultation: Would be held between 3 December 2019 and 31 January 2020. The final outcome would be reported to the OSC on 27 January 2020 and Cabinet on 10 February 2020.

Cabinet was supportive of the current Council Tax Reduction Scheme for 2020/21.  It was also agreed that the Council maintained its policy of maximising the annual increase in Council Tax within the Government’s referendum limit and that the Assistant Director Resources be granted delegated authority, in consultation with the Cabinet Portfolio Holder for Strategic Overview, Finance, Resources and Value for Money to finalise the East Sussex Business Rate Pool agreement.

The MTFP highlighted the challenges the Council continued to face and was now focused on achieving financial self-sustainability, particularly through investment in the local economy.

RECOMMENDED: That the current Council Tax Reduction Scheme be affirmed and continue for the 2020/21 financial year.

AND

*RESOLVED: That the:

1)     the financial issues considered in this report be reflected in the Council’s Medium Term Financial Plan;

2)     Council maintain its policy of maximising the annual increase in Council Tax within the Government’s referendum limit; and

3)     Council continues to be part of the East Sussex Business Rate Pool in 2020/21 and that the Assistant Director Resources be granted delegated authority to finalise the necessary agreement with the Member authorities in consultation with the Cabinet Portfolio Holder for Strategic Overview, Finance, Resources and Value for Money.

*The RESOLVED parts of this minute are subject to the call-in procedure under Rule 16 of the Overview and Scrutiny Procedure Rules.