Agenda and minutes

(Budget), Cabinet
Monday, 11th February, 2019 6.00 pm

Venue: Crompton Suite, Civic Centre, Oldham, West Street, Oldham, OL1 1NL. View directions

Contact: Liz Drogan  0161 770 4705

Items
No. Item

1.

Apologies For Absence

Minutes:

Apologies for absence were received from Councillor Mushtaq.

2.

Urgent Business

Urgent business, if any, introduced by the Chair

Minutes:

There were no items of urgent business received.

3.

Declarations of Interest

To Receive Declarations of Interest in any Contract or matter to be discussed at the meeting.

Minutes:

There were no declarations of interest received.

4.

Public Question Time

To receive Questions from the Public, in accordance with the Council’s Constitution.

Minutes:

There were no public questions received.

5.

Minutes of the Administration Budget Performance and Value for Money Select Committee held on 24th January 2019 pdf icon PDF 357 KB

Minutes:

Members considered the draft minutes of the Performance and Value for Money Select Committee held on the 24th January 2019.

It was reported that the Select Committee recommended to Council all of the budget reduction proposals included in the report to a value of £7.829 for approval.

 

RESOLVED – That the deliberations and comments of the Performance and Value for Money Select Committee held on the 24th January 2019 be noted.

 

6.

Minutes of the Opposition Budget Performance and Value for Money Select Committee held on 5th February 2019 pdf icon PDF 200 KB

Minutes:

The Cabinet gave consideration to the minutes of the Opposition Budget Performance and Value for Money Select Committee minutes held on the 5th February 2019.

It was reported that none of the Liberal Democrat efficiencies outlined for 2019/20 had been agreed by the Select Committee and therefore the investment proposals outlined within the report were not affordable.

The Select Committee did recommend:

OPP-BR1-106 Review of Car Allowance as previously promised to reduce amount paid as a lump sum to staff doing zero or minimal mileage. The Administration might wish to consider in 2019/20 as part of a wider review of the reward and recognition package. There was no guarantee that the outcome would be acceptance of this proposal.

OPP-BR1-108 Additional Bus Lane Enforcement. The Administration may wish to consider this proposal once the Administration’s current bus lane proposals were implemented and shown to be effective.

The proposal concerning the new health centre be pursued to see if a scheme could emerge as part of the corporate strategy.

The leader of the Council advised the meeting that the Opposition saving proposal OPP-BR1-102 Reduction in number of Councillors from 60-40 would not deliver savings for the 2019/20 budget and was not in the Councils gift to implement.

 

RESOLVED – That the deliberations and comments of the Performance and Value for Money Select Committee held on 5th February 2019 be noted.

 

7.

Revenue Monitor and Capital Investment Programme 2018/19 Month 8 pdf icon PDF 202 KB

Additional documents:

Minutes:

The Cabinet gave consideration to a report of the Director of Finance which provided Members with an update on the Council’s 2018/19 forecast revenue budget position and the financial position of the capital programme as at 30 November 2018, together with the revised capital programme 2018/23.

Revenue Position

The current forecast outturn position for 2018/19 was a projected favourable variance of £0.145m after allowing for approved and pending transfers to and from reserves.

The most significant area of concern was the People and Place Portfolio, due to the transfer of Children’s Social Care into that area. Action was being taken and would continue to be taken for the remainder of the financial year to address variances and mitigating action would be taken as detailed within the report. The overall corporate position was being managed by offsetting favourable variances, most notably from Capital, Treasury and Corporate Accounting budgets, in part caused by the anticipated cost of borrowing and capital finance being lower than budgeted and the availability of additional Treasury Management income and unringfenced grants not allocated to service budgets.

Housing Revenue Account and Dedicated Schools Grant

Information on the Month 8 position of the Dedicated Schools Grant (DSG) and Housing Revenue Account (HRA) and collection fund was also outlined in the report.

There were no significant issues of concern in relation to the HRA and Collection Fund however the DSG continued to be an area facing a financial challenge with an increase in the projected year-end deficit. Action was being taken to bring the DSG towards a balanced budget.

Capital Position

The most up to date capital spending proposals for 2018/23 were provided to Members. The revised Capital programme budget was £48.952m at the close of month 8, a net decrease of £40.706m from the original budget of £89.658 and a reduction of £0.571m from the £49.523m reported at quarter 2.

Actual expenditure to 30 November 2018 was £24.637m (50.33% of forecast outturn).

It was reported that at this stage in the financial year, the forecast position would continue to change with additional re-profiling into future years.

Options/Alternatives considered

Option 1 – To approve the forecast revenue and capital positions presented in the report including proposed changes.

Option 2 – To approve some of the forecasts and changes detailed within the report.

Option 3 – Not to approve any of the forecasts and changes detailed within the report.

 

RESOLVED – That:

  1. The forecast revenue outturn for 2018/19 at Month 8 being a £0.145m under spend be approved.
  2. The forecast positions for the Housing Revenue Account and Collection Fund and Dedicated Schools Grant as detailed within the report be approved.
  3. The use of reserves as detailed in Appendix 1 to Annexe 1 of the report be approved.
  4. The revised capital programme for 2018/19 to the extended period of 2022/23 as at 30 November 2018, Month 8 be approved.

 

8.

Revenue Budget 2019/20 and Medium Term Financial Strategy 2019/20 to 2023/24 pdf icon PDF 1 MB

Additional documents:

Minutes:

Consideration was given to a report of the Director of Finance which presented to the Cabinet the current Administration’s budget and budget proposals for 2019/20 together with the forecast budget gap estimates for the period 2020/21 to 2023/24, having regard to the Provisional Local Government Finance Settlement published on 13th December 2018 and subsequent Final Local Government Settlement published on 29th January 2019.

This report set out the proposals for the Council’s Revenue Budget for 2019/20 and Medium Term Financial Strategy for 2019/20 to 2023/24.

Cabinet was provided with details of the key financial challenges and issues which would be faced by the Council over the forecast period.

The report included an update on the national and regional policy landscape within which the Council operated including a summary of the economic outlook published alongside the most recent Autumn Statement, key aspects of the Local Government Finance regime including the Greater Manchester 100% business rates retention pilot scheme and the proposals for the pooling of Business Rates for 2019/20.

The report also highlighted policy announcements and implications arising from the Chancellor’s Autumn budget Statement, the Provisional Local Government Finance Settlement and the Final Local Government Settlement published on 29th January 2019.

The settlement and associated announcements confirmed one-off grants; winter pressures grant and social care support grant.

The settlement also included  £0.013m more grant resources than has been anticipated in the initial budget projections and a £0.978m share of a £180m surplus on the National Rates Levy Account would be used to support the 2019/20 budget. 

The settlement confirmed referendum limits for a General Council Tax increase. The Government would permit rises of 3% per annum for 2019/20 and the Police element of the Mayoral precept could be increased by up to £24 for 2019/20 without triggering a referendum. The increase was being consulted upon.

In addition there was no limit on changes to the Mayoral General Precept and an increase of £9 was being proposed by the Mayor. The estimates included in the report assumed a continuation of current Oldham Council Tax policy which allowed for a 1.99% general Council Tax increase.

There has been no change to the arrangements for charging an Adult Social Care precept and the Council is able to continue with its previously approved policy of charging an Adult Social Care precept of 2% for 2019/20.

Section 7 of the report provided details of the key budget adjustments and expenditure pressures underpinning the forecast.

The report also provided the latest available forecasts for Government Grant income and locally generated income from retained Business Rates and Council Tax.

Based on the latest estimates, the budget reduction requirements for 2019/20 had increased from the previously reported figure of £17.986m to £22.201m.  The increase was due was due to a range of changes to the estimates, set out in detail at Section 11 to the report.

Section 12 of the report detailed the Administration’s budget reduction proposals. There were a total of 35 proposals, delivering  ...  view the full minutes text for item 8.

9.

Housing Revenue Account Estimates for 2019/20 to 2023/24 and Proposed Outturn for 2018/19 pdf icon PDF 309 KB

Minutes:

The Cabinet gave consideration to a report of the Director of Finance which set out the latest Housing Revenue Account (HRA) outturn estimate for 2018/19, the detailed budget for 2019/20 and strategic estimates for the four years 2020/21 through to 2023/24. The report also set out the recommended dwelling and non-dwelling rents and service charge increases to be applied from April 2019.

It was reported that after taking all relevant issues into account, the projected financial position for 2018/19 was estimated to be a £2.506m positive variance when compared to the original budget forecast for 2018/19 approved by Council February 2018 Budget meeting. The majority of this variance was attributed to the re-profiling of HRA funded capital schemes into later years due to revisions to planned spending profiles.

The financial position for 2019/20 showed an estimated HRA closing balance of £19.477m which was considered to be sufficient to meet future operational commitments and the potential financial pressures identified in the risk assessment.

The 2019/20 position had been presented after allowing for an increase in rent of 3.4%.

Members noted the Government had already advised that Private Finance Initiative (PFI) properties would be exempt from Central Government’s 1% Social Rent Reduction Programme. As all Oldham housing stock was contained within two PFI schemes, the 2019/20 budget would follow historic rent setting guidance of Consumer Price Index (CPI) plus 1%, resulting in an increase of 3.4% (CPI was taken as at September 2018).

The proposed HRA budget report was presented for consideration by the Overview and Scrutiny Performance and Value for Money Select Committee on 24 January 2019 The Select Committee was content to commend the report to Cabinet for approval. The Cabinet Member for Finance and Corporate Resources highlighted a recommendation from the Select Committee in relation to financial hardship. The Select Committee agreed that due to the 53 week rent year in 2019/20 and the fact that Universal Credit had been designed around a 52 week rent year, options should be considered to assist tenants in receipt of Universal Credit so that they did not fall into arrears.

Options/Alternatives considered

In order that the Council complied with legislative requirements it must consider and approve a Housing Revenue Account budget for 2019/20.

Within the summer budget announcement of July 2015, the Government imposed a 1% per annum social rent reduction for 4 years. All Oldham housing stock would be exempt from this decrease and an increase would be applied in accordance with current Government guidance.

Should the Council not wish to continue with the established practice of following Government guidelines, 2 potential scenarios had been assessed:

-       proposed rent increase of 3.4% is changed to 2%

-       proposed rent increase is removed altogether

The loss to the Housing Revenue Account in 2019/20 in terms of income would be £0.114m at a 2% increase and £0.278 with no rent increase.  The cumulative impact of this income loss over the life of the Business Plan would have a lasting and significant impact on  ...  view the full minutes text for item 9.

10.

Capital Strategy and Capital Programme for 2019/20 to 2023/24 pdf icon PDF 290 KB

Additional documents:

Minutes:

The Cabinet gave consideration to a report of the Director of Finance which set out the proposed Capital Strategy for 2019/20 to 2023/24, and thereby the proposed 2019/20 Capital Programme, including identified capital investment priorities, together with the indicative capital programme for 2020/21 to 2023/24, having regard to resources available over the lifetime of the programme.

Capital Strategy

The Council’s Capital Strategy and Capital Programme were set over a five year timeframe.

In preparing the 2019/20-2023/24 Capital Strategy, essential elements of the 2018/22 and previous years and strategies and programmes were moved forward in the context of the financial and political environment for 2019/20.

The principles of the Strategy had been prepared in light of all available information and listed areas of potential future investment, subject to the availability of resources.

The Chartered Institute of Public Finance and Accountancy (CIPFA) revised 2017 Prudential Code and Treasury Management Code required, for 2019/20 all Local Authorities to prepare an additional report, a capital strategy report. Whilst the Council had traditionally prepared a capital strategy, the presentation had been changed to ensure compliance with the new guidance.  The strategy was therefore presented so that it provided:

  • A high level long term overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of services.
  • An overview of how the associated risk was managed
  • The implications for future financial sustainability

The strategy was presented in 15 sections to ensure all Council Members were presented with the overall long term capital investment policy objectives and resulting Capital Strategy requirements, governance procedures and risk appetite.

Capital Programme 2018/19-2022/23

The Council capital spending in relation 2018/19 was a key determinant of the 2019/20 programme. The latest available capital monitoring report for the period 2018/19 to 2022/23 at month 8 included capital expenditure totalling £48.952m for 2018/19 matched with corresponding financing.

The People and Place Directorate which managed all of the major regeneration projects had the largest area of expenditure (£31.265m). Prudential borrowing provided the main source of financing (£26.995m) followed by grants and other contributions (£16.068m).

Actual expenditure to 30 November 2018 was £24.637m. The spending profile was in line with previous years, and the position would be kept under review.

Capital Programme 2019/20-2023/24

The Council had set out its Capital Programme for the period based on the principles of the Capital Strategy. The Capital Programme and Strategy had been influenced by the level of resources available.

Anticipated expenditure and matched financing for the period 2019/20 to 2023/24 totalled £262.198m. This incorporated resources expected to be carried forward from 2018/19 and reflected the 2018/19 month 8 monitoring position together with enhanced projection of expenditure.

The detailed programme was set out at Annex C of the Appendix 1.

Proposed expenditure for 2019/20 was £84.332m with the largest area of being on schools, development and infrastructure projects within the People and Place Directorate.

As in previous years a major source of financing was prudential borrowing and Government grants.

It was, however, likely that the capital  ...  view the full minutes text for item 10.

11.

Treasury Management Strategy Statement 2019/20 - including Minimum Revenue Provision Policy Statement, Annual Investment Strategy and Prudential Indicators pdf icon PDF 719 KB

Minutes:

Consideration was given to a report of the Director of Finance that outlined the strategy for 2019/20 Treasury Management activities including Prudential Indicators, the Annual Investment Strategy, the Minimum Revenue Provision Policy Statement and linkages to the Capital Strategy.

It was reported that the strategy for 2019/20 covered two main areas, capital issues and treasury management issues and the report therefore outlined the implications and key factors in relation to each of the two main areas and made recommendations with regard to the Treasury Management Strategy for 2019/20.

The Council was required to operate a balanced budget which broadly meant that cash raised during the year would meet cash expenditure and part of the treasury management operation was to ensure that cash flow was adequately planned with cash being available when needed.

The second main function of the treasury management service was the funding of the Council’s capital plans, which provided a guide to the borrowing need of the Council, essentially the longer term cash flow planning to ensure that the Council could meet its capital spending obligations.

The Treasury Management Strategy 2019/20 was based on the current guidance which resulted from revisions to the Ministry of Housing, Communities and Local Government (MHCLG) Investment Guidance, the MHCLG Minimum Revenue Provision Guidance, thehe Chartered Institute of Public Finance and Accountancy (CIPFA) revised 2017 Prudential Code and Treasury Management Code.  These required additional disclosures which were included in the report together with alignment with the disclosures in the Capital Strategy report (itself prepared in accordance with the revised CIPFA Prudential and Treasury Management Codes).

The report was considered by the Performance and Value for Money Select Committee on the 24th January 2018 and was commended to Cabinet.

Options/Alternatives considered

The Council was required to comply with the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management the Council and has no option other than to consider and approve the contents of the report. Therefore no options/alternatives were considered.

RESOLVED – That:

  1. The Capital Expenditure Estimates as per paragraph 2.1.2 be approved and commended to Council.
  2. The Minimum Revenue Provision policy and method of calculation as per Appendix 1 of the report be approved and commended to Council.
  3. The Capital Financing Requirement (CFR) projections as per paragraph 2.2.4 of the report be approved and commended to Council.
  4. The projected treasury position as at 31/03/2019 as per paragraph 2.3.4.of the report be approved and commended to Council.
  5. The Treasury Limits for 2019/20 to 2021/22 as detailed in section 2.4 of the report be approved and commended to Council.
  6. The Borrowing Strategy for 2019/20 as per section 2.6 of the report be approved of the report be approved and commended to Council.
  7. The Annual Investment Strategy as per section 2.10 including risk management and the creditworthiness policy at section 2.11 of the report be approved and commended to Council.
  8. The level of investment in non-specified investments as detailed at Appendix 5 to the report be approved and commended to  ...  view the full minutes text for item 11.

12.

Statement of the Chief Financial Officer on Reserves, Robustness of the Estimates and Affordability and Prudence of Capital Investments in the 2019/20 Budget Setting Process pdf icon PDF 461 KB

Minutes:

The Cabinet considered a report of the Director of Finance (Chief Financial Officer) that was prepared in accordance with the requirement of Section 25 of the Local Government Act 2003 to report on the robustness of the estimates made for the purposes of the budget calculations and the adequacy of the proposed reserves.

The level of general balances to support the budget and an appropriate level of earmarked reserves maintained by the Council in accordance with the agreed Council policy on earmarked reserves was an integral part of its continued financial resilience supporting the stability of the Council.

The report also included the Director of Finance’s consideration of the affordability and prudence of capital investment proposals.

It was reported that Members could be assured that the Council continued to be well placed to meet the challenging financial future facing Local Authorities and that the Council was preparing a detailed revenue budget within a five year Medium Term Financial Strategy (MTFS), a five year capital programme and the continuation of the early closure of accounts. This allowed early focus on the coming challenges and a robust financial transformation programme.

The financial resilience depended in part on the Council maintaining an adequate level of reserves which were set out in the report. The Audit Committee at its meeting in July 2018 considered the policy on earmarked reserves and it was proposed to action the same review after the closure of accounts for 2018/19.

Options/Alternatives considered

The Cabinet could comment on the recommendations of the report however Members had a statutory duty to have regard to the Chief Financial Officer’s report on the robustness of the estimates and the adequacy of the proposed financial reserves when making decisions.

The robustness of the estimates and reserves were satisfactory, however this was only the case provided the action necessary were taken to ensure the balances were set at the level recommended, that all budget options or in year alternatives were delivered as planned and monitored.

RESOLVED – That:

  1. The General Balances currently calculated for 2019/20 at £14.250m be approved. Any Excess funding in general balances at the financial year end would be transferred to the financial mitigations reserves to support future budgets.
  2. The initial estimate of General Balances to support the 2020/21 Medium Term Financial Strategy and the 2021/22, 2022/23 and 2023/24 Medium Term Financial Strategy were £14.814m and £14.134 respectively.
  3. Submission of the intended report to the Audit Committee to ensure the Council reserves were subject to appropriate scrutiny, be noted.
  4. The actions necessary to secure a properly balanced budget as presented in paragraph 3.6of the report be approved.
  5. The actions necessary to ensure the prudence of the capital investments as presented in paragraph 4.4 of the report be approved.
  6. The report be commended to Council for approval

 

13.

2019/20 Council Tax Reduction Scheme pdf icon PDF 1 MB

Additional documents:

Minutes:

The Cabinet gave consideration to a report of the Director of Finance which sought approval of the Council Tax Reduction Scheme for 2019/20 and to recommend the scheme to Council for approval.

It was reported that it was a requirement each year that a billing authority must formally consider revising its Council Tax Reduction Scheme (CTRS).

To accord with the legislative timetable any changes to the scheme must be agreed by full Council in line with budget setting and no later than 10th March 2019.

Cabinet in August 2018 agreed to a full public consultation focusing on areas of review that either maintained the status quo or introduced changes that would be beneficial to the claimant.

The consultation sought views on the maintenance of the maximum support afforded under the scheme of 85% of a Band A Council Tax property charge, a range of changes to the calculation of Council Reduction for Universal Credit claimants and the alignment of income disregards, already in place in the national Housing Benefit Scheme with the local Council Tax Reduction Scheme.

A public consultation was carried out over the period 12th September 2018 to 24th October 2018. Overall respondents were in favour of the proposals with an average of 77% agreement across the four changes and 71% in favour of maintaining the current 85% scheme.

The Overview and Scrutiny Performance and Value for Money Select Committee at its meeting of the 24th January 2019 was content to agree to the proposed 2019/20 Council Tax Reduction scheme and commended to Cabinet.

Options/Alternatives considered

Option 1 - Maintain the present level of support i.e. Limiting the level of support at 85% of Council Tax  of a Band A property as the maximum amount available and

Change 1 – Making a Claim – Information received by the Council from the DWP relating to a claim for Universal Credit could be treated as a claim for Council Tax Reduction.

Change 2 – Earnings Disregard – As detailed within the report.

Change 3 – Housing Costs – Universal Credit Claimants as detailed within the report.

Change 4 – Disregarded Income as detailed within the report.

 

RESOLVED – That the Cabinet approved and commended to Full Council the proposed Council Tax Reduction Scheme changes for 2019/20:

  1. To continue to limit support to a maximum of 85% of Council Tax of a Band A property
  2. Treat information received from the Department for Work and Pensions (DWP) about Universal Credit entitlement as a claim for Council Tax Reduction
  3. Apply earnings disregards for Universal Credit/Council Tax Reduction (UC/CTR) claims as set out below
  • Single claimant £5 per week
  • Couple £10 per week
  • Disabled/Carer £20 per week
  • Lone Parent £25 per week
  1. Incorporate housing costs into the UC/CTR calculation
  2. Apply disregards for Bereavement Support Allowance and post graduate master’s degree loan and special support payments in the assessment of Council Tax Reduction

 

 

The meeting started at 6.00pm and ended at 18.28