Agenda item

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 13^th December 2018 and subsequent Final Local Government Settlement published on 29^th 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 29^th 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 savings of £7.829m in 2019/20. If approved the proposals would further reduce the budget reduction requirement to £14.372m for 2019/20.

Section 13 of the report explained the approach to balancing the 2019/20 budget.

In order to remove the requirement for further spending reductions, it was proposed to part finance the 2019/20 budget by using opportunities provided by the ability to use Capital Receipts to support spending on transformational projects up to a value of £3.000m and from an available Collection Fund surplus of £2.269m.

A number of specific and corporate reserves would be used to address the balance also. 

Section 17 of the report presented proposed Council Tax and Adult Social Care precept levels for Oldham Council comprising a general increase of 1.99% and a 2% increase for Adult Social Care precept (3.99% in total).

Section 17 also provided detail of the proposed precept for the Shaw and Crompton Parish Council and the approved precept for the  Saddleworth Parish Council.

It was reported that approval of the proposals set out in the report in full by Council would deliver a balanced revenue budget for 2019/20. The budget reduction requirement for subsequent years was forecast to be £22.738m 2020/21, £10.889m for 2021/22, £6.859m for 2022/23 and £4.160m for 2023/24.

The Fees and Charges proposals for 2019/20 were presented at Appendix 4 and the Council’s Pay Policy Statement was presented at Appendix 5.

The report also summarised the reserves and balances position supporting the Councils financial resilience.  In addition, section 19 of the report set out the proposed budget strategy for future years

Options/Alternatives considered:

Option 1 – Cabinet accepts the assumptions and resulting financial forecasts presented within the report and the budget position at Appendix 1.

Option 2 – Cabinet proposes amendments to the assumptions which would change the resulting budget gap and financial forecasts.

Option 3 – Cabinet approves and commends to Council all the budget reduction proposals included in this report to the value of £7.829m  and the approach to the use of reserves and balances as well as Council Tax and Adult Social Care Precept in increases.

Option 4 - Cabinet requests that further work is undertaken on some or all of the budget proposals and the approach to reserves and balances.

RESOLVED – That:

That Cabinet approves and commends to Council:

1. The national and regional policy landscape determining the context in which the Council is setting its revenue budget for 2019/20 and Medium Term Financial Strategy to 2023/24;
2. The impact of Oldham Council Policies and Strategies on the Council’s budget setting process and the development of its Medium Term Financial Strategy;
3. The financial forecasts for 2019/20 to 2023/24 having regard to the Local Government Finance Settlement and associated funding announcements;
4. The key issues to be addressed in continuing to respond to the financial challenges facing the Council;
5. The 2019/20 Budget Reduction Proposals at a value of £7.829m;
6. The proposed use of £2.946m of reserves for specific purposes and £6.157m of corporate reserves to balance the 2019/20 budget;
7. The fees and charges schedule included at Appendix 4;
8. The pay policy statement included at Appendix 5;
9. A proposed Council Tax increase of 3.99% for Oldham Council services resulting in the charges set out at paragraph 17.3 and Table 22 of the report and in detail at Appendix 9;
10. A proposed increase to the empty property premium from 50% to the maximum 100% allowed from 1^st April 2019;
11. The proposal to draw on the Collection Fund for major preceptors of £107.972m for Borough Wide services and £92.090m for Council services;
12. The proposed budget for 2019/20 for the Council set at £223.703m; and
13. Revised estimated budget reduction targets of £22.738m for 2020/21, £10.889m for 2021/22 and £6.859m for 2022/23 and £4.160m for 2023/24.