Agenda item

CAB 66/16 

 

2017/18 Budget & Medium Term Financial Plan

 

Options Considered/Reasons for Decision

 

The Cabinet Member for Finance and Resources introduced the budget report and stated that the adoption of the recommendations in the report would begin the period of formal consultation on the 2017/18 budget and Medium Term Financial Plan (MTFP) and would run until 20^th January, 2017.

 

The Cabinet Member stated that he would welcome comments and asked people to respond and to let the Cabinet know what they think of the proposals or with any alternatives so that all points made could be considered before the final budget is set.

 

He stated that the Cabinet will finalise its proposals in its February meeting, having taken feedback from residents, key partners and interest groups and internally, feedback from our scrutiny committees, unions, school’s forum and, of course, the fairness commission. 

 

The Cabinet Member informed colleagues that the draft proposals had been developed in challenging times. He said that essentially, it comes on the back of over £45m of savings found in previous years and the pressure created by a reducing Revenue Support Grant, which continues into next year, and probably into the future. 

 

The Cabinet Member stated that the provisional grant settlement confirmed a £230,000 reduction in this Council’s rate support grant next year. He informed members that this grant is used to fund 80% of our net costs, meaning that savings need to be found to cover basic inflationary cost increases, cost pressures from increased demand for our services and the cost of policy changes such as the Apprenticeship Levy, which we have no choice over.

 

He and Cabinet Colleagues acknowledged the small increase in Local Government funding overall across Wales for 2017/18 – the Welsh Government is aware of pressures facing the sector, in particular from Social Care demands. But this Council’s individual settlement was not as good in relative terms across the sector, than previous years, when our annual grant change was amongst the best across all Councils. The reasons for this were explained in the report.

 

As to the budget proposals, the Cabinet Member stressed that it was important to note that it was not all about savings. He mentioned the Council was investing significantly in social care, to meet increased demand for these services and was also continuing to invest in the pay of key partners’ staff by funding increases in the Foundation Living Wage. The draft budget also contained investments to deal with national policy changes and to those budgets which require ‘right -sizing’ so that the Council can set a robust budget which is deliverable. The Cabinet Member stated that this needs funding and savings have to be found to do this.

 

The cabinet would be consulting on over £1m of savings and the report provided full details on other new savings of about £2.5m which do not require consultation as they have minimal impact on services and can be implemented by Heads of Service. The report also gave details of those savings already approved and underway, from previous years. All proposals could be viewed and accessed.

 

 

The Cabinet Member stated that schools had been protected from savings and will be ‘cash-flat’ in 2017/18; though the cabinet appreciated schools will need to absorb their own pressures. The cabinet member stated that the cash-flat proposal was on top of the 19% increase in budget they have had over the last 5 years.

 

The Cabinet Member stated the desire was to continue to protect services wherever possible and develop proposals which have the minimal impact on services as possible.

 

On Council Tax, the Cabinet was consulting on a 4% increase. To put things into context, Newport enjoys the second lowest rate of Council Tax in Wales and remains amongst the lowest in the UK. The City Council spends about £7m less than its Standard Spending Assessment (SSA) and therefore, for what is delivered and achieved, provides very good value relative to other areas. The Cabinet Member explained that the SSA was the amount that the Central Government had assessed was needed to run our services. Other Local Authorities benefitted from spending up to, and beyond SSA

 

The Cabinet Member stated that as the MTFP shows, we have some budget ‘in hand’ (a surplus) showing for 2017/18 and this was because the Cabinet and Officers had been prudent and allowed for potential further reduction in our grant.

 

The cabinet member passed on thanks to Cabinet colleagues who had all played an important part in developing these draft proposals and to Council officers. He reiterated his hope that people would provide feedback on what they think the Cabinet could we can take account of people’s views.

 

The Leader thanked the Cabinet Member and Cabinet colleagues for their efforts in putting draft budget proposals together for next year. She stressed that the financial climate is challenging but a lot had been done to minimise impacts on services over the previous 5 years and for next year too.

 

The medium term outlook as shown by this MTFP looks extremely challenging and a key issue for the Council in Newport is the unavoidable financial impact of a growing city. The Chief Executive explained that the City is growing at both ends of the age spectrum so the cost of delivering services was therefore increasing. The increase in costs was not being met. The formula used, which was impacted upon by the growing city, also worked against the ability to meet cost pressures

 

The Leader stated that there had been announcements in England that Councils will be able to charge an additional Council Tax levy of 3%, on top of the basic limit of 3% for the next 2 years to fund increased social care costs. She considered that many Councils would be increasing Council Tax by close to, if not, the full 6% for the next 2 years in England. The cost pressures are very real. The Leader considered there was a need to  address the fundamental issues around how much we invest in key parts of our public services and how they are paid for.  These are fundamental questions for public services in going forward in the UK and here in Wales. 

 

The Leader stated that Newport is a very small part of the national picture but, as a growing city, in many ways, has all the issues – the usual consequences of a growing city on public services, a focus for economic development and enabling as many of our residents to enjoy the benefits of that, developing cohesiveness, creating a vibrant and attractive place, in particular our centre and of course, a growing older population.

 

The challenge locally would be to develop even more innovative ways of delivering public services and to keep our ambitions for this city alive, in difficult times, and deliver sustainable change. It will not be easy, but in working better and collaboratively across all public services, the challenges of our MTFP can be met. 

 

The Leader stated that when the final budget was set in February, it would show how the finances of this Authority will enable it to meet the on-going challenges in delivering essential service to our residents as well as meet aspirations and plans for the city.  She considered these draft budget proposals to be a key part of that and the Leader joined the Cabinet Member in encouraging as many people as possible to comment on them and let us know what you think. The Leader also expressed a wish that sensible discussions could be held with the Opposition Leader to discuss any alternatives proposed by the Opposition Group.

 

The Deputy Leader referred to the continuation of austerity, he feared for local government.     He said as many front line services and jobs as possible would be protected. He was concerned about the impact of reducing budgets and the lack of resources. Some very difficult decisions were to be taken and it was important that people responded to the proposals

 

The Cabinet Member for Adult Social Services and Housing referred to the dramatic increase in the older population and the need to meet the increased costs that this presented. He referred to cost pressures brought about by decisions elsewhere that were not funded.

 

The Cabinet Member for Regulatory Functions referred to the significant impact on funds available to provide social care. He made the point that a percentage increase in Newport was less in cash terms than a smaller percentage increase in other local authorities.

 

The Cabinet stated they were open to discussion and consultation and would welcome any comments that would help formulate the final budget.

 

Decisions:

 

1. To agree the Medium Term Financial Plan, noting that it will be subject to on-going review and updating, in particular on future changes in Welsh Government revenue support grant.

 

2. To agree the new, 4 year draft budget investments and saving options as the basis for consultation, along with the outline business cases showing further details on savings

 

3. To note the new, 4 year draft budget saving options which are being implemented under delegated authority by Heads of Service for information.

 

4. To note the budget savings which were agreed by Cabinet in February 2016 and consulted on then

 

5. To agree the proposed increases in fees & charges as the basis for consultation.

 

6. To note, within the overall budget position, the position regarding the proposed school funding for 2017/18 and medium term

 

 

 

Consultation

 

Monitoring Officer; Head of Finance; Head of People & Business Change

 

Implemented By:   Head of Finance; Head of People & Business Change

 

 

 

 

 

The Cabinet Member for Finance and Resources introduced the budget report and stated that the adoption of the recommendations in the report would begin the period of formal consultation on the 2017/18 budget and Medium Term Financial Plan (MTFP) and would run until 20^th January, 2017.

 

The Cabinet Member stated that he would welcome comments and asked people to respond and to let the Cabinet know what they think of the proposals or with any alternatives so that all points made could be considered before the final budget is set.

 

He stated that the Cabinet will finalise its proposals in its February meeting, having taken feedback from residents, key partners and interest groups and internally, feedback from our scrutiny committees, unions, school’s forum and, of course, the fairness commission. 

 

The Cabinet Member informed colleagues that the draft proposals had been developed in challenging times. He said that essentially, it comes on the back of over £45m of savings found in previous years and the pressure created by a reducing Revenue Support Grant, which continues into next year, and probably into the future. 

 

The Cabinet Member stated that the provisional grant settlement confirmed a £230,000 reduction in this Council’s rate support grant next year. He informed members that this grant is used to fund 80% of our net costs, meaning that savings need to be found to cover basic inflationary cost increases, cost pressures from increased demand for our services and the cost of policy changes such as the Apprenticeship Levy, which we have no choice over.

 

He and Cabinet Colleagues acknowledged the small increase in Local Government funding overall across Wales for 2017/18 – the Welsh Government is aware of pressures facing the sector, in particular from Social Care demands. But this Council’s individual settlement was not as good in relative terms across the sector, than previous years, when our annual grant change was amongst the best across all Councils. The reasons for this were explained in the report.

 

As to the budget proposals, the Cabinet Member stressed that it was important to note that it was not all about savings. He mentioned the Council was investing significantly in social care, to meet increased demand for these services and was also continuing to invest in the pay of key partners’ staff by funding increases in the Foundation Living Wage. The draft budget also contained investments to deal with national policy changes and to those budgets which require ‘right -sizing’ so that the Council can set a robust budget which is deliverable. The Cabinet Member stated that this needs funding and savings have to be found to do this.

 

The cabinet would be consulting on over £1m of savings and the report provided full details on other new savings of about £2.5m which do not require consultation as they have minimal impact on services and can be implemented by Heads of Service. The report also gave details of those savings already approved and underway, from previous years. All proposals could be viewed and accessed.

 

 

The Cabinet Member stated that schools had been protected from savings and will be ‘cash-flat’ in 2017/18; though the cabinet appreciated schools will need to absorb their own pressures. The cabinet member stated that the cash-flat proposal was on top of the 19% increase in budget they have had over the last 5 years.

 

The Cabinet Member stated the desire was to continue to protect services wherever possible and develop proposals which have the minimal impact on services as possible.

 

On Council Tax, the Cabinet was consulting on a 4% increase. To put things into context, Newport enjoys the second lowest rate of Council Tax in Wales and remains amongst the lowest in the UK. The City Council spends about £7m less than its Standard Spending Assessment (SSA) and therefore, for what is delivered and achieved, provides very good value relative to other areas. The Cabinet Member explained that the SSA was the amount that the Central Government had assessed was needed to run our services. Other Local Authorities benefitted from spending up to, and beyond SSA

 

The Cabinet Member stated that as the MTFP shows, we have some budget ‘in hand’ (a surplus) showing for 2017/18 and this was because the Cabinet and Officers had been prudent and allowed for potential further reduction in our grant.

 

The cabinet member passed on thanks to Cabinet colleagues who had all played an important part in developing these draft proposals and to Council officers. He reiterated his hope that people would provide feedback on what they think the Cabinet could we can take account of people’s views.

 

The Leader thanked the Cabinet Member and Cabinet colleagues for their efforts in putting draft budget proposals together for next year. She stressed that the financial climate is challenging but a lot had been done to minimise impacts on services over the previous 5 years and for next year too.

 

The medium term outlook as shown by this MTFP looks extremely challenging and a key issue for the Council in Newport is the unavoidable financial impact of a growing city. The Chief Executive explained that the City is growing at both ends of the age spectrum so the cost of delivering services was therefore increasing. The increase in costs was not being met. The formula used, which was impacted upon by the growing city, also worked against the ability to meet cost pressures

 

The Leader stated that there had been announcements in England that Councils will be able to charge an additional Council Tax levy of 3%, on top of the basic limit of 3% for the next 2 years to fund increased social care costs. She considered that many Councils would be increasing Council Tax by close to, if not, the full 6% for the next 2 years in England. The cost pressures are very real. The Leader considered there was a need to  address the fundamental issues around how much we invest in key parts of our public services and how they are paid for.  These are fundamental questions for public services in going forward in the UK and here in Wales. 

 

The Leader stated that Newport is a very small part of the national picture but, as a growing city, in many ways, has all the issues – the usual consequences of a growing city on public services, a focus for economic development and enabling as many of our residents to enjoy the benefits of that, developing cohesiveness, creating a vibrant and attractive place, in particular our centre and of course, a growing older population.

 

The challenge locally would be to develop even more innovative ways of delivering public services and to keep our ambitions for this city alive, in difficult times, and deliver sustainable change. It will not be easy, but in working better and collaboratively across all public services, the challenges of our MTFP can be met. 

 

The Leader stated that when the final budget was set in February, it would show how the finances of this Authority will enable it to meet the on-going challenges in delivering essential service to our residents as well as meet aspirations and plans for the city.  She considered these draft budget proposals to be a key part of that and the Leader joined the Cabinet Member in encouraging as many people as possible to comment on them and let us know what you think. The Leader also expressed a wish that sensible discussions could be held with the Opposition Leader to discuss any alternatives proposed by the Opposition Group.

 

The Deputy Leader referred to the continuation of austerity, he feared for local government.     He said as many front line services and jobs as possible would be protected. He was concerned about the impact of reducing budgets and the lack of resources. Some very difficult decisions were to be taken and it was important that people responded to the proposals

 

The Cabinet Member for Adult Social Services and Housing referred to the dramatic increase in the older population and the need to meet the increased costs that this presented. He referred to cost pressures brought about by decisions elsewhere that were not funded.

 

The Cabinet Member for Regulatory Functions referred to the significant impact on funds available to provide social care. He made the point that a percentage increase in Newport was less in cash terms than a smaller percentage increase in other local authorities.

 

The Cabinet stated they were open to discussion and consultation and would welcome any comments that would help formulate the final budget.

 

Decisions:

 

1. To agree the Medium Term Financial Plan, noting that it will be subject to on-going review and updating, in particular on future changes in Welsh Government revenue support grant.

 

2. To agree the new, 4 year draft budget investments and saving options as the basis for consultation, along with the outline business cases showing further details on savings

 

3. To note the new, 4 year draft budget saving options which are being implemented under delegated authority by Heads of Service for information.

 

4. To note the budget savings which were agreed by Cabinet in February 2016 and consulted on then

 

5. To agree the proposed increases in fees & charges as the basis for consultation.

 

6. To note, within the overall budget position, the position regarding the proposed school funding for 2017/18 and medium term