Agenda item

The Leader of the Council introduced a report which brought together all the relevant strands of the Council’s financial management including the recommended increase in Council Tax, the consequential overall revenue budget, capital budget, treasury management and the Medium Term Financial Plan.

 

The Leader initially referred to the treasury management strategy, saying that it had been reviewed by the Audit Committee and in essence, the strategy is unchanged from that which had been in place for a number of years which is; to defer actual long term borrowing to fund our capital programme as long as possible and utilise our surplus cash wherever possible. This is more cost effective and reduces investment risk and is a strategy used by most Council’s and recommended by the Council’s Treasury Advisers. 

 

The completion of the current work on the sale of the Friar’s Walk development would have a significant impact on the strategy and proceeds would be used to repay loans taken out for this purpose or if not sold, to re-finance those loans. 

 

In practical terms, the strategy should mean, outside of the Friars Walk loans, that no new long term loans will need to be taken out in 2017/18, we will hold relatively minimal cash holding for most of the year and use short term loans and investments to manage our day to day cash requirements.

 

The Leader then referred to the capital programme which is a key driver to the treasury management strategy. The Leader stated that a new 5 year programme, starting in 2018/19 would be developed over the next few months, and given the pressure on revenue funds, there are no easy solutions to expand the capital programme through additional borrowing, though demand for capital resources, as usual, is high.

 

The Leader was pleased to report the Council had been successful in the last few years in investing in schools and the city centre as well as the usual cyclical investments in ICT. The Leader welcomed the securing of Welsh Government funding, matched with Council funds, to expand the C21 school programme in particular. The Leader stated that the Council could now look forward to new, exciting and much needed schools and buildings over the next 1 – 2 years.

 

In terms of the proposed overall budget and Council Tax, the Leader stated that the budget continues to be challenging. The revenue support grant would reduce by 0.4%, approximately £900k in cash terms.

 

The Council also had new pressures and responsibilities and when these were included, the reduction was 0.7%, nearly £1.5m. The Leader explained that this grant makes up some 80% of the Council’s current total funding

 

There were other unfunded significant financial pressures to be faced such as:

 

• Funding the increasing costs of the new National Living Wage, which will see our social care community care costs increased by nearly £450k in 2017/18 and around £2m over the next 4 years
• Funding of the new Apprenticeship Levy at nearly £320k

 

These came with no additional funding and were outside of the Council’s control, although of course supported by the administration.

 

Ongoing pressures on the budget, such as inflationary pressures and the on-going costs of demand on our social care services also needed to be addressed

 

The Leader informed members that the draft budget which was offered for consultation, included over £8m of savings over the medium term, with nearly 6m for next year. This included a Council Tax increase of 4% and significant investment in services of over £5m.

 

The final outcome of the settlement allowed little flexibility but the Cabinet had listened very carefully to the various responses to the consultation it had received, in particular with the public and we were conscious of the significant issues within the schools area of the budget. The Leader was pleased to announce:

 

·         An increase funding to schools at £1.1m, a 1.2% increase. 

·         The removal of the out-sourcing of the care staff at the Linc extra care scheme saving proposal

·         A reduction in the  proposed Council Tax rise to 3.5%, which is what is required to balance the Cabinet’s budget  

 

The Leader considered that even in a very challenging position, the Cabinet had dealt with most of the key areas of concern.

 

The Leader announced that Cabinet was finalising details on some one-off investments in key areas of, mainly, infrastructure. These would be funded mainly from the current years forecasted underspend, and the review of reserves which had highlighted a couple of those no longer needed.

 

The Leader stated that there would be an announcement at the March Cabinet meeting. This would further add to other investments in the revenue and capital budgets which the Cabinet have already agreed for 2017/18 and shows a commitment to our key priorities. 

 

As to Council tax, the Leader stated that a 3.5% increase was recommended and that she and her cabinet considered this as a fair and balanced recommendation, because:

 

·         This percentage increase is about the average for Wales for 2017/18

·         Newport’s tax is already low and even with this increase, will retain its position as the second lowest rate in Wales, and amongst the lowest across UK unitary councils

·         In cash terms, it will be lower than most as our starting point is lower than virtually all other Councils

·         It will still see the Council spending less than the Standard Spending Assessment – the amount Welsh Government deems is needed to fund a ‘standard level of services’, by around £7 million. This Council will continue to provide good value in what it does

·         It allows the Council to continue to invest in its schools, a commitment to the National Living Wage and social justice and provide funding to other key areas of the budget

 

Whilst balancing this up with savings of approximately £5.5m for 2017/18

 

The Leader considered it to be a fair balance between delivering savings and increasing Council Tax on the one hand to offset lower revenue grant and key budget pressures on the other.

 

The Leader informed members that increase recommended would produce an average Band D Council Tax of £1,008.72, an increase of £34.11 per year, or 65p per week. The Councils overall budget would be just over £266m.

 

The Leader stated that the Cabinet continues in its ambition to protect services and seek social justice and that she was very proud of what this administration had achieved over the last 5 years, under difficult financial challenges.

 

She stated that the capital investment in schools and the city centre, revenue investments in schools and social care, introduction of the living wage to Council employees and care providers, the various ambitious change projects over the last four years was testament to this and the confident manner in which the administration continues to steer a path through these difficult times

 

The Cabinet Member for Finance and Resources seconded the budget proposals saying that the Leader had been quite right in referring to the challenge in setting the budget this year and the continuing difficulties as the grant from Welsh Government who in turn received its budget from the UK government. There were unfunded policy changes that impacted on the budget He was pleased at the increased level of responses to the consultation and was pleased that the Cabinet had listened to the responses when finalising its proposals. He stated that the administration would always put people first. Meeting financial challenges needed a strategic approach as difficulties continued.

 

Members speaking against the proposals stated:

 

·         They had concerns about the funding proposals and the potential impact on schools, inclusion services and school staff

·         There would be an impact on local people as Council tax rises without improved services

·         There is a need to make use of reserves

·         The need collaborate and share services and share Chief Officers

·         There is a need to collaborate and reform the way our structures work

·         The potential impact of a removal of a subsidy for the X16 bus service in the Marshfield area

·         The budget did not put people first as evidenced by previous decisions 

·         Welsh Government took decisions as to allocation of their budget as allocated by the UK Government

 

 

Members speaking in favour of the proposals stated:

 

·         The Administration had increased spending on schools year on year over the past five years and over and above the Welsh Government pledge

·         The budget provided a £1.1m increase in schools’ budgets, despite a reduction in Welsh Government grant.

·         Schools received excellent support as reflected in recent results and Governors and School staff deserved praise

·         A significant amount of money was spent in England on a relatively small number of Free Schools

·         The Council continued to suffer from the decreasing grant aid being received from central government

·         The Cabinet had listened to the main issues raised during the consultation process and addressed the most important issues raised

·         The Deputy Leader explained that meetings were taking place to discuss what could be done to alleviate the impact from the removal of the subsidy for the X16 service and also explained that the route had received subsidy from Caerphilly Council who had announced its intention to remove the subsidy owing to limited use.

·         The level of Council tax remained low despite the position in relation to SSA

·         The proposals put people first  and considered the impact on vulnerable people , listening to people’s comments and acting on them. 

·         Despite the significant pressures which impacted on  the adult social services budget, services to vulnerable older people had been preserved and in terms of disabled facilities grants the waiting times had improved significantly

 

 

The Leader of the Opposition stated that if the Administration had listened to previous suggestions, there would have been some significant changes; including making Newport matter a cost – neutral publication; and reducing the number of Cabinet Members. He asked the Cabinet to consider using underspending and other available funds to invest £250,000 on school buildings; £250,000 on economic development schemes, ensuring Friar’s Walk is the start of regeneration, including the Market; and £ 250,000 on Streetscene, including zero tolerance on fly tipping. He mentioned the significant cost of highway claims that could be avoided by this investment. The Leader of the Opposition considered the budget lacked innovative ideas. 

 

 

The Leader of the Council in conclusion stated that she had listened carefully to all comments. She would do all that she could to protect the education budget but was disappointed that the public realm was shrinking as the UK government was not providing enough funding for the Welsh Government.

 

The Leader was very proud of the achievements of the Cabinet, which continued to protect services and seek social justice despite the very challenging budgets over the past five years.

 

The Leader of the Council stated that there would be capital investments in schools; there had been city centre regeneration; revenue investment had been made in schools and in social care; the living wage had been introduced and there were ambitious change projects as evidenced by the development of the Welsh Secondary School.

 

The Leader of the Council referred to investment projects and stated that the Cabinet would be discussing implementing capital projects for schools; community centres; Streetscene; disability facilities grants; play; the CAB; the market; and the details would be provided to the next cabinet meeting. This added to £2.5m and provided an ambitious range of projects after substantial research. 

 

The required number of elected members sought a recorded vote.

 

The Monitoring Officer reminded elected members that the Council had a legal requirement ti set a balanced budget.

The following members voted in favour of the proposals:

 

Councillors Al Nuaimi; Bond; Cockeram; Corten; Critchley; Davies; Giles; Guy; Harvey; Jeavons; Jenkins; Linton; Mayer; Mlewa; Morris; Mudd; Poole; Rahman; Richards; Spencer; C Suller; H Thomas; K Thomas; Truman; Whitcutt and Wilcox- A total of 26 votes

 

The following members voted against the proposals:

 

Councillors Cleverly; Cornelious; C Evans; M Evans; Ferris; Fouweather; Kellaway; Mogford; T Suller; White; Whitehead; and Williams- A total of 12 votes

 

Abstained from voting: Councillor Townsend.

 

The motion was therefore passed

 

 

RESOLVED

 

 

Revenue budget and Council Tax 17/18 (paragraphs 4-32)

 

i.      To note that an extensive consultation exercise has been completed on the medium term change/efficiency programme, including the 2017/18 budget proposals and that Cabinet have taken these into account in recommending final details of the programme and the resulting 2017/18 overall revenue budget recommended to this Council;

 

ii.     To note the Head of Finance’s recommendations that minimum General Fund Balances be maintained at £6.5million;

 

iii.    To note that, in line with the requirements of the Local Government Act 2003, the Head of Finance confirms the robustness of the estimates underlying the proposals and the adequacy of the General Reserves in the context of other earmarked reserves and a revenue budget contingency of c£1,500k;

 

iv.    To approve the total revenue budget, shown in Appendix 1 of the report;

 

v.     To approve a Council Tax increase for Newport City Council of 3.5%, a band D tax of £1,008.72;

 

 

vi.   To approve the formal Council Tax resolution, included in Appendix 5 of the report which incorporates The Police and Crime Commissioner for Gwent & Community Council precepts; and as set out below:

 

 

PRECEPTS/ COUNCIL TAX

 

The funding required from Council Tax for the recommended draft 2017/18 budget is an increase of 3.50%. The tables below show all the figures involved in that calculation.

 

The tax base

This is the number of properties that attract Council Tax for the year, expressed as if they were all in Band D. In practice, Band A properties only pay 66% of the Band D Council Tax whilst a Band I property pays 233% of the Band D Council Tax. For 2017/18, the tax base is 57,619.96 (2016/17 – 56,145.64).

 

 

Calculation of the Council Tax – Newport City Council

The calculation of the Council Tax follows the process shown below

 

	£000
Net budget requirement	266,372
Less WAG funding	208,250
Equals that which needs funding from Council Tax	58,122
£
Divided by tax base (57,619.96) gives a Council Tax at Band D	1,008.72

 

Calculation of the Council Tax – The Police and Crime Commissioner for Gwent & Community Councils

The final Council Tax also incorporates other demands (precepts) that the Council collects on behalf of other bodies. These bodies are The Police and Crime Commissioner for Gwent (PCC for Gwent) and the Community Councils within the City’s boundary. Of these, The Police and Crime Commissioner for Gwent is the largest and for 2017/18, has set a precept of £13,185,752.00. 

 

Authority	Budget requirement / Precept from Council Tax (£’000)	Tax Base	Council Tax at Band D		% Change
			2017/18	2016/17
Newport City	58,122	57,619.96	£1,008.72	£974.61	3.50%
PCC for Gwent	13,186	57,619.96	£228.84	£220.06	3.99%

 

The table below lists the precepts and Band D Council Tax for the Community Councils within Newport City boundary, for which the Council collects Council Tax

 

Community Council	Council Tax Base	2017/18 Precept (£)	Council Tax at Band D		% Change
			2017/18	2016/17
Bishton	754	9,053.64	12.00	10.90	10.1%
Coedkernew	982	2,945.52	3.00	3.00	-
Goldcliff	185	2,966.56	16.00	15.00	6.7%
Graig	2,866	55,632.94	19.41	18.49	5.0%
Langstone	1,897	39,456.56	20.80	20.80	-
Llanvaches	242	6,044.75	25.00	25.00	-
Llanwern	595	7,500.00	12.61	17.00	-25.8%
Marshfield	1,514	27,243.36	18.00	18.00	-
Michaelstone - Y - Fedw	168	3,635.62	21.70	21.70	-
Nash	135	1,239.70	9.20	9.20	-
Penhow	449	11,552.77	25.73	21.22	21.3%
Redwick	113	2,734.19	24.16	24.16	-
Rogerstone	4,847	90,589.50	18.69	18.36	1.8%
Wentlooge	353	4,247.95	12.04	12.00	0.3%

The Council Tax payable by households is the total of the Newport City Council, The Police and Crime Commissioner for Gwent and, where relevant, the Community Council taxes payable in the above tables. As already noted, the actual Council Tax payable by households will vary from the figures above as they represent those at the Band D only. The tables included in section 5 of the Council Tax Resolution at Appendix 5 show the actual Council Tax for each Band. 

APPENDIX 5 – COUNCIL TAX RESOLUTION

 

RESOLUTION TO SET COUNCIL TAX LEVELS

1.         That the revenue estimates for 2017/2018, as recommended by the Cabinet on 20th February 2017 be approved.

 

2.         That it be noted that the Council at its meeting on 20^th February 2007 delegated the setting of the tax base to the Head of Finance and that on03 November 2016, the Head of Finance acting in accordance with that delegation calculated the following amounts for the year 2017/2018 in accordance with regulations made under Section 33(5) of the Local Government Finance Act 1992:-

 

(a)        Council Tax Base

 

57,619.96being the amount calculated by the Council, in accordance with regulation 3 of the Local Authorities (Calculation of Council Tax Base) Regulations 1992, as its council tax base for the year;

 

(b)        Council Tax base for parts of the Council’s Area

 

Area	Tax base
Bishton	754
Coedkernew	982
Goldcliff	185
Graig	2,866
Langstone	1,897
Llanvaches	242
Llanwern	595
Marshfield	1,514
Michaelstone	168
Nash	135
Penhow	449
Redwick	113
Rogerstone	4,847
Wentlooge	353

 

3.         That the following amounts be now calculated by the Council for the year 2017/2018 in accordance with Sections 32 to 36 of the Local Government Finance Act 1992:-

 

(a)        £405,509,221.11 being the aggregate of the amounts which the Council estimates for the items set out in Section 32(2)(a) to (e) of the Act

(Gross Expenditure).

 

(b)        £138,871,714.00 being the aggregate of the amounts which the Council estimates for the items set out in Section 32(3)(a) to (c) of the Act

(Gross Income).

 

(c)        £266,637,507.11 being the amount by which the aggregate at (3)(a) above exceeds the aggregate at 3(b) above, calculated by the Council, in accordance with Section 32(4) of the Act, as its budget requirement for the year (Budget + Community Council precepts).

 

(d)        £208,250,266.00 being the aggregate of the sums which the Council estimates will be payable for the year into its council fund in respect of redistributed non-domestic rates, revenue support grant or additional grant (RSG + NNDR).

 

(e)        £1,013.32 being the amount at 3(c) above less the amount at 3(d) above, all divided by the amount at 2(a) above, calculated by the Council, in accordance with Section 33(1) of the Act, as the basic amount of its council tax for the year (Average Band ‘D’ Tax for NCC including Community Councils).

 

(f)        £264,843.06 being the aggregate amount of all special items referred to in Section 34(1) of the Act and detailed below (Community Council precepts).

 

 

(g)        £1,008.72 being the amount at 3(e) above less the result given by dividing the amount at 3(f) above by the amount at 2(a) above, calculated by the Council, in accordance with Section 34(2) of the Act, as the basic amount of its council tax for the year for dwellings in those parts of its area to which no special item relates (NCC Band ‘D’ Council Tax).

 

(h)        Council Tax level for parts of the Council’s Area

 

 

 

Being the amounts given by adding to the amount at 3(g) above, the amounts of the special item or items in 3(f) divided by the amount at 2(b) for the specified area of the council.  These amounts are calculated by the Council, in accordance with Section 34(3) of the Act, as the basic amounts of its council tax for the year for dwellings in those parts of its area to which one or more special items relate.

                       

 

 

 

Being the amounts given by multiplying the amounts at 3(g) and 3(h) above by the number which, in the proportion set out in Section 5(1) of the Act, is applicable to dwellings listed in a particular valuation band divided by the number which in that proportion is applicable to dwellings listed in the valuation band D, calculated by the Council, in accordance with Section 36(1) of the Act, as the amounts to be taken into account for the year in respect of categories of dwellings listed in different valuation bands.

 

4.         That it be noted for the year 2017/2018, that The Police and Crime Commissioner for Gwent has stated the following amount in precept issued to the Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings shown below:-

 

 

 

 

 5.        That having calculated the aggregate in each case of the amounts at 3(i) and 4 above, the Council, in accordance with Section 30(2) of the Local Government Finance Act 1992, hereby sets the following amounts as the amounts of council tax for the year 2017/2018 for each of the categories of dwelling shown below:-

 

 

 

 

 

 

Capital Programme and 2017/18 budget (paragraphs 43–56)

 

To approve the 2017/18 capital budget, this being the final year of the current 4 year programme as set out in Appendix 6 of the report

 

Treasury Management and Investment strategies, Minimum Revenue Provision Policies, Prudential Indicators and Reserves Policy (paragraphs 57-90)  

 

i.      To approve Treasury Management Policies in line with the detail contained in Appendix 7 of the report ;

ii.     To approve the Annual Investment Strategy in line with the detail contained in Appendix 7;

iii.    To approve the Council’s Counterparty list (external bodies for Council investments) in line with the detail contained in Appendix 7;

iv.   To approve the Prudential Indicators in line with the detail contained in Appendix 7

v.    To approve the Minimum Revenue Provision policy in line with the detail contained in Appendix 7;

vi.   To approve the Reserves Policy in Appendix 9c of the report

 

 

Medium Term Financial Plan and Capital programme (paragraphs 1 – 3 and 43 - 56)

 

i.      To note the MTFP and the challenging financial climate over the medium term.

ii.     To note Cabinets approval of the implementation of the full 4 year change and efficiency programme, including all budget investments and saving options (Appendices 2 - 3), as summarised within the Medium Term Financial Plan (Appendix 8) and the final year of the current capital programme (Appendix 6). Noting they are subject to on-going review and updating.