Agenda item

(To receive a report by David Forbes (County Finance Officer), which provides an estimate of the budget shortfall being faced by the County Council over the next three financial years in the wake of the acceptance of the four year funding deal from Government)

Consideration was given to a report by David Forbes (County Finance Officer), which provided an estimate of the budget shortfall being faced by the County Council over the next three financial years in the wake of the acceptance of the four year funding deal from Government. 

The report also provided the foundations for the forthcoming budget cycle and it had recently been provided to all councillors in preparation for the Scrutiny Committee budget workshops that were now underway.

The County Finance Officer presented the report to the Committee and in doing so, highlighted the current projected budget shortfall; the balance of the County Council's reserves; an update on the capital programme; and the timetable for the budget approval process.

Members were advised that the Government's Autumn Statement, which had been announced on 23 November 2016, had not provided any relief to local government nor had it recognised the budget pressures being experienced by Adult Care authorities. It was noted that the Provisional Local Government Grant Settlement was due to be announced late November/early December 2016, which meant that the Executive could consider budget proposals at its meeting on 20 December 2016, which would form the basis of public consultation.

It was highlighted that the main budget pressures for 2017/18 for the County Council currently comprised the following: -

·    Adult Care demography and minimum wage increase - £8.5m;

·    Increase in the number of Looked After Children - £1.8m;

·    Waste Disposal (volume and price impact) - £1.0m;

·    Microsoft licences - £1.4m; and

·    County Council Elections (one year only) - £1.1m.

NOTE: Councillor Mrs C A Talbot declared an interest as she was currently participating in research undertaken by Durham University on the funding for Public Health services.

Members were provided with an opportunity to ask questions, where the following points were noted: -

·       The total of the County Council's long term debt was approximately £480m, with a total interest rate of 4%.  A large proportion of the long term debt was of a historic nature.  Further to this, it was noted that any new borrowing would be at a rate of approximately 2-3%, as it was currently a favourable time to borrow.  It was also noted that the County Council's long term debt was in the average range, compared to other local authorities;

·       A Councillor commented that the County Council should be using its capital to encourage business growth, rather than predominantly being spent on housing developments;

·       Government had introduced a new three year concession, which had provided upper tier local authorities with more flexibility in the way of which they could use capital receipts.  This meant that the County Council could fund certain revenue costs for transformation change (for example, redundancy costs) by using capital receipts and thereby freeing up the revenue budget allocation in those three years.  It was noted that upper tier authorities were lobbying Government to make this concession permanent, similar to combined authorities;

·       A Councillor suggested that the County Council explored the possibility of replacing Microsoft with alternatives, such as Open-source software;

·       It was recognised that £1m of the County Council's income was generated by the Energy from Waste plant;

·       It was also recognised that the Rural Services Delivery Grant contributed to the Council's budget by 8%;

·       It was assumed that the increase in the number of Looked After Children had included the 50 additional unaccompanied asylum seeking children, which the Council had accepted into its care through the Government scheme;

·       A concern was raised regarding the contributions of £15.9m from Health into the Lincolnshire Better Care Fund, and whether this would be realistic going forward considering the budget pressures clinical commissioning groups were currently facing;

·       It was confirmed that where grants and contributions from Government and other bodies had been allocated for specific purposes, if they were not used for those purposes, the grants and contributions had to be returned.  However, it was not anticipated that all grant funding would be spent on its specified purpose;

·       Members raised significant concerns with the Government's Autumn Statement and stressed its inadequacy to address the pressures facing Adult Care authorities.  Further to this, it was suggested that the Executive be requested to respond to Government outlining the Council's concerns in relation to the underfunding of Adult Care pressures;

·       Members also raised concerns that there was no provision for price inflation within the budget, with the exception of pay inflation which was limited to 1%, other than the use of the revenue contingency budget.  However, it was noted that in the first instance directorates would try to fund the price inflation within its budget.  It was agreed that the Executive be requested to encourage directors to fund any price inflations through the revenue contingency budget, as it was deemed unfair that they should fund it within their allocated budgets;

·       A Councillor suggested that the County Council continued to lobby government on the funding shortfall for rural authorities.

The Chairman thanked the County Finance Officer for his detailed report.

RESOLVED

That the comments of the Committee be passed onto to the Executive for its consideration.