Agenda and minutes

The Panel is asked to confirm the Minutes of the Meeting of the Financial Policy Panel held 1 December 2015, 2 February 2016 and 24 May 2016 (attached) and to authorise the Chairman to sign them.

The Minutes of the Meetings of the Financial Policy Panel held on 1 December 2015, 2 February 2016 and 24 May 2016 were agreed as a true record and signed by the Chairman.

Members are asked to declare the existence and nature of any Disclosable Pecuniary Interests in respect of any item of business to be considered at the meeting

No declarations of interest were made by Councillors regarding the item of business on the Agenda.

The Panel received a report which updated the financial forecast, recommended financial targets for the preparation of the draft budget for 2017/18 and financial planning for 2018/19 and 2019/20.

The Panel discussed the issues in the context of a financial landscape which had changed significantly following the previous financial settlement in early 2016.

A widely expected phased cut of Revenue Support Grant (RSG) funding was not now proposed by the Government which left the Council with no Revenue Support Grant from 2017/18 onwards and an overall 66% reduction in funding between 2015/16 and 2019/20, posing an even greater challenge to the Council in delivering year-on-year savings to achieve a balanced budget.

The Government had made an offer of a fixed, four year settlement covering the years 2016/17 – 2019/20 early in 2016.  A local authority was not obliged to accept the offer.  However, the report highlighted that that the risk in not accepting the offer was that any subsequent year’s annual settlement might be less favourable than that outlined in the fixed offer – a risk which applied equally to authorities in receipt of Revenue Support Grant and those like Epsom and Ewell which were not scheduled to receive RSG in future years.

The report also highlighted that an advantage of accepting the four year settlement would be the removal of uncertainty in levels of funding from central Government.  This had traditionally placed a strain on resources in this authority around December and January to make revisions to the budget in time for the January committee cycle. The certainty in funding would allow for a more predictable budget setting and the ability to get known positions earlier in the process.

To accept the settlement local authorities had to produce an Efficiency Plan to demonstrate a four year budget with transparency on the benefits for the Council and the community. Significant work had gone into the recent Medium Term Financial Strategy (MTFS) and it was proposed that, should the Panel recommend acceptance of the four year settlement, the current cost reduction plan would be renamed the Efficiency Plan and that the MTFS should be renamed the MTFS and Efficiency Plan.  The report highlighted that this plan would need regular review in light of changes over the next four years.

The forecast budget shortfall for 2017/18 was £220K and over the next four financial years the total deficit was £1.282m.  The latest four year revenue budget forecast was appended as Annexe 2 to the report and included additional efficiency savings of £119K identified by Officers over and above the “Star Chamber” exercise in 2016/17.  It was noted that Officers had taken a prudent approach in profiling the identified savings in relation to the reduction in homelessness costs through new properties.  There were a number of projects coming on-line but it was not known when the savings would come through (although it was confirmed that some were starting to do so) and so were not forecast to come through until 2019/20.  In fact,  ...  view the full minutes text for item 7.