Agenda item

Report of the Corporate Director (Resources, Environment and Cultural Services) presenting the budget proposals for 2019/20.

(Note:  This report will be considered at the Resources Overview and Scrutiny Committee meeting on 14 January 2019).

The Cabinet approved the following budget proposals and noted that any comments from the Resources Overview and Scrutiny Committee on 14 January will be returned to the Special Cabinet on 22 January for consideration before final recommendations were made to the Council meeting on 4 February 2019.

General Fund

The proposed General Fund Budget as summarised in Appendix A, and detailed in appendix B.

The inclusion of the savings and growth proposals into the budget as detailed in appendices C and D.

The approval of the 2019/20 fees and charges which have been incorporated into the budget proposals, as set out in appendix E.

The increase in the Council’s Band D Tax of £5.16 (2.5%), taking the average Band D Tax to £211.77 for 2019/20.

Housing Revenue Account

That dwelling rents are reduced by 1% in accordance with Government legislation, resulting in an average rent of £103.37 per week.

The continuation of the policy charge formula rent minus 1% when vacant properties are re-let.

The approval of the Housing Revenue Account budget for 2019/20 as shown in appendix F.

The approval of the 2019/20 fees and charges which have been incorporated into the budget proposals, as set out in appendix H.

The Medium Term Financial Strategy to maintain Housing Revenue Account working balances to around 5% of rental income.

Capital Programme

The approval of the Capital Programme for 2019/20 to 2023/24 as set out in Appendix I.

The approval of the Capital Financing for the Capital Programme, for 2019/20 to 2023/24 as set out in Appendix J.

Medium Term Financial Strategy

The approval of the Medium Term Financial Strategy for 2019/20 – 2021/22 as set out in appendix L.

Other Strategies

The approval of the Treasury Management Strategy for 2019/20 as set out in appendix M.

The approval of the Investment Strategy for 2019/20 as set out in appendix N

The approval of the Capital Strategy for 2019/20 as set out in appendix O.

Report of the Corporate Director (Resources, Environment and Cultural Services) presenting the budget proposals for 2019/20.

(1)        The Decision Taken

RESOLVED:

That the Cabinet approves the following budget proposals and notes that any comments from the Resources Overview and Scrutiny Committee on 14 January will be returned to the Special Cabinet on 22 January for consideration before final recommendations were made to the Council meeting on 4 February 2019.

General Fund

The proposed General Fund Budget as summarised in appendix A, and detailed in appendix B.

The inclusion of the savings and growth proposals into the budget as detailed in appendices C and D.

The approval of the 2019/20 fees and charges which have been incorporated into the budget proposals, as set out in appendix E.

The increase in the Council’s Band D Tax of £5.16 (2.5%), taking the average Band D Tax to £211.77 for 2019/20.

Housing Revenue Account

That dwelling rents are reduced by 1% in accordance with Government legislation, resulting in an average rent of £103.37 per week.

The continuation of the policy charge formula rent minus 1% when vacant properties are re-let.

The approval of the Housing Revenue Account budget for 2019/20 as shown in appendix F.

The approval of the 2019/20 fees and charges which have been incorporated into the budget proposals, as set out in appendix H.

The Medium Term Financial Strategy to maintain Housing Revenue Account working balances to around 5% of rental income.

Capital Programme

The approval of the Capital Programme for 2019/20 to 2023/24 as set out in appendix I.

The approval of the Capital Financing for the Capital Programme for 2019/20 to 2023/24 as set out in appendix J.

Medium Term Financial Strategy

The approval of the Medium Term Financial Strategy for 2019/20 – 2021/22 as set out in appendix L.

Other Strategies

The approval of the Treasury Management Strategy for 2019/20 as set out in appendix M.

The approval of the Investment Strategy for 2019/20 as set out in appendix N.

The approval of the Capital Strategy for 2019/20 as set out in appendix O.

(2)        Reasons for the Decision

Despite a challenging financial environment with a continued reduction in Government financial support the Council had been able to produce a General Fund budget that protected and invested in services.

The impact of salary changes and contract inflation had been offset through a combination of further savings and income generation, together with a rise in Council Tax and a small drawdown from balances.

Having regard to savings and additional income generation for 2019/20, notable items included £600,000 from commercial property investment, a greater than predicted take up of the garden waste service and a reduction in the fee paid to GLL to manage leisure facilities.  However, no income from the bereavement services development was now likely until 2020/21.

£235,000 of fixed term growth items would be funded from earmarked reserves previously established for this purpose.

It was proposed to increase Council Tax by 2.5% or £5.00 per Band D property which was below the rate of inflation.

For 2019/20 it had now been confirmed that all Hertfordshire authorities would participate in a pilot to retain 75% of business rates.  This would be financially beneficial for the Council.  The pilot would only last for one year, however it was anticipated that the 75% business rates retention scheme would be rolled out nationally from 2020/21.

A small drawdown of £95,000 in General Fund working balances was anticipated.

This would leave General Fund working balances of £8.7M at the end of 2019/20, together with remaining Earmarked Reserves of £3.4M which meant that the Council’s General Fund would remain in a healthy state.

For the Housing Revenue Account, it was recognised that the rollout of Universal Credit was impacting on rent arrears and envisaging this, bad debt provision had already been increased in 2018/19 and was felt to be slightly more than sufficient for 2019/20 but would be kept under review.

It was intended to maintain balances at a minimum of £2.5M.

The total proposed capital budget for 2019/20 was £50M.  £27.7M related to the General Fund and notable items included continued investment in Hatfield Town Centre of £9.6M, £3.1M for Welwyn Garden City North, £1.8M for the Splashlands development, £2.9M for bereavement services and £3M for fleet renewal in advance of the new Streetscene contract.

£22.3M related to the Housing Revenue Account and included £12M for the Affordable Housing Programme and £6M for major repairs to the stock.

There was a need to increase borrowing in 2019/20 as the Council’s investment requirements would not be covered by sufficient capital receipts of grants.

Within the General Fund, as well as drawing down on cash balances, £10M of external borrowing was envisaged by the end of 2019/20.

Within the Housing Revenue Account the Council would continue to repay the original housing debt taken on in 2012, but it was currently envisaged that over the period to 2020/21, new borrowing would exceed debt repayments, meaning that net debt would increase slightly, before falling back again thereafter.  The increased net debt figure was well within the Council’s debt headroom of £305M, however the Medium Term Financial Strategy highlighted a number of opportunities and challenges faced by the Council in the period through to 2021/22, notably the likely requirement to find a further £1.5M of annual General Fund savings by 2020/21 and the document demonstrated the Council’s commitment to financial stability.