General Fund Revenue and Capital Estimates 2020/21
- Meeting of Overview Scrutiny Committee, Thursday, 13 February 2020 7.30 pm (Item 136.)
- View the background to item 136.
The Assistant Director (Corporate Services) presentedthe Committee with the draft revenue and capital estimates for General Fund services in 2020-21 together with the recommended level of council tax to be levied for 2020-21.
The Assistant Director (Corporate Services) advised that, on 20 December 2019, the Provisional Local Government Finance Settlement for 2020-21 only was announced by the Ministry for Housing, Communities and Local Government (MHCLG). This set out an inflationary increase in the Business Rates Retention Baseline Funding Level of 1.63%, in line with the September 2019 CPI inflation figure, as well as confirming that the government would be eliminating negative RSG amounts in 2020-21.
The Council had also secured indicative New Homes Bonus funding for 2020-21 of £603,010; this was above the level of funding that was previously in the Medium Term Financial Plan (MTFP) with the increase principally due to there being a net increase in the housing stock of the borough of 309 units between October 2018 and October 2019. This was above the national baseline of 0.4%, or 180 net additional homes. The government had stated that funding of New Homes Bonus beyond 2020-21 will be subject to the 2020 Spending Review.
The Kent Business Rates Pool will continue to operate in 2020-21. Modelling of anticipated business rates to be generated in the year (including the projected benefit of membership of the Kent Pool) indicated a benefit to Gravesham of £529,650 beyond that previously expected and reflected in the MTFP.
The current Medium Term Financial Strategy (MTFS) covered the period 2016-17 to 2019-20. Given the current lack of clarity from the government around the future funding of local government, the S151 Officer and the Council’s Senior Management Team agreed that it would be prudent to put in place a one year MTFS for 2020-21. The strategy was attached at appendix three of the report.
In response to the 2020 pay claim, the National Employers indicated that they would not be in a position to respond to the claim until the outcome of the General Election was known. In the absence of any agreed pay claim, the proposed revenue budget for 2020- 21 reflects a 2% pay award for all staff; this is in line with the pay award assumptions of other council’s whose pay negotiations are also managed by the National Employers.
The Kent Superannuation Fund has recently undergone its triennial revaluation and the draft results have been shared with key stakeholders. The review will set the ongoing employer’s contribution rate from 1 April 2020 as well as the level of back funding contributions. The draft figures represent 2020-21 employer contributions for
Gravesham being some £54,000 more than 2019-20 levels, with the balance between future services contribution and back funding having been adjusted. This has been incorporated into the proposed budget.
A Vacancy Allowance of £350,000 has been retained for the General Fund.
£4.2million of bridging the gap / balancing the budget activity has been implemented and reflected in the MTFP
In relation to the council tax to be levied, Members were advised that the provisional settlement announcement confirmed the continued flexibility for district councils in setting council tax levels by permitting district councils to raise council tax by 2% or up to and including £5 (whichever is higher) without triggering the requirement for referendum. Taking the decision to freeze council tax in 2020-21 rather than implementing a 2.44% increase would see total council tax income reduced by £1,697,660 across the plan period. A 2.44% (£4.95) increase in Council Tax in 2020-21 would equate to 10 pence per week for a Band D property, with the total annual charge being £208.08.
The Assistant Director (Corporate Services) advised that the delivery of the proactive strategy to respond to the financial pressures first identified by the Council in 2016 had enabled the 2020-21 budget proposals to be presented alongside a MTFP which required no additional savings to be delivered in the plan period to 2028-29. After a decade of significant and sustained cuts to local government funding and the increased focus on financial governance that comes with such circumstances, the Council was now in a position to bring forward the ambitions set out in the Corporate Plan 2019-2023 to deliver a Gravesham to be proud of, specifically supporting:-
· the delivery of a new Leisure Centre for the residents of the borough in 2025;
· a fully-funded replacement programme for Council-owned play sites in the borough from 2020-21;
· the delivery of new housing in the borough;
· an improved town centre street scene;
· seed-funding of £500,000 for taking forward the Council’s actions to deliver against its commitment to do what was within its powers and resources to become carbon neutral by 2030 and to work with partners on this.
The Director (Corporate Services) advised the Committee that for the first time the Council has a 10 year MTFP that does not have a budget saving. This is the most sustainable MTFP of any district council in Kent in terms of matching annual expenditure with annual income over the period.
The Capital Programme for 2020-21(estimated at £14.4million) is largely a continuation of the schemes approved in 2019-20 and previous years, with the below new projects coming on line. New schemes include:
· Town Centre Improvements – a programme of activity has been established to deliver an improved street scene with enhanced cleanliness of Gravesend Town Centre.
· Replacement Waste Freighters – Waste collection freighters have a 7-10 year expected lifespan. The oldest vehicles in the current fleet are now reaching the end of their useful life and the cost of replacing these machines in 2019-20 has been added to the capital programme.
· IT Infrastructure Projects – the council needs to reinvest in its telephony and network infrastructure to ensure that these remain technologically up to date and fit for purpose.
The Director (Corporate Services) and Assistant Director (Corporate Services) fielded questions from the Committee and highlighted the following:
· The Council tax increase of £4.95 does not include the increase from KCC and the Kent Police and Crime Commissioner. The Assistant Director (Corporate Services) will confirm the official figure with Members but it is expected to be around £1,840.00 for a band D property with the Councils element of the charge being about 11%
· This item is brought to the Overview Scrutiny Committee to allow further in-depth understanding and transparency ahead of a decision at Full Council on 25 February 2020. The Finance Team will also be attending both Group meetings next week with a budget briefing paper and to answer any further questions Members may have.
· Negative Revenue Support Grant (RSG) arose as part of the four year settlement from 2016/17 to 2019/20. It is defined as a 'downward adjustment of an authority's business rates top-up and tariff'. It occurs when an authority's required reduction in core funding exceeded the available amount of RSG for that authority meaning that the reduction has to be sought from their retained business rates share.
Negative RSG is not an expense the Council has had to incur.
· Business Rates are set by central government; the Council’s role is to collect them. The Council collects £25million in business rates and gets to keep £3million.
Around 500 of the 2200 businesses in the Borough benefit from small business rate relief.
· There should be a review of membership of the Independent Members Remuneration Panel every 5 years. It is down to the individual Member if they accept an increase.
Resolved that the Committee note the General Fund Revenue and Capital Estimates 2020/21
- 1. GF Estimates Report 2019-20 - Summary Version, item 136. PDF 119 KB
- 2. Appendix 2 - Government Funding, item 136. PDF 122 KB
- 3. Appendix 3 - MTFS 2020-21, item 136. PDF 74 KB
- 4. Appendix 4 -General Fund Revenue Budget, item 136. PDF 234 KB
- 4a. Appendix 4a -General Fund Budget Book Service View 20-21, item 136. PDF 2 MB
- 5. Appendix 5 -Council Tax, item 136. PDF 88 KB
- 5a. Council Tax Freeze Impact 2020-21 to 2028-29, item 136. PDF 58 KB
- 5b. MTFP - V14 - 2019-20 Q3 & Budget-Setting, item 136. PDF 77 KB
- 5c. MTFP - V14 - 2019-20 Q3 & Budget-Setting (CT Freeze in 2020), item 136. PDF 77 KB
- 6. Appendix 6 - GF Working Balances, item 136. PDF 220 KB
- 6a. Reserves Policy 2019, item 136. PDF 297 KB
- 6b. Assessment of GF Working Balance Level 2020-21, item 136. PDF 28 KB
- 7. Appendix 7 - Capital Programme 1920, item 136. PDF 74 KB
- 8. Appendix 7a - Gym Kit Budget Addendum, item 136. PDF 48 KB