General Fund Revenue and Capital Estimates 2019-20
The Cabinet was presented with the draft revenue and capital estimates for General Fund services in 2019-20 together with the recommended level of council tax to be levied for 2019-20.
The Assistant Director (Corporate Services) advised that the Provisional Local Government
Finance Settlement set out the level of funding assessed by Central Government for
Councils (the Settlement Funding Assessment – SFA) and was made up of two elements Revenue Support Grant (RSG) and Business Rates Retention. Since 2018-19, the Business Rates retention element of the assessment had increased each year in line with the Consumer Price Index (CPI), with the RSG element effectively used to bring the funding received by Councils to the level assessed by Central Government.
On 13 December 2018, the provisional settlement for 2019-20 was announced. The provisional settlement would be the final year of the multi-year finance settlement announced in 2016-17 and completes the Government’s intended reduction in the total level of funding for local government over the next three-year period.
The SFA for the Council was a slightly improved position than that expected due to the decision of Government to provide an additional £153m of funding to those authorities that were due to pay negative RSG for 2019/20. For Gravesham, this amounted to £243,710 that the Council was expecting to lose by way of a reduction to its business rates retention baseline funding level.
As part of the announcement, it was also confirmed that Kent & Medway had been unsuccessful in retaining pilot status for Business Rates in 2019-20. In response to this, a letter of representation had been sent on behalf of all Members of the Kent & Medway Pilot to the Ministry for Housing, Communities and Local Government (MHCLG) seeking reconsideration of the decision. The budget had therefore been prepared on the basis of being in a no pilot arrangement however the report included a recommendation allowing adjustment of the budget to reflect any change to the Pilot Status decision for Kent & Medway as time may allow.
The report was presented in seven sections and the Assistant Director (Corporate Services) provided Members with a detailed summary of each section:-
· Section One – Policy Context;
· Section Two – Government Funding;
· Section Three – Medium Term Financial Strategy (MTFS);
· Section Four - General Fund Revenue Budget;
· Section Five – Council Tax;
· Section Six - Robustness of Estimates and Adequacy of Reserves; and
· Section Seven - Capital Programme.
The Cabinet was reminded that the MTFS for 2016-17 to 2019-20 identified a residual funding gap of £2.5m emerging in 2019-20 which increased by a further £0.4m to £2.9m in 2017-18. The funding gap was widened by at least a further £1m at budget setting 2018-19 due to the financial impact of low housebuilding rates in the borough, the higher than anticipated staff pay award and lower than expected interest rates.
The MTFS detailed the actions to be taken by the Council in order to bridge the funding gap. These actions commenced during 2016-17 and have continued. It had now been identified that savings of around £1.9m would need to be delivered by the Council by 2023-24. Just over £1.2m of these savings would be received from the further bridging the gap and balancing the budget activity which is yet to be delivered. The Council will therefore have a window of three years in which to identify further activity that can contribute towards the further savings required particularly as there still remained significant volatility in proposed changes to local government funding from 2020-21, as detailed below, which will begin to materialise during the next year:-
· Spending Review 2019;
· Fair Funding Review;
· Business Rates Reform;
· New Homes Bonus; and
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 3% or up to and including £5 (whichever is higher) without triggering the requirement for referendum. Taking the decision to freeze council tax in 2019-20 rather than implementing a 2.97% increase (the level of % increase closest to 3% which is divisible by nine to account for council tax banding ratios) would see total council tax income reduced by £1,985,030 across the plan period and add to the already challenging financial position. A 2.97% increase in Council Tax in 2019-20 would equate to 11 pence per week for a Band D property, with the total annual charge being £203.13. By way of comparison, the Band D equivalent Council Tax for 2018-19 is £197.28.
The Cabinet thanked the Assistant Director (Corporate Services) and her team on the work that had been undertaken to date.
Resolved that the Cabinet recommends to Council that:-
1. the draft revenue estimates for 2019-20 together with revised estimates for 2018-19, be approved, subject to any final amendments agreed by the Section 151 Officer in consultation with the Chief Executive and Leader of the Executive;
2. the provisional estimates for the following nine years be noted;
3. the draft capital estimates for 2019-20, together with the revised estimates for 2018- 19, be approved subject to detailed reports coming forward on new schemes where applicable; and
4. arrangements be made for a resolution to be placed before the meeting of the Council, to be held on 26 February 2019, specifying the council tax to be levied in the Borough of Gravesham for the year 2019-20.
- 1. GF Estimates Report 2019-20 - Summary Version, item 156. PDF 258 KB
- 2. Appendix 2 - Government Funding, item 156. PDF 188 KB
- 3. Appendix 3 -General Fund Revenue Budget, item 156. PDF 139 KB
- 3a. General Fund Budget Book Service View 19-20 V4, item 156. PDF 2 MB
- 4. Appendix 4 -Council Tax, item 156. PDF 88 KB
- 4a. Council Tax Freeze Impact 2019-20 to 2027-28, item 156. PDF 55 KB
- 4b. MTFP - V13 - 2018-19 - BMR Q3 & Budget-Setting, item 156. PDF 76 KB
- 4c. MTFP - V13 - 2018-19 - BMR Q3 & Budget-Setting CT Freeze, item 156. PDF 76 KB
- 5. Appendix 5 - GF Working Balances, item 156. PDF 68 KB
- 5a. Reserves Policy 2018, item 156. PDF 296 KB
- 5b. Assessment of GF Working Balance Level 2019-20, item 156. PDF 28 KB
- 6. Appendix 6 - Capital Programme 1920, item 156. PDF 75 KB