Issue - meetings

To consider and endorse to County Council for agreement, the draft budget and the council tax precept (including the additional Social Care Levy) taking into account proposed amendments from Cabinet Committees and late changes to the draft Budget and MTFP published on 11th January 2016.

Cabinet received a report setting out the proposed budget for 2016/17 and the Council’s Medium Term Financial Plan (MTFP) 2016-19 for consideration and comment before it would be considered and determined at County Council on 11 February 2016. The proposed draft budget included a 1.998% council tax increase (up to the referendum limit) and a further 2% through the social care levy. The draft budget represented the Council’s response to the local budget consultation and consequences of the Spending Review and Autumn Statement 2015 and the provisional Local Government Finance Settlement.

Ms Susan Carey, Deputy Cabinet Member for Finance and Procurement introduced the item. 

She began by congratulating officers, particularly Dave Shipton and Lizi Payne for the timely production of a clear and detailed draft budget based on the information currently available to the Council, which was made even more difficult than usual this year because the provisional local government finance settlement announcement just before Christmas was so significantly different to what the Council had expected. In particular, the changes to various grants, together with a redistribution change had affected the Council in a fundamental way and these changes were made very late.  She observed that the balancing of the 2015/16 budget would be extremely difficult as reported in the last item and that the setting of the 2016/17 budget had also presented significant challenges.  The squeeze on local government finances would continue to present increasing problems in the future, particularly 2017/18.

She went on to refer in particular to the following:

1. The proposed Revenue Support Grant (RSG) settlement included three key changes, which were set out in detail in paragraph 1.2. The combined effect was a reduction of £18m more than had been anticipated following the Spending Review, which had been done without consultation or prior notification and could not have been anticipated.
2. There was some good news, however, in paragraph 1.3, where confirmation was given about an increase in the council tax base, both in terms of collection and a growth in housing stock. 
3. However, even if KCC decided to increase Council Tax up to the referendum level (1.998%) as well as the additional 2% social care levy, there remained a shortfall when compared to the additional spending demands of almost £80m as detailed in paragraph 1.4 of the report. Announcements about a number of specific and ring-fenced grants were also still awaited.
4. At such short notice, the proposed budget included a greater use of reserves in a way that had not been planned.
5. The Capital budget was also under significant pressure, as described in paragraph 1.6; as the Council’s revenue budget decreased, the amount of money used to finance borrowing would also have to be reduced and, therefore, it was unlikely that any new borrowing would be considered and new schemes would have to be limited to resources available from capital grants and external sources/receipts.
6. She referred to the table in paragraph 2.1, which showed a significant reduction in the Council’s funding settlement over the next three  ...  view the full minutes text for item 152

To receive a report by the Deputy Leader and Cabinet Member for Finance and Procurement, the Cabinet Member for Specialist Children’s Services, Specialist Children’s Services and Community Services as well as the Corporate Director for Social Care, Health and Wellbeing and the Corporate Director for Finance and Procurement, which sets out the proposed draft Budget 2016/17 and Medium Term Financial Plan (MTFP) 2016/19 as it affects the Children’s Social Care and Health Cabinet Committee.  The report includes extracts from the proposed final draft budget book and Medium Term Financial Plan relating to the remit of this committee.

1) Dave Shipton, Head of Financial Strategy, introduced the report on the Budget and Council Tax level for 2016-17 and Medium Term Financial Plan 2016-19 as it affects the remit of the Children’s Social Care Cabinet Committee.

2) Philip Segurola, Director of Specialist Children’s Services, stated that the savings targets are challenging. He further explained a heightened level of efficiency and rigour in reducing individual caseloads and avoiding drift is a very effective way his Directorate can respond to reaching the savings targets. He also explained that 92% of Children placed in foster care are now being placed in Kent which, as placements outside of Kent have additional costs to Kent County Council, has given additional savings.

3) RESOLVED that Members noted the Budget and Council Tax level for 2016-17 and Medium Term Financial Plan 2016-19 report.

To receive a report by the Deputy Leader and Cabinet Member for Finance and Procurement, the Cabinet Members for Education and Health Reform, Specialist Children’s Services and Community Services as well as the Corporate Director for Education and Young People’s Services and the Corporate Director for Finance and Procurement, which sets out the proposed draft Budget 2016/17 and Medium Term Financial Plan (MTFP) 2016/19 as it affects the Education and Young People’s Services Cabinet Committee.  The report includes extracts from the proposed final draft budget book and Medium Term Financial Plan relating to the remit of this committee.

1) Simon Pleace, Revenue Finance Manager, introduced the Budget 2016-17 and Medium Term Financial Plan 2016-19 report which focused on the budget for areas covered by the Education and Young People’s Services Cabinet Committee’s remit.

2) Mr Pleace confirmed that the Dedicated Schools Grant settlement for Kent County Council was received on 17 December 2015 and, as expected, it contained no increase for inflationary pressures.  He confirmed that the Local Authority is receiving increasing feedback from schools and early year’s providers that they are finding it more and more difficult to find year on year efficiency savings to offset these annual inflation pressures.  These difficulties are compounded if you are a school with low pupil numbers.

3) In regards to savings Mr Pleace explained that in total £7.5m worth of savings are proposed from the Directorate, with £600k coming from increased income.

4) Patrick Leeson, Corporate Director of Education and Young People’s Services, went on to explain that the Directorate would have to focus resources and effort on where it would have the greatest impact with the further £7.5m being cut from the Education and Young People’s Services budget. He expressed a view that more income needs to be generated around key areas by working in innovative and different ways. He also brought attention to the fact his Directorate had achieved considerable savings of £7.6m in the current financial year by integrating services across Early Help and Preventative Services.

5) Mr Cowan expressed a view that education being considered a protected service by Government was contradictory with them allowing Local Government cuts which impact on local education budgets.

6) RESOLVED that the Education and Young People’s Services Cabinet Committee noted the Budget 2016-17 and Medium Term Financial Plan 2016-19.

To receive a report that sets out the proposed draft Budget 2016/17 and Medium Term Financial Plan (MTFP) 2016/19 as it affects the Policy and Resources Cabinet Committee.  The report includes extracts from the proposed final draft budget book and MTFP relating to the remit of this committee (although these are exempt until the Budget and MTFP is published on 11^th January).  This report also includes information from the KCC budget consultation, Autumn Budget Statement and provisional Local Government Finance Settlement as they affect KCC as a whole as well as any specific issues of relevance to this committee

Andy Wood (Corporate Director Finance and Procurement), Dave Shipton (Head of Financial Strategy) and Jackie Hansen (Finance Business Partner) were in attendance for this item

(1)       Mr Wood gave a presentation setting out the context in which the proposed budget was being developed.  A copy of the presentation is available on-line as an appendix to the minutes.  He also said that the late announcement of the Local Government Finance Settlement meant there had been insufficient time to interpret and analyse it so that the Medium Term Financial Plan (MTFP) could be published in full.  It was anticipated that appendices 1-3 would be published early next week.

(2)       Mr Wood said the Local Government Finance Settlement, announced on 17 December, meant the Council was £18 million worse off than anticipated as a result of the reduction in Revenue Support Grant (RSG). This was on top of the £30 million reduction anticipated and an additional spending demand estimated to be £80 million. This would  require savings or additional income of £126 million for 2016/17 in order to balance the budget.  Around £33 million of this would come from the proposed council tax leaving a £94 million savings target. 

(3)       Mr Wood said the Council would respond to the Government’s consultation and, in particular, about: the extra spending demands on local authorities particularly those with social care responsibilities; the distribution formula which was flawed; the absence of floors and ceilings, the more favourable treatment of inner London boroughs; the late announcement of the Settlement and the failure to carry out any consultation prior to the announcement of the provisional settlement; as well as offering to work with Government to develop a new social care needs formula. 

(4)       Mr Wood said the council tax base was better than expected and the council tax collection fund might be better than anticipated however some of the reserves that had been drawn down to balance the budget would need to be repaid in future years.

(5)       Mr Carter said the County Councils’ Network would respond to the Government’s consultation and in particular would develop a coherent response to the Government’s view that flat cash was sustainable over the next four years.  The County Councils’ Network considered that funding for social care needed to increase over the next three years and, as a minimum, the Better Care Fund needed to be brought forward to year 2 of the Settlement. 

(6)       Mr Carter also said that the re-distribution formula needed to be reviewed urgently to be effective for 2017/8 and this, in turn, would create a better basis from which to consider Business Rates equalisation.

(7)       In response to questions, officers said that:

(i)         A decision had not yet been made about whether to take up the offer of a guaranteed four-year settlement particularly as the Council’s response to the consultation was that the RSG distribution was unfair and should be changed;

(ii)        External consultants had been engaged to validate responses to the budget consultation. Past experiences  ...  view the full minutes text for item 187

To receive a report by the Deputy Leader and Cabinet Member for Finance and Procurement, the Cabinet Member for Adult Social Care and Public Health and the Corporate Director Social Care, Health and Wellbeing, which sets out the proposed draft Budget 2016/17 and Medium Term Financial Plan (MTFP) 2016/19 as it affects the Adult Social Care and Health Cabinet Committee.  The report includes extracts from the proposed final draft budget book and Medium Term Financial Plan relating to the remit of this committee (although these are presented as exempt appendices as item F5 below, until the Budget and Medium Term Financial Plan are published on 11 January)

Mr D Shipton, Head of Financial Strategy, was in attendance for this item.

1.            Mr Shipton introduced the report and said this would be the most difficult budget the County Council had faced.  He outlined the following:

a)    one of the biggest issues had been that the County Council had not have the spending plans from Central Government until the announcement of the spending review on 25 November 2015.  This meant that officers did not know the total financial envelope within which they were working.  The County Council did not receive its own individual settlement until 17 December 2015;

b)    the settlement on 17December included a significant re-distribution of Revenue Support Grant  which officers had not been able to anticipate. The net impact of that re-distribution was a £15million reduction to the Council’s budget;

c)    papers for this committee had been published with an assumption that there was still £8m of the £15million to be found, and this was included in the appendices of the papers for this committee.  The County Council’s draft budget had subsequently been published on 11 January.  That draft identified another £4million of the £8million, so there was now only £4million left unidentified, and this would nearly all be taken from financing items.  However, having a small gap still to close would make scrutiny of the budget somewhat difficult, as Members were unable to scrutinise a whole budget;

d)    the provisional settlement also included the spending power calculation, which  measured the County Council’s change in funding, both through council tax and through government grants.  It took no account of the additional spending requirements the County Council was facing, through the effects of inflation, the effects of the rising population or the impact of increasingly complex needs. Mr Shipton’s request to Members was that they bear in mind that the spending power figure in the report represented only the funding half of the equation and not the spending half; and

e)    the County Council faced real-term reductions in its funding. The Council  would not be able to raise enough through council tax to compensate for both the spending demands and the reductions in central government funding, and therefore needed to make substantial savings.

2.                  Mr Shipton then explained that the impact upon this committee’s work area of having to find £4million of additional savings was that the savings identified for housing-related support would need to increase from £1.5million to £2million. The appendices to the report set out the extracts of the published budget which related to the Social Care, Health and Wellbeing and Public Health portfolios. A statement of variation would be prepared later as it had not been possible to produce this level of detail in the time available since the spending review announcement.

3.                  Mr Shipton, Mr Ireland and Mr Lobban responded to comments and questions from Members, as follows:

a)      in response to a question about the income generated by raising the precept to 2% and the extent to which this would help  ...  view the full minutes text for item 76

To receive a report by the Deputy Leader and Cabinet Member for Finance and Procurement, the Cabinet Member for Economic Development, the Cabinet Member for Community Services, the Corporate Director for Finance and Procurement and the Corporate Director for Growth, Environment and Transport that sets out the proposed draft Budget 2016/17 and Medium Term Financial Plan (MTFP) 2016/19 as it affects the Growth, Economic Development and Communities Cabinet Committee.  The report includes extracts from the proposed final draft budget book and MTFP relating to the remit of this committee (although these are exempt until the Budget and MTFP is published on 11^th January)

1.            The Head of Financial Strategy, Mr Shipton, gave an overview of the Council’s draft revenue and capital budgets and Medium Term Financial Plan.  He stressed that this was going to be the most difficult budget KCC had faced.  He highlighted some of the listed factors prior to the introduction report.

2.            He explained that one of the biggest issues was that KCC did not receive the spending plans from central government until the spending review was announced on the 25th November.  This meant KCC was not aware of the total financial envelope it was working within. KCC did not get its own individual settlement until 17 December 2015.  The settlement received on 17 December included a significant redistribution of Revenue Support Grant that KCC had not been able to anticipate.  Of that redistribution the net impact was a £15m reduction on Kent’s budget that it could not have anticipated before that announcement. This meant the papers were published for this Cabinet Committee with an assumption that there was still £8m of that £15m to find which was included in the appendices of the report for this Cabinet Committee.  Since the report was published the Draft Budget was published on 11 January, and in that draft another £4m of the £8m had been identified, so there was now £4m left unidentified.  None of the extra £4m identified in the published draft budget affected services within the remit of this Cabinet Committee’s portfolio; it was nearly all being taken from Financing Items.  Mr Shipton stated that there was still a little bit of gap to close which he understood made scrutinising the Budget difficult.  He advised that there was not a complete Budget for Members to scrutinise as this was a very late change and was unexpected.

3.            He went on to advise that the provisional settlement also included the spending power calculation.  This measured Kent’s change in funding both through Council Tax and through Government Grants.  This took no account of the additional spending requirements Kent County Council was facing either through the effects of inflation or the effects of the rising population or the impact of increasing competitive need.  He suggested that the Cabinet Committee looked at the spending power figure which was reproduced in the report but reminded Members that this was only the funding half and not the spending half.  He concluded that there were real term reductions in KCC’s funding and KCC was not able to raise enough through Council Tax to compensate for both the spending demands and the reductions in central government funding, and therefore there was a need to make substantial savings.

4.            Mr Shipton advised that the revenue support grant for 2016/17 of £111.4m, a reduction of £49.6m on 2015/16 actual grant £58.1m or 32% on adjusted 2015/16 RSG.  The council tax would raise £33m leaving a shortfall of £25m. This could not be compared to the revenue support grant.  The consultation on the settlement we are working on the presumption that  ...  view the full minutes text for item 130