Agenda item

(Report by Mr J Simmonds, Cabinet Member for Finance and Procurement and Mr A Wood Corporate Director Finance and Procurement)

(Mr D Shipton, Head of Financial Strategy and Mr K Abbott, Director, School Resources, were present for this item)

1.               The Head of Financial Strategy, Mr Shipton, introduced a report that informed Members of the latest funding estimates for the next four years and the implications for KCC’s financial planning.

2.               Mr Shipton highlighted the following points:

• The launch of the consultation on next year’s budget would take place in early November when this Cabinet Committee would have the opportunity to debate the findings at its meeting on 2 December in advance of Cabinet debate in January 2014 and then County Council in February 2014.
• The new funding arrangements were complex.  The report outlined the baseline figures that the government was setting and those figures were being used as the level of funding that would be available to Kent. There would be some minor variation with business rate collection in local districts but it was considered that this would have a minimum impact on Kent.
• The position for 2014/15 had been set out in the report and Kent was expecting a £36 million reduction in its baseline compared to 2013/14 which was £3 million more than was expected in the settlement in February 2013.  For 2014/15 across the whole of the County Council the 2013/14 budget had £25 million one-off actions to balance the budget and alternatives would need to be found for 2014/15 to balance the budget.  There was a £36 million reduction in the funding and £25 million needed to be found and there would still be unavoidable spending pressures that would arise through the course of the year.
• The budget for 2015/16 was significantly worse than was previously anticipated; there was to be a 13% reduction in the core base line funding because some of the new initiatives that were announced were to be recycled money from the main baseline settlement and was not from new money.
• A government consultation was launched regarding the funding of the new Local Growth Fund (LGF).  The Government had already determined that the LGF should be created by redirecting existing funding from education and skills, transport, and housing.  This consultation dealt with the proposal that £400 million would be pooled from the New Homes Bonus (NHB) between authorities with each Local Enterprise Partnership.   In essence legislation would be passed requiring local authorities to pas on a fixed % of NHB to the LEP which could have a significant impact on Kent’s funding for 2015/16.
• For 2015/16 the government, in the new spending round in June, announced that there would be a 20% reduction in the Education Services Grant, which was money that was taken away from local authorities and given to the Department of Education (DfE) to fund local authority central services and then the DfE reissued it back, as a grant to local authorities and academies.  It was not known how that 20% would be allocated.  It was anticipated that Kent could be looking at a £56 to £64 million reduction in funding, compared to the £36 million for 2014/15.

3.               Mr Shipton and Mr Abbott responded to comments and questions by Members which included the following:

a)         Mr Shipton advised that the Council Tax Freeze Grant for 2011/12 was already factored into the baseline therefore the £14 million was secured until 2015/16.  The freeze money for 2013/14 was going to be added to the baseline for 2014/15 and 2015/16. There was no pro rata reduction in that money which meant that when the government transferred that money that element of Council Tax Freeze money was protected.  Those authorities that did not take the Council Tax Freeze Grant would face a larger percentage reduction in their baseline than authorities that did take the Council Tax Freeze money because the money was protected.  This would enable Kent to keep the Council Tax at the level set this year.  For 2015 the Government had offered another Council Tax Freeze Grant which this County Council would need to decide on at its meeting in February 2014.

b)         Mr Gough advised that there were changes around the Post 16 funding which was a national formula which local authorities had no direct control over and Kent was aware of the issues for all schools including grammar schools.

4.               RESOLVED that:-

a)      the responses to comments and questions by Members be noted; and

b)      the potential implications on future funding settlements; the Council’s Budget/Medium Term Financial Plan; and the likely timetable for setting the 2014/15 budget be noted.