Agenda item

Dave Shipton, Head of Financial Strategy was in attendance for this item)

The Committee received a report from the Cabinet Member and Director containing for consideration funding estimates for the next four years and implications for KCC’s financial planning.  The report also included information on two key government consultations launched over the summer and the likely timetable for setting the 2014/15 Budget and Medium Term Financial Plan

The Chairman introduced Mr Shipton and commented on the scale of the challenge ahead for local government and the further savings that would need to be made owing to impending reductions in funding.

(1)     Mr Shipton reported that owing to the current uncertainties regarding funding the budget consultation, which had gone out in September 2012, would not happen before November this year.  However, he emphasised that it was important to engage early with Cabinet Committees to ensure awareness and encourage debate and discussion.  The new funding arrangements were extremely complicated and although baseline indications provided a good guide, this would not be confirmed until December.

(2)     The paper gave details of the position for 2014-15 and 2015-16.  2014-15 was very much as had been anticipated and published in the Medium Term Financial Plan.  2015-16, however, looked much more challenging than had previously been anticipated with a likely 13% reduction in core funding, although some monies would transfer to new streams delivering programmes such as “Troubled Families’.

(3)     The Chairman asked Mr Shipton to expand on the thinking behind New Homes Bonus (NHB) and money transferring to the Local Enterprise Partnership (LEP).  Mr Shipton explained that this would be applied to all tiers of local government and that the government was committed to moving £400m from the NHB budget, a 35% reduction, with consultation taking place regarding how this 35% reduction was split between contributions from the upper tier and lower tier authorities .

(4)     If KCC lost all its NHB monies this would result in an estimated £8m loss by 2015-16 whereas a pro rata share would mean an estimated £2.83m loss.  The consultation was due to close the day after the meeting and indications were that a number of people had responded negatively to the suggestion, claiming that the government should rethink the principle of top slicing the NHB.  It had only been introduced two years before as a way of incentivising local authorities to grant planning for new homes and the possibility of such a substantial change after such as short time and when many authorities, including Kent, had entered into commitments with NHB monies raised concerns about future spending plans.

(6)     Comments and questions were received from Members and the following points were highlighted:-

·                The current NHB was used to fund general services but for the future it had been earmarked for specific developments in the Thames Gateway, namely for transport and infrastructure improvements. 

·                That the Committee was welcome to receive a list of statutory duties should it wish but that it might not be as helpful as desired as the level to which statutory duties must be delivered was subject to interpretation in some areas.

·                It was important to assess the impact of any reductions in funding for additional and follow-on costs that may occur if services had been reduced.  The Transformation process was an attempt to do things differently so that savings could be made without loss of service.

·                Customer and Communities had historically been successful at securing funding from outside sources, with up to 50% of the budget being funded this way.  If more money could be secured like this it could alleviate pressures.

(7)       It was RESOLVED that the potential implications on future funding settlement, the Council’s Budget/Medium Term Financial Plan and the likely timetable for setting the 2014/15 budget be noted.