Agenda item

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 Environment and Transport Cabinet Committee.  The report includes extracts from the proposed final draft budget book and MTFP relating to the remit of this Cabinet 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 Kent County Council (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.            Mr Shipton advised 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 Tilson highlighted the detail in the appendices to the report explaining that:

5.            Mr Balfour, Mr Shipton and Mr Tilson noted comments and responded to questions by Members as follows:

a)    A comment was made that it would be helpful to have the measurements in miles rather than kilometres.

b)    It was clarified that the majority of the budget reduction was to be achieved through spending reductions including the move to direct billing of utilities to the pitch holder. Previously KCC paid and recharged.

c)    Mr Shipton advised that the Council Tax referendum level for 2016/17 was 2% and would raise £11.2m.  Mr Shipton explained that the next version of the budget book would be published with more detail.

d)    Mr Wilkin advised that the income from recycling and composting was on a downward cycle but would come up again.  There was a healthy income over the years but this was typical of this market.

e)    Mr Balfour advised that Kent was a well-managed authority compared to others and would with others match fund the £17m of Highways England funding for flooding defence.

f)     Mr Shipton agreed that if the revenue support grant continued to be reduced there would be no further capital money as KCC cannot borrow more if the ratio of borrowing costs (interest and repayments) exceeded 15% of the net budget.

g)    It was suggested that KCCs response should challenge why the recalculation of the revenue support grant meant that the money was going to the London boroughs.  Mr Balfour advised that for every £1 per head Kent received, London received £4 for looking after the elderly. 

6.            RESOLVED that:-

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

(b)  the draft Budget and MTFP (including responses to consultation and Government announcements) be noted prior consideration by Cabinet on 25 January 2016 and County Council on 11 February 2016.