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 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 there would be no change.  KCC would make representation and would ask for a settlement as a one off as KCC did not consider this sufficient for KCC to set its budget.

5.            The Finance Business Partner for Growth, Environment and Transport, Mr Tilson, gave a brief overview of the draft budget as it affected the Growth, Economic Development and Communities Cabinet Committee portfolio.

6.            Mr Tilson highlighted the detail in the appendices to the report explaining that:

7.            Growth, Environment and Transport Directorate had to make £12m in savings across the next financial year, £2½m of which fell within the Growth, Environment and Transport Directorate, primarily within the Economic Development Division and some within the Environment and Planning Enforcement Division and Libraries, Registration and Archives.

8.            Mr Tilson advised that when the Library, Registration and Archive (LRA) Trust was proposed there were savings anticipated of £1.3m, due to the decision not to proceed with the proposal at this time the service was still required to deliver the £1.3m savings through the internally commissioned service.  Mr Tilson referred to page 61, Appendix 2 and the column that referred to LRA Highways then pages 62 and 63 that highlighted how the savings were to be delivered through staffing restructures and procurement savings for books and the ICT budget.

9.            Mr Tilson advised that the savings had been delivered by Highways through budget realignment on drainage but there were no additional savings.  It was a standstill budget.

10.         RESOLVED that:-

(a)    the response to a question by a Member be note and;

(b)      the Growth, Economic Development and Communities Cabinet Committeenoted the proposed draft Budget 2016/17 and Medium Term Financial Plan (MTFP) 2016/19 (including responses to consultation and Government announcements) that was due to be considered by Cabinet on 25 January 2016 and County Council on 11February 2016.