Agenda item

(Report by Mr Paul Carter, Leader of the Council, Mr Nick Chard, Cabinet Member for Finance, Mr Peter Gilroy, Chief Executive and Ms Lynda McMullan, Director of Finance)

(1)     This report set out the context of both national and local level within which the County Council’s Medium Term Financial Plan would be framed over the next three years.

(2)     Mr Chard said that it was expected the delayed Comprehensive Spending Review 2007 would now be published by the Government on 15 October 2007.  The Review would inform the overall financial perimeters within which local authorities such as Kent would be able to work.  Mr Chard spoke about the critical issues facing local Government including the issue of how KCC was to balance increasing demands on its services at a time of nationally and locally constrained resources.

(3)     During the course of discussion, Mr Carter said that next year and beyond would be a major challenge for the County Council.  Its resource in spending assumptions were based on the Government’s expressed views about levels of council tax, increases in Government grant and funding for Kent schools.  However, the Council faced uncertainty over funding for both next year and the following years and these had to be taken into account as the Council strove to develop and strengthen its policy-led budgeting to ensure that it optimised the allocation of constrained resources to meet local priorities.

(4)     Cabinet then noted the report as follows:-

1.         National Context:

·      that the outcome of the delayed Comprehensive Spending Review 2007 will inform the overall financial parameters within which we will be able to work

·      that the subsequent local government finance settlement, which will be dependent upon CSR 07, will be the first full three year settlement for local government covering the period 2008-11

2.                  National Resources Position:

·       key driver of resources for local government in total will be CSR 07

·       pre-announcements for many central government departments include a raft of minus 5% in real terms per annum budget reductions  - the funding position will therefore be significantly constrained

·       awaiting spending announcements on the NHS, defence and local government amongst others

·       Institute for Fiscal Studies suggests there may be a little as 0.4% real terms spending available for all remaining services not yet announced, after allowing for expected increases for the NHS

·      currently there is a major consultation on reforms to the local government finance formula which will set the formula for the next three years

·      outcome of local government finance settlement remains extremely uncertain both at national level and individual authority level

3.         Kent – Local Resource Allocation

a)         the items on which KCC and partners are most concerned are:

·     the local impact of the Comprehensive Spending Review 2007

·     the overall resources available to fund service pressures and inflation

·     regional disparities, in particular flowing from the Barnett formula and other regional comparisons

·     the funding of the Growth Agenda

·     the operation of the main funding formula and its inbuilt deficiencies which fail to adequately reflect Kent’s unique features

·     the operation of Dedicated Schools Grant and its inbuilt deficiencies in terms of resource allocation and the total quantum of funding

·     the burdens imposed upon us by government without adequate recompense in terms of additional funding

·     a continued failure by government to assure us that it will fully reimburse asylum costs

b)                 KCC has been and will continue to lobby and influence the CSR as it progresses.

c)                 KCC has developed and strengthened its policy led budgeting yet further to ensure that it optimises the allocation of constrained resources to meet local priorities

d)                  the financial planning risks for KCC which are set out in paragraph 98 onwards of this report

e)                  the proposed Medium Term Planning key milestone dates set out in Appendix 1.