Agenda item

Draft Budget 2020/21 and Medium Term Financial Strategy Update

To consider and provide a recommendation to Cabinet on the proposals set out in the attached report.

Minutes:

Lee Colyer, Director of Finance, Policy and Development introduced this Report that outlined the assumptions that have been built into the draft budget for 2020/21 and included the following:

 

-       This was the 3rd Report in the process of setting the budget.

-       Since the last Report the Ministry Housing, Communities and Local Government (MHCLG) had issued a technical consultation in advance of the provisional settlement. 

-       New Homes Bonus – Any new allocation for next financial year would not result in legacy payments. This was a complete change in how the system used to work.  Of more concern was the Government’s intention to review this scheme and explore the most effective way to incentivise housing growth – this suggested that the Government were minded to bring the scheme to an end. It was therefore prudent to suggest the Council remove its reliance on the New Homes Bonus within its base budget where it could afford to do so. Any New Homes Bonus that the Council received could then be placed into the reserves to help fund the Capital Programme.

-       2019/20 the Council received 4 years of New Homes Bonus allocation, a total of £1.1m.  £921,000 was used in the base budget, the remaining £222,000 was put in reserves.  

-       The New Homes Bonus had not worked for TWBC having received only £9m (Tonbridge and Malling received £23m). 

-       Central Government continued to restricted the ability for Local Councillors to take decisions on the level of Council Tax needed.  The £5 deminimis limit introduced in 2015 had not changed.  This was at odds with the Policy Authority who in 2018/19 raised theirs to £12 and to £24 in 2019/20.  Details of the cap would not be known until the provisional Local Government Settlement was announced.

-       Following concerns from Local Government that the Settlement was not received in time to plan for future expenditure, Central Government commissioned The Hudson Review to look into this issue.  The Report had one main recommendation – to provide Local Councils with their settlement by 5 December each year. The Council was notified last week by MHCLG that this deadline would not be met and no date could be given for the provisional settlement due to the impending General Election.

-       The Budget for 2019 was due to take place on 6 November – but had been cancelled with no future date announced.

-       This meant there would be no context or national data that would help plan TWBC’s budget.

-       Economic data for Tunbridge Wells was available, in summary:

o   The Borough had the highest level of gross disposal household income in Kent.

o   The highest earnings in Kent lived within the Borough of Tunbridge Wells.

o   The unemployment rate for the Borough was 1.4% as at the end of September 2019 – significantly lower than the Kent and National average.

o   There were 7,000 businesses registered for VAT in the Borough.

o   The percentage of employees in the Knowledge Economy was 23.5% - second only to Sevenoaks.

o   The 3 year new business survival rate was 62%.

o   The Borough also had the highest level of NVQ level 4 or above at 50%.

-       The Council would continue to partake in the Kent Business Rate Pool. 

-       The Report included a breakdown of the draft Budget for next year.  

-       The biggest cost increases included:

o   Employment costs, including a manager for the Amelia.

o   An increase in the demand for temporary accommodation where the use of private rental properties had been required to fulfil the Councils homelessness obligations.

o   An additional subsidy was included for the Assembly Hall.

o   The payment of Business Rates on all Council owned property.

o   An increase in Grounds maintenance costs and utility costs.

-       Income streams included:

o   An increase in car parking revenue due to the Great Hall car park remaining in operation for the whole of next year.

o   An assumption that Council Tax next year would increase by £5.  

o   Garden waste income of just over £1m.

o   The cessation of the  Calverley Square scheme meant that saving that had been put aside would be put back into the base budget.

-       The 4 year Capital Programme would be rolled over for another year and was broken down into 2 parts:

o   A List – Health and Safety related, Revenue or Capital Income Stream Protection.

o   B List – Civic Site Initial Essential Works.

-       Consultation remained important, with every household to receive details of last years accounts and opportunity to participate in the setting of the budget for next year. There would be an online survey which would be placed on the Council’s website – the closing date for the consultation would be 17 January 2020.

-       A level of uncertainty remained and further work would be needed in order to deliver a balanced budget in February 2020.

 

Discussion and responses to member questions included the following matters:

 

-       The target to remove the Council’s liability to New Homes Bonus in one year was ambitious and therefore not possible to guarantee at this time. 

-       Due to the lower amount received by the Council should make it easier to reduce its reliance.  Council’s in receipt of larger amounts would find it more difficult. 

-       The works associated with Civic Site would be reviewed as and when the Council decided on next steps.  The funding identified was in recognition that the site would be in the Council’s ownership for at least the next couple of years.

 

RESOLVED – That the recommendation to Cabinet set out in the Report be supported.

 

Supporting documents: