To consider and decide on the recommendations set out in the attached report.
Minutes:
Lee Colyer (Director of Finance, Policy and Development) introduced the report.
Discussion included the following comments:
· The report outlined the assumptions that had been built into the draft budget for 2020/21 – this was the third report in the process.
· The Ministry for 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 year would not include any legacy payments which was a fundamental change to how the system worked. In addition the Government intended to review the scheme and explore the most effective way to incentivise housing growth – which suggested they were minded to bring the scheme to an end. It was therefore prudent for the Council to reduce its reliance on the New Homes Bonus within its base budget where it could afford to do so.
· In 2019/20 the Council received 4 years of New Homes Bonus allocation. The total amount received was £1.1m. £921,000 was used in the base budget, the remaining £222,000 was put in reserves.
· For 2020/21 the Council was only guaranteed 3 years of allocation, a total of £589,000 with an estimated £300,000 allocated for next year, but this couldn’t be confirmed until Government had issued the settlement.
· Although a good incentive for house building, the New Homes Bonus had not worked for TWBC. Developers had not delivered the housing growth achieved by TWBC neighbours. Tonbridge and Malling received £23m, TWBC received £9m.
· Government continued to restrict the level of increase for Council Tax – the £5 deminimus was introduced in 2015 and had not changed. There was a precedent for requesting an increase, the Police Authorities had increased initially to £12, and then again to £24.
· Local authorities were concerned that settlement was too late for future expenditure to be planned. In light of this, Government commissioned the Hudson Review to look into this. The outcome was one recommendation – to provide Local Councils with their settlement by 5 December each year. MHCLG had recently announced that this deadline would not be met and no date was given for the provisional settlement due to the impending General Election.
· The 2019 Budget was due to be published on 6 November – but had been cancelled, with no future date announced. This meant there was no context for setting the budget at the local level.
· Within the above context, the report set out some local economic data relevant to the Borough:
o Residents of the Borough had the highest level of gross disposable household income in Kent.
o They also had the highest earnings within Kent.
o As at the end of September 2019, the unemployment rate was 1.4 per cent – significantly lower than the Kent and National average.
o There were 7,000 businesses registered for VAT in the Borough, with a continued upward trajectory.
o The percentage of employees in the Knowledge Economy was 23.5 per cent, second only to Sevenoaks.
o New Business survival rate was 62 per cent.
o The Borough had the highest level of NVQ level 4 qualified residents at 50 per cent.
· The Council would continue to be part of the Kent Business Rate Growth Pool. With the abolition of the Revenue Support Grant it would be important for the Borough to continue to deliver economic growth as it would be the only way to get the proceeds to fill the gap from the loss of the Revenue Support Grant and to deliver the range of services expected by residents.
· The gross revenue expenditure planned for next year was just under £67m which was matched by the revenue funding.
· Details of the major changes over the current year included:
o Employee costs (which included a manager for the Amelia);
o Increased demand for temporary accommodation required to fulfil the Council’s homelessness obligations;
o An additional subsidy for the Assembly Hall Theatre;
o The Council’s payment of Business Rates on its own properties; and
o Major contract costs and increased costs for utilities.
· Additional income was expected from:
o An increase in car parking revenue from the Great Hall car park which would now remain in operation for the whole of next year;
o The Council Tax increase of £5 (assumed);
o Garden waste income totalling just over £1m; and
o Savings due to the cessation of the Calverley Square scheme would be returned to the base budget.
· The Council had a 4 year rolling Capital programme which would be rolled over for another year. It comprised 2 parts:
o A List – Health and Safety related, Revenue or Capital Income Stream Projection; and
o B List – Civic Site Initial Essential Works (following the cessation of the Calverley Square scheme the existing buildings would be in use for the foreseeable future).
· The impact of the essential works that now need to be undertaken would add a further £1.9m to the Capital Programme. This amount would be borrowed, with a revenue impact of £116,000 required to fund the borrowing.
· Consultation remained important. An article had been written for the Local Magazine and details would be available on the Council’s website.
· The consultation would close on 17 January 2020.
· A level of uncertainty remained and further work was needed to deliver a balanced budget in February 2020.
· The draft Budget had been supported by the Finance and Governance CAB on 12 November 2019 and would be presented to Cabinet on 5 December 2019.
· The cessation of the Calverley Square scheme would not result in an increase in usable reserves because the funding came from borrowing so there would be no impact on reserves. In addition some of the elements from the funding strategy had already been released as it was needed to help balance next years budget.
· High earnings of people living in the borough masked below average earnings for people working in the borough and the fact that three wards had a 30 per cent child poverty rate. There needed to be a relationship between local income and genuinely affordable housing. Cabinet were challenged to recognise alternative views on the well-being of the Borough and address the issue of child poverty.
· Funding for the Citizens Advice Bureau (CAB) was reviewed as part of the Community Grants process – it was the first year of a three year funding programme. It was understood that the CAB were content with this level of funding. That said, the CAB were at liberty to approach other organisations, including Parish Councils for additional funding.
· The reinstatement of the Members Grant had not been considered.
RESOLVED – That the update be noted.
Supporting documents: