Agenda item

Key Decision - Draft Revenue Budget 2014/15 and Medium Term Financial Strategy 2014/15 to 2016/17

Report of the Director of Finance and Assurance.

Decision:

RESOLVED: That

(1) the draft budget for 2014/15 and the Medium Term Financial Strategy (MTFS), as set out in appendix 3 to the report, be approved for general consultation including an anticipated 0% Council Tax increase;

(2) the current remaining budget gaps of £19.481m in 2015/16 and £18.612m in 2016/17 be noted;

(3) the draft Public Health Budget for 2014/15, as set out in Appendix 5 to the report, be approved;

(4) the statutory changes to schools funding for 2014/15 be noted and the proposed arrangements for the 2014/15 school funding formula as set out in Appendix 6 to the report be approved;

(5) the sum of £239,219 be approved as Harrow’s contribution to the London Grant Scheme in 2014/15;

(6) a Capital Financing Risk Reserve be established to allow for delays in capital receipts in the current financial year.

Reason for Decision: To ensure that the Council publishes a draft budget for 2014-15.

Alternative Options Considered and Rejected: None.

Conflict of Interest relating to the matter declared by Cabinet Member / Dispensation Granted: None.

Minutes:

The Portfolio Holder for Finance introduced the report, which set out the draft Revenue Budget for 2014/15 and the Medium Term Financial Strategy (MTFS) for 2014/15 to 2016/17, with the report on the budget returning to Cabinet in February 2014 prior to the final approval by Council. The Portfolio Holder added that £30m savings had to be identified and shortfalls had to be addressed. He was critical of the way the savings and the shortfalls had been handled by the previous administration(s) and outlined the savings that had not been achieved previously. As a result, the new administration was presenting a modest set of proposals in order to ensure that the budget was fair.

The non-voting non-Executive Cabinet Members were critical of the proposed reduction in the welfare contingency budget and the message this sent out to residents. They enquired about the long term strategy, in view of the possible changes in welfare entitlement. They also asked about the proposed freeze on the Council Tax for 2014/15 which one of them considered to be irresponsible, claiming it was electioneering, which would create problems for future administrations. He was of the view that at some point the Council Tax would need to be increased and that this proposal could increase the deficit for future years with rate payers having to pay in later years.

In response, the Portfolio Holder for Finance stated that the claims against the welfare contingency budget had been modest and a £1m contingency was still available to help mitigate the impact of welfare changes. He added that the new administration would go as far as to say that it would freeze or reduce Council Tax during the next administration should it be elected. The Portfolio Holder explained that the argument put forward by a non-voting non-Executive Cabinet Member that as prices generally went up he expected the Council Tax to go up as well was an invalid one, as it did not equate with the inflation figures which were 5% and 1.3% in 2012/13 and 2013/14 respectively. He added that well established practices on spending would ensure that officers were compelled to manage budgets and confirmed that the new administration would reduce or freeze Council Tax in future years.

The Portfolio Holder referred to the amount of money that was spent on servicing the debt on the £250m Capital Budget, which had risen during by £10m under the previous administration(s). This issue needed to be resolved.

The Leader of the Council stated that her administration would freeze or reduce Council Tax at every opportunity and it was the way this administration would be moving forward; which was warmly received by her colleagues.

The Portfolio Holder for Communications, Performance and Resources added that Harrow had one of the highest Council Taxes in London and there had been a time when a Labour administration had increased Council Tax by 21% and still had run out of money. It was important that budgets were controlled and managed appropriately, with Value for Money being a key driver. The Portfolio Holder stated that the administration would “Listen” to the residents’ views as part of the budget consultation process instead of the “Let’s Talk” approach taken by the previous administration(s) which continued with the implementation of proposals that the residents had not supported, such as the outsourcing of the libraries. In response, a non-voting non-Executive Cabinet Member cited the example of what he felt was the administration’s lack of proper consultation on the post of the Chief Executive. He considered the budget to be unfair and that the previous Labour administration’s priority had been to centre the budget around the people of Harrow. He enquired about the long term plans of the new administration in respect of the budget.

The Deputy Leader of the Council and Portfolio Holder for Adults and Housing paid tribute to the work done by officers, including his most recent predecessor as Housing Portfolio Holder. He added that the role of the Councillors was to develop and innovate services and he cited examples of Re-ablement and My Community e-Purse as fine examples of such work. It was important that the social care fund was used to support services and that services provided helped to improve outcomes and the quality of life. A strategic goal was to focus on needs and provide choice to the users.

The Portfolio Holder for Finance stated that the administration was “Working for a Cleaner, Safer and Fairer Harrow” and had increased the Adult Social Care budget and provided additional social workers. It would therefore not take any lessons from the previous administration(s), particularly in regard to the “fair agenda”. The Leader of the Council added that this was not a reckless budget as was being insinuated by the non-voting non-Executive Cabinet Members, and challenged them on whether it was reckless to have cleaner and safer streets, which was one of the new administration’s priorities.

The Portfolio Holder for Communications, Performance and Resources explained how people would engage with the consultation process which would be conducted through various Committees and the Council’s website. There would be extensive consultation on the budget which would reflect residents’ priorities. The Leader of the Council stated that she had made representations in regard to the settlement that the Council received from the government and would continue to lobby on this important matter.