The background to Brent's 2013-14 budget

Mike Bowden. Assistant Director of Finance for Brent Council, gave a PowerPoint presentation to the Budget and Finance Overview and Scrutiny Committee on Thursday setting out the background to Brent's 2013-14 Budget. This does not appear to be available on the council website so I have extracted some of the key points below.

For clarity any explanations or comments from me are in italics (ie words in italics are not Mike Bowden's responsibility).

BUDGET MONITORING 2012/13

• Quarter 1 forecast was overspend of £2m
• Latest forecast is small underspend of £0.1m
• Departments are on track to deliver within budgets
• Need strong foundations to manage risks from 2013/14 onwards (this implies radical actions including cuts and possibly council tax rise)

 NON-EARMARKED RESERVES

Target for 2013/14 of £12m

• Reserves at 31/3/12                £10.3m
• Budgeted increase 12/13           £1.0m
• Projected increase in 13/.14       £0.7m

External audit - acknowledged improved financial resilience and recommended that we should should continue to build level of reserves (It was revealed more than a year ago that Brent had some of the lowest reserves in London and Audit Commission followed this up with recommendation for increase)

BUDGET GAP:

Medium Term Financial Projections:

• 2013/14      (£0.2m)
• 2014/15        £2.5m
• 2015/16        £7.5m

BUDGET GAP - July 2012

Assumptions for 2013/14 included

• Council tax increase 3.5% (it now looks as if Eric Pickles will trigger local referenda for any increase over 2%. Any rise will impact on the poor as well as meaning more people default on payment)
• Existing planned savings of £7m are delivered
• Cost avoidance included through one council projects
• New Council Tax Support Scheme would meet shortfall in Council Tax Benefit Funding (scheme going before Special Council Meeting on December 10th)

UPDATE ON 2013/14 BUDGET

• Government Autumn Statement will not now  be delivered until 5th December 2012
• Provision Local Government Settlement will not be known until 20th December 2012 ?? (subject to confirmation)
• Impact on council's  decision making timetable
• Government's regular announcements - uncertainty over true impacts

Developments

• Council tax free - New one off grant offered by Government
• Top -slicing - EIG (Early Intervention Grant) £4m (includes provision for 2 year olds but see Muhammed Butt's statement LINK) Academies£7m (partly to council and partly to schools)
• Census - £4m (due to increase in Brent's population but it is not certain we will get it)
• Council Tax Surplus - £1.8m (one-off) (Council more successful in collection this year - uncertainty that will continue after council tax benefit changes and increasing economic pressure on families).

Uncertainties and risks

• Further changes by central government
• Housing Benefit subsidy regime/Temporary Accommodation (shift of costs of housing crisis to local government)
• One Council Savings (presumably whether they are successful)
• Review of pressures (housing, adult and children's social care)
• Opportunities for additional savings  (I interpret this as 'What's left to cut without causing damage or merely shifting pressures within the council's budget)

COUNCIL TAX

Temporary council tax freeze spending:
2011/12   £2.6m for 4 years
2012/13   £2.6m for 1 year
2013/14   £0.8m for 2 years

Ongoing income foregone of 3 year tax freeze = c£7m per annum (what will lost if council puts up Council Tax. Previous reports by Clive Deaphy (ex Director of Finance) referred to the need to strengthen the council's Council Tax base)

KEY ISSUES FOR 2013-14

• Late settlement = decision making later than usual
• Need to maintian focus on long-term position > Recognise that funding will continue to diminish > Fundamental change to Council's approach and services required (this again implies cuts, decision to no longer deliver some services, more out-sourcing etc. Bowden commented that a 'resilience budget' was required and the council needed to ensure that short-term decision did not affect long-term prospects)
• Flexible approach to ensure capability to withstand risks
• Opportunities for tactical savings that do not undemine future prospects
• New commitments to be funded by offsetting savings

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Readers will see that there are plenty of issues to raise questions about here and hence the public's disappointment at the Scrutiny Committee that councillors failed to ask searching questions. Labour councillors had probably been briefed already so thought it unnecessary to question in public. Conservative councillors did attend and Lib Dem Alison Hopkins was in the chair.  However Cllr Brown did not attend and nor did his Lib Dem alternates Cllr Green or Lorber. There were no questions about how the compressed timetable would now include consultation with the public, community organisations and trades unions. Councillors asked only one question of Muhammed Butt who, along with Cllr Ruth Moker, specifically attended to answer questions after Bowden's presentation.

BUDGET DECISION MAKING TIMETABLE

Before funding announcement:

19th November - Full Council - first reading debate

10th December  - Executive - council tax surplus

10th December -  Special Council - council tax support scheme

After funding announcement

22nd January 2013 - General Purposes Committee - Council tax base - business rate base
5th February - Budget and Finance Overview and Scrutiny Committee

11th February 2013 - Executive - council tax level recommendation
25th February 2013 - Full Council