In a report LINK going before Cabinet on February 13th
Brent's Chief Finance Officer is recommending a Council Tax of 3.99% over eachof the next 3 financial years:
In October 2016, Cabinet agreed
to consult on a 3.99% increase in Council Tax (2% Adult Social Care precept
plus 1.99% for general purpose). Some additional savings of £4.4m were also
consulted upon. Following that, in December 2016, as part of the provisional
local government finance settlement, central government recognised the
immediate pressures in the care market. It has therefore allowed local
authorities to bring forward up to 2% of the precept for 2019/20, by increasing
2017/18 and 2018/19 council tax by an additional 1%, in return for a
corresponding reduction in the precept for 2019/20. Brent could therefore
increase Council Tax by up to 4.99% in each of 2017/18 and 2018/19, but if it
exercised this flexibility then the maximum allowable increase in 2019/20 would
be 1.99%.
After due consideration the recommendation of this report is that the
budget should be constructed on the basis of a council tax increase of 3.99% in
each of the next three years. This is what was consulted upon and so is clearer
for residents. The additional flexibility announced in December 2016 is also of
relatively minor financial benefit to the council, and has negligible long term
impact from 2019/20 onwards. By increasing the council tax in this way the
impact of stark and ongoing reductions to local government funding since 2010
will be partly mitigated.
The report has been issued
before the budget consultation with the public has been completed and a report
on the consultation will be tabled before the Cabinet meets. Clearly this
leaves little room for any change as a result of the consultation.
In fact consultation responses have been low with 57 on line (with no clear
pattern of responses) at the time the report was written and these attendances
at Brent Connects meetings:
The report goes on:
Although demography, in this
context, is typically discussed as a cost pressure it also results in
additional income. As a consequence of this, and of the planning and
regeneration policies adopted by the council, the council tax base (i.e. the
number of properties on which council tax is paid) is growing significantly
year on year. This increases the council tax payable to the council, and helps
the council finance the various pressures caused by population growth.The
council is required to balance its budget in this year as in all years.
In order to balance its budget
the council has developed an approach that will help it meet the goals of the
Borough Plan and Brent 2020 Vision, comprising:
Increases in council tax to
minimise the requirement to reduce services;
Innovative capital investment to
reduce costs in key services, such as temporary accommodation;
Planning for growth in services
facing major demographic pressure for example adult social care;
and Investing in key services for
the Brent community, e.g. community safety.
The report states that if
the 3% Adult Social Care Council Tax increase is not approved Adult Social Care
in 2017-18 will have to be cut by £2.1m. This is in addition to further
cuts in the overall council budget required of £2.3m in 2017-18 and £2.1m in
2018-19.
The Council hopes to achieve £5.6m through a civic enterprise project to
increase income from Council assets (you have probably see the posters encouraging
people to get married at the Civic Centre) and £8m from improving commissioning
and procurement services. The Council is hoping to sell its procurement
services to schools.
It is clear that increasing the number of properties in the borough is seen as
one way of increasing Council Tax income, even if they are not affordable for
ordinary Brent residents on an average income. Population growth increases
income for charged services such as parking.
The Council has a big capital investment programme and it is planned to
increase borrowing to finance the projects. Expenditure was £111.7m less than
expected this year due to a variety of delivery delays and the balance will be
carried forward. The Council is planning to increase the amount it raises and
increase the authorised limit:
It is important to
stress that the authorised limit – the maximum amount that the council may
borrow – has for a number of years been several hundred millions pounds above
the level of actual borrowing – last year it was set at £400m above the level
of actual borrowing. It is proposed to increase that by £100m to £500m, in
light of the Council’s investment strategy, while recognising that the Council
has been prudent with its estimate of the additional resources that may finance
capital spend. Potentially, the additional growth would cost up to an
additional £3m to service annually, should the borrowing become necessary, and
if this was not offset by additional income or savings. The calculation noted
above merely follows from the strength of the council’s balance sheet, as it is
largely prescribed by statute and regulation.
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(Bracketed
red offsets borrowing requirement)
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One area of interest is the
school budget where the report notes that:
As at 31 March 2016, Brent’s
maintained schools held £24.8m in balances, a relatively high figure, prudently
held in view of upcoming school funding reforms. [Cllr Warren attacked the
level of school balances at the last Full Council Meeting]
Overall DSG (Dedicated Schools
Grant) funding has increased for 2017/18 due to growing pupil numbers,
however on a per pupil level it remains a cash flat settlement, with the main
schools block funded on 41,879 pupils at £5,522 per pupil totalling £231.3m.
The other blocks support early years provision, funded at £23.4m, and high
needs provision which includes all special schools, funded at £52.7m. Total DSG
funding for 2017/18 is £307.4m.
A number of schools are
expanding and as a result overall pupil numbers have increased by over 500 in
Brent. The two secondary schools experiencing rapid growth of 58 and 116 pupils
have gained £238K and £675K, whilst 26 primary schools experienced growth in
pupil numbers with an average gain of £125K. Reductions in funding are also in
line with decreasing pupil numbers, for example two secondary schools have
significant drops of 25 and 54, which results in funding reductions of £260K
and £441K respectively. In the primary phase, 30 schools had a fall in pupil
numbers resulting in an average reduction of £44k.
After the expansions of recent
years a reduction in pupil numbers in a number of schools is significant,
particular when the potential impact of Brexit on immigration numbers is taken
into account. The major factor affecting school budgets is of course the
reductions involved when the government introduces a new National Funding
Formula.
Conrad Hall, Chief Finance Officer, commenting on the overall Brent budget
states:
In considering
the budget report, the following key considerations should be highlighted
in particular.:
The extent to which the overspends in 2016/17 are structural, that
is, that they will or may recur in 2017/18, is a particular risk. Any
element of these overspends that may be structural will, if not addressed
during 2017/18, require further savings to be agreed next year to offset
this. Whilst plans are in place to address this the scale of risk is
significant.
Delivering the saving programme agreed in February 2016 will present
substantial management challenges, particularly around procurement and
civic enterprise savings. Again, considerable management attention has
been and is being devoted to ensure that these can be delivered, but it is
important to stress again the inherent risks in delivering such a large
and complex programme.
That said, the budget now proposed is realistic and affordable, albeit
challenging. The increases in council tax set out, if agreed in this and
subsequent years, will generate significant additional revenue over time,
minimising the number of difficult new decisions about funding for
specific services to be proposed. If agreed, this budget would provide for
affordable services in 2017/18 and 2018/19, but a further gap of nearly £13m
remains in 2019/20. Building on the outcome based reviews and other
initiatives to start to close this gap quickly will be an important future
consideration.
