Agenda item

Further to Minute No. 42 of the meeting of the Cabinet held on 3^rd July 2013, consideration was given to a report presented by the Director of Finance stating that, in setting the 2013/14 Revenue Budget, it was recognised that the current budget principles, which had served the Council well since the coalition Government’s programme of austerity begun, would need to be refreshed in the light of recent announcements that further significant funding reductions for Local Government were likely to continue until at least 2018. The report proposed a refreshed set of budget principles on which the 2014/15 General Fund Revenue Budget and Medium Term Financial Strategy should be based.

Included within the report were the proposed Budget Setting Timetable for the 2014/15 Revenue Budget and Medium Term Financial Strategy, as well as the proposed approach to reporting the Council’s in-year financial performance to Cabinet for the financial year 2013/14.

Members noted that with the significant, continuing funding reductions and welfare reform changes that the Council would face until at least 2018, the new Budget principles were proposed to ensure the Council operated effectively within the funding available and delivered savings which had the least impact on the citizens of Rotherham.

The salient points of the presentation by the Director of Finance were:-

: April 2013 – changes, imposed by central Government, in the way local government is financed and to the welfare system;

: emphasis on the economic performance of local areas; areas performing less well, will have fewer resources to provide services;

: national funding outlook (before the recent spending review announcements by the Chancellor of the Exchequer); the changing mix of funding, including the business rates retention scheme, with the revenue support grant reducing;

: the outlook for local authorities, especially the rising costs of adult social care, waste management and also capital financing costs;

: studies by Sheffield Hallam University have produced forecast losses to the local economy arising from welfare reform changes and local authority budget reductions; the implications for the Rotherham Borough area;

: the prediction that the UK economy will take several years to recover; the International Monetary Fund’s decisions on the AAA rating of the UK economy;

: using traditional budget principles, the Council has managed significant budget reductions during the past three years, although the next generation of savings will be especially difficult to manage without adopting new budget principles;

: the proposed budget principles were outlined; eg: to stop doing things that are not important to all people; a Business and Jobs Growth Fund ought to be created;

: the importance of “crime and grime” services for local people; eg: concerns about anti-social-behaviour, noise nuisance and also ensuring that street cleansing and grass cutting services are maintained;

: a forecast of the indicative funding gap from 2014/15 to 2015/16; revisions necessary as a consequence of the coalition Government’s recent spending review;

: adjustments to Formula Grants;

: the triennial review of the Local Government Pension Scheme; increasing liabilities for the scheme, because people are living longer;

: the summary position of the Medium Term Financial Strategy; a funding gap of £20 millions from 2013/14 to 2014/15; resources are predicted to reduce into the 2015/16 financial year and beyond;

: the scope for change : managing service reductions and effectively managing choice and risk by making difficult decisions about funding for services;

: the radical changes have occurred to the Council during the past three years;

: the report included details of the budget timetable for the budget setting process for the 2013/2014 financial year; the timetable might be subject to change, in response to any announcements by the coalition Government.

Copies of the presentation slides will be provided for Members of the Overview and Scrutiny Management Board.

Members discussed the following issues:-

: protecting important services, such as those for children at risk;

: the need to grow the local economy, both in the Rotherham Borough area and in the wider Sheffield City Region; the difficulty of local authorities competing with each other to attract inward investment;

: ensuring that Members receive sufficient information about budget issues;

: the pressure on services (especially housing) from immigration;

: the impact of privatisation of public services;

: the ‘community right to challenge’;

: procurement from companies in the local area;

: the impact of the Local Plan and the availability of land for commercial and industrial use;

: the need to increase the business rates base in the Rotherham Borough area; eg: the recent business confidence survey; the importance of the Advanced Manufacturing Park (Waverley);

: the demand for and pressure on local authority and health services caused by social deprivation, homelessness and poverty;

: local authority funding for Local Economic Partnerships.

Resolved:- (1) That the report be received and its contents noted.

(2) That the Overview and Scrutiny Management Board notes:-

(a) the refreshed principles on which the 2014/15 General Fund Revenue Budget and Medium Term Financial Strategy will be based; 

(b) the proposed budget setting timetable for the Revenue Budget 2014/15 and Medium Term Financial Strategy, with an additional opportunity for this management Board to receive a report prior to budget finalisation in February 2014 (this timetable may be subject to alteration);  and

(c) the proposed approach to reporting to the Cabinet on the Revenue Budget monitoring position for the 2013/14 financial year and onwards.