Agenda item

Pre-Decision Scrutiny: Proposed General Fund Revenue Budget 2019-20

To discuss the Administration’s Budget Proposals for 2019 – 2020.

Minutes:

The Cabinet Member for Finance and Resources, Councillor Simon Hall introduced the report with a summary of the key points of the budget in the year ahead. It was noted that the financial landscape for local government continued to be challenging, with the outlook for beyond April 2020 unknown at the present time. From the introduction, the following points were noted.

·         There were no material changes to the Local Government Settlement, which had seen our funding from government fall by 6.5% as predicted.

·         There was an assumption in the Budget that Council Tax would rise by 3%, the Adult Social Care Precept would also rise by 3% and the Greater London Authority were planning to raise the Police Precept by £24 per annum.

·         Nationally £180m had been released to local authorities from the Central Business Rate Account, with £1.1m of this awarded to Croydon.

·         The budget for 2019/2020 was balanced, but in the Medium Term Financial Strategy it was predicted that there would be a £20m gap in funding in the subsequent two years.

·         Substantial growth in demand was predicted in the services for the people of the borough and in particular vulnerable residents. £12m had been allocated to Children’s Services, £10.2m to Adult Social Care and £3.2m to the Gateway Service to account for the growth in demand.

·         Within the budget there was an assumption that there would be a rise in income from car parking and also through investing in assets, such as the recently purchased Colonades.  It was also proposed to transfer property owned by the Council to the pension fund to reduce the cash contribution on the fund deficit.

·         Brexit and the impact it would have upon both the local and national economy was a significant unknown risk to the budget.

·         The Capital Programme included provision for a new Special Educational Needs School, which would help to reduce the reliance on the private sector. There were also plans to deliver £150m of affordable housing, investment in the Growth Zone, a new leisure centre in New Addington and investment in libraries across the borough.

It was questioned whether representations were being made on behalf of Croydon to the Fair Funding Consultation. In response it was advised that representations were being made on both a national and regional level, as well as individual representation on the circumstances specific to Croydon, such as Unaccompanied Asylum Seeking Children.

It was questioned how the budget would be impacted if Council Tax was not increased by the planned 3%. It was advised that should Council Tax remain at its current level, an additional £7m would need to be found within the budget which was likely to mean there would be a significant impact upon services provided to residents. 

It was confirmed that the Council was on track to save £1m over half a year from the new Waste and Recycling contract. This had been extrapolated for a full year and used as a basis for the assumed income from the contract for 2019/2020.

As the Business Rate Retention Scheme was being reduced from 100% to 75%, it was questioned how this would impact upon the budget. It was confirmed that as the Council had been pessimistic in predicting the income from the scheme, the reduction had not cause significant problems. The 25% reduction equated to approximately £1.5m.

As the Council was now pursuing additional income streams through the purchase of assets, it was questioned whether there was a specific strategy in place to guide the type of assets the Council would and would not invest in. It was advised that the Council had a three year programme of investment, which was set out in the Asset Acquisition Strategy that sat alongside the Medium Term Financial Strategy and informed the type of investments the Council would pursue. It was agreed to share a copy of the Strategy with the members of the Committee.

In response to a question about the basis for the predicted increased income from parking and penalty charge notices, it was advised that it was based on a combination of factors. In 2017/2018 the Service had been cautious in predicting its income, so the base rate for 2018/2019 had been underestimated. As the growth rate was expected to continue, the increase had be carried forward into the next year. The size of the enforcement team had also been increased which would lead to a likely increase in income from penalty charge notices.

It was noted that the Budget had assumed that there would be a saving from the charging policy in the Adults Service. As the charging policy was still being consulted upon, it was questioned what had been used as the basis for the assumption. It was advised that although the consultation was still underway, it was assumed that the proposals set out in the consultation would be endorsed. If there were major changes arising from the consultation, then the budget would have to be adjusted.

In response to a question about the assumed dividend of £2.2m from Brick by Brick, it was highlighted that the Council had not taken a dividend since the company was set up. As there were now 20 separate schemes in the process of completion, the dividend had been based on a prudent assumption of profit available in 2019/20.

The low level of reserves held by the Council in comparison to other local authorities was highlighted and questioned whether this should be any cause for concern. It was advised that the level of reserves held by the Council was something that was tracked and balanced as needed. In the Medium Term Financial Strategy there was an aim for the level of reserves held to be 5% of the net budget, which equated to £12m, but since 2010 the level of reserves had varied between £10m - £11m.

In response to a question about the increased demand for Adults Social Care, it was advised that demand was increasing as people were now living for longer and the complexity of cases had increased. It was also highlighted that demand for Children’s Services had also increased, with a large increase in the number of foster children, including additional pressures from Unaccompanied Asylum Seeking Children. It was agreed that statistics on the numbers of children in the care system over the past few years would be provided to the Committee to demonstrate the increased demand.

It was noted that the Budget included an assumption of reduced costs in the Revenues and Benefits team and as such it was questioned what this assumption had been based upon. It was advised that it had been based upon the introduction of news systems and increased engagement through the new Gateway Service, which would reduce the level of engagement with the Revenues and Benefits team.

It was highlighted that voluntary organisations were finding they were having to help people with applications for grants and benefits more frequently due to issues caused by many of the application now being online. As such concern was raised that the Council may be adding to this problem by introducing new systems. Reassurance was given that the Council was determined to safeguard the face to face option for those residents who preferred to interact with the Council in this way. Additionally the ongoing work on locality based services was about providing support for people where it was most needed.

As it was noted that the Election team was being reshaped, it was questioned whether the team would be able to cope in the event of having to deliver either the European Elections or a snap General Election. It was confirmed that contingency plans had been made should either of these elections happen this year.

In response to a question about what lessons had been learned from past budgets, it was advised that the Finance team now had a stronger handle on the areas for growth and pressures within the budget. There were better systems in place for tracking the budget and there had been more detailed work undertaken focussed upon the key areas of pressure within the Council. However there would always be unknowns and risks to the budget and it was essential to prepare for these where possible.

It was suggested that it would be useful for the Committee to meet with the Cabinet Member for Finance and Resources early in the budget setting for 2020/2021 to focus on the actual process of setting the budget in more detail and ensure it was fit for purpose.

The Chair thanked the Cabinet Member and the Officers for their attendance at the meeting and answering the Committees questions. In particular extending the thanks of the Committee to the Executive Director for Resources and Section 151 Officer, Richard Simpson, who was attending his last Scrutiny meeting before leaving the Council.

Additional Information Requested

1.    Figures providing a breakdown on the number of Looked After Children in the borough over the past few years, broken down to provide data on the number of Unaccompanied Asylum Seeking Children and locally Looked After Children.

2.    A copy of the Asset Acquisition Strategy.

Conclusions

Following the discussion of this item, the Committee reached the following conclusions:

1.    That the Budget being proposed by the Administration was reasonable and took into account potential risks where possible.

2.    That it would be beneficial to scrutinise the budget setting process in the new municipal year, to provide reassurance on the preparation of the budget at an early stage.

Recommendation

The Scrutiny and Overview Committee agreed to recommend to the Cabinet Member for Finance and Resources that he be invited to attend a meeting of the Committee early in the new municipal year to discuss with Members on the process for setting the next budget.

Supporting documents: