Agenda item - General Fund and HRA Budget 2019/20

Officer: Lisa Taylor

Key decision: Council Tax recommendations are reserved to Council. Housing rents and charges are Key Executive Decisions

The Leader of the Council delegated authority to the Cabinet to make the following decisions.

RESOLVED:

1. That Cabinet recommend to full Council:

a. A 2.99% increase in the Council Tax for Croydon Services (a level of increase Central Government has assumed in all Councils’ spending power calculation).

b. A 1.0% increase in the Adult Social Care precept (a charge Central Government has assumed all councils’ will levy in its spending power calculations).

c. To welcome the GLA increase of 8.93%, of which 91% of which is being used for the Metropolitan Police service and 9% is being used for the fire service.

With reference to the principles for 2019/20 determined by the Secretary of State under Section52ZC (1) of the Local Government Finance Act 1992 (as amended) confirm that in accordance with s.52ZB (1) the Council Tax and GLA precept referred to above are not excessive in terms of the most recently issued principles and as such to note that no referendum is required. This is detailed further in section 3.5 of the report.

d. The calculation of budget requirement and council tax as set out in Appendix D and E of the report. Including the GLA increase this will result in a total increase of 4.88% in the overall council tax bill for Croydon.

e. The revenue budget assumptions as detailed in the report and the associated appendices :-

f. The programme of revenue savings and growth by department for 2019/20 (Appendix A of the report).

g. The Council’s detailed budget book for 2019/20 (Appendix B of the report).

h. The Capital Programme as set out in section 16, table 16 and 17 of the report.

i. To note there are no proposed amendments to the Council’s existing Council Tax Support Scheme for the financial year 2019/20.

j. The adoption of the Pay Policy statement at Appendix H of the report.

k. Approve the increase in premium for long-term empty dwellings with effect from 1st April 2019 as set out in section 9.10 of the report and Appendix I of the report.

l. The adoption of the Adult Social Care Charging Policy with effect from the 1^st April 2019 as set out in section 8.11 and appendix J of the report.

2. That Cabinet agree:

a. A rent decrease for all Council tenants for 2019/20, in line with the Government’s social rent policy which has legislated to reduce social rents by 1%.

b. No increase to Garage and Parking space rents.

c. No increase to the service charges for caretaking, grounds maintenance and bulk refuse collection as detailed in section 17 of the report.

3. That Cabinet note:

a. That in respect of the Council’s public sector equalities duties where the setting of the capital, revenue and HRA budget result in new policies or policy change the relevant service department will carry out an equality impact assessment to secure delivery of that duty including such consultation as may be required.

b. The progress being made towards balancing the Council’s financial position for 2018/19 as at Quarter 3 and the current projected outturn forecast of £5.466m as set out in the report at item 5b on the agenda.

c. The response to the draft local government settlement which is attached at Appendix F of the report.

d. That pre-decision scrutiny of the proposed budget 2019/20 took place at the Scrutiny and Overview Committee on the 15^th January 2019. The Scrutiny and Overview Committee agreed to recommend that the Cabinet Member for Finance and Resources be invited to attend a meeting of the Committee early in the new municipal year to discuss with Members the process for setting the following year’s budget.

e. The statement on reserves and balances and robustness of estimates from the statutory Section 151 Officer.

The Leader began with a presentation and noted that despite local government experiencing cuts of 76% since 2011/12 the Prime Minister claimed that austerity had ended. The Leader stated he was proud to be presenting a budget which would see a modest increase of £1.54 per week in Council Tax in light of the large cuts experienced by the council. A budget, it was noted, which allowed for investment in areas including libraries, culture, young people, leisure centres and youth zones. The Leader further welcomed the Mayor of London’s budget being approved by the London Assembly, a budget which would provide additional funding for the Metropolitan Police Service which had also experienced large cuts in funding in recent years.

The Leader thanked Richard Simpson for his work on the budget and previous budgets. It was noted that in his role of S151 Officer, he had guided the council through some of the toughest times experienced in local government, and Members wished him well for the future. The Cabinet Member for Finance & Resources noted the huge contribution of Richard Simpson, and welcomed Lisa Taylor into the role of S151 Officer stating that Croydon continued to be in very safe hands financially.

The Cabinet Member for Finance & Resources gave a presentation to the meeting, stating the local government had experienced the largest cuts from central government and as a result local government across England was in crisis. Alongside the real term cut in spending power there had also been increases in demand which put further pressure on local government, and as such a multi-billion pound shortfall in funding had been identified nationally. Furthermore, it was raised that uncertainty remained in regard to the funding formula to be used by the government in future, and the council’s response to the proposal was included within the agenda papers.

Whilst it was noted that funding cuts had placed a large pressure on local government, additional responsibilities such as Public Health and care leaver responsibilities, had also compounded the issue. Additionally, the Cabinet Member informed Members that demographic changes with an older population and more children in care, had increased pressures on the budget.

The Section 151 Officer noted that the Medium Term Financial Strategy in 2018 had reported a gap in 2019/20 and the following two years; however it had become possible to close the gap for 2019/20. The funding gap for the following two years, however, remained in place but work would continue to close the gap.

Members were informed that in addition to the central government funding reductions experienced since 2011, the council would see a further reduction of 8.2% in funding in 2019/20. Additionally, funding per head was significantly below that received by inner London boroughs despite Croydon experiencing the same issues as those experienced by inner London boroughs.

The Cabinet Member highlighted some areas where shortfalls in funding had been experienced; including Unaccompanied Asylum Seekers which saw a shortfall in funding of £7m and the Public Health grant had decreased by £2m per annum. Additionally, the council received only half the amount required for Council Tax Support.

Despite these shortfalls, the Cabinet Member noted that the council had focussed on delivery and having a tight control of the finances over recent years. The council, it was stated, had protected frontline services and had invested in the future of the borough. Furthermore, the council had introduced the London Living Wage and continued to encourage suppliers to also pay the London Living Wage. In relation to suppliers, the council was working to ensure that suppliers performed through improved commissioning and contract management, and penalties were imposed where necessary.

The Cabinet Member stated that the council remained committed to implementing the Labour manifesto despite the historic massive underfunding, which saw Croydon receiving £31m per annum less than inner London boroughs. A renewed focus on prevention and locality working would help to protect vulnerable residents and deliver high quality services for every resident.

It was noted that the proposed Council Tax rise of £1.54 per week would include a 77p rise in Council Tax, 26p for adult social services and 51p for the Greater London Authority which included greater funding for the Metropolitan Police Service. The Council Tax rise would include growth of £11m in Children, Families & Education which would help deliver support to Unaccompanied Asylum Seekers, children in care and education improvements, whereas the proposed growth in the Health, Wellbeing and Adults budget was due to the increase in number of adults in care and young adults requiring support. It was noted that a number of departments were making savings; including landfill tax reductions due to increased recycling rates, solutions being found by the Gateway team and back office savings.

In regard to capital expenditure, the Cabinet Member stated the largest area of expenditure was in relation to investment in housing. The Growth Zone, it was noted, would improve the infrastructure in the borough thereby bringing further benefits to Croydon. Investment in education would enable the delivery of greater SEN provision in the borough.

The Cabinet Member for Finance & Resources commended the budget to Council, which would be voted upon on Monday 4 March 2019.

The Cabinet Member for Homes & Gateway Services presented the Housing Revenue Account which would see a rent decrease of 1%, in line with government requirements, and no increases in ground rent or maintenance. The proposed repairs budget would ensure robust work continued to be undertaken, especially in the wake of the Grenfell tragedy, and as such £5m would be further invested into fire safety works.

The formal view of the Section 151 Officer was highlighted; that the budget must be considered in the context of the financial standing of the authority. The Section 151 Officer noted that in the 2018/19 outturn earmarked reserves were expected to drop by £5m; however it was planned that the reserves would be replenished in 2019/20.

Despite the rising demand and cuts experienced by the authority the Section 151 Officer stated the council had not been using the reserves to plug any gaps in the budget. Furthermore the authority expected to receive £30m in capital receipts over the following three years which would facilitate the budget.

It was noted that £28m of growth was proposed within the budget which was in line with the detailed work that had been undertaken to forecast expected increases in demand and growth. Additionally, the Section 151 Officer highlighted that savings of £27m were set out in the budget, each saving had a clear delivery plan and the relevant Cabinet Member was clear of the expectations.

The Section 151 Officer informed Members that there were risks in relation to the delivery of the budget; including the increasing demands on social care, continuing Brexit uncertainty and continuing Unaccompanied Asylum Seeker underfunding by the Home Office. Additionally, it was noted, there remained uncertainty in regard to local government funding nationally, however as the Fair Funding Review continued further reports would be taken to Cabinet outlining the impact.

In conclusion, the Section 151 Officer considered the proposed budget to be robust.

Members of Cabinet welcomed the budget as it delivered in terms of Croydon’s ambitions for culture, both in terms of investing in the Fairfield Halls but also ensuring savings were realised in the long term maintenance of assets. The budget also enabled the council to ensure better outcomes for communities.

In response to Member questions the Cabinet Member for Finance & Resources stated there was a quirk in local government finance regulations that if the authority collects more than was budgeted for then the council cannot recognise that additional money until the following financial year. This had been recognised by the external auditors within their audit report and was not considered inappropriate.

Members noted that there were a number of factors which caused uncertainty in local government funding; however despite the difficulties Members stated that investment in services, such as education and supporting the local economy, continued which delivered for local residents.

The Cabinet Member for Families, Health & Social Care stated the 6% precept for adult social care over the last three years was a repressive tax which burdened those who could least afford it. Despite the precept a £2b funding gap for adult social care remained nationally, and the Local Government Association anticipated this funding gap to increase to £25b by 2025. It was suggested that the government should not push forward with the NHS long term plan until the funding for adult social care was sorted as the two were linked.

In response to questions the Cabinet Member for Families, Health & Social Care confirmed that a consultation was undertaken before Christmas 2018 in regard to the proposed charging schedule and while it was noted that there was a low response rate from some residents, such as eight responses in terms of learning disabilities, organisations which supported those residents were consulted and responded. It was not felt that the consultation could have gone further, and when the Cabinet Member had spoken to service users they had understand the fairness of the proposal.

The Cabinet Member for Finance & Resources further stated that the consultation had been undertaken properly and the proposals had been carefully thought out. The council continued to work with the voluntary sector and support services to assist those affected, and would work to ensure people did not fall through the net. The Leader stated that if the council received the proper funding then different proposals would have been put forward, but while the council continued to be underfunded difficult decisions were necessary.

In response to Member questions the Cabinet Member for Environment, Transport & Regeneration (non-voting – Job Share) confirmed that the capital budget for TfL was the council’s contribution to the capital programme and was linked to improvement to cycle provision in the borough.

Councillor Alisa Flemming arrived at the meeting at 7.28pm.

The Leader proposed recommendation 1.1 (III) of the report be amended to read: “To welcome the GLA increase of 8.93%, of which 91% of which is being used for the Metropolitan Police service and 9% is being used for the fire service”. Cabinet agreed to this amendment.