Minutes:
The Director of Finance and IT
introduced the report and stated it had gone to Cabinet earlier in
January 2019 and was coming back to the Corporate Overview and
Scrutiny Committee for comment, before being reconsidered by
Cabinet and going onto Full Council in February. He commented that
the old approach had used top-down cuts which risked creating false
savings, and felt that the new approach outlined in the report
increased income through investment and taxes, saved money through
the ‘Do More For Less’ Scheme, and decreased demand
through early intervention. He felt this was a successful approach,
although overspends were still occurring. He commented there were
three main points outlined the report, these being:
1. All savings outlined in the report for next year had already
been achieved or were a continuation of current savings.
2. Cabinet had recommended a freeze on council tax for the coming
municipal year.
3. As outlined on page 49 of the report, the Council Spending
Review (CSR) had introduced corporate wide savings targets, such as
getting better contracts in the ICT digital sector, and decreasing
the amount spent on people by reducing the number of agency workers
sickness cover.
The Director of Finance and IT drew Members attention to the
figures associated with the Children’s Services budget and
stated that £1million had been invested for early
intervention and promoting in-house foster carers, rather than
foster carers through an independent agency which were more
expensive. He added that the savings from this investment would
take time to come through. He then drew Members attention to the
table on Page 53 and stated that the first column was the budget
for this municipal year, the second column was extra changes that
had been made this year due to various variances, and the fourth
column was re-balanced and showed growth, such as the extra
£1.78million in environment and highways to be able to meet,
for example, waste disposal pressures. He summarised by stating
that there had been some changes to the figures since it has been
to Cabinet due to winter pressures and employee costs funding being
allocated, and the position had changed again since this version
had been published.
The Chair stated that the suggested recommendations, proposed a
council tax freeze and felt Members had to have 2 simultaneous
ideas, as they wanted affordable council tax for residents, but
also wanted to ensure the council could provide and deliver all
services. He stated that over the course of the Medium Term
Financial Strategy (MTFS) the council would lose £2.1 million
per annum income revenue if there was a council tax freeze, which
equated to almost £11million over the course of the MTFS and
commented that this would cause a deficit in the 5th
year. He asked if the lost council tax revenue could be replaced
with commercial income, so the council could remain in surplus. The
Director of Finance and IT stated that the approach would always be
to maximise income streams, so more money could be spent on
services, which meant his recommendation was for an increase in
council tax, but the decision could only be taken by Members. He
listed his reasons for his view which included the uncertainties
over the government comprehensive spending review which would
determine business rates. He stated that the published government
figure was currently £2.8million, which was higher than it
should be, and as the government worked on a notional figure, and
Thurrock was below average, it was classed as an
‘underfunded’ borough. He added that if there was a not
an increase in council tax, the gap between Thurrock’s actual
business rate figure, and the government’s notional figure,
would increase. He also stated that all investments were finite and
although the council was constantly trying to renew and replace
investments, it was not viewed as a stable and sustainable source
of income, compared to council tax. He added that as Thurrock had a
lower base for the adult social care precept, the amount they could
raise through council tax was already lower than other surrounding
councils. He stated that his position was fully outlined in his
Section 25 Statement, and although Members did not have to follow
this, they are required to bear it in mind when making
decisions.
The Director of Finance and IT then drew the Committee’s
attention to the table on pages 43 and 44 of the report, which
outlined what the increase in council tax would mean for residents
in the borough, and stated that in the typical Band A to C
properties, which made up 70% of all houses in Thurrock, it would
mean an increase of £9.06 per year, or 19p per week. He felt
that if council tax were increased then residents would receive
better quality services, for the price of 19p per week. He stated
that Appendix 1 fully explained the points outlined on page 41 and
stated that if years 5 and 6 were to be balanced then a significant
amount of input would be needed going forward and would increase
the pressure on finding investments. The Director of Finance and IT
felt that he did not want to be chasing investments, although new
investments could be found as there was a long lead time.
The Chair asked what the budget would look like if the MTFS was
extended to include the next 8 or 9 years, and if the
£1.8million deficit in year 5 would grow. The Director of
Finance and IT replied that the deficit would grow if the MTFS was
extended to include the next 10 years, but currently the team were
expanding investments so they covered longer than a 10 year period,
although they were still being negotiated. He added that this would
have an impact on a 10 year MTFS. The Chair asked if Annual Council
in February could see the 10 year MTFS to have a longer term view.
The Director of Finance and IT replied that statutorily the MTFS
only needed to be 3 years long, but it was right for Members to see
the longer term picture. He answered the Chair’s questions by
stating he needed to consult with officers.
The Chair stated that it was good to see longer term investments
and savings as outlined on page 49, and asked how deliverable those
savings were, as the people sector was constantly targeted, and
rental income was only a stretched target. He also asked for more
detail regarding the £920,000 in savings to be identified.
The Director of Finance and IT first answered the questions
regarding people savings, as this target had been in place for 2
years, and had been successfully delivered. He added that a report
on this was coming monthly to Directors Board meetings which
focused on sickness rates and return to work processes. He
commented that targets around agency workers were also going to
Directors Board on a monthly basis which reported on the employee
budget as a whole. He stated that the stretch target regarding
rental income should also be seen in relation to fees and charges
and was regularly challenged at Commercial Board and Directors
Board. He clarified the savings regarding Children’s Services
and stated that savings of £3million had been signed up to by
the Children’s Services team, and had not been given to them
as a target. However, as less than a £1million reduction was
included within the proposed budget this effectively equated to
growth of £2millon.
The Chair then discussed Appendix 3 and stated it was a welcome
change to see foster carer’s being actively recruited, but
sought reassurance that foster carers would still receive their
allowances and benefits. The Director of Finance and IT replied
that Thurrock wanted to promote and grow their internal foster
caring service, as although independent fostering agencies were
good, they were more expensive than the in-house service. He stated
that he had not heard of any changes to the foster caring
allowance. The Director of Strategy, Communications and Customer
Services stated that the communications team were doing lots of
work with the fostering recruitment team to promote the benefits
related to being a foster carer, and was also not aware of any
changes.
Councillor Duffin felt it was good to see a freeze in council tax,
and asked if there was any investment growth to fund the freeze, or
if it could come through savings. The Director of Finance and IT
replied that he had not been asked to fund a council tax freeze,
but the change to council tax had only been agreed in
January’s Cabinet meeting. He stated that a decrease in
council tax would decrease surpluses for a five year period and
meant the 5th year of the MTFS would be in
deficit.
Councillor Hague thanked officers for their clear approach and felt
pleased to see an aspirational council tax freeze. He commented
that resident’s wages often did not increase in line with
inflation, and felt morally that council tax should be kept low. He
felt that lots of work had been put into the budget and it was
robust. He added it would be good to see a 10 year MTFS, but
understood this would be hard to do as it was difficult to predict
certain changes. Councillor Duffin thanked the Director of Finance
and IT, as well as his team, for their good work, and asked how far
the increase in investments could be pushed. The Director of
Finance and IT responded that it was a difficult question to answer
as it depended on the nature of investments that come forward.
Councillor Duffin then asked for clarification regarding business
rates, and if 100% business rates could happen, and if they did how
much money the Council could lose. The Director of Finance and IT
replied that 100% business rates would happen, but required primary
legislation from central government, although they were too busy to
discuss this at present. He stated that although business rates
were currently 49%, the government could bill the council on top of
this headline figure and remove grants.
The Chair then asked if council tax could be decreased for the next
municipal year. The Director of Finance and IT replied that his
duty was to ensure the council remained viable for the next 3
years, and if council tax was reduced then the budget would remain
balanced for the next 3 years. He stated that he would feel
concerned if this became a pattern as an increase in council tax
could prove more beneficial for residents through improved
services. He stated that if, during the next municipal year,
another council tax freeze or reduction was introduced he would be
in a difficult position, although he could only provide advice or a
Section 114 Notice, as had been given in Northamptonshire Council,
but this was a last resort and Thurrock was nowhere near that
position.
RESOLVED: That:
1. The Committee commented on the proposed council tax freeze with
mind to the comments set out in the report.
2. The Committee commented on the draft budget as set out within
this report to inform final budget proposals at Cabinet on 12
February 2019.
Supporting documents: