Agenda item

Draft General Fund Budget and Medium Term Financial Strategy Update


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.


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: