Executive Member Portfolio Update (Agenda Item 6)
Councillor Pablo Dimoglou, Executive Member for Finance, has been invited to attend the meeting to update Members on key ongoing issues and policies within his portfolio and to answer any questions.
The Chairman noted that it was the first task of the Council year to set the budget and so he had invited the Executive Member for Finance to address the Commission.
Councillor Dimoglou said that his Finance Portfolio had been able to build on the astute management of previous generations to present a balanced budget for the first year of the Medium Term Financial Plan (MTFP) with a predicted shortfall of £806,000 at the end of year four. Since those predictions were made there had been some changes and an opportunity had arisen to accept a four year funding deal from Central Government. The final budget proposals would be presented to Cabinet on 9 February 2016.
He invited the Executive Director Commercialisation to give Members a short presentation on the impact of the Comprehensive Spending Review, its effect on the Budget and the project to meet the key issues for Breckland.
New Homes Bonus (NHB) – Change had been expected. It had been thought that the NHB would only be available for the next three years. In fact it should continue for the next four year, but there were retrospective changes to the way it was paid. Consultation was also underway on other changes. It was now directly linked to the Local Plan submission. If that was not made in a timely fashion the NHB would not be paid. The Plan also had to be robust otherwise the Government would withhold payment. The Council’s Local Plan was on-track for submission in Autumn 2016. However, if it was rejected the Government could withhold payment of about £500,000.
Another issue was that if the Council refused planning permission for housing which was then granted on Appeal, the Council would not receive any NHB for that development. The potential reduction in NHB would impact on the Council’s Growth Fund.
The good news was that the Necton Sub-Station had received an estimated Business Rates valuation of £500,000 so it could be used to top up the Growth Fund to mitigate the NHB risk if required.
Revenue Support Grant (RSG) – The Government had introduced a four year settlement for those Councils that had structured plans. Breckland qualified and would seek agreement from Cabinet to accept the four year settlement. There were no details about the proposal yet but they should be available in time for the Cabinet meeting.
War Pensioners – The changes would mean a small cost to the Authority of about £2,000 which would be recommended to Cabinet for approval.
The effects of those changes on the MTFP would increase the shortfall by the end of the term to £2million. However, the Transformation Programme had identified sources of funding for 100% of that. A summary of savings and income opportunities which showed the plans in place to secure the money was displayed. Delivery of the Transformation Programme was critical. The total expected return was actually higher than was needed, allowing greater flexibility.
Council Tax Comparative Position – The proposed £5 increase in Council Tax would not alter the Council’s position of having the lowest Council Tax in the country and would result in less than a 10p per week increase on Band D properties.
Councillor Joel asked for clarification on Business Rates (BR) and he was advised that the Government wanted to move towards 100% BR retention but as some of that money went towards the RSG it did not mean that the Council would receive 100%. The details were not known yet. The Council should retain 100% of the Necton Sub-Station BR as the money came from renewable energy. Balanced against that was the fact that the NHS Trusts had applied for zero rating and if approved that would reduce income from BR. The Council would also receive 100% BR from Snetterton power station and the estimated value of this was already included in the proposed budget.
Councillor Oliver asked if the possibility of NHS Trusts receiving zero rating had been catered for in the budget and the Executive Director Commercialisation said that the budget adopted a prudent approach to BR, taking a cautious view of potential BR bases. As the District did not have any hospitals the NHS Trust situation would have a small impact on Breckland.
She was keeping an eye on the provisions for Appeals as the fact that they could be back-dated was a significant issue. The Chief Accountant confirmed that £3.1million had been set aside and was considered to be adequate provision at the moment.
Councillor Stasiak asked about the Council’s ability to invest and the Executive Member for Finance advised that the regulations had been relaxed to allow Council’s to invest in AA rated counter parties to spread their investments further. The Council also intended to invest in market housing. Breckland Bridge was already building houses in Mileham and Attleborough. Cash in the bank was only providing half a percent whereas investment in holdings provided a greater return.
Councillor S Chapman-Allen asked whether there were figures for the number of appeals granted when the Planning service was in-house, compared to the number granted under Capita and Councillor Claussen thought it might affect the way that the Planning Committee operated if they felt pressure to allow housing developments in order to receive NHB payments. He asked for specific figures on the reduction in reliance on NHB and the Executive Director Commercialisation agreed to find those out for him.
The Chairman wanted to know how much income came from NHB and how the Council could discount 100% of that, so that planning decisions would not be compromised. As well as unsuitable housing developments there was the potential for allowing unsuitable green energy projects in order to receive BR.
Councillor Jermy agreed that the impartiality of the planning process could be called into question if the Council was reliant on NHB. He went on to ask what difference the £5 increase in Council Tax would make compared to the 2% increase previously proposed.
The Executive Director Commercialisation explained that the £5 increase had not been known about when the draft budget had been presented. It was an option added by the Government due to the changes in RSG and NHB. With the 2% increase the budget deficit had been £806,000 after four years. With the £5 increase that deficit reduced by £165,000. It was up to Members to decide.
The Deputy Leader and Executive Member for People & Information pointed out that the £5 increase would have less impact than 10p per week as most properties in the District were below Band D.
It was noted that the Council had received NHB on development approved on appeal previously. The changes were currently under consultation.
Councillor R Richmond asked if there were enough commercial sites in the Local Plan proposals to provide sufficient Business Rates. The Executive Director Commercialisation said that the Council was definitely on-track. Government policy was aimed at growth and it was therefore necessary to be successful in that field. The Council was in a good position compared to others.
Councillor Webb asked if the proposed reduction in BR trial had been provided for in the MTFP and it was confirmed that the pilot scheme was covered. The costs for Dereham were known. If the scheme was successful it would be reviewed annually.
Councillor Oliver asked if there had been any modelling in the MTFP of the impact of Devolution. There had not, and the Chairman advised that he had attended a briefing on Devolution at County Hall and it had been made clear that there was no intention to ‘raid the Breckland pot’ if devolution went ahead.
Councillor Bambridge referred to the Appendix to the presentation and to projects C3, C4 and C5. He had expected much higher income.
The Executive Director Commercialisation explained that the plan was based on deliverability and figures were not included if they were not certain. The Business Case for Breckland Training Services was being prepared and the figures would include the costs of providing a dedicated training centre at Breckland House, Thetford.
Discussions were underway about C4 and it was hoped that income would come from that. Project C5 was heavily reliant on the digitalisation agenda and there was no business case for that yet. When there was, the income line would be populated.
Councillor Jermy asked about C11 (Thetford Tax Base Growth). The issued had been discussed by the Town Council because the new housing was outside the Thetford boundary but would impact on the services in the town.
The Chairman thought that was a valid point and said that Watton had the same issue with the housing developments in Carbrooke. He noted that the income generator was not showing start-up costs and asked if they had been included in the MTFP. It was confirmed that they were either in the MTFP or the Transformation Budget and that an expenditure table would be included in the budget pack for Members.
The Chairman thanked the Executive Member and the Executive Director for their presentation.