Further to my coverage LINKLINK on the Revenue Support Grant (RSG) freeze and the associated Efficiency Plan, this is the briefing note sent to Labour councillors and opposition leads by the Labour leadership. You will see that the 'minimal controversy' position is based on a 4% Council Tax rise in 2017-18 and 2018-19.
Briefing note
Summary financial position
August 2016
1. Brent council is in a good financial position. Compared to previous years, the decisions required to balance the budget for the next two years may be less difficult than previously. New savings of £16.4m over 2017/18 and 2018/19 are required. It is recommended that all of the proposals required to achieve this are agreed at the February 2017 budget meeting.
2. Council tax can now be increased by up to 4% each year. The previous financial incentives to freeze council tax have been withdrawn. Each 1% increase in council tax yields an extra £1m in income so approximately half of the savings target could be met through council tax rises.
3. Officers propose to publish draft budget proposals in October. It is anticipated that proposals more than sufficient to balance the budget could be published, provided that council tax increases of 4% in 2017/18 and 2018/19 were to be agreed. This would enable meaningful choices to be made through the ensuing consultation process. Most, though not all, of these proposals would reflect efficiencies in service delivery, minimising the amount of controversial proposals. If council tax increases were not to be agreed then more challenging decisions about services would have to be confronted.
4. It will be necessary to look at charges for services as part of the civic enterprise strategy and the planned work on parking policy and therefore potentially charging must also be considered. Officers are not suggesting that the entire budget for 2017/18 and 2018/19 can be balanced with council tax rises and no other contentious decisions about services. However, the quantity and scale of such decisions could be minimised.
5. To achieve this the council must ensure that there are no structural overspends in its current budget. Significant service pressures will need to be managed down by the end of the financial year if this budget strategy is to be delivered. Significant savings for 2017/18 and 2018/19, agreed as part of the budget set in February 2016, will also need to be delivered. Some, such as from procurement (£8m) and civic enterprise (£2.5m), may be managerially challenging, as we have not targeted savings of this scale in this way before.
6. More widely, the Chancellor has indicated that economic policy will be “reset” in the autumn statement. It is not clear what the implications of this may be for local government, or the wider economy, and updates will be provided as more information becomes available.
7. Business rates devolution, we presume, will go ahead as planned. DCLG is currently consulting on some of the details of this so it is not possible to provide a comprehensive update. However, it is important to stress that the national tax take from business rates is already greater than the DCLG settlement payments to local government. This gap will get larger by 2020 as local government grants fall.
8. Business rates devolution will mean that local authorities receive more income than they do now. Whitehall will therefore devolve more services to local government and require us to pay for them. This could be cost neutral, with the cost of the services devolved being equal to the extra income received. However, in practice this may lead to cost pressures.
9. The choice of which services are devolved is critical. Local government would want these to be those that could be integrated effectively with existing services, leading to improved outcomes and financial efficiencies. This devolution could also be different in different parts of the country, especially as the business rates take in London is disproportionately high.
10. Further updates will be brought as the position becomes clearer.