Minutes Appendix A
2012/13 Base Budget and Projections for 2013/14 to 2015/16
Cabinet 6 February 2011
This is the first budget to be presented for approval by the first Conservative
Administration. I cannot say how delighted I am the proposals are in compliance with our
Manifesto promise to limit Council Tax increases for our recommendations are for a zero
Council Tax increase.
I should emphasise we had decided on a zero Council Tax increase before the
Government announced their incentive of a grant, equal to a 2.5% increase in council
tax, to Councils who froze their council tax at 2011/12 levels.
Introduction
This report recommends for approval the base budgets for both revenue and capital for
the 2012/13 financial year and also provides indicative budgets for the following 3
financial years and reflects the result of many months of detailed work by both officers
and Members.
Settlement
The Council had already forecast significant reductions in terms of central grant funding
following the 2 year provisional settlement which was announced in December 2010.
Confirmation of the Councils final allocation for 2012/13 was issued on 2 December
2011 and represents a 10% reduction compared to 2011/12 which in cash terms
equates to £688,835 less that is available to be spent on services. This reduction is not
as much as originally anticipated and has been helped by a further council tax freeze
grant.
The Chancellor of the Exchequer announced in early October that a further grant would
be offered to those Authorities which freeze the Council Tax for 2012/13 at 2011/12
levels, but this grant was to be a ‘one-off grant’.
This means that, for the second year running the Council is able to recommend a NIL
increase in the council tax for the District element, with the average Band D council tax
remaining at £138.87. The budget presented however assumes no further increases in
council tax for the period up to and including 2014/15.
New Homes Bonus
2012/13 will see the second year of the operation of the New Homes Bonus, for which
the Council’s provisional allocation is £611,678 and this money, along with allocations in
future years, is to be placed into the New Homes bonus reserve to be used to support
communities with growth and development. The last administration used the New
Homes Bonus to present a balanced budget.
Minutes Appendix A
Local Government finance Bill
The Local Government Finance Bill was published in December 2011. It contains
provisions which will implement from 2013/14 proposals for business rates retention,
localisation of council tax support and technical reforms to council tax which are key
elements of the Government’s localism agenda.
These represent significant changes to be addressed during the next financial year.
The Localism Act
The Localism Act received Royal Assent on 15th November 2011 and its wide ranging
provisions will be implemented over the next few years.
Revenue Account
Taking account of all of the known changes affecting 2012/13 relating to further grant
reductions, increasing pressure on investment income and service impacts, a surplus of
£87,975 is forecast.
In relation to the Council’s investments, while it might be tempting to try and search out
the highest rates of return when facing such drastic budget reductions, the primary
objective of the Council’s treasury activity remains the security of the sum invested.
Forecasts predict that interest rates are set to remain low, and it is anticipated that
official bank rate, will remain at 0.5% throughout the budget year, and possibly stay at
this level until 2015. Investment income of just under £270,000 is anticipated for the
2012/13 financial year which compares with receipts of £1.3m for the 2008/09 financial
year, which has added to the financial pressures faced by the Council. However on a
more positive note the Council’s investments are still producing a return and if this
income were not to be received council tax would need to be increased by over 6%.
Savings
Following the budget savings exercise a report recommending the inclusion of these
bids within the 2012/13 budget was presented to Cabinet on 28 November and
subsequently approved by Full Council on 13 December 2011 and additional detail
regarding the bids can be found within the previous report. May I remind Members there
was no opposition to these proposals at either meeting.
These total £897,000 for 2012/13 and just over £920,000 for the following years.
In addition to these reductions a further £150,000 of savings have been built into the
budget in relation to the review of management structures. The first part of this involved
the rationalisation of the Corporate Management Team, and the new structure for this
was approved by Full Council at the special meeting of 11 January 2012.
Reserves
The savings report mentioned previously recommended the establishment of a New
Homes Bonus reserve to be used to support communities with future growth and
development. A further report on the same agenda covering the Council’s approach to
Minutes Appendix A
localism recommended that a Big Society reserve also be established and these have
now both been reflected within this budget report.
Capital
The report also recommends the capital programme for the next three years and
includes an appendix containing new capital bids totalling £374,000.
Although not contained within the report, I would like a recommendation added to allow
for a £42,000 virement to be made from within the capital budget from the BPR EDM
(Business Process Re-engineering – Electronic Data Management) budget to the
Sheringham East promenade public conveniences budget to allow for this scheme to be
completed.
Future years
The report also includes projections for the following three financial years. The
projections have been prepared on the provisional funding announcement for 2013/14
and 2014/15 and further grant reductions of 7% have been assumed for both of these
years.
Taking all of these factors into account there is still a forecast gap of £275,343 for which
further savings will need to be identified in 2013/14, increasing by a further £805,924 in
the following year.
Summary
Taking all of the known changes into account for the 2012/13 financial year a surplus of
£87,975 is forecast and so a balanced budget has been achieved. The position will be
monitored throughout 2012/13 by both officers and members to ensure that this position
remains achievable, and work will commence early in the next financial year too address
the current deficit anticipated for 2013/14 onwards.
Conclusions
We understand how difficult it is for so many people right now, not just across the District
of North Norfolk but across the country as a whole. We feel that the council tax freeze
will help with the many burdens faced by residents in these trying times.
To address the budget deficit we have had to make difficult decisions and further difficult
decisions will need to be made to address future years deficits to achieve a balanced,
sustainable budget.
The budget is based on sound financial decisions, with new reserves introduced to help
support local communities, this administration has a plan and we are sticking to it.
This was always going to be a challenging budget as the country tries to recover from
the worst recession in decades, with the funding reductions being enforced by Central
Government and the declining returns from investments following the largest banking
crisis in our entire history.
Minutes Appendix A
In the face of all of this it gives me great pleasure to recommend a balanced budget
which has been achieved in a time of severe grant cuts, facing a deficit of just under
£1m, whilst still managing to freeze council tax and make provision for communities with
the New Homes Bonus Reserve and the Big Society Fund.
Finally Mr Chairman, before I move the recommendations may I express my thanks and
those of my Cabinet colleagues to our excellent Accountancy team for their expert
advice and guidance in the production of this budget. This includes Sheila Oxtoby, now
our Chief Executive, Karen Sly in the early stages and latterly Duncan Ellis. We, The
Cabinet, listened intently to their advices and expressed our opinions. The Budget being
proposed today we feel is in the best interests of this Council and, most importantly, the
best interests of all the people of North Norfolk District.
I would especially like to thank Karen and Duncan for their forbearance and patience in
putting up with my continual questions and my Cabinet colleagues for their unwavering
support and valuable contributions.
We shall not be judged by the criticisms of our opponents but by the consequences of
our acts, therefore Mr Chairman, I have no hesitation in moving the recommendations.