Minutes:
5.1 The Chair welcomed Ian Williams, Corporate Director Finance and Resources and Councillor Geoff Taylor, Cabinet Member for Finance from London Borough of Hackney (LBH) to the meeting.
5.2 The PowerPoint presentation about the budget was circulated to Member prior to the meeting.
5.3 The key points highlighted from the presentation were:
5.3.1 The Council has made no material cuts to frontline services.
5.3.2 The cost pressures are homelessness, welfare reform, no resources to public funds (NRPF), pay award, London living wage, care costs, bedroom tax and right to buy. The Council continues to manage the pressures outlined above on its budget.
5.3.3 Council’s budget has been reduced by £130 million.
5.3.4 The Council’s capital investment programme is extensive and the Council’s strategic acquisition approach is adding value.
5.3.5 The Housing Revenue Account continues to be impacted by the benefit cap reduction (to £23k) and the introduction of Universal Credit.
5.3.6 The Council is expected to come in on budget for 2015/16.
5.3.7 The Government are offering a 4 year funding allocation in return for efficiency plans. Local authorities have until 14 October 2016 to accept the offer.
5.3.8 Change in the Revenue Support Grant (RSG) distribution methodology aims to help more grant dependent authorities.
5.3.9 Council tax changes – no council tax freeze grant. The council tax referendum limit stays at (2%) and introduction of the social care “precept” of 2% for council tax. This is expected to raise £55m in 2016/17 for London and a cumulative total of c.£560m by 2020. There is an assumption of council tax growth.
5.3.10 Significant shift from previous regime of capping and freeze grants.
5.3.11 The “Core Spending Power" has been cut by 9% (England 8%) this includes Better Care Fund (BCF) and New Homes Bonus (NHB).
5.3.12 Transition grant (following final settlement) of £300m in first 2 years of spending review period nationally (£26m for London) – however it is unclear how this will be calculated.
5.3.13 For 2016/17 the visible top slices and transfers in are:
• £1.275bn for NHB.
• £20m for Rural Services Delivery Grant. The total grant increased to £65m in the final settlement, however it is unclear whether the extra £45m is top-sliced or new money – Hackney Council has been lobbying on this.
• £50 million top slice for the safety net.
• Care Act funding £308m.
• Extra funding for flooding £10m + £1.9m Sustainable Urban Drainage System (SuDS)
• 2015-16 Council Tax Freeze Grant £115m.
• 2015-16 Efficiency Support Grant.
• £129m Local Welfare Provision (LWP) funding.
5.3.14 Members were shown a chart highlighting the spending reductions for each local authority tier. This demonstrated how it varied over time.
5.3.15 Significant changes to spending power has and will be:
• There are assumptions of a 1.75% average council tax increase each year as well as all eligible social care authorities taking up the 2% social care precept.
• There is an assumption the tax base will grow at the same rate as historic trends 2013/14 to 2015/16.
• There is an assumption that the Mayor of London will increase the police tax element.
• There is significant underemphasises of the extent of overall funding cuts as council tax is exaggerated.
• New Homes Bonus for 2016/17 allocations confirmed (London £254m) but the NHB is not guaranteed to continue.
• Department Communities and Local Government (DCLG) is consulting on options to save £800m by 19/20 (to fund new BCF). The deadline for this consultation is March 2016.
• NHB (17/18 to 19/20) in Core Spending Power (CSP) estimate is based on current share of national total.
• The BCF is expected to receive £1.5 billon by 2019/20. The Council hopes this will support better partnership working between local government and Clinical Commissioning Groups (CCG).
5.3.16 Other funding outside the local government settlement:
• Public Health Grant (PHG) – England total of £3.4bn in 2016-17 (London £682m).
• Better Care Fund – England total of £3.9bn in 2016-17 (London £603m).
• Independent Living Fund – England total of £177m in 2016-17 (London £21m).
• Housing benefit administration of benefit grant - England total of £224m (London £49.3m).
• No Council Tax administration of benefit grant advised to date.
• Compensation for previous cap on business rates multipliers details are not confirmed).
• Small business rate relief extension – s31 grant.
• S31 grant for flooding to increase in real terms.
• Education Services Grant allocations (8.5% cut for London £94m to £86m).
5.3.17 The Council has lost £36million in revenue support grant (the council’s largest general grant).
5.3.18 In summary
• The Budget Report will go to Full Council on 2nd March 2016.
• 2% Social Care precept is recommended.
• Continuation of existing policies.
• The significant cost pressure are temporary accommodation and looked after children.
5.4 Questions, Answers and Discussion
(i) Members enquired if funding levels for local authorities was stabilising and if the furore of the recession had passed. Members queried if local authorities have identified the level of funding they need to be sustainable and the future role of local authorities.
The Corporate Director Finance and Resources from LBH advised the forecasts projected by the council were based on the forecasts from the Office for Budget Responsibility (OBR). He acknowledged changes to the world economy does have an impact on the council’s budget too.
The Cabinet Member for Finance from LBH commented there is a vision for local authorities and how they will be funded. Implementation of this vision would reduce local authority spending by 65% and push local authorities towards being self-financing. The theory behind this is, if local authorities become more reliant on creating their own income they will be more responsible. It was noted other factors like Britain exiting the European Union would also have an impact.
(ii) Members referred to the changes to the New Homes Bonus and enquired if this resembled top slicing?
The Corporate Director Finance and Resources from LBH notified Members that the proposed changes were out for consultation and this consultation was scheduled to end 12th March 2016. A key change is moving from the current 6 year funding to 4 year funding. It was also noted that the proposals would be taking money from District Councils to pay for the Better Care Fund (BCF). It was highlighted councils need to be mindful that they could lose the NHB and the BCF.
(iii) In relation to the budget Members enquired about changes or updates, linked to devolution, in relation to health, employment etc. Members were interested in understanding if there was a possibility of joining up budgets and the future of local authorities in 5 years time, as a result of changes like this.
The Cabinet Member for Finance from LBH informed Members there is no authorised body with authority for pan London to capture the views and needs. Following stability in funding for local authorities Hackney Council could consider building on initiatives that align with Hackney’s vision and meet local need. It was highlighted that there needed to be an authorised responsible body with authority to develop a vision for pan London’s needs.
(iv) Members discussed if they the budget challenges needed pan London level thinking to develop sustainable solutions.
In response the Cabinet Member for Finance from LBH suggested there should be discussion about a pan London authority to deal with the overarching needs for London.