Agenda item

A     City Fund – 2014/15 Budget Report and Medium Term Financial Strategy including 

Non Domestic Rates and Council Taxes for the Year 2014/15

 

We have considered as to the Non-Domestic Rates and Council Taxes to be levied to meet the City Fund budget requirement during the year ensuing including the proposal to levy:

 

·                an unchanged premium multiplier of 0.004 on the Non-Domestic Rate and Small Business Rate multipliers to enable the City to continue to support the City of London Police, security and contingency planning activity within the Square Mile at an enhanced level; and

·                an unchanged Council tax of £857.31 for a Band D property (excluding the GLA precept).

 

We submit a printed and circulated report thereon:  City Fund – 2014/15 Budget Report and Medium Term Financial Strategy.

 

We recommend that the report be agreed to and that the Court do pass a Resolution in the following terms:-

 

Overall Financial Framework - Revenue

 

1.         Approve the overall financial framework and the revised Medium Term Financial Strategy for the City Fund noting, in particular, that work continues on the Service Based Review to identify savings options to eliminate the deficits forecast from 2016/17 as a result of the significant and continuing Government funding cuts.

2.         Approve the City Fund Revenue Budgets.

3.         Note the following assumptions:

·         the 2% efficiency savings required over the two year period 2013/14 and 2014/15 have been included alongside procurement savings;

·         an allowance of 2% a year has been included for pay and prices across the forecast period (to 2017/18);

·         a neutral position with regard to the Government’s system of Business Rates retention introduced on 1 April 2013 – i.e. no speculation as to growth or reduction;

·         a reduction in the anticipated interest rate on cash balances from 1.5% to the 0.75% currently being achieved; and

·         the revenue position cannot support significant contributions to the funding of the capital programme beyond the limited sums already included in the forecasts.

 

City Police

 

4.         As part of the strategy to achieve a balanced budget over the medium term, continue the policy of allowing City Police to draw from its reserves on a managed basis, subject to a minimum £4.5m being retained.

 

Council Tax

     

5.         From April 2013, council tax reduction replaced council tax benefit and in accordance with Section 10 of the Local Government Finance Act 2012 which amended Section 13A of the Local Government Finance Act 1992, local authorities have to make their own local schemes if not applying the Government default scheme. The City adopted the default scheme for 2013-14. There is no intention to amend the scheme for 2014-15 other than to apply the annual uprating of applicable amounts in line with housing benefit applicable amounts to ensure that no claimants in receipt of the council tax reduction are worse off in 2014/15.

 

6.         The Common Council of the City of London hereby agrees, therefore, that the  annual uprating of applicable amounts, premiums, disregarded income, or capital in relation to the Local Council Tax Reduction Scheme  2014/2015 as it applies to working age claimants, be in accordance with the uprating to be applied under the Housing Benefit Regulations which take effect from 1 April each year; and the annual uprating of non-dependent income and deductions, and income levels relating to Alternative Council Tax Reduction, or any other uprating as it applies to working age claimants, shall be adjusted in line with inflation levels by reference to relevant annual uprating in the Housing Benefit Scheme, or The Prescribed Council Tax Reduction Scheme for Pensioners.

 

7.         It be noted that the Council Tax Base now has to be reduced to reflect the changes resulting from the new council tax reduction scheme.

 

8.        It be noted that in 2012 the Finance Committee delegated the calculation of the Council Tax Base to the Chamberlain and the Chamberlain has calculated the following amounts for the year 2014/15 in accordance with Section 31B of the Local Government Finance Act 1992:

 

(a)     £6187.65 being the amount calculated by the Chamberlain (as delegated by the Finance Committee), in accordance with the Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012, as the City’s Council Tax base for the year; this amount includes a calculation of the amount of council tax reduction; and

 

(b)     Parts of Common Council’s Area

 

 

InnerTemple	MiddleTemple	City excl. Temples (special expense area)
83.02	69.87	6034.76

 

 

being the amounts calculated by the Chamberlain, in accordance  with  the  Regulations,  as  the amounts  of  the  City's  Council  Tax  Base  for  the  year  for dwellings in those parts of its area to which the special items relate.

 

9.         For the year 2014/15 the Common Council determines, in accordance with Section 35(2) (d) of the Local Government Finance Act 1992, that any expenses incurred by the Common Council in performing in a part of its area a function performed elsewhere in its area by the Sub-Treasurer of the Inner Temple and the Under Treasurer of the Middle Temple shall not be treated as special expenses, apart from the amount of £13,152,000 being the expenses incurred by the Common Council in performing in the area of the Common Council of the City of London the City open spaces, highways, waste disposal, transportation planning and road safety, street lighting, drains and sewer functions.

 

10.       That the following amounts be now calculated by the Common Council for the year 2014/15 in accordance with Sections 31 to 36 of the Local Government Finance Act 1992:

 

(a) £326,698,734	Being the aggregate of the amounts which the  Common   Council estimates   for  the items set out in Section 31A(2) (a) to (f) of the Act, including the local precepts issued by the Inner and Middle Temples
(b) £321,394,000	Being the aggregate of the amounts which the  Common   Council  estimates   for  the items set out in Section 31A(3) (a) to (d) of the Act;
(c) £5,304,734	Being the amount by which the aggregate at 9(a)  above  exceeds  the aggregate  at 9(b) above, calculated by the Common Council, in accordance with Section 31A(4) of the Act, as its council tax requirement for the year;
(d) £857.31	Being the  amount of  9(c) above, divided  by the amount at 7(a) above, calculated by the Common Council, in accordance with Section   31B   of   the   Act,   as  the   basic amount of its Council Tax for the year;
(e) £13,485,203.88	Being the aggregate amount of all special items referred to in Section 34(1) of the Act, including the local precepts issued by the Inner and Middle Temples;
(f)   £1,322.06 CR	Being the  amount at 9(d) above less the   result given by dividing the amount at 9(e) above by the amount at 7(a) above, calculated by the Common Council, in accordance  with Section 34(2) of the Act, as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no special item relates;

        

(g)    Partsof CommonCouncil’sArea

 

InnerTemple	MiddleTemple	City excl. Temples (special expense area)
£	£	£
857.31	857.31	857.31

 

beingtheamountsgivenbyaddingto theamountat9(f)above theamountsof thespecial itemoritemsrelatingto dwellingsin thosepartsof the CommonCouncil’sareamentionedabove dividedin eachcase by the amountat 9(b)above,calculatedby theCommonCouncil,inaccordancewithSection34(3)of the Act,as thebasic amountsof its CouncilTaxfortheyearfor dwellingsinthosepartsof its areato whichoneof the special itemsrelate;and

             

 

(h)CouncilTaxValuationBands

 

 

 

being  the  amounts  given  by  multiplying  the  amounts  at  9(g) abovebythenumberwhich,intheproportionset outin Section 5(1)of theAct,is applicabletodwellingslistedina particular valuationbanddividedby thenumberwhich,inthat proportion,is applicabletodwellingslisted invaluationbandD,calculatedby theCommonCouncil,in accordancewithSection36(1)of theAct, as theamountsto be takenintoaccountfortheyearin respectof categoriesofdwellingslisted indifferentvaluationbands.

 

11.      It be noted that for the year 2014/15 the Greater London Authority has proposed the following amounts in precepts issued to the Common Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings shown below:

 

ValuationBands	Precepting Authority
	GreaterLondonAuthority
	£
A	56.32
B	65.71
C	75.09
D	84.48
E	103.25
F	122.03
G	140.80
H	168.96

 

12.         Having calculated the aggregate in each case of the amounts at 9(h) and 10 above, the Common Council, in accordance with Section 30(2) of the Local Government Finance Act 1992, hereby proposes the following amounts as the amounts of Council Tax for the year 2014/15 for each of the categories of dwelling as shown below:

 

 

 

 

 

Council Tax Valuation Bands Inclusive of GLA Precept

 

 

 

 

 

13.         The Common Council of the City of London hereby determines that the following amounts of discount  be awarded:

 

i.        to dwellings in Class B as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992 (i.e. second homes) - Nil for the financial year beginning on 1st April 2014:

 

ii.       to dwellings in Class C as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992:

 

(a)     in the case of a vacant dwelling that has been such for a continuous period of less than 6 months ending immediately before the day in question: 100% for the financial year beginning on 1st April 2014;

 

(b)     in the case of a vacant dwelling that has been such for a continuous period of 6 months or more: 50% for the financial year beginning on 1st April 2014; (i.e. a dwelling that is unoccupied and substantially unfurnished will qualify for a discount from the date the dwelling became vacant of 100% for the first 6 months (less one day) and 50% thereafter).

 

iii.      to dwellings in Class D as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992 (i.e. vacant uninhabitable dwellings or vacant dwellings undergoing major works to make them habitable or vacant dwellings where major repair works have taken place): 100% for the financial year beginning on 1st April 2014.

 

14.         The Common Council of the City of London hereby determines that its relevant basic amount of council tax for 2014/15, calculated in accordance with Section 52ZX of the Local Government Finance Act 1992 is not excessive in accordance with the Referendums Relating to Council Tax Increases (Principles) (England) Report 2014/15.

 

Non Domestic Rates

 

15.       The Common Council of the City of London being a special authority in accordance with Section 144(6) of the Local Government Finance Act 1988 hereby sets for the chargeable financial year beginning with 1st April 2014, a Non-Domestic Rating Multiplier of 0.486 and a Small Business Non-Domestic Rating Multiplier of 0.475 in accordance with Part II of the Schedule 7 of the said Act.  (Both multipliers are inclusive of the City business rate premium of 0.004 which is unchanged from the current year.)

 

16.       In addition, the levying by the Greater London Authority of a Business Rate Supplement in 2014/15 of 0.020 (i.e. 2.0p in the £) on hereditaments with a rateable value greater than £55,000, to finance its contribution to Crossrail, be noted.

 

17.       A copy of the said Council Taxes and the Non-Domestic Rating Multipliers, signed by the Town Clerk, be deposited in the offices of the Town Clerk in the said City, and advertised within 21 days from the date of the Court’s decision, in at least one newspaper circulating in the area of the Common Council.

 

 

 

 

 

Capital Expenditure and Financing for the Year 2014/15

 

Having considered the circulated report, we further recommend that your Honourable Court do pass a resolution in the following terms:-

 

18.       The City Fund capital budget be approved and its final financing be determined by the Chamberlain, apart from in regard to any possible borrowing options.

 

19.       The continued pursuit of the approved financing methodology for the Corporation’s funding commitment towards the cost of Crossrail be noted, particularly that each future year’s budget report will give a detailed update on funding progress.

 

20.       For the purpose of Section 3(1) of the Local Government Act 2003, for the financial years 2014/15 to 2016/17, the Court of Common Council hereby determines that at this stage the amount of money (referred to as the “Affordable Borrowing Limit”), which is the maximum amount which the City may have outstanding by way of borrowing, shall be £0.

 

21.       For the purpose of Section 21(A) of the Local Government Act 2003, for the financial year 2014/15, the Court of Common Council hereby determines that the prudent amount of Minimum Revenue Provision is £0, apart from any specific requirement arising from any property leases which have to be treated as finance leases.

 

22.       Any potential borrowing requirement and associated implications will be subject to a further report to Finance Committee and the Court of Common Council.

 

23.       The Chamberlain be authorised to lend surplus monies on the basis set out in the Annual Investment Strategy, with an absolute limit of £200m for maturities in excess of 364 days.

 

24.       The following Prudential Indicators be set:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prudentialindicatorsforaffordability,prudence,capital expenditureand external debt:

 

	2014/15	2015/16	2016/17
Estimates  ofthe  ratio  of financingcoststo netrevenue stream:   HRA Non-HRA Total	0.31      (0.39)	0.31  (0.41)	0.31  (0.36)
	(0.34)	(0.35)	(0.31)
Estimateof the incremental impactof capitalinvestment decisionsontheCouncilTax - compared to 2013/14 estimates and expressed as a Band D equivalent	£ (918)	£ (1,744)	£       (2,035)
Estimate of the incremental impact on average weekly rent of capital investment decisions on housing rents	£              1.04	£            (0.37)	£           (0.27)
Estimatesof Capital Expenditure HRA Non-HRA Total	£m   17.378 56.209	£m   3.253  231.551	£m   0.620 20.655
	73.587	234.804	21.275
Estimatesof CapitalFinancing Requirement – underlying need to borrow HRA Non-HRA Total	£m     10.492 (12.420)	£m     10.282 (12.210)	£m     10.076 (12.004)
	(1.928)	(1.928)	(1.928)
Net borrowing/(Net investments)   Capital financing requirement – underlying need to borrow	Period2013/14to2016/17 £m (70.174)    (1.928)

 

 

 

 

 

 

 

PrudentialIndicatorsforTreasuryManagement:

 

	2014/15	2015/16		2016/17
OperationalBoundaryforExternalDebt   Borrowing   OtherLong TermLiabilities     Total	£m   0   0	£m   0   0		£m   0   0
	0	0		0
AuthorisedLimit   Borrowing   OtherLong TermLiabilities     Total	£m   0   0	£m   0   0		£m   0   0
	0	0		0
UpperLimit- FixedInterestRate Exposure	100%	100%		100%
UpperLimit-VariableInterestRate Exposure	100%	100%		100%
UpperlimitforPrincipalSums Investedfor> 364days	£200m	£200m		£200m
MaturityStructureof NewFixedRate BorrowingDuring2014/15	UpperLimit   %		LowerLimit   %
Under12months	0		0
12monthsand within24months	0		0
24monthsand within5 years	0		0
5yearsand within10years	0		0
10yearsandabove	0		0

 

 

 

 

 

 

 

 

 

 

 

 

 

LocalIndicatorsfocusingoninvestmentincomesandrevenuereserves:

 

	2014/15   Estimate	2015/16   Estimate	2016/17   Estimate
Netinvestmentincome lost/(gained)dueto capitaldisposalsand capitalexpenditureinthe period2013/14to2015/16	(£4.9m)	(£5.1m)	(£0.4m)
Timescoveron unencumberedrevenue reserves(bracketed figuresdenoteannual surpluses)	(7.7)	250.0	6.4

 

Other Recommendations

 

25.     The Treasury Management Strategy Statement and Annual Investment Strategy 2014/15 are endorsed.

 

26.     The Chamberlain’s assessment of the robustness of budgets and the adequacy of reserves be endorsed.

FINANCE COMMITTEE

(Roger Arthur Holden Chadwick)

18 February 2014

 

A)     City Fund – 2014/15 Budget Report and Medium Term Financial Strategy including Non Domestic Rates and Council Taxes for the Year 2014/15

 

We have considered as to the Non-Domestic Rates and Council Taxes to be levied to meet the City Fund budget requirement during the year ensuing including the proposal to levy:

 

·              an unchanged premium multiplier of 0.004 on the Non-Domestic Rate and Small Business Rate multipliers to enable the City to continue to support the City of London Police, security and contingency planning activity within the Square Mile at an enhanced level; and

·              an unchanged Council tax of £857.31 for a Band D property (excluding the GLA precept).

 

We submit a printed and circulated report thereon:  City Fund – 2014/15 Budget Report and Medium Term Financial Strategy.

 

We recommend that the report be agreed to and that the Court do pass a Resolution in the following terms:-

 

Overall Financial Framework - Revenue

 

1.         Approve the overall financial framework and the revised Medium Term Financial Strategy for the City Fund noting, in particular, that work continues on the Service Based Review to identify savings options to eliminate the deficits forecast from 2016/17 as a result of the significant and continuing Government funding cuts.

2.         Approve the City Fund Revenue Budgets.

3.         Note the following assumptions:

·        the 2% efficiency savings required over the two year period 2013/14 and 2014/15 have been included alongside procurement savings;

·        an allowance of 2% a year has been included for pay and prices across the forecast period (to 2017/18);

·        a neutral position with regard to the Government’s system of Business Rates retention introduced on 1 April 2013 – i.e. no speculation as to growth or reduction;

·        a reduction in the anticipated interest rate on cash balances from 1.5% to the 0.75% currently being achieved; and

·        the revenue position cannot support significant contributions to the funding of the capital programme beyond the limited sums already included in the forecasts.

 

City Police

 

4.         As part of the strategy to achieve a balanced budget over the medium term, continue the policy of allowing City Police to draw from its reserves on a managed basis, subject to a minimum £4.5m being retained.

 

Council Tax

     

5.       From April 2013, council tax reduction replaced council tax benefit and in accordance with Section 10 of the Local Government Finance Act 2012 which amended Section 13A of the Local Government Finance Act 1992, local authorities have to make their own local schemes if not applying the Government default scheme. The City adopted the default scheme for 2013-14. There is no intention to amend the scheme for 2014-15 other than to apply the annual uprating of applicable amounts in line with housing benefit applicable amounts to ensure that no claimants in receipt of the council tax reduction are worse off in 2014/15.

 

6.         The Common Council of the City of London hereby agrees, therefore, that the  annual uprating of applicable amounts, premiums, disregarded income, or capital in relation to the Local Council Tax Reduction Scheme  2014/2015 as it applies to working age claimants, be in accordance with the uprating to be applied under the Housing Benefit Regulations which take effect from 1 April each year; and the annual uprating of non-dependent income and deductions, and income levels relating to Alternative Council Tax Reduction, or any other uprating as it applies to working age claimants, shall be adjusted in line with inflation levels by reference to relevant annual uprating in the Housing Benefit Scheme, or The Prescribed Council Tax Reduction Scheme for Pensioners.

 

7.         It be noted that the Council Tax Base now has to be reduced to reflect the changes resulting from the new council tax reduction scheme.

 

8.     It be noted that in 2012 the Finance Committee delegated the calculation of the Council Tax Base to the Chamberlain and the Chamberlain has calculated the following amounts for the year 2014/15 in accordance with Section 31B of the Local Government Finance Act 1992:

 

(a)     £6187.65 being the amount calculated by the Chamberlain (as delegated by the Finance Committee), in accordance with the Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012, as the City’s Council Tax base for the year; this amount includes a calculation of the amount of council tax reduction; and

 

(b)     Parts of Common Council’s Area

 

InnerTemple	MiddleTemple	City excl. Temples (special expense area)
83.02	69.87	6034.76

 

 

being the amounts calculated by the Chamberlain, in accordance  with  the  Regulations,  as  the amounts  of  the  City's  Council  Tax  Base  for  the  year  for dwellings in those parts of its area to which the special items relate.

 

9.         For the year 2014/15 the Common Council determines, in accordance with Section 35(2) (d) of the Local Government Finance Act 1992, that any expenses incurred by the Common Council in performing in a part of its area a function performed elsewhere in its area by the Sub-Treasurer of the Inner Temple and the Under Treasurer of the Middle Temple shall not be treated as special expenses, apart from the amount of £13,152,000 being the expenses incurred by the Common Council in performing in the area of the Common Council of the City of London the City open spaces, highways, waste disposal, transportation planning and road safety, street lighting, drains and sewer functions.

 

10.       That the following amounts be now calculated by the Common Council for the year 2014/15 in accordance with Sections 31 to 36 of the Local Government Finance Act 1992:

 

(a) £326,698,734	Being the aggregate of the amounts which the  Common   Council estimates   for  the items set out in Section 31A(2) (a) to (f) of the Act, including the local precepts issued by the Inner and Middle Temples
(b) £321,394,000	Being the aggregate of the amounts which the  Common   Council  estimates   for  the items set out in Section 31A(3) (a) to (d) of the Act;
(c) £5,304,734	Being the amount by which the aggregate at 9(a)  above  exceeds  the aggregate  at 9(b) above, calculated by the Common Council, in accordance with Section 31A(4) of the Act, as its council tax requirement for the year;
(d) £857.31	Being the  amount of  9(c) above, divided  by the amount at 7(a) above, calculated by the Common Council, in accordance with Section   31B   of   the   Act,   as  the   basic amount of its Council Tax for the year;
(e) £13,485,203.88	Being the aggregate amount of all special items referred to in Section 34(1) of the Act, including the local precepts issued by the Inner and Middle Temples;
(f)   £1,322.06 CR	Being the  amount at 9(d) above less the   result given by dividing the amount at 9(e) above by the amount at 7(a) above, calculated by the Common Council, in accordance  with Section 34(2) of the Act, as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no special item relates;

        

(g)    Partsof CommonCouncil’sArea

 

InnerTemple	MiddleTemple	City excl. Temples (special expense area)
£	£	£
857.31	857.31	857.31

 

beingtheamountsgivenbyaddingto theamountat9(f)above theamountsof thespecial itemoritemsrelatingto dwellingsin thosepartsof the CommonCouncil’sareamentionedabove dividedin eachcase by the amountat 9(b)above,calculatedby theCommonCouncil,inaccordancewithSection34(3)of the Act,as thebasic amountsof its CouncilTaxfortheyearfor dwellingsinthosepartsof its areato whichoneof the special itemsrelate;and

          

(h)CouncilTaxValuationBands

 

 

 

being  the  amounts  given  by  multiplying  the  amounts  at  9(g) abovebythenumberwhich,intheproportionset outin Section 5(1)of theAct,is applicabletodwellingslistedina particular valuationbanddividedby thenumberwhich,inthat proportion,is applicabletodwellingslisted invaluationbandD,calculatedby theCommonCouncil,in accordancewithSection36(1)of theAct, as theamountsto be takenintoaccountfortheyearin respectof categoriesofdwellingslisted indifferentvaluationbands.

 

11.      It be noted that for the year 2014/15 the Greater London Authority has proposed the following amounts in precepts issued to the Common Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings shown below:

 

ValuationBands	Precepting Authority
	GreaterLondonAuthority
	£
A	56.32
B	65.71
C	75.09
D	84.48
E	103.25
F	122.03
G	140.80
H	168.96

 

12.         Having calculated the aggregate in each case of the amounts at 9(h) and 10 above, the Common Council, in accordance with Section 30(2) of the Local Government Finance Act 1992, hereby proposes the following amounts as the amounts of Council Tax for the year 2014/15 for each of the categories of dwelling as shown below:

 

Council Tax Valuation Bands Inclusive of GLA Precept

 

 

 

 

 

13.         The Common Council of the City of London hereby determines that the following amounts of discount be awarded:

 

i.        to dwellings in Class B as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992 (i.e. second homes) - Nil for the financial year beginning on 1st April 2014:

 

ii.       to dwellings in Class C as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992:

 

(a)     in the case of a vacant dwelling that has been such for a continuous period of less than 6 months ending immediately before the day in question: 100% for the financial year beginning on 1st April 2014;

 

(b)     in the case of a vacant dwelling that has been such for a continuous period of 6 months or more: 50% for the financial year beginning on 1st April 2014; (i.e. a dwelling that is unoccupied and substantially unfurnished will qualify for a discount from the date the dwelling became vacant of 100% for the first 6 months (less one day) and 50% thereafter).

 

iii.      to dwellings in Class D as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992 (i.e. vacant uninhabitable dwellings or vacant dwellings undergoing major works to make them habitable or vacant dwellings where major repair works have taken place): 100% for the financial year beginning on 1st April 2014.

 

14.         The Common Council of the City of London hereby determines that its relevant basic amount of council tax for 2014/15, calculated in accordance with Section 52ZX of the Local Government Finance Act 1992 is not excessive in accordance with the Referendums Relating to Council Tax Increases (Principles) (England) Report 2014/15.

 

Non Domestic Rates

 

15.       The Common Council of the City of London being a special authority in accordance with Section 144(6) of the Local Government Finance Act 1988 hereby sets for the chargeable financial year beginning with 1st April 2014, a Non-Domestic Rating Multiplier of 0.486 and a Small Business Non-Domestic Rating Multiplier of 0.475 in accordance with Part II of the Schedule 7 of the said Act.  (Both multipliers are inclusive of the City business rate premium of 0.004 which is unchanged from the current year.)

 

16.       In addition, the levying by the Greater London Authority of a Business Rate Supplement in 2014/15 of 0.020 (i.e. 2.0p in the £) on hereditaments with a rateable value greater than £55,000, to finance its contribution to Crossrail, be noted.

 

17.       A copy of the said Council Taxes and the Non-Domestic Rating Multipliers, signed by the Town Clerk, be deposited in the offices of the Town Clerk in the said City, and advertised within 21 days from the date of the Court’s decision, in at least one newspaper circulating in the area of the Common Council.

 

Capital Expenditure and Financing for the Year 2014/15

 

Having considered the circulated report, we further recommend that your Honourable Court do pass a resolution in the following terms:-

 

18.       The City Fund capital budget be approved and its final financing be determined by the Chamberlain, apart from in regard to any possible borrowing options.

 

19.       The continued pursuit of the approved financing methodology for the Corporation’s funding commitment towards the cost of Crossrail be noted, particularly that each future year’s budget report will give a detailed update on funding progress.

 

20.       For the purpose of Section 3(1) of the Local Government Act 2003, for the financial years 2014/15 to 2016/17, the Court of Common Council hereby determines that at this stage the amount of money (referred to as the “Affordable Borrowing Limit”), which is the maximum amount which the City may have outstanding by way of borrowing, shall be £0.

 

21.       For the purpose of Section 21(A) of the Local Government Act 2003, for the financial year 2014/15, the Court of Common Council hereby determines that the prudent amount of Minimum Revenue Provision is £0, apart from any specific requirement arising from any property leases which have to be treated as finance leases.

 

22.       Any potential borrowing requirement and associated implications will be subject to a further report to Finance Committee and the Court of Common Council.

 

23.       The Chamberlain be authorised to lend surplus monies on the basis set out in the Annual Investment Strategy, with an absolute limit of £200m for maturities in excess of 364 days.

 

24.       The following Prudential Indicators be set:

 

Prudentialindicatorsforaffordability,prudence,capital expenditureand external debt:

 

	2014/15	2015/16	2016/17
Estimates  ofthe  ratio  of financingcoststo netrevenue stream:   HRA Non-HRA Total	0.31      (0.39)	0.31  (0.41)	0.31  (0.36)
	(0.34)	(0.35)	(0.31)
Estimateof the incremental impactof capitalinvestment decisionsontheCouncilTax - compared to 2013/14 estimates and expressed as a Band D equivalent	£   (918)	£   (1,744)	£       (2,035)
Estimate of the incremental impact on average weekly rent of capital investment decisions on housing rents	£              1.04	£            (0.37)	£           (0.27)
Estimatesof Capital Expenditure HRA Non-HRA Total	£m   17.378 56.209	£m   3.253  231.551	£m   0.620 20.655
	73.587	234.804	21.275
Estimatesof CapitalFinancing Requirement – underlying need to borrow HRA Non-HRA Total	£m     10.492 (12.420)	£m     10.282 (12.210)	£m     10.076 (12.004)
	(1.928)	(1.928)	(1.928)
Net borrowing/(Net investments)   Capital financing requirement – underlying need to borrow	Period2013/14to2016/17 £m     (70.174)      (1.928)

 

PrudentialIndicatorsforTreasuryManagement:

 

	2014/15	2015/16		2016/17
OperationalBoundaryforExternalDebt   Borrowing   OtherLong TermLiabilities     Total	£m   0   0	£m   0   0		£m   0   0
	0	0		0
AuthorisedLimit   Borrowing   OtherLong TermLiabilities     Total	£m   0   0	£m   0   0		£m   0   0
	0	0		0
UpperLimit- FixedInterestRate Exposure	100%	100%		100%
UpperLimit-VariableInterestRate Exposure	100%	100%		100%
UpperlimitforPrincipalSums Investedfor> 364days	£200m	£200m		£200m
MaturityStructureof NewFixedRate BorrowingDuring2014/15	UpperLimit   %		LowerLimit   %
Under12months	0		0
12monthsand within24months	0		0
24monthsand within5 years	0		0
5yearsand within10years	0		0
10yearsandabove	0		0

 

 

 

LocalIndicatorsfocusingoninvestmentincomesandrevenuereserves:

 

	2014/15   Estimate	2015/16   Estimate	2016/17   Estimate
Netinvestmentincome lost/(gained)dueto capitaldisposalsand capitalexpenditureinthe period2013/14to2015/16	(£4.9m)	(£5.1m)	(£0.4m)
Timescoveron unencumberedrevenue reserves(bracketed figuresdenoteannual surpluses)	(7.7)	250.0	6.4

 

Other Recommendations

 

25.    The Treasury Management Strategy Statement and Annual Investment Strategy 2014/15 are endorsed.

 

26.    The Chamberlain’s assessment of the robustness of budgets and the adequacy of reserves be endorsed.

 

Read.

 

Resolved – That that the report be agreed to and that the Court do pass a Resolution in the following terms:-

 

Overall Financial Framework - Revenue

 

1.         Approve the overall financial framework and the revised Medium Term Financial Strategy for the City Fund noting, in particular, that work continues on the Service Based Review to identify savings options to eliminate the deficits forecast from 2016/17 as a result of the significant and continuing Government funding cuts.

2.         Approve the City Fund Revenue Budgets.

3.         Note the following assumptions:

·        the 2% efficiency savings required over the two year period 2013/14 and 2014/15 have been included alongside procurement savings;

·        an allowance of 2% a year has been included for pay and prices across the forecast period (to 2017/18);

·        a neutral position with regard to the Government’s system of Business Rates retention introduced on 1 April 2013 – i.e. no speculation as to growth or reduction;

·        a reduction in the anticipated interest rate on cash balances from 1.5% to the 0.75% currently being achieved; and

·        the revenue position cannot support significant contributions to the funding of the capital programme beyond the limited sums already included in the forecasts.

 

City Police

 

4.         As part of the strategy to achieve a balanced budget over the medium term, continue the policy of allowing City Police to draw from its reserves on a managed basis, subject to a minimum £4.5m being retained.

 

Council Tax

     

5.       From April 2013, council tax reduction replaced council tax benefit and in accordance with Section 10 of the Local Government Finance Act 2012 which amended Section 13A of the Local Government Finance Act 1992, local authorities have to make their own local schemes if not applying the Government default scheme. The City adopted the default scheme for 2013-14. There is no intention to amend the scheme for 2014-15 other than to apply the annual uprating of applicable amounts in line with housing benefit applicable amounts to ensure that no claimants in receipt of the council tax reduction are worse off in 2014/15.

 

6.         The Common Council of the City of London hereby agrees, therefore, that the  annual uprating of applicable amounts, premiums, disregarded income, or capital in relation to the Local Council Tax Reduction Scheme  2014/2015 as it applies to working age claimants, be in accordance with the uprating to be applied under the Housing Benefit Regulations which take effect from 1 April each year; and the annual uprating of non-dependent income and deductions, and income levels relating to Alternative Council Tax Reduction, or any other uprating as it applies to working age claimants, shall be adjusted in line with inflation levels by reference to relevant annual uprating in the Housing Benefit Scheme, or The Prescribed Council Tax Reduction Scheme for Pensioners.

 

7.         It be noted that the Council Tax Base now has to be reduced to reflect the changes resulting from the new council tax reduction scheme.

 

8.     It be noted that in 2012 the Finance Committee delegated the calculation of the Council Tax Base to the Chamberlain and the Chamberlain has calculated the following amounts for the year 2014/15 in accordance with Section 31B of the Local Government Finance Act 1992:

 

(a)     £6187.65 being the amount calculated by the Chamberlain (as delegated by the Finance Committee), in accordance with the Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012, as the City’s Council Tax base for the year; this amount includes a calculation of the amount of council tax reduction; and

 

(b)     Parts of Common Council’s Area

 

InnerTemple	MiddleTemple	City excl. Temples (special expense area)
83.02	69.87	6034.76

 

 

being the amounts calculated by the Chamberlain, in accordance  with  the  Regulations,  as  the amounts  of  the  City's  Council  Tax  Base  for  the  year  for dwellings in those parts of its area to which the special items relate.

 

9.         For the year 2014/15 the Common Council determines, in accordance with Section 35(2) (d) of the Local Government Finance Act 1992, that any expenses incurred by the Common Council in performing in a part of its area a function performed elsewhere in its area by the Sub-Treasurer of the Inner Temple and the Under Treasurer of the Middle Temple shall not be treated as special expenses, apart from the amount of £13,152,000 being the expenses incurred by the Common Council in performing in the area of the Common Council of the City of London the City open spaces, highways, waste disposal, transportation planning and road safety, street lighting, drains and sewer functions.

 

10.       That the following amounts be now calculated by the Common Council for the year 2014/15 in accordance with Sections 31 to 36 of the Local Government Finance Act 1992:

 

(a) £326,698,734	Being the aggregate of the amounts which the  Common   Council estimates   for  the items set out in Section 31A(2) (a) to (f) of the Act, including the local precepts issued by the Inner and Middle Temples
(b) £321,394,000	Being the aggregate of the amounts which the  Common   Council  estimates   for  the items set out in Section 31A(3) (a) to (d) of the Act;
(c) £5,304,734	Being the amount by which the aggregate at 9(a)  above  exceeds  the aggregate  at 9(b) above, calculated by the Common Council, in accordance with Section 31A(4) of the Act, as its council tax requirement for the year;
(d) £857.31	Being the  amount of  9(c) above, divided  by the amount at 7(a) above, calculated by the Common Council, in accordance with Section   31B   of   the   Act,   as  the   basic amount of its Council Tax for the year;
(e) £13,485,203.88	Being the aggregate amount of all special items referred to in Section 34(1) of the Act, including the local precepts issued by the Inner and Middle Temples;
(f)   £1,322.06 CR	Being the  amount at 9(d) above less the   result given by dividing the amount at 9(e) above by the amount at 7(a) above, calculated by the Common Council, in accordance  with Section 34(2) of the Act, as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no special item relates;

        

(g)    Partsof CommonCouncil’sArea

 

InnerTemple	MiddleTemple	City excl. Temples (special expense area)
£	£	£
857.31	857.31	857.31

 

beingtheamountsgivenbyaddingto theamountat9(f)above theamountsof thespecial itemoritemsrelatingto dwellingsin thosepartsof the CommonCouncil’sareamentionedabove dividedin eachcase by the amountat 9(b)above,calculatedby theCommonCouncil,inaccordancewithSection34(3)of the Act,as thebasic amountsof its CouncilTaxfortheyearfor dwellingsinthosepartsof its areato whichoneof the special itemsrelate;and

          

(h)CouncilTaxValuationBands

 

 

 

being  the  amounts  given  by  multiplying  the  amounts  at  9(g) abovebythenumberwhich,intheproportionset outin Section 5(1)of theAct,is applicabletodwellingslistedina particular valuationbanddividedby thenumberwhich,inthat proportion,is applicabletodwellingslisted invaluationbandD,calculatedby theCommonCouncil,in accordancewithSection36(1)of theAct, as theamountsto be takenintoaccountfortheyearin respectof categoriesofdwellingslisted indifferentvaluationbands.

 

11.      It be noted that for the year 2014/15 the Greater London Authority has proposed the following amounts in precepts issued to the Common Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings shown below:

 

ValuationBands	Precepting Authority
	GreaterLondonAuthority
	£
A	56.32
B	65.71
C	75.09
D	84.48
E	103.25
F	122.03
G	140.80
H	168.96

 

12.         Having calculated the aggregate in each case of the amounts at 9(h) and 10 above, the Common Council, in accordance with Section 30(2) of the Local Government Finance Act 1992, hereby proposes the following amounts as the amounts of Council Tax for the year 2014/15 for each of the categories of dwelling as shown below:

 

Council Tax Valuation Bands Inclusive of GLA Precept

 

 

 

 

 

13.         The Common Council of the City of London hereby determines that the following amounts of discount be awarded:

 

i.        to dwellings in Class B as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992 (i.e. second homes) - Nil for the financial year beginning on 1st April 2014:

 

ii.       to dwellings in Class C as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992:

 

(a)     in the case of a vacant dwelling that has been such for a continuous period of less than 6 months ending immediately before the day in question: 100% for the financial year beginning on 1st April 2014;

 

(b)     in the case of a vacant dwelling that has been such for a continuous period of 6 months or more: 50% for the financial year beginning on 1st April 2014; (i.e. a dwelling that is unoccupied and substantially unfurnished will qualify for a discount from the date the dwelling became vacant of 100% for the first 6 months (less one day) and 50% thereafter).

 

iii.      to dwellings in Class D as defined in the Council Tax (Prescribed Classes of Dwellings) (England) Regulations 2003 prescribed by the Secretary of State under the provisions of Section 11A of the Local Government Finance Act 1992 (i.e. vacant uninhabitable dwellings or vacant dwellings undergoing major works to make them habitable or vacant dwellings where major repair works have taken place): 100% for the financial year beginning on 1st April 2014.

 

14.         The Common Council of the City of London hereby determines that its relevant basic amount of council tax for 2014/15, calculated in accordance with Section 52ZX of the Local Government Finance Act 1992 is not excessive in accordance with the Referendums Relating to Council Tax Increases (Principles) (England) Report 2014/15.

 

Non Domestic Rates

 

15.       The Common Council of the City of London being a special authority in accordance with Section 144(6) of the Local Government Finance Act 1988 hereby sets for the chargeable financial year beginning with 1st April 2014, a Non-Domestic Rating Multiplier of 0.486 and a Small Business Non-Domestic Rating Multiplier of 0.475 in accordance with Part II of the Schedule 7 of the said Act.  (Both multipliers are inclusive of the City business rate premium of 0.004 which is unchanged from the current year.)

 

16.       In addition, the levying by the Greater London Authority of a Business Rate Supplement in 2014/15 of 0.020 (i.e. 2.0p in the £) on hereditaments with a rateable value greater than £55,000, to finance its contribution to Crossrail, be noted.

 

17.       A copy of the said Council Taxes and the Non-Domestic Rating Multipliers, signed by the Town Clerk, be deposited in the offices of the Town Clerk in the said City, and advertised within 21 days from the date of the Court’s decision, in at least one newspaper circulating in the area of the Common Council.

 

Capital Expenditure and Financing for the Year 2014/15

 

Having considered the circulated report, we further recommend that your Honourable Court do pass a resolution in the following terms:-

 

18.       The City Fund capital budget be approved and its final financing be determined by the Chamberlain, apart from in regard to any possible borrowing options.

 

19.       The continued pursuit of the approved financing methodology for the Corporation’s funding commitment towards the cost of Crossrail be noted, particularly that each future year’s budget report will give a detailed update on funding progress.

 

20.       For the purpose of Section 3(1) of the Local Government Act 2003, for the financial years 2014/15 to 2016/17, the Court of Common Council hereby determines that at this stage the amount of money (referred to as the “Affordable Borrowing Limit”), which is the maximum amount which the City may have outstanding by way of borrowing, shall be £0.

 

21.       For the purpose of Section 21(A) of the Local Government Act 2003, for the financial year 2014/15, the Court of Common Council hereby determines that the prudent amount of Minimum Revenue Provision is £0, apart from any specific requirement arising from any property leases which have to be treated as finance leases.

 

22.       Any potential borrowing requirement and associated implications will be subject to a further report to Finance Committee and the Court of Common Council.

 

23.       The Chamberlain be authorised to lend surplus monies on the basis set out in the Annual Investment Strategy, with an absolute limit of £200m for maturities in excess of 364 days.

 

24.       The following Prudential Indicators be set:

 

Prudentialindicatorsforaffordability,prudence,capital expenditureand external debt:

 

	2014/15	2015/16	2016/17
Estimates  ofthe  ratio  of financingcoststo netrevenue stream:   HRA Non-HRA Total	0.31      (0.39)	0.31  (0.41)	0.31  (0.36)
	(0.34)	(0.35)	(0.31)
Estimateof the incremental impactof capitalinvestment decisionsontheCouncilTax - compared to 2013/14 estimates and expressed as a Band D equivalent	£ (918)	£ (1,744)	£       (2,035)
Estimate of the incremental impact on average weekly rent of capital investment decisions on housing rents	£              1.04	£            (0.37)	£           (0.27)
Estimatesof Capital Expenditure HRA Non-HRA Total	£m   17.378 56.209	£m   3.253  231.551	£m   0.620 20.655
	73.587	234.804	21.275
Estimatesof CapitalFinancing Requirement – underlying need to borrow HRA Non-HRA Total	£m     10.492 (12.420)	£m     10.282 (12.210)	£m     10.076 (12.004)
	(1.928)	(1.928)	(1.928)
Net borrowing/(Net investments)   Capital financing requirement – underlying need to borrow	Period2013/14to2016/17 £m   (70.174)   (1.928)

 

PrudentialIndicatorsforTreasuryManagement:

 

	2014/15	2015/16		2016/17
OperationalBoundaryforExternalDebt   Borrowing   OtherLong TermLiabilities     Total	£m   0   0	£m   0   0		£m   0   0
	0	0		0
AuthorisedLimit   Borrowing   OtherLong TermLiabilities     Total	£m   0   0	£m   0   0		£m   0   0
	0	0		0
UpperLimit- FixedInterestRate Exposure	100%	100%		100%
UpperLimit-VariableInterestRate Exposure	100%	100%		100%
UpperlimitforPrincipalSums Investedfor> 364days	£200m	£200m		£200m
MaturityStructureof NewFixedRate BorrowingDuring2014/15	UpperLimit   %		LowerLimit   %
Under12months	0		0
12monthsand within24months	0		0
24monthsand within5 years	0		0
5yearsand within10years	0		0
10yearsandabove	0		0

 

 

 

LocalIndicatorsfocusingoninvestmentincomesandrevenuereserves:

 

	2014/15   Estimate	2015/16   Estimate	2016/17   Estimate
Netinvestmentincome lost/(gained)dueto capitaldisposalsand capitalexpenditureinthe period2013/14to2015/16	(£4.9m)	(£5.1m)	(£0.4m)
Timescoveron unencumberedrevenue reserves(bracketed figuresdenoteannual surpluses)	(7.7)	250.0	6.4

 

Other Recommendations

 

25.    The Treasury Management Strategy Statement and Annual Investment Strategy 2014/15 are endorsed.

 

26.    The Chamberlain’s assessment of the robustness of budgets and the adequacy of reserves be endorsed.