Agenda item

Report of The Chamberlain.

Members received items 13 and 14 together. These concerned Reports of the Chamberlain regarding the 2018/19 Budget & the medium term financial strategy, and the Revenue and Capital Budgets for 2017/18 and 2018/19.

 

The Deputy Chamberlain delivered a brief overview of both items, she emphasised several points, including:

 

-       The City’s Council Tax rate remained the third lowest of all local authority areas in Greater London.

-       Business rates remained a political hot topic, the City was making efforts to support small and medium sized businesses in the square mile, but increases were being introduced by central government and the GLA

-       Capital Expenditure would bear down on City Fund from 2019/20 onwards

-       City Fund was currently in a good position, but the Police Budget remained a concern – reserves were being drawn down to plug the deficit.

 

A Member suggested that the issue of Rates for small businesses was very serious, she had received several messages from her constituents concerned with the increases. It was incumbent on the City to speak out for and support SME’s in the Square Mile.

 

In response to a query from a Member about progress on the Police’s finances, the Chairman emphasises that while resources were finite and effective financial management was critical, the Police were being given the time to implement the Deloitte Review’s findings – these were sensible options that could deliver significant efficiencies.

 

The Commissioner stressed that the Police were working hard to deliver and that they were committed to efficiency, he emphasised that “the Deloitte Review was not about cuts, it was about transformation”. The Commissioner confirmed that he would be speaking to the Efficiency & Performance Sub (Finance) Committee on 21^st March to discuss more about the Police’s plans for efficiencies and value-for-money.

 

A Member expressed his concern that the Police’s previous £12m surplus that had been built up over several years, had, effectively, been drawn down recently to plug the deficit in the Police budget. This was labelled as ringfenced but in practical terms was there now a case for abandoning the Reserve altogether?

 

A Member suggested that the Police’s medium-term strategy (and consequent funding arrangements) needed to be carefully thought out in light of the changing nature of policing.

 

RESOLVED – that Members approved the following:

 

·Approved the overall financial framework and the revised Medium Term Financial Strategy (paragraph 2)

 

· Approve the Treasury Management Strategy Statement and Investment Strategy Statement for 2018/19 and for it to come into effect once it has been agreed by the Court of common Council i.e. on 8th March.

 

· Approve the City Fund Net Budget Requirement of £148.6m (paragraph 14)

 

· Approve the following changes from the previous forecast (paragraphs 3 and 11):

 

· Allowances for pay and prices are factored in at 2% for 2018/19 and thereafter (paragraph 11c);

 

· A 2% efficiency savings for City Fund from 2018/19 is included in line with the published Efficiency Plan, which will fund a new “Priorities Investment Pot?. Members are asked to note the approval process for funding from the Priorities Investment Pot as outlined at (paragraph 11d);

 

• Substantial additional City Fund support for City Police potentially amounting to £13m revenue funding across the planning period, prior to mitigations/transformation (paragraph 7) and a further £13m to underpin the shortfall on Police capital schemes (paragraph 13d);

 

• A provision of £265k in 2018/19, rising to £400k in 2019/20 onwards for Adult Social Care (paragraph 4a); and

 

• An additional £1m to £1.5m ring-fenced provision for waste and cleaning from 2019/20 onwards (paragraph 4d).

 

· Approve the following investment opportunities being included, subject to further reports:

 

Substantial provision for major projects including £90m for the Combined Courts relocation and £187m for the Museum of London projects (paragraph 4c) across the planning period (noting further costs of £137m are forecast beyond the planning period for the Museum of London;

 

Due to the uneven profile of spend on the major projects, Members are also asked to approve the establishment of a new “Major Projects Earmarked Reserve?.

 

Additional allocation of £4m to address more of the backlog of refurbishment costs; (paragraph 4b); and

 

Provision for spending on the Cultural Hub of £4.4m within the planning period (paragraph 4h).

 

· Note that the forecast includes items already agreed by Policy and Resources Committee:

 

An additional £571k p.a. for the restructuring of the Brussels office. A review of the effectiveness of the office and resourcing need will be undertaken as the UK approaches Brexit.

 

Note that the revenue estimates from 2018/19 assumes the City will be in a “growth? position under the business rates retention scheme, with an income of typically £40m p.a. (including the benefit of the London business rates pool) (paragraph 12b).

 

Note the Local Council Tax Reduction Scheme set by the Court of Common Council on 11 January 2018 and as set out at paragraph 33.

 

Key Decisions

The Key decisions to make are in setting the levels of Non-Domestic Rates and Council Tax.

 

Business Rates

 

· Set, inclusive of an unchanged business rate premium (0.5p in the £), a Non-

Domestic Rate multiplier of 49.8p for 2018/19 together with a Small Business

Non-Domestic Rate multiplier of 48.5p (paragraph 17).

 

· Note that the Greater London Authority is, in addition, levying a Business Rate Supplement in 2018/19 of 2p in the £ on properties with a rateable value

greater than £70,000 (paragraph 24).

 

· As in previous years, delegate to the Chamberlain the award of the discretionary rate reliefs under Section 47 of the Local Government Finance Act 1988 as set out in paragraphs 21 and 22.

 

Council Tax

 

· Recommendation is for the City?s Council Tax (excluding the Greater London Authority precept) to remain unchanged. Page 49

 

· Based on a zero increase from 2017/18, determine the provisional amounts of Council Tax for the three areas of the City to which are added the precept of the Greater London Authority (appendix A).

 

· Determine that the relevant (net of local precepts and levies) basic amount of Council tax for 2018/19 will not be excessive in relation to the requirements for referendum.

 

· Approve that the cost of highways, transportation planning, waste collection and disposal, drains and sewers, open spaces and street lighting functions for 2018/19 be treated as special expenses to be borne by the City?s residents outside the Temples (appendix A).

 

Other Recommendations

 

· All other recommendations are largely of a technical and statutory nature; the only one to highlight for particular attention is that it is proposed that the City of London Corporation remains free of external borrowing for 2018/19.

 

Capital Expenditure

 

· Note the proposed financing methodology of the capital programme in 2018/19 (paragraph 35).

 

· Approve the Prudential Code indicators (Appendix B).

 

· Approve the following resolutions for the purpose of the Local Government Act 2003 (paragraph 36 and Appendix E) that:

 

At this stage the affordable external borrowing limit (which is the maximum amount which the Corporation may have outstanding by way of external borrowing) be zero.

The prudent amount of Minimum Revenue Provision (MRP) for 2018/19 is £975k which equals the amount of deferred income released from the premiums received for the sale of long leases in accordance with the MRP Policy at Appendix E.

 

Any potential external borrowing requirement and associated implications will

be subject to a further report to Finance Committee and the Court of Common

Council.

 

 

Treasury Management Strategy Statement and Investment Strategy Statement

2018/19

 

· Members are asked to agree the change to allow investment in short-dated bonds in the Treasury Management Strategy Statement and Investment Strategy Statement 2018/19 with immediate effect (paragraph 40).

 

Chamberlain’s Assessment

 

· Take account of the Chamberlain’s assessment of the robustness of estimates and the adequacy of reserves (paragraph 42-45 and Appendix D).