Agenda item

(A) City Fund 2018/19 Budget Report and Medium Term Financial Strategy –

to approve the budget for 2018/19.

For Decision

20 February 2018

(A) City Fund 2018/19 Budget Report and Medium Term Financial Strategy

The Court proceeded to consider a report of the Finance Committee presenting the overall financial position of the City Fund (i.e. the Corporation’s finances relating to Local Government, Police and Port Health services) recommending that:

·         the Council Tax for 2018/19 remains unchanged from 2017/18; and

·         The Business Rate Premium is unchanged.

 

The Chairman spoke to introduce the budget and clarify a number of elements, following which a number of Members took the opportunity to ask questions. In response, the Chairman observed that specific funding requirements relating to the City Police’s budget would be considered as part of the overall budget setting process, prior to any decision as to an increase to the Business Rate Premium. This was by no means ruling out any increase; indeed, notice had been provided to ratepayers at this year’s annual meeting that such an increase might be forthcoming. However, the Chairman was clear that any decision should only be made once the budgetary position was confirmed and it was then possible to ascertain whether an increase to the premium was necessary.

 

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

1.         that for the 2018/19 financial year the Court of Common Council approves:

·         the Premium multiplier on the Non-Domestic Rate and Small Business Rate multipliers be set at 0.005, to enable the City to continue to support the City of London Police and security and contingency planning activity within the Square Mile at an enhanced level;

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

·         the overall financial framework and the revised Medium Term Financial Strategy for the City Fund; and

·         the City Fund Net Budget Requirement of £148.6m.

Council Tax

2.         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 2018/19 in accordance with section 31B of the Local Government Finance Act 1992:

(a)          7210.97 beingthebeingtheamountcalculatedby the Chamberlain (as delegated by the Finance Committee),in accordancewith the Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012,as theCity’sCouncilTaxBasefor theyear; this amount includes a calculation of the amount of council tax reduction;and

 

(b)          Partsof CommonCouncil’sArea:

 

Inner temple	Middle Temple	City excl. Temples (special expense area)
85.58	68.74	7,056.65

 

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.

3.    For the year  2018/19 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 £16,899,000 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 collection and disposal, transportation planning and road safety, street lighting, drains and sewer functions.

 

4.         That the following amounts be now calculated by the Common Council for the year 2018/19 in accordance with Sections 31 to 36 of the Local Government Finance Act 1992:

(a) £388,467,000	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) £382,284,963	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) £6,182,037	Being the amount by which the aggregate at 4(a) above exceeds the aggregate at 4(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 4(c) above, divided by the amount at 2(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)£17,268,559.36	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)    £1,537.45	Being the amount at 4(d) above less the result given by dividing the amount at 4(e) above by the amount at 2(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)  Parts of Common Council’s Area

 

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

 

being the amounts given by adding to the amount at 4(f) above the amounts of the special item or items relating to dwellings in those parts of the Common Council’s area mentioned above divided in each case by the amount at 2(b) above, calculated by the Common Council, in accordance with Section 34(3) of the Act, as the basic amounts of its Council Tax for the year for dwellings in those parts of its area to which one of the special items relate; and

             

(h)  Council Tax Valuation Bands

 

 

being  the  amounts  given  by  multiplying  the  amounts  at  4(g) above by the number which, in the proportion set out in Section 5(1) of the Act, is applicable to dwellings listed in a particular valuation band divided by the number which, in that proportion, is applicable to dwellings listed in valuation band D, calculated by the Common Council, in accordance with Section 36(1) of the Act, as the amounts to be taken into account for the year in respect of categories of dwellings listed in different valuation bands.

 

5.         It be noted that for the year 2018/19 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	PreceptingAuthority
	GreaterLondonAuthority
	£
A	50.73
B	59.19
C	67.64
D	76.10
E	93.01
F	109.92
G	126.83
H	152.20

 

6.         Having calculated the aggregate in each case of the amounts at 4(h) and 5 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 2018/19 for each of the categories of dwelling as shown below:

 

Council Tax Valuation Bands Inclusive of GLA Precept

 

7.         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 2018;

 

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 April2018;

 

(b)       in the case of a vacant dwelling that has been such for a continuous period of 6 months or more: nil for the financial year beginning on 1st April 2018 (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 six months (less one day) and nil 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 2018;

 

iv.  to care leavers within the City up to the age of 25, 100% under Section 13A(1)(c) of the Local Government Finance Act 1992 subject to liability considerations for the financial year beginning on 1st April 2018; and

 

v.  discretionary discounts up to 100% under Section 13A(1)(c) of the Local Government Finance Act 1992 to provide council tax support in exceptional circumstances as agreed by the Finance Committee at its meeting in November 2017.

 

8.         The Common Council of the City of London hereby determines that its relevant basic amount of council tax for 2018/19, 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 (2018/19).

 

Council Tax Reduction

 

9.         It be noted that at the Court of Common Council meeting in January 2017 Members approved the Council Tax Reduction Scheme for 2017/18 and future years to be the same as the scheme for 2016/17 There were no proposals to make any specific amendments to the Council Tax Reduction Scheme for that or future years, beyond keeping the scheme in line with Housing Benefit.

Effectively, therefore, the City’s Local Council Tax Reduction Scheme for  2018/19 will remain the same as was administered in 2016/17 and 2017/18 subject to 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, 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. 

Non-Domestic Rates

 

10.      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 2018, a Non-Domestic Rating Multiplier of 0.498 and a Small Business Non-Domestic Rating Multiplier of 0.485 in accordance with Part II of the Schedule 7 of the said Act.  Both multipliers are inclusive of the City business rate premium of 0.005.

11.      In addition, the levying by the Greater London Authority of a Business Rate Supplement in 2018/19 of 0.020 (i.e. 2.0p in the £) on hereditaments with a rateable value greater than £70,000, to finance its contribution to Crossrail, be noted.

12.      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 2018/19

Further resolved – That:

13.      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.

 

14.      For the purpose of Section 3(1) of the Local Government Act 2003, for the financial years 2018/19 to 2020/21, 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 external borrowing, shall be £0.

 

15.      For the purpose of Section 21(A) of the Local Government Act 2003, for the financial year 2018/19, the Court of Common Council hereby determines that the prudent amount of Minimum Revenue Provision is £975,000 which equals the amount of deferred income released from the premiums received for the sale of long leases in accordance with the Minimum Revenue Provision Policy at Appendix E.

 

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

 

17.      The Chamberlain be authorised to lend surplus monies on the basis set out in the Annual Investment Strategy, with an absolute limit of £300m for maturities in excess of 364 days.

 

18.      The following Prudential Indicators be set:

	2017/18	2018/19	2019/20
Estimates ofthe ratio of financingcoststo netrevenue stream: HRA          Non-HRA                Total	0.72  (0.23)	0.84  (0.23)	0.71  (0.11)
	(0.15)	(0.14)	(0.05)
Estimatesof Capital Expenditure HRA Non-HRA Total	£m   16.686 76.003	£m    35.957 116.594	£m   18.652 142.595
	92.689	152.551	161.247
Estimatesof CapitalFinancing Requirement – underlying need to borrow HRA Non-HRA Total	£m     0.000 49.095	£m        9.500 68.104	£m     9.310 155.682
	49.095	77.604	124.992
Net borrowing/(Net investments)   Capital financing requirement – underlying need to borrow	Period2017/18to2020/21 £m 28.875 184.582

 

Prudential indicators for affordability, prudence, capital expenditure and external debt:

TREASURY MANAGEMENT INDICATORS	2017/18	2018/19	2019/20	2020/21
	probable outturn	estimate	estimate	estimate
	£'000	£'000	£'000	£’000
Authorised Limit for external debt -
Borrowing	£0	£0	£0	£0
other long-term liabilities	£14,006	£13,888	£13,770	£13,653
TOTAL	£14,006	£13,888	£13.770	£13,653
Operational Boundary for external debt -
Borrowing	£0	£0	£0	£0
other long-term liabilities	£14,006	£13,888	£13,770	£13,653
TOTAL	£14,006	£13,888	£13.770	£13,653
Actual external debt	£0	£0	£0	£0
Upper limit for fixed interest rate exposure
Expressed as either:-
Net principal re fixed rate borrowing / investments OR:-	100%	100%	100%	100%
Net interest re fixed rate borrowing / investments	100%	100%	100%	100%
Upper limit for variable rate exposure
Expressed as either:-
Net principal re variable rate borrowing / investments OR:-	100%	100%	100%	100%
Net interest re variable rate borrowing / investments	100%	100%	100%	100%
Upper limit for total principal sums invested for over 364 days	£300m	£300m	£300m	£300m
(per maturity date)

 

Maturity structure of fixed rate borrowing during 2017/18	upper limit	lower limit
-       under 12 months	0%	0%
-       12 months and within 24 months	0%	0%
-       24 months and within 5 years	0%	0%
-       5 years and within 10 years	0%	0%
-       10 years and above	0%	0%

 

Local Indicator focusing on revenue reserves:

 

19.      The Treasury Management Strategy Statement and Annual Investment Strategy 2018/19 be endorsed and come into effect once as of 8^th March 2018.

 

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