Agenda item

Verbal update on latest position of 2009/10 and 2010/11 budgets.

Duncan McLeod (Director of Finance and Corporate Resources) briefed members and answered questions on fundamental changes to the budget since its first reading on 23 November 2009. He reported that the provisional local government finance settlement, announced on 26 November 2009, had confirmed a 1.5% increase in formula grant, and that other grants had been set as expected as part of the three-year comprehensive spending review. However, the government had also sent a strong message about the capping of council tax increases. The expectation was that the capping level was likely to be set below 5%.

Two major new issues had arisen – concessionary fares and the Personal Care at Home Bill. The government had been seeking to change the funding scheme with a view to redistributing £29m of grant from London to other parts of the country. If this went ahead, Brent would lose around £1.1m. An announcement was expected at the end of January. A more surprising announcement had been the consultation on the Personal Care at Home Bill. Brent was already aiming to implement the aims of the bill, to help more people with high care needs to stay in their homes as long as possible, but the timing and financial implications were a challenge, with the government looking to pass bill in the current session and implement from October 2010. The government anticipated providing a grant of two-thirds of the cost, with councils to fund one-third from efficiency savings. The cost to Brent was not yet clear, as the number of people was not known, nor were their needs. In terms of efficiency savings, these had already been calculated and allocated, and it would not be possible to deliver further savings in the timeframe. Based on government estimates, up to £635,000 would be needed in 2010/11. This was a very late change and would require a late decision.

A potential gap around £8.9m, with a range of options to close it, had been set out at the first reading of the budget. These options included the use of any surplus from the 2009/10 budget and any additional savings identified as part of managing the 2009/10 budget. Reviews of spending on central items and of inescapable growth were also taking place, and there were options to increase fees and charges. In addition, efficiency savings would be delivered as part of the Council’s improvement and efficiency strategy, and any increase in council tax would provide extra revenue. The 2009/10 outturn was improving from that originally forecast, and additional savings had been made, in particular around West London Waste, where a projected price increase of 22% had been reduced to around 13%, in particular as a result of the increase in recycling. The deficit of the parking account had also been reduced. Specific proposals would be put to the Executive on 5 February 2010.

As expected, the GLA precept included a 0% rise in council tax, to be agreed by the London Assembly on 10 February 2010.

The Housing Revenue Account (HRA) was key area of uncertainty, with government proposals having been made for the restructuring of rents for 2010/11. The net impact of the proposals would be that Brent could lose both rental and grant income. This was a complex situation, and would be explained in a full report to the Executive on 5 February 2010. Duncan McLeod informed the Panel that the future of the HRA was not viable on this basis and currently it was unclear how to move forward. The real issue was reform of the HRA, which would now become a post-election issue.

The increase in the schools budget would be as announced in the comprehensive spending review – 4.7% per pupil in Brent. The new capital programme would run from 2010/11 to 2013/14, and was being updated in the light of recent government announcements – around £85m for Building Schools for the Future (BSF) and £14.7m for additional primary school places.

Aside from the 2010/11 budget, the major issue was what would happen in future years. In view of the need for the government to reduce its budget deficit, Brent would need to prepare for further financial constraint by addressing big decisions early in the financial year. The improvement and efficiency strategy meant that the Council was better prepared for this than in the past.

The government’s pre-budget report had provided little firm information about levels of resources for local government from 2011/12, but this would become clearer after a general election. Members recommended planning for the future, with scenario planning.

The next stage in the budget process would be the publication of the Executive’s budget proposals on 5 February 2010 and consideration by the Budget Panel on 11 February 2010, with all councillors invited. On 15 February 2010 the Executive would consider the budget and council tax, rents, the schools budget and fees and charges, as well as the Budget Panel’s second interim report. The budget and council tax would be determined by Full Council on 1 March 2010.

Asked where savings could come from to bridge the budget gap, Duncan McLeod informed the Panel that these would involve political decisions, but that the improvement and efficiency strategy was a planned way to reduce the size of the organisation and to re-engineer processes in order to deliver them in a better way.

In answer to the question whether there was a way of bridging the budget gap without affecting frontline services, Duncan McLeod reported that in most cases this would be possible.

Asked how Brent’s deficit compared with those of other London boroughs, Duncan McLeod informed the Panel that virtually all authorities were carrying out the same kind of operation, and that the levels of deficit – £50m, for example – were not uncommon. He added that Brent’s budget gap for 2010/11 as currently projected was not out of step with budgets in previous years.

RESOLVED:

that the verbal update be noted.