The Council Budget 2019/20 Councillor Rajawat Cabinet Member for - - PowerPoint PPT Presentation

The Council Budget 2019/20

Councillor Rajawat

Cabinet Member for Finance and Corporate Services

The budget setting timetable

MEDIUM TERM FINANCIAL STRATEGY (MTFS)

(October – November 2018)

• Strategy agreed
• Savings targets determined

Internal

GENERATION OF IDEAS AND ASSESSMENT

(Spring/Summer 2019)

Cabinet Awaydays, Forums

• Generation of savings proposals
• Lead member review
• Agree proposals

Area Forum, Business & Scrutiny

CONSUL T ATION ON BUDGET

(January – February 2019)

• Input from critical friends
• Departmental cash limits
• Council Tax, Rents, service charges, fees

2019/20 BUDGET - DECISION (February 2019)

Borough Council

CORPORATE PLAN, BUSINESS PLAN AND MEMBER PRIORITIES

(January – March 2019)

Internal, Borough Councill

• Completion of corporate and business

plans to support member priorities

The main objective of the MTFS is to understand the financial climate both within and external to Hounslow and to determine the level of savings required to allow the council to futureproof the organisations finances. Current modelling indicates a savings gap of £5.8m for 2019/20.

2019/20 – Balancing the budget

2019/20 Savings requirement 6.0 Prior year approved savings (0.2) Adjusted savings requirement 5.8

• Based on the October budget monitoring position taken to cabinet, the

council are forecasting a departmental overspend of £16.9m for 2018/19.

• The Council must demonstrate its ability to manage spend within

prescribed budgetary limits. The immediate focus of the MTFS is to manage current overspends.

• This will reduce the need for additional savings, and provide a basis from

which the Council can grow its capacity, in order to deliver its refreshed corporate plan.

• Lead members have been working with officers to review over spending
• areas. Although mitigation action plans have been developed for some

areas, there is still a significant budget pressure remaining in future years (contributing to the overall savings requirement).

Future Pressures

2019/20 2020/21 2021/22 Pressure 22.1 17.6 17.1 Mitigation (5.9) (1.9) (1.8) Remaining pressure 16.2 15.7 15.3

Local Government Financial Settlement 2019

The provisional 2019/20 Local Government Finance Settlement was announced

• n the 13 December 2018, having been delayed by over a week due to the Brexit

discussions in Parliament. Although there is some new money from central government included in the settlement, councils will still face pressures and an overall funding gap in 2019/20. The headlines related to increases in spending power include the assumption that councils will maximise increases to Council Tax. Changes to local resources:

• Council tax referendum principles to continue.
• Allocation of business rates levy account surplus, £0.7m one off sum for

Hounslow.

• London business rates pilot to continue, at the 75% retention level rather than

the 100% retention in 2017/18.

Local Government Financial Settlement cont…

• As per 2018/18, Revenue Support Grant (RSG) rolled into business rates pilot

rather than separate grant Special and specific grants:

• New homes bonus baseline to remain at 0.4%. Hounslow forecast to receive

£6.6m in 2019/20, marginally higher than expected

• Social Care Grant (Winter Pressures & Social Care Support Grant), Hounslow

forecast to receive £1.7m social care support grant and £1.0m winter pressures for 2019/20. This was expected.

• Public Health Grant – allocations not yet published

Consultations:

• Consultations launched on the business rates retention system and the new

approach to distributing funding to local authorities through the Review of Relative Needs and Resources (known as the Fair Funding review).

Council Tax

Council tax is the charge made to residents of Hounslow. This is reviewed on an annual basis. Council tax increases:

• Councils are able to raise an Adult Social Care precept. LB Hounslow has

the option to apply 2% in 2019/20.

• Councils are able to apply a general inflationary increase. LB Hounslow

have the option to apply an increase of up to 3% in 2019/20.

• A 1% increase equates to approximately £1m additional income
• The MTFS assumed a 0% rise in council tax for 2019/20.
• The Greater London Authority (GLA) sets a precept annually which is

applied to all London councils (this is not controlled by LB Hounslow). Council tax base

• For 2019/20 the council tax base is 85,195.40

Business Rates – Overview

Business rates are a tax on properties used for business purposes. They are charged on properties such as offices, shops, pubs, and warehouses. Most non- domestic properties will attract business rates. Changes to the system

• In October 2015, the Government announced that, by the end of this Parliament,

local authorities will be able to keep 100% of the business rates growth they raise locally.

• Individual authorities are likely to still be required to pay a portion of their

business rates into a national pool which will be used to implement a system of redistribution across the country, similar to the current top up/tariff system in

• place. However, local authorities would be able to keep a larger share of

business rates than previously.

• As part of this process councils would cease to receive any Revenue Support

Grant (RSG) and be given new responsibilities for the delivery of some services that are currently funded by central government.

Business Rates – Pilot Scheme

Pilot scheme

• In 2018/19 Hounslow took part in a London wide pilot which involved modelling a

100% growth retention approach.

• This pilot is set to continue into 2019/20, however the growth retention model will

move to 75%.

• 15% of growth over the pool is allocated to the Strategic Investment Pot, which

is to be spent collectively on projects that will contribute to the sustainable growth of London’s economy and lead to an increase in London’s overall business rate income. Bids have to be submitted to access this funding.

• During the pilot the Revenue Support Grant (RSG) was rolled into the baseline

funding rather than being received as a separate grant from government. This will be the same for 2019/20. 2019/20 will be the last year for this grant.

Business Rates - Revaluations

Revaluation

• In 2017 a revaluation exercise took place, which resulted in many increases to

business rates bills.

• An appeals process is in place, and the outcome is still outstanding.
• A provision has been set aside for this, based on estimates received from

Analyse Local.

• However there remains a risk that successful appeals may significantly exceed

this provision.

Business Rates – Future Risks

Fair Funding Review

• The fair funding review will seek to set new baseline funding allocations for

local authorities.

• The methodology that currently determines how much funding each local

authority receives annually was introduced over ten years ago at the start of the 50 percent retention scheme.

• The Fair Funding Review will result in an update to the needs formula (through

an up-to-date assessment of their relative needs and resources).

• This presents a significant financial risk to LB Hounslow for 2020/21 and

beyond.

Questions & Answers

Contact details

Thank you

Councillor Rajawat Cabinet Member for Finance and Corporate Services Shantanu.Rajawat@hounslow.gov.uk