Contact: Jon Pittam, 7400; e-mail: [email protected]

1 Summary

1.1 This report recommends provisional service budget and capital programme guidelines to enable policy review committees and executive members to consider their budget proposals in January for submission to the Cabinet in February.

1.2 The Cabinet set its budget strategy and guidelines when it considered its medium term financial strategy, provisional budget strategy 2006/07 and budget consultation on 25 July 2005. Two budget options were agreed for consultation with a community workshop and other `stakeholder' interests, to consider at this meeting. The two options for 2006/07 would have lead to:

· a budget rise of 4% and a council tax increase of 6.7% with efficiency savings to absorb new pressures

· or a budget rise of 2.4% and a council tax increase of 4.7% within the projected capping limit of 5%, requiring £8m of cuts as well as efficiency savings

1.3 The Government has responded to the campaign for more grant resources to avoid higher council tax rises and cuts in services. For this County Council, grant reductions are deferred for two years by a higher grant floor, which is £24m in 2007/08, paid for by scaling-back other authorities grant increases. This means that budget guidelines can now be set with a spending increase commensurate with the first option but with a council tax rise equivalent to the second option.

1.4 The following decisions are sought:

i. the County Treasurer in consultation with the Leader should submit a written response by 11 January 2006 to The Office of the Deputy Prime Minister (ODPM) on behalf of the County Council to the provisional formula grant settlement

ii. the Cabinet determine if the County Council should seek an individual meeting with the ODPM as well as the Leader's deputation on behalf of the County Councils' Network

iii. service budgets be prepared within the provisional guidelines set out in Table 8, paragraph 6.2 of the report, for consideration by policy review committees

iv. following consideration by policy review committees, executive members approve service budgets within the budget guidelines for submission to the Leader and Cabinet in February 2006

v. executive members identify efficiency improvements for inclusion in the 2006/07 Annual Efficiency Statement which meet or exceed the 2.5% per annum target

vi. executive members meet their inescapable budget pressures and legislative requirements within the provisional budget guidelines with proposals for cashable efficiency savings or redeployment of resources to offset any new spending priorities

vii. any proposals for additional spending above budget guidelines which are met from redeployments or proposed efficiency savings, should be accompanied by a summary business case containing clear financial and performance data setting out how performance will be improved and value for money achieved

viii. executive members report back on their annual review of charges and maximisation of income

ix. executive members identify the workforce implications of their proposed budgets as part of the process of linking workforce and financial planning

x. executive members prepare indicative budget plans within the provisional budget guidelines for 2007/08

xi. considered the recommendation of the Policy and Resources Scrutiny and Select Committee to continue looking at the option of a 2.7% council tax increase, but given the ultimate withdrawal of grant in 2007/08 coupled with the fact that the actual grant increase for 2006/07 now appears to be lower than the headline floor increase, the Cabinet were of the view that this option was not feasible

xii. executive members prepare proposals for a locally resourced four year capital programme within the current limits, adjusted for inflation

xiii. in addition, executive members submit:

· capital schemes supported by Government grants and scheme or programme specific supported borrowing for 2006/07 and those expected to be supported in 2007/08, 2008/09 and 2009/10

· proposals for the use of unsupported borrowing in accordance with the County Council's policy on prudential borrowing

· proposals for supported credits for any Private Finance Initiative scheme.

2 Reason

2.1 The Leader and Cabinet need to determine the basis on which service budgets and capital programmes are prepared for consideration by executive members and policy review committees in January, as the next step in the preparation of final budget and council tax decisions for 2006/07 to be taken in February 2006, together with setting provisional budget limits for 2007/08.

2.2 These decisions support all of the aims of the corporate strategy as it provides the financial resources for:

Aim 1 - maximising life opportunities

Aim 2 - stewardship of the environment

Aim 3 - achieving economic prosperity

Aim 4 - building strong and safe communities

Aim 5 - improving services

Aim 6 - developing councillors and staff

3 Other options considered and rejected: - none

4 Conflicts of interest declared by the decision maker or other Executive member consulted - none

5 Dispensation granted by the Standards Committee - none

6 Reason(s) for the matter being dealt with if urgent - none

Approved by: ............................... ... Date: ..............................
Councillor T K Thornber, CBE