Contact: Jon Pittam, (01962) 847400; [email protected]

With the concurrence of the Chairman under Section 100B (4)(b) of the Local Government Act 1972, this matter has been included on the agenda to inform the Cabinet about the announcement of the provisional grant settlement on 6 December 2007 which did not allow for a full report in time for the publication deadlines for the Cabinet meeting.

1 Summary

1.1 The Government announced the provisional grant settlement figures on 6 December 2007. As expected the County Council remains at the grant floor, and will receive cash increases of 2%, 1.75% and 1.5% for 2008/09, 2009/10 and 2010/11 respectively. This is slightly better than assumed in setting the budget guidelines, but as the Council only receives about 20% of its funding from grant support this does not have a substantial impact.

1.2 The extra grant will provide some further flexibility in setting the budget in February 2008, either to increase spending or reduce the council tax increase. However the position on supported borrowing has got worse as the amount of capital grant has been reduced for both the local transport and the school capital programmes. If the Council wishes to take up all the allocated borrowing approval or maintain its planned capital programme, which already assumes the non take up of supported borrowing of £31m over the next three years, it will need to increase its borrowing further. Higher capital financing costs will erode some of the grant gain, or require new savings elsewhere. To continue the current policy of limiting the increase in the capital financing requirement to 2.5% per annum will require the non take up of approximately a further £10m of supported borrowing in 2008/09 increasing to £14m over a three year period.

1.3 Decisions on the level of new borrowing can be deferred until February, and it is proposed that programmes be formulated by Executive Members on the basis of the current policy on supported borrowing highlighting the implications for the capital programme and the achievement of corporate strategy objectives of the non take up of supported borrowing of up to £45m over the next three years.

1.4 Overall the settlement is much as expected. It is anticipated that service budgets can be contained within the budget guidelines set and there is no need at this stage to change the budget guidelines agreed at the last meeting.

1.5 Cabinet will consider the outcome of the Executive Member budget reports and scrutiny arrangements at the Cabinet meeting on 8 February 2008 when final decisions on budgets and council tax can be recommended to Council.

1.6 Because of the lateness of the announcement the County Treasurer will make a presentation on the grant settlement at this meeting. The Cabinet may wish to make written representations on the provisional settlement to Communities and Local Government (CLG) by the deadline of 8 January 2008, based on the issues raised during the presentation. Local authorities which in addition wish to meet with Ministers during the consultation period in order to make face-to-face representations on the settlement proposals must arrange to do so before 28 December 2007.

1.7 The following decisions are sought:

i) to continue with budget preparation within the provisional budget and locally resourced capital programme guidelines for 2008/09 to 2010/11 agreed at the last meeting, as the basis for Executive Members to prepare draft revenue budgets and locally resourced capital programmes for consideration by the Cabinet on 8 February 2008.

ii) to request Executive Members to prepare draft capital programmes for government supported capital programmes based on capital grant approvals and the take up of supported borrowing consistent with limiting the increase in the capital financing requirement to 2.5%, and to highlight the implications of not taking up supported borrowing in full.

iii) to protest to Government about the increased borrowing costs of implementing the local transport and schools capital programmes following the further reduction in capital grant to support the Government's allocations.

iv) to determine the final flexibility available from the marginal increase in grant, over that assumed in setting guidelines, to meet additional borrowing costs, or other spending priorities at the February Cabinet meeting.

v) to authorise the County Treasurer, in consultation with the Leader to make written representations to CLG on the provisional settlement, based on the presentation to the meeting and any other issues the Cabinet wish to raise.

vi) to determine whether to seek a meeting with Ministers to make further representations on behalf of the County Council.

vii) to authorise the County Treasurer, in consultation with the Leader, to determine the form of any further budget consultation for 2008/09, possibly through the Citizens Panel.

2 Reason

2.1 The Cabinet needs to respond to the consultation as it sets the government grant allocations for the next three years. Good progress is already being made in preparing the budgets within the guidelines set. It should be possible to contain pressures and costs within the guidelines by means of the annual efficiency savings and redirection of priorities within cash limits, without reductions in services. This continues the annual projected rises in council tax at about 5%.

3 Other options considered and rejected:

3.1 None.

4 Conflicts of interest declared by the decision maker or other Executive member consulted

4.1 None.

5 Dispensation granted by the Standards Committee

5.1 None.

6 Reason(s) for the matter being dealt with if urgent

6.1 Not applicable.

Approved by: Date:
Councillor T K Thornber CBE