Decision details

Cabinet considered a report which sought approval to the Cabinet’s initial budget proposals in the context of a refreshed Our North Tyneside Plan 2020-24. The proposals covered a four-year planning period from 2020-24 for the Revenue Budget and a five-year planning horizon for the Investment Plan.

 

The 2019/20 financial year was the final year of the 2016 Spending Review, which had afforded local government some financial certainty with which to plan over the medium term.  The lack of a multi-year Spending Review had meant that there was a significant level of uncertainty when undertaking financial planning for the longer term.  Political uncertainty remained high.  Brexit had been delayed until 31 January 2020 and the forthcoming General Election had caused delays for major funding announcements. The initial proposals had therefore been prepared on the basis of assumptions included in the Spending Round 2019 (SR19) announced in September.

 

The SR19 was limited to a single year, which included headline numbers for Government spending for 2020/21 and indicative three-year allocations for schools.  In addition, SR19 confirmed the Government’s proposal to ‘roll forward’ the 2019/20 Local Government Finance Settlement.  Specific funding allocations were yet to be confirmed and a full multi-year Spending Review was now planned to be held in 2020.  The main headlines announced in SR19 included:

 

•           Departmental spending to increase by 4.1% in real terms, whilst keeping within the Government’s fiscal rules;

•           Social care grants received by local authorities in 2019/20 would continue in 2020/21;

•           The Improved Better Care Fund would be maintained at 2019/20 levels, and the Winter Pressures Grant (£240m allocated in 2019/20) would be rolled into the Fund for 2020/21;

•           An additional £1bn of grant funding would be distributed for social care in 2020/21, plus local authorities would be able to charge a further 2% Adult Social Care Precept;

•           A real terms increase in the Public Health and Revenue Support Grant; and

•           Authorities would be able to increase Band D Council Tax up to 2% for the basic element in line with the referendum limit for 2020/21.

 

Consultation with Government was underway on the basis of distribution of the additional social care grant.  However, initial indications were that the Authority would receive additional social care funding of £4.300m in 2020/21.

 

SR19 also included a three-year funding settlement for schools, high needs and early years which were part of the Dedicated Schools Grant (DSG).  Nationally, additional funding would be £2.6bn in 2020/21, £4.8bn in 2021/22 and £7.1bn in 2022/23.  The main headlines announced included:

 

•           An increase in per pupil funding for all schools in line with inflation in 2020/21 (1.8%) with minimum per pupil funding levels set at Primary £3,750, Key Stage 3 £4,800 and Key Stage 4 £5,300;

•           Minimum rate per pupil for primary schools rising to £4,000 in 2021/22;

•           Additional funding of £700m in 2020/21 for children with special educational needs;

•           Additional early years funding of £66m;

•           Additional funding of £400m in 2020/21 for further education;

•           Confirmation that the Government would continue to support additional teachers’ pension costs for schools; and

•           Commitment to move towards a ‘hard’ National Funding Formula for schools as soon as practical.

 

The Authority was currently working through the implications of the funding announcement and was waiting for further details to be released by the Government to understand the impact for schools and other services supported by the DSG.

 

The Authority was experiencing a difficult period and it was faced with relentless pressure on reduced budgets.  The initial Budget proposals aimed to protect essential services for the people of North Tyneside, invest in the future of the borough, grow the local economy, and create more jobs and opportunities in a borough that worked better for residents.

 

With so many competing demands to pay for services, the Elected Mayor and Cabinet had carefully scrutinised the Authority’s financets.  With the scale of the funding reductions, difficult decisions had had to be made and many more lay ahead if the Authority was to manage within available resources.  These proposals aimed to protect essential services and make sure that the Authority operated as efficiently as possible to provide excellent value for money for local taxpayers.

 

The Our North Tyneside Plan 2020 – 2024 provided the policy framework or context for the Budget proposals.  The Plan, which had been refreshed to reflect two key policy developments as agreed previously by full Council, namely the declaration of a climate emergency and the role of the North of Tyne Combined Authority, was set out in Appendix A to this report.

 

Engagement on both the refreshed Our North Tyneside Plan and the draft Budget proposals set out in the report would take place from 26 November to 5 January 2020.  The engagement approach would be as agreed by Cabinet on 9 September 2019.

 

The Housing Revenue Account (HRA) had faced significant challenges from legislation, particularly linked to the Welfare Reform and Work Act 2016 and the Housing and Planning Act 2016.  2020/21 represented the end of the Government’s policy to reduce rent by 1% for four years for all housing stock.  From April 2020 Government had announced that social rents would once again be based on Consumer Prices Index plus 1% for at least 5 years to give some greater surety to allow longer-term business planning. The Authority was also facing the impact of the continued roll-out of Universal Credit and other welfare reforms. 

 

The report outlined how the initially identified benefits from the transfer of the Housing, Property and Construction Service back into the Authority would be re-invested. It also referred to the removal of the HRA borrowing cap announced in the October 2018 Spending Review. These various factors continued to be considered as part of the updating of the 30-year plan which aimed to ensure the long-term viability of the HRA in line with the policy direction of the Elected Mayor and Cabinet and the needs of tenants. For the current financial planning and budget process, a four-year revenue plan had been developed in line with the approach adopted for the General Fund. Tenants would be consulted on the proposals and the final HRA business plan and budget for 2020/21, including the housing rent, garage rent and service charges and the Housing Capital Investment Plan, would be presented to Cabinet on 20 January 2020 for approval.

 

Annex 1 to the report set out in detail the Cabinet’s 2020-2024 initial Budget proposals for the General Fund Revenue Budget, Dedicated Schools Grant, Housing Revenue Account, 2020-2025 Investment Plan, and the 2020/21 Treasury Management Statement and Annual Investment Strategy.

 

Cabinet’s initial Budget proposals were based upon available information and judgements at the time of the writing of the report.  There were a number of assumptions and judgements built into the figures presented that were outside the control of the Authority and needed to be finalised.  The initial Budget proposals were therefore subject to further review before they could be confirmed.  The information to be assessed and finalised was:

 

(a)       The Government’s Budget;

 

(b)       The Provisional and Final Local Government Finance Settlement announcements for 2020/21, including capital announcements and specific grants (including the Dedicated Schools Grant;

 

(c)        Police and Crime Commissioner for Northumbria and the Tyne and Wear Fire and Rescue Authority Precepts (due February 2020);

 

(d)       Levies, including the North of Tyne element of the Newcastle Upon Tyne, North Tyneside and Northumberland Combined Authority Transport Levy (due January 2020);

 

(e)       Tyne and Wear Joint Service Budgets (due January/February 2020); and

 

(f)        Consideration of the impact of the economic climate on the residents of the borough and Council Tax payers.

 

Therefore, as some external announcements were still to be received, Cabinet was recommended to authorise the Elected Mayor, in conjunction with the Cabinet Member for Finance and Resources, Deputy Mayor and other Cabinet Members, to work with the Senior Leadership Team to continue their joint review of these proposals.

 

The Elected Mayor made reference to public engagement and how the Authority delivered services and met the needs and priorities of residents in the context of increasing demand and financial pressures. She thanked Cabinet Members and the officers for their work so far.  The Cabinet Member for Finance and Resources endorsed the Mayor’s thanks to officers.

 

Mr D Bavaird, on behalf of the business sector, applauded the Authority’s engagement programme in respect of the budget process and welcomed the opportunity for businesses to be involved in the process.

 

Cabinet considered the following decision options:  to either agree the proposals set down in the report, or alternatively, to suggest that further / different options were considered by the Senior Leadership Team and be reported back to Cabinet for further consideration.

 

Resolved that (1) the progress made in relation to this year’s Financial Planning and Budget process be noted;

(2) the key principles being adopted in preparing the Medium-Term Financial Strategy for the Authority, subject to an annual review, be noted;

(3) the medium-term financial challenges and financial risks facing the Authority be noted and these issues be addressed as part of the Efficiency Programme for the Authority, to deliver continued financial stability and prudent management of its financial resources;

(4) the formal Reserves and Balances Policy for the Authority, subject to review at least Annually, be noted;

(5) the initial Budget proposals in relation to the 2020/21 General Fund Revenue Budget and Dedicated Schools Grant, including the assessment of the current year’s budget monitoring information 2019/20 be approved; 

(6) the Head of Resources, in consultation with the Head of Commissioning and Asset Management, the Cabinet Member for Children, Young People and Learning and the Cabinet Member for Finance and Resources, be authorised to undertake resource allocations to schools for 2020/21 in line with the school funding arrangements set out in the report;

(7) the proposed 2020-2025 Investment Plan be approved, noting that the Plan continues to be under review;

(8) the draft Capital Investment Strategy be noted and it be noted that this Strategy will now be subject to consultation as part of the Budget Engagement Strategy;

(9) it be noted that all approved schemes within the 2020-2025 Investment Plan will be kept under corporate review by the Investment Programme Board;

(10) the draft 2020/21 Treasury Management Statement and Annual Investment Strategy be approved;

(11) the Provisional Statement by the Chief Finance Officer be noted;

(12) the initial Budget proposals in relation to the 2020-2024 Housing Revenue Account Budget, and associated Business Plan, including an assessment in relation to the current year’s budget monitoring information 2019/20 be approved;

(13) the proposed April 2020 2.7% rent increase from April 2020 (in line with Government policy), and the initial proposals in relation to housing service charges and garage rents for 2020/21 be noted;

(14) the Elected Mayor, in conjunction with the Cabinet Member for Finance and Resources, Deputy Mayor and other Cabinet Members, be authorised to work with the Senior Leadership Team to continue their joint review of these initial Budget proposals;

(15) the Chief Executive, in consultation with the Elected Mayor, Cabinet Member for Finance and Resources, Deputy Mayor and the Senior Leadership Team, be authorised to manage the Efficiency Programme and it be noted that progress will be reported to Cabinet as part of the regular budget monitoring process;

(16) the proposed refreshed Our North Tyneside Plan, as set out in Appendix A to the report, be approved; and

(17) it be noted that the timetable of key milestones for 2020-2021 has been updated to reflect the potential changes which will be proposed to full Council on 28 November 2019.

 

(Reason for decisions: Due to external information still to be received, Cabinet is not in a position to finalise setting its proposed Council Tax level for 2020/21 in relation to the General Fund.  These initial Budget proposals include the Government’s assumed general increase to Council Tax of 1.99% and the Social Care Precept of 2% in 2020/21.  This report will form the basis of Budget engagement and scrutiny over the next two months, but further work will inevitably be required before final decisions are made on the budgets for next year, hence the authorisation recommendation referred to in paragraph 1.6.2 of the report.)