Stockton-on-Tees Borough Council

Thursday, 18 February 2010

Budget and Council Tax for 2010/11

Members considered the final report in determining the Medium Term Financial Plan (MTFP) for 20010/2011 onwards, which also incorporated the level of Council Tax increase and associated budget issues.

It was explained that the Council's current policy was to hold 3% of General Fund expenditure as balances (this equated to £7.9 million at 1 April 2010). It was anticipated that the General Fund balance would stand at £10.8 million at 1 April 2010, which would exceed the 3% level by £2.9 million. This was a change of £2.43 million from the position reported at the end of the last quarter of £8.37 million. Cabinet had agreed site investigations in the south of the Borough for BSF and costs associated with that would reduce the balances.

On 20 January 2010 the Government confirmed the Provisional Settlement of £78,196,322. With the announcement there was a statement from the Government that it was in the process of capping 4 Police Authorities at the 3% level. This confirmed earlier speculation that this was likely to be the tolerated ceiling for council tax increases after the Government had stated that it expected increases for 2010/11 to be substantially below 3%.

Cabinet was reminded that when the budget had been set for 2009/10 an increase of 3.9% for 2010/11 had been anticipated which would contribute to funding a net resource allocation of £155,551,091. Members were informed of potential savings that would reduce the net resource allocation for 2010/11 to £152,762,091. A 2% council tax increase would generate resources of £71,468,861 and together with the final settlement of £78,196,322 this would leave a gap of £3,096,908 against the £152,762,091 resource allocation requirement referred to above. This would need to be funded from SBC generated resources.

This would result in Stockton setting a balanced budget for 2010/11, at the same time as halving its proposed council tax increase, without any reduction in services or a programme of significant job cuts. A position that was far superior to that which most councils were facing during difficult economic times. This was allied to the situation that Stockton continued to make considerable investment in service provision, the £180 million that would be expended on Building Schools for the Future, the £15 million refurbishment of Billingham Forum, £7 million to be spent on the Primary Capital Programme in 2010/11, and the £7 million Stockton was investing in the Communities Fund that sought to redress unemployment issues by utilising Voluntary Sector Organisations.

Cabinet noted that this balanced budget did not contain any additions to pressures other than those that were incorporated as unavoidable when the MTFP was agreed in February 2009. Services had coped with those pressures by making efficiencies or adaptations to ensure the Council remained within the approved financial envelope. Based on current projections, this was expected to be the position, however work was ongoing to assess future social care demand pressures along with a range of reviews into how the services were delivered, most notably to the Personalisation agenda which was the Government's proposals for free Personal Care for a range of people based upon differing criteria.

Members considered the financial year 2011/12 and onwards and noted that the picture became a lot less certain and gloomier. When the Provisional Settlement was announced for 2010/11 there was no indication to likely grant settlements for the next three year period. What had been stated quite openly was that Public Sector Expenditure would need to be reduced to help pay back the current high levels of national debt, and talks of council tax increase freezes had been regular. In the absence of any definitive data it was considered that Stockton must make a calculated estimate of the possible impact on its revenue resource stream for the two financial years after 2010/11. For illustrative purposes projections were that revenue support grant would be reduced by 3.333% year on year, and that council tax increases would be frozen for 2011/12 and 2012/13.

Cabinet was reminded that Stockton was going to have some additional one-off resource available from 2009/10. This was estimated to be in the region of £4.5 million. It had been past practice in the era of year on year grant increases and headroom, to allocate this money to time limited projects and initiatives. Given the uncertainty about future funding levels and future potential pressures and the need with some efficiency measures to invest to save, it was considered prudent not to agree any use of this resource in that manner until the grant settlements for 2011/12 were known, when a more informed choice could be made about the utilisation of any such resources.

It was explained that a 2% increase in 2009/10 Council Tax rates would have the following impact:

Members noted that it was anticipated the Police Authority would recommend a precept of £10,989,972, £125.23 at Band A (£187.84 at Band D) which equated to a 2.94% increase in Council Tax based on a Band A figure of £121.65 for 2009/10 (£182.47 at Band D).

The Fire Authority had determined a precept of £3,742,736, £42.65 at Band A (£63.97 at Band D) which equated to a 3.9% increase in Council Tax based on a Band A figure of £41.05 for 2009/10 (£61.57 at Band D). It was noted that this was above the Government's capping level but indications were that the Fire Authority were likely to appeal against any capping, with the outcome not expected until July. The financial implications on this Council should their appeal be unsuccessful and a revised Council Tax demand be subsequently required, were noted as being in the region of £75,000, although this amount would be reimbursed to the Council by the Fire Authority. Members were provided with details of all the Parish precepts for 2010/11.

Cabinet, in proposing a budget to be determined by full Council on the 24th February 2010, recommended that the Council Tax for Stockton-on-Tees Borough Council, prior to Parish, Fire and Police Precepts, be increased by 2.0% to a level of £1221.53 at Band D (£814.35 Band A). Full details of the budget recommendations, and the subsequent decision of full Council can be found at http://www.egenda.stockton.gov.uk/aksstockton/users/public/admin/kab71.pl?cmte=CAB

Further information regarding the Council's Medium Term Financial Plan and Council Tax position can be obtained by contacting Paul Saunders, Head of Finance, Procurement & Performance, tel. 01642 527010; e-mail: Paul.Saunders@stockton.gov.uk