Cabinet considered the council’s latest financial update for 2018-19.

(Councillor S Rayner declared a Disclosable Pecuniary Interest as her family trust owned land that may be affected by the Heathrow proposals, she left the room for the duration of the discussion and voting on the item.)

The Lead Member for Finance introduced the report and informed that this was the first substantive review of the year where we could see how the Council’s finances are doing.  Over the course of the first few months there had been initial signs of some of the very significant national pressures which the Royal Borough were not protected from.  In particular the significant pressures of growing placement costs for children in care and the importance of continuing to fully subsidise the housing benefit payments where it is not expected to fully recover certain overpayments.

There were also a number of less significant items within the report but the for mentioned were the two substantial issues where we were reflecting the national pressure.  As a result it was important to acknowledge, as shown in appendix A, that there could be a accumulating over the year a net pressure.  This net position had been subject to a range of mitigating measures being identified by Lead Members and officers.  This position may be subject to further mitigating action as future possible pressures arise. 

The Lead Member for Finance went on to explain that he was please to say that appendix B did show the council’s reserves that had variances that more than offset, at this point in time, various amounts that had been settled above that accounted for.  For example national non domestic rates (NNDR) pressure was expected to be reversed, section 31 grant of £186,000 and the adjustments to the business rates that we were confident of receiving £710,000.  Looking forward because of business rates pooling with other Berkshire authorities it was anticipated that there would be generated £1.5 million in excess of the amount in the budget.

Appendix B also showed a couple of minus figures.  The Berkshire Pension Fund valuation had shown that it was just below 75% funded.  Although funding levels had risen to just above 75%.  As the actuary had to use the latest valuation there had been identified additional contributions of £748,000 towards the pension deficit.

There was also a second figure, that was part of the report’s recommendations, for £100,000 towards a judicial review with other authorities affected by the Heathrow proposals. 

The Lead Member for Finance informed that as a consequence of the additional positive items the net contribution at this stage of the year exceeded the adverse variances.  As a consequence the reserves were expected to be £9,352,000 compared to the £8,947,000 at the beginning of the financial year.  This was significantly above the recommended level of between £5 to £6 million.

Cabinet were informed that it was expected that there would be continued pressures throughout the year which may impact on the current buffer of our reserves, however at this stage we could be confident that the net impact over the balance of the year was highly unlikely to have a material negative on the current projected balance.

The Chairman mentioned that there had been a recent statement from the Ministry of Housing, Communities and Local Government regarding local government funding with a proposal for the revenue support grant (RSG) to help the 158 local authorities affected which in 2019/20 could see the Royal Borough receive £2.200,000.

The Chairman also mentioned that the pressures in Children’s Services were mirroring the national pressures with the same lack of funding that was previously seen in Adult Social Care.  The pressures in Adult Social Care had been dealt with via the precept but there was no similar solution for our vulnerable children.  The Local Government Association had identified £2 billion of pressure by 2020 and the same pressures were being felt locally.  As a council we were determined to continue to protect the most vulnerable children in the borough. 

The Chairman requested that a letter be sent signed by himself to the Secretary of State highlighting the pressures in children’s services.  The letter should show the pressures we see and the shortfall in funding that had been dealt with in adult social care by the precept.  It should highlight the financial pressures being placed by the statutory and moral responsibilities to protect our vulnerable children.  The Lead Member for Finance suggested and it was agreed to also add to the letter the financial pressures on the dedicated schools grant around high needs children.

The Leader for the opposition recommended that it would have been useful to have had the mitigating actions highlighted and also asked if the future pressures would impact on the capital programme and not result in the council loaded with dept.  The Leader replied that he would arrange a meeting to discuss mitigating actions and that regarding the capital programme it could show the gross and net position and that there were a significant amount of investments for the regeneration programme.  Other capital items, such as the Oaks Leisure Centre that would only commence when funding was available.

The Chairman also mentioned that it was ironic that the hottest temperature of the year had been reported today at Heathrow Airport when Cabinet were being asked to approve up to £100,000 for legal action to get answers for our residents.

Resolved unanimously: that Cabinet:

·         Notes the Council’s projected outturn position for 2018-19 and requests the Directors to identify and propose mitigations for the projected variance.

·         Approves an additional budget of £100,000 for the Council’s contribution to the legal costs relating to Heathrow expansion to be funded from the General Reserve.