Agenda item

Cabinet Member for Finance and Assets – Councillor Brian Donnelly

The Cabinet Member for Finance and Assets was invited to the meeting of the Overview and Scrutiny Committee to present his portfolio summary and answer any questions arising based on his area of responsibility.

Three questions had been submitted in advance of the meeting and the Cabinet Member provided full responses:

Question 1:

Despite Austerity and Government reduction in Local Government Funding HDC (primarily because the District is a prime target for housing development) remains solvent and effectively untouched by reduced Government Funding. Is this understanding of the above data valid? Councillor Leonard Crosbie

Response from the Cabinet Member:

“The Council has lost also other government funding in the same period that is not included above. For example, Council Tax support funding was linked to RSG in 2013. As RSG is now zero, the Council has effectively lost this funding by having to now fund this Council Tax support directly. This is running at approximately £200k to £250k a year. 

More housing over this period means more householders requiring more services from the Council, which has an impact on the costs of the Council. 

Note that in this time, cost inflation as measured by RPI has increased by about 10% since April 2013.  This means the cost of goods and services in this period have increased.

If the table was extended back to 2010/11 – the year before austerity started after the May 2010 election, then the changes in funding are comparable as shown: i.e. less.

Over 7 years, inflation as measured by RPI has increased by about 18%.

The Cabinet Member added that the Council has been working over the past years to generate additional income.

Question 2:

In the five years (2013/14 to 201718) the New Homes Bonus (NHB) was used to fund Council revenues (Revenue  Account) to the total of £5.3 million.

From 2018/19 the NHB funds have been switched to fund capital projects and investment purchases projected at over £10 million.

Why not continue to support the Revenue Account with some of the remaining £4m.of NHB funds, as this decision has directly resulted in forecast deficits on the Revenue Account of some  £1m and £2m  for 2020  and 2021 respectively? Councillor Leonard Crosbie

Response from the Cabinet Member:

The NHB cannot be regarded as a permanent source of income, until Government confirms that it is. The sharpening of NHB indicates (payments reduced from six years to 4 years and may reduce further) and the introduction of a baseline that is highly likely to increase in the future indicates that the government is delivering on its 2015/16 settlement to reduce the budget envelope for the NHB pot.

It would be risky to rely on something that could easily be switched off. This may happen as part of the reorganisation of business rates in the early 2020s. The Council needs to be prepared for that eventuality and use the funding as the bonus name suggests.

By directing the funding towards capital expenditure, this could also be more easily switched off, by not spending on something. Not spending on revenue is slower to turn off. The application of NHB reserve against infrastructure assets that would otherwise generate a Minimum Revenue Provision (revenue account) charge means that this approach is contributing to the revenue account. This approach also arguably drives greater efficiencies from the Council.

Question 3:

Can the Cabinet Member kindly a) identify which capital projects over the Medium Term Financial Strategy (MTFS) period are funded from revenues, reserves, NHB, loans/borrowings and S106/CIL funds, and b) confirm the budgeted revenues from the newly introduced charges from rural car parks in the MTFS together with confirmation that those revenues are ring fenced to cover the costs to HDC of maintaining and improving those running car parks. Councillor Nigel Jupp

Response from the Cabinet Member:

Significant capital projects in 2018/19 and the MTFS:

•           £12.3m – BBH LC funded by NHB

•           £8m Piries Car park – funded by borrowing

•           £3m p.a. property investment currently from borrowing. May be funded by NHB in future once BBH has been built

•           £3m Rowan Drive and Peary Close temporary accommodation funded by S106

•           £1m Swan Walk redevelopments – funded by borrowing

N.B. borrowing may be internal borrowing or external borrowing, depending on cashflow. The Head of Finance can provide more detailed analysis against the 2018/19 capital programme if required.

The 2018/19 budget includes £374k income from rural car parks, which is a combination of season tickets, rural parking disks and pay and display tickets. £50k per year is placed into a sinking fund reserve to fund capital expenditure on these car parks. There are other costs, e.g. from general maintenance, enforcement, business rates. 

The capital programme in 2018/19 includes capital expenditure funded by the rural car park sinking fund of £161k improving two of busiest car parks in the district at Steyning and Henfield. The works include resurfacing, relining and relocating the bays to maximise the space and improve traffic flow.

All the rural car parks are included over the coming years.

The Chairman invited any supplementary questions.

The Cabinet Member was asked to provide details of all the capital projects that are to be funded from revenues, reserves, NHB, loans/borrowing and S106/CIL funds, as only the significant ones had been identified at the meeting. This more detailed information would be provided following the meeting.

The Committee sought further confirmation that the revenue generated from rural car parks would be ring fenced only for the use of improving and maintaining the car parks. The Cabinet Member confirmed that this was the intended use of the funds.

Members questioned the uptake of the parking discs for the rural car parks along with the revenue generated from the fines issued by enforcement officers in the rural areas. It was agreed that the Director of Community Services would provide a written answer with the details following the meeting. 

The Chairman of the Committee thanked the Cabinet Member for attending the meeting and answering the questions presented.