Agenda item

Cabinet Member for Finance and Assets

The Cabinet Member for Finance and Assets had been invited to the meeting as part of the Cabinet Member interviews.

The following questions had been submitted in advance of the meeting, which the Cabinet Member answered at the meeting.

Question 1:

Although the MTFS has now gone through Cabinet, it does appear that some members of the council are not aware of the relationship between the MTFS and the final Budget. Could you please clarify?

On the same subject I have seen that some councils operate a 5 year cycle of MTFS and assume that we do the same. If this is the case can you please tell the committee where we are in the cycle. Councillor Coldwell

Answer:

Council finances are different to businesses.  We receive our funding and then design the services offer we can give our customers within the money given.   Businesses design their services and then work out how much they can sell and at what price they sell them at.

The Medium Term Financial Strategy initially works out how much money we believe we will receive.  Then it looks that the cost of the current service offer.  Because it is illegal for the Council to set an unbalanced budget we then have to consider how we fill in the difference.  In these years of austerity I’m afraid this difference is always, or almost always, a shortfall of money to service cost.  The strategy then looks at all the changes we could make to fill the gap between what we provide and what we can afford.  These changes include increases in council tax and fees and charges but also, efficiencies officers can make and new income ideas.  For most councils this also means cuts to services our residents and businesses value.    Horsham District Council is in the fortunate position we have been able to make these changes without damaging cuts.

The budget is then, or rather is now, being calculated by each service in the council in detail.  The 2 processes come together with service plans to present to Cabinet and Council after Christmas the full position.   The strategy sets the direction and the key changes, the budget fills in the detail.

On length of strategy there is no set rule.  Some Council’s use 3, 4 or 5 years, others go as long as 10.  With our government funding, the capping levels, being decided in December each year the further out we look the more unreliable our estimate of the difference.  The art of the Medium Term Financial Strategy is to make enough change to make our position stable.  If we do too much, which a long strategy could encourage us to do, we may have to make cuts to services our residents value.  And then find ourselves making surpluses.  Do too little we end up like Northamptonshire. 

That said we do have an outline 10 year model and I have looked at what our longer term position is.  If we are prudent, and that includes inflationary increases on council tax and charges, and maximising use of our commercial property portfolio, then this Council will not sit on large unnecessary reserves nor face the Government inspectors coming in to reverse a situation we could have managed had we made those prudent decisions at the start.

Question 2:

Regarding the sale of surplus land, I accept that some of the parcels that might be sold unsuitable for affordable or social housing for a number of reasons including small plot size and/or location but will Cllr Donnelly confirm that the Parish Councils be asked if they could suggest a community use for the land? Councillor Coldwell

Answer:

No.  The Council has an obligation under S123 of the Local Government Act 1972 to achieve the ‘best consideration’.  The Head of Property Services is preparing a report for January’s Cabinet proposing to sell some surplus land and this was considered at my PDAG earlier this month.  Selling this land we release money we can reinvest in investment property for a return that will support our financial strategy and enable us to maintain a balanced budget.  While community uses are valued, and as you know we support our communities way in excess of the offer of other districts either in Sussex or elsewhere, we cannot give away land for “nice to do” purposes, when we need to create a sustainable future for this Council, its residents and its businesses.

The Committee noted the responses and the Cabinet Member agreed to take supplementary questions.

The Committee noted that one of the difficulties with the Medium Term Financial Strategy (MTFS) was forecasting the level of uncertainty of New Homes Bonus, the Government grant and the cap on Council Tax.

The Committee discussed the sale of surplus Council owned land and whether these could be suitable for affordable housing or temporary accommodation units.

The Cabinet Member explained that these pockets of land were being sold to increase the Council’s income. However he agreed that the sale of units for temporary accommodation was a good project and land would be assed for sale or such purposes, as it became available.

The Chairman thanked the Cabinet Member for attending the meeting.