Agenda item

This report sets out the budget proposals for the services covered by this Policy and Accountability Committee (PAC). An update is also provided on any proposed changes in fees and charges.  

Hitesh Jolapara (Strategic Director, Finance and Governance) introduced the report that set out the budget proposals for the services covered by the Committee. He showed slides that gave context for the scale of the challenge facing local government in recent years.

H&F’s general government grant funding had been cut each year since 2010/11. The total reduction since April 2010 to April 2019 was £73m. This was a cash terms reduction of 47% and real terms reduction of 59%. It was noted that Funding was forecast to be reduced by a further 5% per annum from 2020/21 onwards with no confirmation of the continuation of new one-off funding of £4m received in 2019/20.

It was noted that Government resource assumptions, that were used to calculate Government grant for the London Borough of Hammersmith & Fulham (LBHF), model the Council increasing council tax by 3% in 2019/20. 

In terms of the adult social care precept, the Committee learnt that due to the continued high levels of inflation in the social care market and the Government’s continued failure to propose a long-term funding solution to social care funding, the Council proposed, for the first time, to allow 2% of the government’s adult social care levy for 2019/20.   

Concluding his initial remarks, Hitesh Jolapara explained that in accordance with the administration’s policy of keeping the council tax low while protecting and improving services, the Council’s budgeted council tax increase was restricted to an inflationary increase of 2.7%.

Councillor Zarar Qayyum asked how business rates were forecast. Hitesh Jolapara explained that business rates were calculated using the same rate in the pound (the multiplier) across the whole of England. It was noted that there were two national multipliers, the first was the national non-domestic rate multiplier which was used to calculate the rates for all businesses. The second multiplier was for small businesses who qualified for rate relief. The actual amount a business would pay was calculated by multiplying the rateable value of the property by the relevant multiplier.

Councillor Zarar Qayyum followed his question by asking whether the Council’s Business Intelligence Unit provided a calculation on those new businesses that came into the borough (annually). Officers responded that the work on new businesses was completed by the Business Rates Team. Intelligence was gained from a number of sources including the work of Council Inspectors, Valuation Office Agency, information from new occupiers, landlords and their agents and Street Naming & Numbering (Gazetteer). This year, the Council’s database had grown from 9,795 properties on 3 April 2018 (rateable value £567,261,653) to 9,952 properties expected at the end of March 2019 (rateable value £580,194,220), an increase of approx. £6.2m.

Councillor Rowan Ree noted the reduction in overall grant funding and asked for further details to be provided on forecasting and how this worked. Hitesh Jolapara said that Finance officers looked at inflation, spoke to service areas and used these conversations to produce a forecast on inflation. Further calculations were then conducted on budget pressures. He explained that when the modelling was being done, officers assumed a zero percent Council Tax increase. When these calculations had been completed, officers examined all income and expenditure streams and the best and worst-case scenarios before producing a forecast which balanced these factors.

In relation to Business Rates, Councillor Adronie Alford commented that there had been a number of shop closures which had adversely affected collection rates. She asked what actions were being taken to address business closures. In response, Hitesh Jolapara explained that officers had baseline figures, spoke to colleagues within departments, as well as the Business Intelligence Unit and used this data to forecast likely numbers through predictive modelling. The Chair commented that the Business Rate formula was very complex and asked how officers arrived at the £78 million figure. He also asked what the difference was between the assumed amount and the actual amount. Hitesh Jolapara confirmed that the assumed amount was provided by government on the basis of assumptions around the business base and levels of need, however actual collection may be less than that assumed. In the Council’s case we have historically collected less than the assumed amount and have therefore have received business rates at the safety net threshold, which provided the minimum level of funding.

Councillor Zarar Qayyum asked who determined the amount of business rates that were paid to the Government. In response, the Strategic Director, Finance and Governance explained that ultimately the Government decided after various conversations had been conducted between London Councils, the GLA and the Mayor’s Office in relation to the London Business Rates retention pilot.

In relation to growth, Emily Hill explained that the Council was developing an Assets and Growth Strategy, which would enable the redevelopment of existing non-residential assets to provide new community assets and affordable housing. It was noted that each specific scheme would be the subject of separate approvals at Cabinet and Full Council where necessary. Councillor Zarar Qayyum asked if there was a benchmark for growth bids. In response, Emily Hill explained that all growth bids were brought forward on a case by case basis.

Speaking on the Affordable Housing Strategy, Councillor Lisa Homan, Cabinet Member for Housing said that only a limited amount of work had been done on Council housing at this stage, but this work would help the Council to assess whether or not to develop pockets of land as well as work collaboratively with housing associations. Emily Hill confirmed that there was budget growth within temporary accommodation last year, but not within the current year.

With regards to savings proposals, Emily Hill confirmed that the Council faced a continuing financial challenge due to overall Central Government funding cuts, unfunded burdens, inflation, and demand and growth pressures. It was noted that the budget gap would increase in each of the next three years if no action was taken to reduce expenditure, generate more income through commercial revenue or continue to grow the number of dwellings and businesses in the borough. As a result, it was noted that Growth & Place planned to deliver a savings target of £0.779m primarily from the Housing Solutions and Planning divisions. These included actions such as: The Temporary Accommodation reduction programme and investment in private rented sector properties, internal staff restructuring (within Housing Solutions and Planning), as well as restructures of the Work Matters service and Section 106 substitution.

Councillor Rowan Ree asked for further details to be provided on the Planning and Housing Solutions Savings. In response, Glendine Shepherd (Assistant Director, Housing Management) confirmed that the idea was for Housing Management and Housing Solutions to be brought together. The Council was in the process of realigning services and was putting more emphasis on front line services and reducing back office expenditure. David McNulty added that this work involved how teams worked across service areas and how further efficiencies could be made.

Councillor Zarar Qayyum asked whether the savings targets would be reviewed in 6 months-time. Glendine Shepherd confirmed that all savings targets were monitored very closely and were continuously reviewed monthly.

Emily Hill, provided an overview of the main budgetary risks. It was noted that the main risks affecting Growth & Place related to managing the impact of the Government’s programme of Welfare Reform, which anticipated added client numbers and additional costs. Further risks included the inherent volatility of Planning Department income, as well as the Adult learning and Adult Education Budgets which were reliant on grants and fees income.

Councillor Adronie Alford noted the pressures which had been described and commented that the difficulties appeared to stem from the Council not receiving sufficient income. Councillor Zarar Qayyum asked about how the spending on Adult Learning operated and whether this was funded only from S106 monies or if other funding revenue streams were used. Emily Hill confirmed that course fees and EFA grants were the main sources of funding.

The Chair noted that the Economic Development Service was responsible for the delivery of key elements of the Council’s Economic Growth priorities and that the service was dependent upon securing Section 106 funding. The Chair asked for confirmation that should funding not be approved, the risk was £1.2m for each year from 2019/20 onwards. In response, Emily Hill confirmed that Cabinet decisions were needed to award S106 monies. The risks in Planning stemmed from the likelihood of an increased number of planning appeals (and the associated costs) which in the past had been funded from reserves. However, this was now funded differently.

Councillor Rowan Ree asked for clarification about how the S106 process worked and whether an officer team worked with developers to determine what funds might be generated. In response, Emily Hill provided an overview of the S106 process and confirmed that a dedicated team worked on S106 funding opportunities. These officers worked in a cross cutting way, using expertise across the Council to mitigate risks (i.e. schools, education, highways and Planning policy) to ensure informed choices were taken.

Councillor Rowan Ree asked how many officers were in the S106 team. Emily Hill confirmed that this information would have to provided outside the meeting.

Action: Emily Hill to provide details of how many S106 officers worked at the Council.

Councillor Rowan Ree asked whether S106 agreements generated spending power. In response, Councillor Max Schmid, Cabinet Member for Finance and Commercial Service provided a detailed explanation of how S106 funding agreements worked and underlined how it important it was to have excellent negotiating skills within the Council.

Noting the fees and charges outlined in the report, the Chair drew the Committee’s attention to Appendix 4. The Chair highlighted that there were lots of 0% increases. Both the Chair and Vice-Chair agreed it would be useful for the Committee to receive an update on savings targets later in the year.

RESOLVED

That the Committee reviewed and commented on the report.