Agenda item

[To approve matters relating to the draft budget for 2016/17 and beyond as the basis of consultation with stakeholders]

Cllr Andrew Johnson took Cabinet through the report on progress to identify additional savings for 2016/17 and future years in accordance with the budget strategy approved by Cabinet in February 2015 and Full Council in March 2015.  A further report would be presented to Cabinet in October 2015 and then the draft budget would be the subject of formal consultation and scrutiny. Cllr Johnson also informed Cabinet that during the period 2010/11 to 2015/16 the Council’s Government grant had been cut by 50% in real terms and he suggested that the Government cuts were likely to continue.  It was the Council’s responsibility to manage the situation as best as it could for the citizens of Wolverhampton.

Resolved:

1. That the savings target amounting to £16.9 million in 2016/17, be further developed, including the necessary equalities analyses, for inclusion in the Draft Budget and Medium Term Financial Strategy 2016/17 – 2018/19, to be reported to Cabinet in October 2015 for approval to proceed to the formal consultation and scrutiny stages of the budget process.

2. That the commencement of initial consultation and/or stakeholder engagement relating to individual savings opportunities, where this is necessary in order that they can be fully developed ahead of the Draft Budget and Medium Term Financial Strategy 2016/17 – 2018/19 being reported to Cabinet in October 2015.

3.    That it be noted:

a.      That while progress is being made against the Council’s approved strategy to identify new savings of £20 million for 2016/17; work continues to identify £5.1 million of the £20 million new savings for 2016/17.

b.      That the General Fund revenue outturn position for 2014/15 was a net underspend of £6.991 million (2.82%) against the net budget requirement of £247.6 million, as reported to Cabinet at this meeting in the Revenue Outturn 2014/15 report. This, combined with the receipt of additional Business Rates Support grant totalling £3.4 million, resulted in the Council not needing to draw down £9.9 million from General Fund Balances to balance the budget, as originally budgeted for.

c.      That a significant element of the underspend arising within the 2014/15 General Fund outturn is already factored into the Council’s Medium Term Financial Strategy, including savings arising as a result of changes to the Council’s Minimum Revenue Provision (MRP) Policy, as approved by Full Council on 4 March 2015. Whilst the underspend against budget during 2014/15 would help to support the Council’s short term financial position, it does not address the challenging financial position that the Council finds itself in over the medium term; namely identifying an additional £46.3 million of savings. Further to this, it is anticipated that the financial challenge could potentially be worse once the Autumn Spending Review is announced.

d.      That  a comprehensive review of all service areas, which is being led by Finance, is currently being undertaken to challenge all areas of underspend and identify any  recurring savings which may contribute towards the savings strategy for 2016/17. The results of this review would be reported to Cabinet in October as part of the Draft Budget and Medium Term Financial Strategy report.

e.      That it is proposed that £17 million is transferred from the General Fund Balance into specific reserves, for which approval is sought in the Reserves, Provisions and Balances 2014/15 report to be presented at this meeting. The Council’s General Fund Balance will therefore stand at £10 million; the minimum balance as determined in the Council’s approved Reserves and Balances Policy. This is in accordance with the planned approach as set out in the Council’s MTFS, approved by Full Council on 4 March 2015.

f.       That due to the uncertainty surrounding the future of public finances in 2016/17 and beyond following the Government budget announcement on 8 July which indicated that there would be some additional cost pressures and potential further cuts to grant, and the existing assumptions concerning the successful delivery of significant levels of challenging savings, the projected additional savings requirement in each of the next four financial years could still change significantly as more information becomes available, particularly following the spending review that is due to be published in the Autumn.

g.      That in the event that the challenge increases in 2016/17 it will be necessary to identify more savings to ensure that the minimum of £10 million in the General Fund Balance is maintained for 2016/17.

h.     That the 2016/17 budget timetable will, as in previous years, include an updated report presented to Cabinet in October 2015 detailing savings proposals that will be subject to formal budget consultation and scrutiny during October 2015 - January 2016. Further to this, an update on all budget assumptions and the Local Government Settlement will be presented to Cabinet by January 2016, with the final budget report due to be approved by Full Council in March 2016.