Agenda item

To receive a Budget Update Report (Copy attached).

Consideration was given to a report providing the Panel with an update in respect of progress in relation to the Budget.  It was noted that the final paragraph commencing with the words “The current financial scenario identifies a possible funding gap …” should not have been included within the report and should be deleted.

It was reported that the high level financial planning process had been reported to the Cheshire East Cabinet on 16 June 2008 and set out a number of stages of the budget setting process for 2009-10; Stage 1 (April to June 2008), 2008-9 baseline; Stage 2 (June to September), high level planning; Stage 3 (October to December), refinement and adjustment of options; Stage 4 (January to February) finalisation of the 2009-10 budget.

In considering the report Members of the Panel raised the following issues:

(i)      With reference to Stage 3, it was noted that Cheshire East Cabinet had set a target of £35M savings, which would include income generation for the three year planning period.  It was queried what areas the Council would be considering.  Some examples were given, including the examination of assets and also consideration of external funding, which had to be funding which met the Council’s priorities.

(ii)     It was queried how the inflation rate used had been assessed.  It was reported that the original scenario had gauged inflation at 2.5%, however, the position had changed over the last few months and it was proposed to revisit the inflationary factors and to revise the figures accordingly.  This issue had been discussed at a recent Budget Cabinet Away Day and it would be necessary to strike a balance between the assumptions made and the provision of services.

(iii)    It was queried how the proportions were distributed between Cheshire West and Chester and the Cheshire East Authorities in respect of the assets owned by the County Council.  It was noted that the split was mainly geographic, but where there was shared property ownership with regard to delivery, consideration would be given on a case by case basis.

(iv)    With regard to the County Council’s investment in the Icelandic Bank, it was queried what proportion would be inherited by the Cheshire East Authority. It was noted that the current position looked more positive in respect of this matter, but both new Authorities would have to consider the future risk in terms of the repayment of the investments.

(v)     Clarification was sought as to the amount of reserves to come from each Authority. A brief summary was provided and more detailed figures would be circulated to the Panel.  It was noted that the position in respect of reserves was being reviewed on a quarterly basis by the Cheshire East Cabinet.  The Medium Term Financial Strategy would be reported to the Cabinet at its meeting to take place in the following week and would include details of the reserves position.

(v)     With reference to Stage 4, it was queried where the key dependencies in respect of service design principles and shared services originated from.  It was noted that these had been put forward by the various Workstreams.

(vi)    With regard to the setting of the Council Tax for 2009/10, it was queried whether inflation would be included.  It was noted that there would be a neutral position in each area, but this would not be agreed until the budget setting in February.

(vii)   Members were concerned that there should not be a funding gap, which would lead to a cut in services.  It was noted that this was a prime opportunity to bring the four Authorities together and to make economies of scale.

(viii)  It was queried whether there would be a Capital Programme for Cheshire East and how this would be set.  It was noted that the Medium Term Financial Strategy report would define the Capital Programme.  The Capital Programme was currently being reviewed in consultation with Cabinet Members to assess whether it met the priorities of the Cheshire East Programme and reprioritisation was taking place where necessary.  Consideration was also being given to any new commitments required.

(ix)    Members expressed concern that the existing Authorities had made commitments to local residents and it was considered that these should be met.

(x)     With regard to Council Tax rates, it was noted that a commitment had been made in the bid to equal the lowest of all the constituent Councils, which was Crewe & Nantwich and it was queried what allowances had been made for inflation.  It was reported that the Council Tax proposal would come forward as a package, in terms of the three District areas, however, it was not possible to provide specific information at this stage.  The main focus would be to come within inflation and well within capping limits.  This would be part of the budget setting process, which would be considered in February.

(xi)    The position in respect of double taxation was queried.  It was noted that the position in respect of double taxation would be recognised for each of the Authorities and if not resolved within the existing Authorities, would be resolved by the new Cheshire East Authority.

(xii)   It was queried whether Ward budgets would be an option. This would also be considered and recognised.

(xiii)  The Performance and Capacity Portfolio Holder stated that the intention was not to include any inflation increase and to achieve a balanced budget in the current year, and to enhance some services.  However, some services may disappear or be provided in another way, and consideration was given to combining roles and achieving economies of scale.  All four of the existing Councils had worked closely together in respect of the transitional costs to ensure that they were not higher than expected.