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OVERVIEW AND SCRUTINY COMMITTEE DATE OF MEETING: 16 JANUARY 2018 TITLE OF REPORT: DRAFT BUDGET 2018/19 Report of: Head of Corporate Services

Cabinet Member: Councillor David Neighbour, Leader and Finance 1 PURPOSE OF REPORT 1.1 This report provides a summary of the revenue and capital budget proposals for

2018/19 to enable the Overview and Scrutiny Committee to forward its recommendations on the budget and Council Tax levels to Cabinet on 1 February 2018. The report also includes the statutory statement of the Head of Corporate Services (Section 151 Officer) to Council on the robustness of the estimates and adequacy of reserves.

2 OFFICER RECOMMENDATIONS

That the Committee: 2.1 Note that there is currently a surplus of £97k in the draft revenue budget for

2018/19. 2.2 Recommend that Cabinet approves the level of Council Tax for 2018/19 be increased

by £5 (3.09%) and set at £166.84 2.3 Recommend to Cabinet that the summary revenue budget for 2018/19 as set out (in

Paragraph 12 of this report) be approved. 2.4 Recommend that Cabinet approve the revised capital programme for 2017/18 and

2018/19 as detailed in Appendix 2. 2.5 Recommend to Cabinet that no changes are made to the Council Tax Support

Scheme for 2018/19. 2.6 Note the Section 151 Officer’s statutory report regarding the robustness of the

estimates and the adequacy of reserves detailed in paragraph 13. 3 BACKGROUND INFORMATION 3.1 The period of austerity for local government continues based on the financial

settlement the Council has received. It is clear the government continues to face a challenge in financing the costs of adult social care.

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4 GOVERNMENT GRANT FOR HART IN 2018/19 AND BEYOND 4.1 Hart was one of 10 authorities to reject the government’s 4 year settlement offer

announced in December 2015. The settlement figures are therefore only guaranteed for 2018/19:

2016/17

£m 2017/18

£m 2018/19

£m 2019/20

£m Revenue Support Grant (RSG) 0.562 0.082 0 -0.515 Business Rate Baseline Funding 1.265 1.291 1.329 1.359

4.2 The grant figures above show a negative figure for RSG in the last year. Even though

the government previously stated they would not change the amount of tariff that a council pays (the amount of business rates collected in excess of the amount the government thinks each local authority needs to retain), the figures above suggest otherwise as the negative RSG will be offset by a matching reduction in the Business Rate Baseline Funding paid to the Council. The government assumes councils can make up the deficit by increasing Council Tax each year on a higher tax base as more houses are built in line with government estimates.

4.3 During his statement on the provisional settlement to Parliament, the Secretary of

State acknowledged councils’ concerns on negative RSG. He confirmed that DCLG “will be looking at fair and affordable options for dealing with negative RSG”. Consultation on the proposals will follow this spring.

4.4 Members will be aware that from 2020 onwards the Chancellor intends to localise

business rates and it is not known how this will affect the amount of business rates Hart is allowed to retain.

4.5 A Fair Funding Review to revise the methodology for distributing RSG and business

rates is due in 2020. There is a separate paper on the agenda on this issue. 5 COUNCIL TAX 5.1 It is clear from the figures provided to local government that the government

assumes some of the funding shortfall will continue to be met by increases in Council Tax. This continues the significant change in approach introduced in 2016/17 as previously councils were encouraged to freeze Council Tax levels and specific grants were provided to partly cover the cost to councils of not increasing the tax.

5.2 Freeze grants are no longer available. The Government is allowing shire districts to

raise the Council Tax in 2018/19 by up to 2.99% or £5, whichever is the greater, and consequently the budget proposals included in this report assume a £5 increase in both 2018/19 and 2019/20. Any figure above this will require the Council to seek residents’ approval through a referendum. The financial effect of this increase is to add approximately £200k per annum to income and this will increase each year if Council Tax increases are approved annually.

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6 NEW HOMES BONUS 6.1 New Homes Bonus remains a crucial part of the Council’s budget and £2.148m will

be received in 2017/18 and wholly used to support the revenue account. Whilst this is more than predicted in the Medium Term Financial Outlook (£250k extra), the risk is that future year’s levels cannot be guaranteed.

6.2 The following changes were introduced in 2017/18:

• Overall reduction in the amount available for New Homes Bonus nationally (presumably to make more funds available for upper tier authorities to meet social care obligations).

• Reduction of payments to 4 years, instead of the current 6 • Transitional year in 2017/18 of 5 years to give affected councils time to plan

their finances. • A threshold of 0.4% growth in housing, below which no NHB will be paid

6.3 The threshold is to be maintained at 0.4% in 2018/19. 6.4 The future of NHB continues to remain uncertain and is a matter is of great concern

because any reductions in this grant will have an adverse effect on financial projections and jeopardise the chances of making proper financial plans for the future.

6.5 At the extreme the Council would be in serious financial straits if all New Homes

Bonus was lost, whether by increases in the threshold, or by changes to the scheme.

7 COUNCIL TAX SUPPORT SCHEME 7.1 The introduction of this scheme in 2013 meant that Council Tax benefits would be

replaced by a Council Tax discount scheme and the government reduced funding to 90% of the cost of discounts. Councils had either to reduce the discount paid to working age claimants or find income to make up the reduction. In the event this Council agreed not to reduce the discount (benefits) paid to such claimants but to fund the cost from the revenue account.

7.2 During 2016/17, the Council consulted on changes to the scheme for 2017/18. All

claimants would have had to pay at least 20% of their Council Tax. The changes would have saved approximately £24,000 per annum.

7.3 Cabinet decided on 5th January 2017 not to progress with changes to the scheme. 7.4 There have been no proposals to change the scheme for 2018/19. 8 FEES AND CHARGES 8.1 The budget has been prepared taking account of the following changes to charges in

the main service areas:

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• Green Waste - inflationary increase • Car Parking - to be reviewed after a year of lower fees • Housing - inflationary increase • Leisure - N/A • Planning - 20% • Building Control - none • Licensing - none

9 GROWTH AND SAVINGS INCLUDED IN BUDGET 9.1 Officers have adopted an incremental approach to the budget as well as identifying

areas for further savings, as well as any opportunities to secure new sources of income. Naturally, given the current financial climate, few discretionary growth items have been included.

9.2 Appendix 1 attached shows the movement of budgets between 2016/17 and 2017/18. 9.3 The final outcome of the waste collection tender process is not yet known, and could

lead to cost pressures or savings from October 2018. 10 OUTTURN BUDGET FOR 2017/18 10.1 The outturn budget is expected to balance in 2017/18. 11 CAPITAL PROGRAMME 11.1 The Capital Programme is attached as Appendix 2. 12 DRAFT BUDGET 2018/19 AND INITIAL PROJECTION 2019/20 12.1 The table below summarises the draft budget for 2018/19 and an initial projection for

2019/20.

2017/18

2018/19

2019/20

Net Cost of Services 9,933 9,786 9,785 Less Debt Interest New Homes Bonus

111

-2,273

111

-2,148

70

-2,443

Net Budget Requirement 7,771 7,749 7,412 Financed By Government Grant - Business Rates Retained - Revenue Support Grant

-1,193 -82

-1,230 0

-1,257 515

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- Transitional Grant Collection Fund (Surplus) / Deficit NNDR Reserve Council Tax Income £5 Increase in Council Tax S106 Receipts SANG Receipts/Loan Repayments Minimum Revenue Provision / Loan

Repayments

-109 827

-930 -6,186

-197 -48 -99 180

0 390

-493 -6,537

-202 -65

-131 422

0 0 0

-6,870 -203 -45

-100 422

Transfer (to) from Reserves to balance Revenue Account

-66 -97 -126

General Fund Balance as at 1 April Transfer to (from) Reserves

5,392 97

5,489 126

General Fund Balance at 31 March 5,489 5,615 12.2 The major issues looking beyond 2018/19 are:

• The negative RSG issue • Changes to New Homes Bonus Funding, including possible changes to the

threshold • Waste tenders • Fair Funding Review

13 ROBUSTNESS OF ESTIMATES AND ADEQUACY OF RESERVES 13.1 Section 25 of the Local Government Act 2003 requires the Chief Financial Officer to

report on the robustness of the estimates and adequacy of proposed financial reserves.

13.2 The budget has been constructed following a detailed and robust process involving

budget holders, finance staff, the leadership team and Members. Account has been taken of identified financial issues and pressures and realistic budget assumptions have been made and key risks identified. Service changes and savings options have been considered by Heads of Service and Members through the service review process.

13.3 Budget risks are managed throughout the year by a comprehensive budget

monitoring process, which acts as an early warning of budget issues allowing corrective action to be taken, and via the general fund reserve.

13.4 The Council has limited reserves available to it. A summary of the estimated

movement on the General Fund balance is shown in paragraph 12. 13.5 The S151 Officer considers that the projected General Fund balance is adequate to

help manage the 2018/19 budget risks. While the use of the General Fund balance is for financing unplanned one-off costs and does not underwrite on-going expenditure, the level of the General Fund balance does provide a buffer against the uncertainty of future central government funding.

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14 COMMENTS OF THE MONITORING OFFICER 14.1 This report recommends the adoption of a lawful budget and the level of Council

Tax for 2018/19. It also outlines the Council’s current and anticipated financial circumstances, including matters relating to capital expenditure and resources.

14.2 The setting of the Budget and Council Tax by Members involves their consideration

of choices. No genuine or reasonable options should be dismissed out-of-hand and Members must bear in mind their fiduciary duty to the council taxpayers of Hart.

14.3 Members must have adequate evidence on which to base their decisions on the level

and quality at which services should be provided. Where a service is provided pursuant to a statutory duty, it would not be lawful to fail to discharge it properly or abandon it, and where there is discretion as to how it is to be discharged, that discretion should be exercised reasonably. Where a service is derived from a statutory power and is in itself discretionary that discretion should be exercised reasonably.

14.4 Should Members wish to make additions or reductions to the budget, on which no

information is given in the report before Members, they should present sufficient information on the justification for and consequences of their proposals to enable the Council to arrive at a reasonable decision on them.

14.5 The report sets out the relevant considerations for Members to consider during

their deliberations and members are reminded of the need to ignore irrelevant considerations. Members have a duty to seek to ensure that the Council acts lawfully. They are under an obligation to produce a balanced budget and must not knowingly budget for a deficit. Members must not come to a decision which no reasonable authority could come to; balancing the nature, quality and level of services which they consider should be provided, against the costs of providing such services.

14.6 Members are also reminded of Section 106 of the Local Government and Finance Act

1992 which prohibits any Member, who has not paid for at least two months his/her Council Tax when it became due, from voting on setting the Budget and Council Tax.

CONTACT: Andrew Vallance, Head of Corporate Services x4207, email: andrew.vallance@hart.gov.uk APPENDICES: Appendix 1 - Comparison of Original Budget 2017/18 to Draft Budget 2018/19 Appendix 2 – Capital programme

PAPER CAppendix 1

Comparison of Original Budget 2017/18 to Draft Budget 2018/19

Cost 2017/18 2018/19Centre Original Draft Budget

Budget Budget ExplanationCost Centre Total : C651 - Civic Function & Chairman 9,140 8,990Cost Centre Total : C652 - Corporate - Apprentices 26,320 44,940 Year 2 ApprenticeCost Centre Total : C653 - Corporate Communication 176,810 178,090Cost Centre Total : C654 - Leadership Team 573,975 651,505 Project Management Cost Centre Total : C655 - Corporate Performance Team 64,214 65,684Cost Centre Total : C656 - External Audit 66,660 66,660Cost Centre Total : C657 - Non Distributed Costs 160,000 160,000Cost Centre Total : C659 - Climate Change 18,870 18,370Cost Centre Total : C661 - Hart Development 112,180 55,880 Staff transfer to Strategy & Policy & Neighbourhood

PlanningCost Centre Total : C663 - Neighbourhood Planning 0 0Cost Centre Total : C664 - Strategy & Policy 0 30,160 Staff transfer from Hart DevelopmentCost Centre Total : C680 - Customer Services Contract 248,675 192,950 Lot 1Cost Centre Total : C681 - IT Contract 151,885 0 Lot 1Cost Centre Total : C682 - HR Contract 8,978 0 Lot 1Cost Centre Total : C708 - Internal Audit 99,850 107,410Cost Centre Total : C709 - Legal Services 291,920 304,890 Increase in line with SLACost Centre Total : C780 - Customer Services Client 40,330 57,910 Client officer for BDBC ContractCost Centre Total : C781 - IT Client 172,270 180,170Cost Centre Total : C782 - HR Client 31,200 28,940Cost Centre Total : C800 - 5 Council Contract - Lot 1 1,337,010 2,324,050 Lot 1 full year effectCost Centre Total : C801 - 5 Council Contract - Lot 2 292,428 0 Lot 2Cost Centre Total : P113 - Local Land Charges -159,000 -159,000 Cost Centre Total : T702 - Admin Bldgs - R & M 315,479 400,360 Lot 2 & staff Realignment Business SupportCost Centre Total : D110 - Rechargeable Elections 0 0Cost Centre Total : D111 - Register Of Electors 121,203 116,003Cost Centre Total : D112 - Election Expenses 99,848 208,273 Election costs in 18/19Cost Centre Total : D650 - Support To Elected Bodies 302,955 332,055 to reflect agreed allowancesCost Centre Total : F105 - Revs & Bens Contractor Costs 309,000 0 Lot 1Cost Centre Total : F106 - Revenues & Benefits Client -273,660 -287,560 Legacy Revs & Bens system Cost Centre Total : F600 - Housing/Council Tax Benefits 152,300 -40,000 Latest rent allowance and subsidy estimatesCost Centre Total : F657 - Bank Charges 53,000 53,000Cost Centre Total : F698 - Finance Client 122,385 123,830Cost Centre Total : F699 - Finance Contract 237,535 0 Lot 1Cost Centre Total : L308 - Hart Leisure Centre Building 228,400 125,230 Mid year cost of legacy buildingCost Centre Total : L310 - Frogmore LC Building 3,200 3,300Cost Centre Total : L313 - Leisure Centres Contract -334,000 -789,746 Additional contract fee incomeCost Centre Total : L314 - Leisure Centres Client 64,456 60,636Total Corporate Services 5,125,816 4,622,980Cost Centre Total : P407 - Planning Policy 586,591 734,820 Staff transfer from Hart DevelopmentCost Centre Total : A421 - Community Safety - Shared Serv 178,889 139,355 As per SLA with RushmoorCost Centre Total : H220 - Private Sector Housing 213,320 151,910 HIA Budget CapitalisedCost Centre Total : H611 - Strategic Housing Services 117,938 154,290 Staff RealignmentCost Centre Total : H612 - Housing Needs Service 548,990 508,100 Staff RealignmentCost Centre Total : H613 - Help for Single Homelessness 0 0Cost Centre Total : H615 - Homelessness Trailblazer 0 0Total Community Services 1,645,728 1,688,475Cost Centre Total : A307 - Licences -8,830 -6,390 Cost Centre Total : A418 - Hackney Carriages -21,460 -18,860 Cost Centre Total : P210 - Dog Warden 49,140 48,245Cost Centre Total : P211 - Pest Control 1,080 1,270Cost Centre Total : P215 - Env Health Commercial 154,200 164,510 Staff RealignmentCost Centre Total : P216 - Environmental Protection 179,700 173,880 Staff RealignmentCost Centre Total : P217 - Health and Policy 51,660 55,230Cost Centre Total : P218 - Churchyards 7,500 7,500Cost Centre Total : P230 - Out Of Hours Noise Service 27,650 24,410Cost Centre Total : P719 - Health & Safety 32,510 33,890Cost Centre Total : C660 - Business Support Unit 278,680 367,640 Staff RealignmentCost Centre Total : C662 - Corporate Support - Non Staff 219,860 188,640 Staff RealignmentCost Centre Total : D660 - Print Room & Photocopying 19,300 40,300 Lot 2 Printing ContractCost Centre Total : P401 - Planning Development -197,115 -279,300 Additional Fee IncomeCost Centre Total : P403 - Building Control - Fee Earning -136,970 -92,760 Realignment of Shared Service 60/40 splitCost Centre Total : P404 - Building Control - Non-Fee 79,410 98,590 Realignment of Shared Service 60/40 splitCost Centre Total : P410 - Street Naming & Numbering -3,115 -1,780 Total Regulatory Services 733,200 805,015Cost Centre Total : L208 - Land Repossessions 4,480 4,480Cost Centre Total : L302 - Fleet Pond 68,370 65,340Cost Centre Total : L303 - Commons 46,470 42,090Cost Centre Total : L304 - Odiham Common 57,450 37,020 Staff Alignment to Capital Cost Centre Total : L306 - Elvetham Heath Nature Reserve 53,190 50,940Cost Centre Total : L325 - Edenbrook Country Park 65,430 93,370 Additional S&S to reflect site adoption

PAPER CAppendix 1

Comparison of Original Budget 2017/18 to Draft Budget 2018/19

Cost 2017/18 2018/19Centre Original Draft Budget

Budget Budget ExplanationCost Centre Total : L326 - QE || Fields 8,580 8,170Cost Centre Total : L327 - Biodiversity 27,113 27,483Cost Centre Total : L328 - Bramshot Farm 50,910 0 Staff Alignment to Capital Cost Centre Total : L406 - Landscape & Conservation 63,250 61,970Cost Centre Total : L407 - Tree Preservation Orders 140,340 155,580 Tree Safety monitoring software Cost Centre Total : L410 - Environmental Promotion - Stra 145,595 147,965Cost Centre Total : A419 - CCTV 169,510 177,570Cost Centre Total : T116 - Emergency Planning 42,130 43,230Cost Centre Total : T200 - Waste Client Team -733,230 -714,055 Contract & Mobilisation SupportCost Centre Total : T207 - Hart Drainage 88,040 89,140Cost Centre Total : T208 - Waste Contract 1,682,209 1,754,639 Inflation increase for first 6 months and estimated

contract for last 6 months. Loss of Depot income with new contact

Cost Centre Total : T210 - Grounds Mtn Contract 326,290 314,580 SLA with BDBC see StreetsCost Centre Total : T211 - Street Cleaning 538,070 552,860 SLA with BDBC see GroundCost Centre Total : T212 - Clinical and Bulky -6,420 -7,730 Cost Centre Total : T213 - Basingstoke Waste Contract 0 0Cost Centre Total : T214 - Fair Trade 2,000 2,000Cost Centre Total : T413 - Street Furniture 11,080 11,170Cost Centre Total : T416 - Highways Traffic Management 56,080 39,350 Additional TRO fee income Cost Centre Total : T417 - Highways Agency - Development 15,290 20,920Cost Centre Total : T423 - Estates/Asset Management 40,760 63,290 Lot 2Cost Centre Total : T501 - Off Street Enforcement -548,507 -481,250 Lot 2Cost Centre Total : T502 - On Street Enforcement 14,043 109,210 Lot 2Total Technical & Environmental Maintenance 2,428,523 2,669,332Grand Total 9,933,267 9,785,802

PAPER CAppendix 2

Corporate Services Capital 573 0Housing & Customer Services Code 630 530Leisure 651 0Environmental Promotion 2,690 161Technical Services 1,979 872TOTAL CAPITAL PROGRAMME 6,523 1,563

Service Area Scheme Current Available Budget

Carried Forward 2015/16

CCTV-Rushmoor YY16 50 0Rural Broadband YL37 23 0Upgrade to IT infrastucture (5 Counsil's) YT07 500 0Trading Company 0 0

573 0Private Sector Renewal - Minor Works Grants(Home trust Loan YR03 60 30Grant for 13x 4 bed dwellings. YR04 70 0Disabled Facilities Grants YR05 500 500

630 530Fleet Area Football (S106) YL33 180 0Leisure Centre SCAPE project appraisal YL34 0 0Strategic Leisure YL35 0 0Leisure Centre Pre Construction Stage YL47 53 0Frogmore leisure Re-Development YL30 42 0Leisure Centre Construction YL52 264 0Leisure Centre Consultants & Fees YL53 112 0

651 0Fleet pond Nature Reserve Visitor Strategy (S106) YL29 17 0Odiham Common (S106) YL32 15 5S106 Leisure Parish Funded Projects YF09 14 0Fleet Pond Access Track YL54 150 0Fleet Pond Visitor Enhancements YL55 20 106Hazeley Heath Grazing Project YL56 80 0Hazeley Heath Notice Boards YL57 15 0Hazeley Heath Access Improvments YL58 77 0HW Central Common Enhancement YL59 22 0HW Central Common Access Improvements YL60 80 0HW QEII Fields Improvements YL61 35 0Edenbrook CP Play Tree YL62 0 30Edenbrook CP History Walk YL63 0 20Cricket Hill Pond Phase 2 YL64 8 0Service Vehicles YL65 65 0Countryside Workshop YL66 0 0Bramshot Farm YT67 2,092 0Edenbrook CP - Skate/Bike Park YL69 0 0Edenbrook CP - Teen Health YL70 0 0Edenbrook CP - Visitor Improvements YL71 0 0

2,690 161Technical Services Fernhill Road, Pedestrian Facilities (S106) YT09 13 0

S106 NEHTS Parish YT14 9 0Church Road Improvements YT18 377 0Post Payment Parking YT19 120 0Phoenix Green, Hartley Wintney YT10 18 0Mill Corner, North Warnborough YT11 20 13Kingsway Flood Alleviation Scheme 22 99Refuse Vehicles 1,400 760

1,979 872TOTAL CAPITAL PROGRAMME 6,523 1,563

Capital FundingDisabled Facilities Grant 500 500Environment Agency 60 112S106 Receipts Housing 70 0S106 Receipts Leisure District/Parish 2,818 161S106 Receipts Leisure Centre 471 0S106 Receipts NHTS 129 0SANG 0 0Capital Recepits Housing 60 30Internal Borrowing 2,415 760TOTAL CAPITAL PROGRAMME 6,523 1,563

Current Available Budget 2017/18

£'000

Budget Requirement

2018/19 £'000

Corporate Services

Housing & Customer Services

Leisure