Agenda item

Consider report by Chief Financial Officer.  (Copy attached.)

There had been circulated copies of a report by the Chief Financial Officer providing an initial assessment of the planning assumptions that should now be followed in constructing the revenue plans for 2019/20 and in subsequent financial years following the publication of the Local Government Finance Settlement for 2019/20 on 17 December 2018.  Now the draft Settlement had been received, the report updated the financial challenge facing the Council and set out a recommended approach to be followed to balance the budget. Reductions in the level of government grant being provided to the Council totaled 2.3% next year.  This would see the resources available to the Council reduced by £4.604m when compared to resources available in 2018/19.  The comparable figure for Local Government in Scotland was a cash reduction of 2.4%.  Officers in planning for the settlement had been assuming a reduction in government grant of 1% in 2019/20 which was in line with average assumptions across Scotland.   The actual cash reduction of 2.3% was significantly higher than estimated and presented greater challenges to the organisation.  The settlement also contained a number of new statutory burdens which authorities were expected to deliver in 2019/20.  This included a requirement to increase the funding available to the Integration Joint Board (IJB) by £2.496m when compared to the 2018/19 recurrent delegated budgets. Coupled with the reduction in Government grant, the Council would have to fund significant cost pressures next year that would require increases in the Council Tax, increases in fees & charges and a significant programme of cost reductions in order to balance the budget and protect core services.  The settlement permitted the Council to increase the council tax by up to 3% to fund local services and offset the impact of grant reductions.  The Settlement noted that £120m had been made available nationally and would be transferred from the health budget to local government in year for further investment in integration, including delivery of the living wage and uprating of free personal care.  This funding was in addition to the £7.347m of delegated budget from the Integration Joint Board (IJB) in 2018/19.  This funding was baselined and would continue.  2019/20 would be the second year of the 5 year financial plan which commenced in 2018/19.  This longer term corporate approach to the budget would, by the end of 2018/19 have delivered over £60m of cost reduction savings thereby ensuring the Council had balanced its budget and delivered a small underspend in each year since the 5 year planning approach was first adopted in 2013/14.  A corporate approach was again being taken to the development of the budget in 2019/20 focussed on transforming Council services, investment in new technology to reduce costs, greater operational efficiency, new ways of working and the prioritisation of core Council services.  Members discussed the settlement and in response to a question the Chief Financial Officer advised that inflation was currently 2.3% which increased the budget challenge.

DECISION

NOTED the outcome of the local government settlement and the planning assumptions being made for the revenue budget for 2019/20.