Agenda item

Consider report by Chief Financial Officer.  (Copy to follow.)

There had been circulated copies of a report by the Chief Financial Officer providing an initial assessment of the broad planning assumptions that should be followed in constructing the revenue plans for 2017/18 onwards following the publication of the Local Government Finance Settlement for 2017/18 on 15 December 2016.  Now the Settlement had been received, the report updated the financial challenge facing the Council and set out a recommended approach to be followed balancing the budget.  The report explained that reductions in the level of government grant totaled 4.08% next year which resulted in the resources available to the Council being reduced by £8.28m when compared to 2016/17.  The Corporate Management Team, in planning for the settlement, had been assuming a reduction in government grant in the range of 3.5% to 5% so the actual reduction of 4.08% was in the mid-range of these assumptions.  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 estimated at 3%, increases in fees & charges and a significant programme of cost reductions to balance the budget and protect core services.  In a late change to its previously published intensions, Scottish Government had now decided that income raised through changes to the Council Tax multiplier (bands E–H) to be introduced from 1 April 2017, would be retained by Councils to contribute to general fund expenditure.  This change had significantly helped the underlying financial position and reduced the gap that would otherwise have been required to be funded by the Council.  The £250m made available by Government in 2016/17 via the Health budget to fund the introduction of a Living Wage in the care sector had now been baselined.  A further £107m had been provided by Government, again through the Health budget, to fund the full year effect of the Living Wage and further service developments.  The Council’s budget for 2017/18 was predicated on £5.3m of the £250m  national fund being delegated by the Integration Joint Board (IJB) to fund the continuation of this initiative augmented by a pro rata £2.27m share of the £107m.  Government had also made available £120m nationally to establish the Scottish Attainment Fund with £1.83m of specific grant to be allocated to the Borders for distribution to Head teachers. The report noted that 2017/18 would be the final year of the 5 year financial plan first commenced in 2013/14.  The longer term corporate approach to the budget adopted by the current Administration would by the end of 2016/17 have delivered £26.87m of cost reduction savings. These significant reductions had ensured the Council had balanced its budget and delivered a small underspend in each year of the 5 year plan to date. Continuing the robust corporate approach to the budget in 2017/18 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 would be required.   It was noted that further revisions may be required when the final budget was set in February 2017.

DECISION

NOTED the outcome of the local government settlement and the planning assumptions being made for the revenue budget for 2017/18.