The Portfolio Holder for Finance and Value for Money introduced a report which detailed the progress made in preparing the budget for 2012/13 and updated the Cabinet on changes in key financial information since the Cabinet considered the financial prospects for 2012/13 and beyond at its meeting in October. The report reviewed progress against the 10 Year budget, growth and savings items, risk analysis and the position of reserves and provisions. The draft budget proposed for 2012/13 of £13.443m was dependent upon a number of key assumptions which would continue to be monitored and members were reminded of the need for the Council to operate flexibly in the current economic conditions. Allowing for proposed amendments and growth items a budget gap of £46,500 was projected for 2012/13. The sources of income available to the Council, the outturn for 2011/12 and proposed level of reserves were reported. Steps taken to publicise the Council’s budget proposals including consultation on the 2012/13 budget process were detailed. It was noted that the budget could be subject to final adjustment in the light of prevailing financial conditions before being considered by the Cabinet on 9 February and recommendation to the Council on 21 February.

The service pressures identified by the Select Committees and by the Performance and Governance Committee had also been considered and it was proposed that whilst the proposed budget for diesel would not be changed the position would be closely monitored and action taken as appropriate. In terms of pressures on the Housing Benefit Service it was proposed and Cabinet agreed that £50,000 be made available from the Housing Benefit Subsidy Reserve. Cabinet also agreed that the £20,000 pa saving associated with the shared Democratic Services Management pilot arrangement, due to end in December, would be put back into the budget and covered by the increase in market rents that had been secured by the Professional Services Manager. In terms of funding the budget gap it was proposed that the £40,000 reduction in the Housing Benefits grant should be funded from the Housing Benefit Subsidy Reserve and the £6,500 provision for the Members’ IT Allowance should be funded from the underspend on Members’ Allowances.

The Chairman gave the Cabinet a brief overview of the provisional financial settlement that had just been announced by the Government. This broadly followed the Council’s assumptions and the reduction in the revenue grant to the Council amounted to a fall of 29% over two years. The Government had confirmed the offer of a 2.5% Council Tax freeze grant  to those authorities delivering a freeze on Council Tax for the year. The threshold for triggering local referendums on Council Tax increases had been set at 3.5%. The Government had also announced that the total distribution of Business Rates would increase from £19B last year to £23.1B next year and that the New Homes Bonus Scheme would continue but that this would no longer be funded by new money but by top slicing. It was felt that it would be important to keep this money separate until there was greater certainty about how grant funding would work in future. However the Chairman envisaged that the Council’s Big Community Fund would be able to continue during the next financial year.

The Deputy Chief Executive and Director of Corporate Resources updated the Cabinet on action to reclaim money invested with Landsbanki. It was expected that 98% would be recovered and it is hoped that around £300,000 would be repaid in this financial year.

The Cabinet thanked the Deputy Chief Executive and Director of Corporate Resources and his team for their diligence in preparing the budget proposals and commended their earlier work on formulating the 10 Year Budget Plan which had guided the arrangements for this year.

            Resolved: That

(1) the Cabinet welcomes the comments of the Select Committees to the budget and service plan proposals which have been considered in the preparation of the draft budget;

(2) the budget gap of £46,500 identified for the 2012/13 financial year should be met by £40,000 from the Housing Benefit Subsidy Reserve and £6,500 from the underspend on Members’ Allowances;

(3) the Council be recommended to approve the changes to reserves set out in Appendix D to the report;

(4) the level of Council Tax should be frozen for 2012/13; and

(5) any changes in the taxbase and collection fund and other minor variations be transferred to/from the Budget Stabilisation Reserve.