Issue - meetings

The Portfolio for Finance, Legal and Democratic Services noted that the Chancellor had brought forward a spending review at short notice which was overall good for Somerset as it included increased funding for social care and children’s services although it was still not known when the fair funding review would be brought forward or when the Government’s settlement would be known.  He referred to the scale of cuts in Government grants since 2010, the reliance on Council Tax and the need to concentrate on Business Rates and the proposal to focus on income generation with the aim to be fully self-financing without relying on general Government Grant in future.

The Section 151 Officer said the spending review still held some uncertainty and the Government’s settlement would not be known before December.  It appeared a Council Tax increase cap of 2% was likely although the current MTFP assumption was an increase of 2.99% which meant a possible reduction of £600,000 per year in income by Year 5 of the Medium Term Financial Plan.  If the negative Revenue Support Grant (RSG) was removed for one year then that would be worth £327,000 as a one off figure.  New Homes Bonus remained under review by Ministers and it was a concern that this funding would be significantly reduced in future. It was confirmed in the spending review that there will not be a Business Rate pilot next year so the current Somerset Pilot would definitely be for one year only.  He said that he would circulate a Local Government Association ‘on the day briefing’ to all Members.

The Chief Executive reminded Members that the Financial Strategy had been agreed two years previously and £5.5m of the £6m target savings had been secured.  But this had placed a strain on the organisation and he urged caution at the current time due to the political and financial uncertainties that remained. 

In response to questions from Members, the Section 151 Officer advised that the statutory guidance regarding use of borrowing for investment property acquisition had been issued in 2018 and commercial activity had grown since then.  Both the internal and external auditors had not offered an opinion on regulatory compliance but the Annual Audit report had made positive points on the Council’s commercial activity.  He confirmed that he would provide a written response to a question on the total of reserve balances.

The Chief Executive confirmed that a commercial approach did expose the Council to risk and that as a result both internal or external audit had been requested to review the Council’s approach. Neither gave positive endorsements of a council’s activities but that they had not raised any concerns was sufficient reassurance.

At the conclusion of the debate, Members unanimously confirmed the recommendations of the report.

Subsequent to the meeting, the Section 151 Officer provided the following response to the question on the total of reserve balances:

·         As shown in the Financial Strategy report the current uncommitted balance in General Reserves is £4.1m

·         Additionally, I  ...  view the full minutes text for item 40