Agenda item

(a)  That option 3 for changes to school funding, as detailed in paragraphs 5.7 to 5.17 of the report, be approved.

(b)  That the latest financial planning assumptions contained within the report be noted.

A report was considered that set out the latest medium term financial position and the options for closing the 2016-17 financial gap following the draft Local Government Finance Settlement.  The report also proposed changes to the schools funding formula following consultation with schools.

The Local Government Finance Settlement was announced on 17^th December 2015 and the key provisions were summarised in Appendix B to the report.  One of the key changes was the timing of funding reductions compared to November’s Spending Review with a further £1m of additional loss of grants in 2016-17 putting even further pressure on the savings requirement.  The main Government grant had reduced from £40m in 2013-14 to £24m in 2015-16 and would fall to £6m by 2019-20.  The Government had announced that it would allow Councils to raise an additional Council Tax precept of 2% to support Adult Social Care which would mean relevant authorities could raise Council Tax by up to 4% without the requirement for a referendum.

The Cabinet had previously identified savings totalling £9.45m for 2016-17 and with the updated financial assumptions the residual savings requirement was £2.59m.  The report set out the available options to close the gap and present a balanced budget to Council on 25^th February, which included further savings across service areas; increasing Council Tax (noting that the financial models currently assumed a 2.94% increase, including the 2% Adult Social Care precept, and would be determined by Council in February); utilising the new provision to use capital receipts to fund revenue expenditure; and utilising capital receipts to fund restructuring costs.

The Leader reported that a delegation from all six Berkshire authorities had met the Minister to discuss the settlement and they gave a clear view of the implications on services and financial planning of the higher than anticipated funding reductions in the next financial year.  The Cabinet noted the options to close the residual gap and were mindful that utilising capital receipts for revenue expenditure was an opportunity in terms of balancing the budget but should be used cautiously and with a clear strategy.

The Cabinet considered the proposed changes to the schools funding formula used to allocate the Dedicated Schools Grant as detailed from paragraph 5.7 of the report.  The Cabinet considered the options and the results of the consultation carried out with schools, noting that 64% agreed with the Council’s preferred option 3.  In relation to paragraph 5.17 of the report, further detail was provided to clarify that some schools could lose more than 1.5% of funding from one year to the next, for example if there was a loss of pupils, and that some funding for schools was outside of the formula.  After due consideration, the Cabinet noted the latest financial planning assumptions and approved option 3 for changes to school funding.

Resolved –

(a)  That option 3 for changes to school funding, as detailed in paragraphs 5.7 to 5.17 of the report, be approved.

(b)  That the latest financial planning assumptions contained within the report be noted.