Issue - meetings

Policy and Resources Strategy financial remit 2019-20

Meeting: 18/09/2018 - Cabinet (Item 12)

12 Policy and Resources Strategy: 2019-20 Updated Financial Remit

To note various issues connected with the policy and resources strategy financial remit 2019-20.

Supporting documents:





1.  That it be noted that from financial year 2020-21, local government finance is set to be subject to fundamental reform with the government undertaking a Fair Funding Review alongside a redesign of the Business Rates Retention System.


2.  That it be noted that a budget is initially prepared for 2019-20 on a one-year basis, recognising the funding uncertainties and limited information available beyond 2020-21.


3.  That it be noted that the indicative resources available for 2019-20 budget (Annex A of the report) indicate a budget gap of £18.0m.


4.  That it be noted that this budget gap would reduce by £3.2m should the council decide to increase council tax by 2.99%.


5.  That it be noted that this indicative budget is prepared on the following national and local factors:


National factors

·  Known reduction of £8.647m in government resources from the Settlement Funding Assessment (SFA) and increase in specific grant funding of £1.489m

·  Net inflation and pay award pressures of £7.344m have been provisionally assumed, subject to further analysis


  Local factors:

·  Increase of £2.635m of resources generated through council tax and business rates

·  Decrease of £6.879m in collection fund surplus

·  Increased debt financing costs of £3.809m arising from capital investment programme, offset by the use of £4.6m of capital resources

·  Retaining a £4m contingency within the overall budget to support in year cost pressures

·  No utilisation of reserves have been included

·  That all approved savings are delivered.


6.  That it be noted that the key areas of risk for Southwark arising from the 2019-20 provisional settlement are the lack of certainty for Business Rate Retention, budget pressures arising from children’s and adults’, Dedicated Schools Grant, welfare reform, housing inflation increases and new commitments.


7.  That it be noted that the revenue and capital outturn position and utilisation of reserves, reported at the cabinet meeting in July 2018, will need to be considered when finalising the 2019-20 budget.


8.  That the bids to the strategic investment pot, with the outcome expected in October be noted.


9.  That it be noted that a future report will consider the indicative savings and commitments for 2019-20 in order to balance the budget; and that it be noted that this will include a review of the original indicative 2019-20 savings reported to cabinet in February 2018, 2018-19 outturn forecast and the impact of the budget recovery board.


10.  That it be noted that a future report will also consider a refreshed medium term financial strategy for the period 2020-2023; and that it be noted that resetting the MTFS and managing risk will require careful attention over the transition to the new local government finance system based on business rates retention, and a new funding formula.