Review finds that the City’s finances are in good shape

Published: Wednesday, 10th February 2016

- though government policies have led to scaled-back house-building programme.

A cross-party group of backbench councillors have praised the Council for increasing the amount of revenue generated from external sources which has meant that service levels have been largely protected despite government policy changes and funding cutbacks.

The Scrutiny Committee’s Finance Panel found that annual spending by the Council totals some £109m.  Over 80% of this is funded by income generated from trading, grants, commercial assets, fees and charges.  The remaining £19.8m for next year will be funded by a combination of council tax, business rates and a Revenue Support Grant from government, the latter is expected to reduce to zero by 2019/20.  Despite this loss of income, the panel found that the council has robust plans in place to protect services and jobs over the next four years by continuing to increase income as well as making further efficiency savings.

Councillor Craig Simmons, Chair of the Finance Panel, said “The Finance Panel has been an enthusiastic supporter of external revenue generation as a means of  sustaining service delivery in the face of government cuts to local authority funding and is pleased to have contributed to identifying, encouraging and securing a number of new sources of funding over the past couple of years.  Senior officers have wholeheartedly embraced this approach and have demonstrated exceptional entrepreneurial spirit”.

The panel also found that while the general fund is generally in good shape, the Council has had to significantly scale-back its house-building plans due to the expected impacts of government policy changes, such as annual reductions in social rent levels and the forced sale of higher value council houses when they become empty.  Spending on regeneration and energy efficiency schemes has been reduced and funding for the Council’s new build housing programme has been removed entirely meaning that new build housing will have to be delivered in a different way.

Councillor Simmons said “the ambitious plans announced last year, which the Panel welcomed, have been hampered by anticipated changes resulting from government housing policies.  Extensions to right to buy, a levy on high value council houses and cuts in council house rental income will all erode funds which we had planned to spend on building new affordable homes.”

The Panel conducted a detailed analysis of the Councils spending plans during January and a report with twenty-four recommendations will be presented to the City Executive Board meeting on Thursday 11 February.  .  The recommendations include suggestions around further maximising income, mitigating risks and improving the accessibility and transparency of the Council’s budget proposals.