Bath & North East Somerset Council
MEETING:	Council Executive	PAPER NUMBER	11
DATE:	8th February 2006
TITLE:	Revenue and Capital Budget and Council Tax 2006/07	EWP	01224
WARD:	All
AN OPEN PUBLIC ITEM
List of attachments to this report: Appendix 1: Changes in the Budget Proposals since the Council Executive of 11th January 2006 Appendix 2: Interim Report on the Capital Review approved by the Council on 17th November 2005 APPENDIX 3: The Budget and Council Tax Proposal of the Council Executive 2006/07 (and Indicative) Budget and Council Tax 2007/08). This comprises of a covering document, plus 5 Annexes. Annex 1 Changes to Revenue Items already built into the base draft financial plan for 2006/07 to 2008/09 Annex 2 Draft Base Revenue Budget 2006/07 and indicative budgets to 2008/09 by Service Annex 3 Proposed Additions to the Capital Programme 2006/07-2008/09 Annex 4 Draft Capital Programme 2006/07 and indicative programmes for 2007/08 and 2008/09 Annex 5 Use and Reconciliation of General Fund Balances to date 2005/06 Annex 6 Section 25 of the Local Government Act 2003 - Chief Financial Officer's Report on Adequacy of Balances and the Robustness of the Budget

1

THE ISSUE

1.1 This report presents the Council Executive's draft revenue and capital budgets for the 2006/07 financial year together with a proposal for a Council Tax level for 2006/07.

1.2 The Government, in making a two year settlement, also expects Councils to indicate a budget and Council Tax for 2007/08.

1.3 The ODPM expects that: "Sensible planning for service delivery needs a stable and predictable funding environment. Freezes on grant distribution changes have helped. But the time has come to go further, and give Councils firm forward financial allocations. There is no reason why Councils cannot now provide similar certainty for their local taxpayers when setting their council tax for 2006/07, by providing an indicative council tax for 2007/08."

2 RECOMMENDATIONS

The Council Executive is asked to recommend:

2.1 That the Council approve:

a) The General Fund revenue budget for 2006/07 of £182.182m and the associated Council Tax increase of 4.95%.

b) That no Special Expenses be charged other than Town and Parish Council precepts for 2006/07.

c) That no use be made of non-earmarked revenue reserves in 2006/07 to finance General Fund revenue expenditure.

d) The individual service cash limits for 2006/07 contained in Annex 2 to the budget proposal.

2.2 That the Council include the Local Precepts of Town and Parish Councils and those of the Fire and Police Authorities in its Council Tax setting.

2.3 That the Council acknowledges the Section 151 officer's report on the robustness of the proposed budget and the adequacy of the Council's reserves (Appendix 3, Annex 6) and approves the conditions upon which the recommendations are made as set out throughout Appendix 3.

2.4 That in relation to the capital budget the Council:

a) approves a capital payments budget of £42.206m for 2006/07 (excluding further slippage from 2005/06) as shown in Appendix 3, Annex 4, including the adjustments proposed in Appendix 2 (Table 2) and the additions to the programme proposed Appendix 3, Annex 3.

b) notes the indicative capital payments budgets of £30.062m in 2007/08 and £18.824m in 2008/09 as shown in Appendix 3 Annex 4, and agrees that any further additions to the programme are subject to additional capital resources (government or third party funding and/or capital receipts) and an evaluation of the balance of benefits from additional capital investment and further reducing unsupported borrowing in the light of future years' revenue budget pressures.

c) notes the continuing work on the Capital Programme Review due to be reported to the June meeting of the Council Executive as set out in paragraph 4.6 and 4.7 of Appendix 2 to the Report to the Executive.

2.5 The Council approves a high level review of the cost and performance of services be carried out and reported to the Council Executive in July 2006 to inform consideration of value for money and service and financial planning for 2007/08 onwards.

2.6 That the Council instruct Executive Members to finalise their revenue and capital budgets for 2006/07 within the cash limits and amounts set by Council, for inclusion on the weekly decision list no later than April 2006 (as part of the approval of Service and Resource Plans).

2.7 Authorise the Interim Head of Finance and Resource Planning, in consultation with the Executive Members (Resources) and the Leader of the Council, to make presentational improvements to the draft Budget Proposal prior to submission to Council and to include an update on the EPH programme as required by the Council at its meeting in November 2005.

2.8 That the Council request the Council Executive and the Resources Overview and Scrutiny Panel to consider how Councillors can be more involved in developing the budget in the context of the Council's Corporate and Financial Plan.

3 FINANCIAL IMPLICATIONS

3.1 The financial implications are contained within the body of the report. At the time of writing, the final financial settlement from Government had not been announced. A verbal update will be given to the Council Executive at its meeting.

4 BACKGROUND

4.1 In the attached document (Appendix 3)the Council Executive puts forward its budget proposal to Council. It has been prepared alongside, and is consistent with, the draft Corporate Plan Review which appears elsewhere on this agenda.

5 THE REPORT

5.1 It is important to be clear on the process to be followed in setting the 2006/07 Budget. The Solicitor to the Council has given the following guidance:

5.2 The Council Executive has the responsibility to prepare and propose a draft Budget to Council for its approval.

5.3 The Council Executive can receive from any political group that so wishes, an alternative budget proposal to that published in the Council Executive agenda papers and will satisfy itself that any such proposals have been discussed with the Council's statutory officers and that an impact statement from Officers about such proposals is available. Any alternative proposal will be formulated so it is prefaced by a standard form of words.

5.4 Therefore all proposals notified to the Council Executive meeting will be cleared with the Section 151 Officer and the Monitoring Officer beforehand. Those Officers will offer advice to Members on the "significance" of any proposals. (See paragraphs 5.7 and 5.8 for the relevance of whether a proposal is, or is not, "significant").

5.5 The Council Executive will formulate a budget proposal and council tax recommendation to the council meeting on 21^st February, 2006 which may include agreed core proposals and options for allocating parts of the budget.

5.6 The Council has available to it at the budget setting meeting two options. It can object to specific parts of the proposals and if it does so must require the Executive to reconsider its proposals. The Council is required to give the Executive the reason(s) why it considers those proposal(s) should be changed and it is then for the Executive to consider those proposed changes and the reasons put forward. Alternatively it is, of course, open to the Council to accept the budget in its proposed form at the meeting, in which case no further action is necessary.

5.7 Council may then determine the budget on the basis of the Council Executive's recommendation plus any insignificant changes adopted as amendments from any proposals notified at the Council Executive meeting.

5.8 However if a significant proposal is accepted on a vote at Council, from those notified at the Council Executive meeting, this stands as a formal objection within the terms of the Regulations and will be referred to the Leader for him to secure consideration by the Council Executive and report back to the Council meeting on 2^nd March 2006.

5.9 When the Executive has considered the objections, it is required to put its proposals (which may or may not be revised) back to the Council Meeting. If the Executive does not agree with Council's views on a proposed change, it is required to state why and the Council can then take those reasons into account, along with its original thoughts as to why the change was desirable.

5.10 In setting the budget the council is required to approve a full budget resolution including the police, fire and parish precepts and the proposed council revenue and capital budgets for 2006/07. That budget will include within it the overall proposed council cash limits for 2006/07 including the provision for inflation, the proposed use of balances in the 2006/07 budget (if any) and the resulting budget requirement and Council Tax for Bath and North East Somerset including any recommendations for special expenses. At the same meeting the Council will also approve the borrowing limits for 2006/07 and prudential indicators.

5.11 Legally, the council must set a balanced budget for the forthcoming year and determine the council tax. If a budget is not set by the date of the reserve budget-setting meeting (2^nd March), this will lead to a delay in billing and a loss in council tax cash flow. It is highly likely that this will also translate into a higher level of un-collectable debt and debt collection costs and in addition this will significantly impact on council tax performance indicators. a delay until 2^nd March will also compromise the Council's ability to meet current billing deadlines, and there is a serious risk billing will be delayed also with negative cash flow impacts.

5.12 The final Council Tax set will encompass all parish and police and fire precepts (that is the money we collect on behalf of the parishes, fire and police and pay to them).

6 RISK MANAGEMENT

6.1 A risk assessment related to the issue and recommendations has been undertaken, in compliance with the Council's decision making risk management guidance.

6.2 In addition Appendix 3 to this report includes (at Annex 6) the Resources Director's assessment of the Robustness of Estimates and Adequacy of Reserves. One of the considerations taken into account is the Directors' Review of Robustness of Estimates and Budget Risks/Sensitivities and the Corporate Risk Register.

7 RATIONALE

7.1 The rationale for the recommendations is contained in the supporting paper to this report.

8 OTHER OPTIONS CONSIDERED

8.1 The supporting paper and appendices also contain the other options that can be considered in making any recommendations.

9. CONSULTATION

9.1 Meetings have been or will be held with trades unions and with stakeholders during the development of service and resource plans which have fed into this budget.

9.2 The proposals have been issued to representatives of the business community for consultation.

Contact person	Councillor Malcolm Hanney, Executive Member (Resources), (01225) 477034 and Councillor Paul Crossley , (Leader of the Council) (01225) 477496 Richard Szadziewski, Interim Head of Finance and Resource Planning (01225) 477468
Background papers	Corporate Plan Review Draft Service Plans 2006/07 Reports to Overview and Scrutiny Panels and Service Plans, Jan/Feb 2006 Record of base budget changes and all budget adjustments from 2005/06 to 2006/07 Directors' Reviews of Robustness of Estimates and Budget Risks/Sensitivities.