Proposed replacement savings

The Commission considered each of the proposed amendments to previously agreed savings for Corporate Services and Safer Merton.

Caroline Holland, Director of Corporate Services, explained that the amendments relating to Corporate Services resulted in part from delays in delivery of key projects that had impacted on staffing savings and also from a review of HR savings following the withdrawal from the shared service with Sutton. In response to a question about energy savings (CSD2) she said that this had been deferred for a year to provide more time to identify other ways of achieving energy efficiency savings.

Chris Lee, Director of Environment and Regeneration, said that the amendments to the Safer Merton proposed saving resulted from a comprehensive review of the service budget and changes to ways of working that would mean staffing levels could be maintained.

The Commission RESOLVED to accept the proposed amendments to the previously agreed savings for Corporate Services and Safer Merton.

Capital programme

The Commission reviewed and RESOLVED to accept the proposed capital programme for Corporate Services.

Members asked questions about the impact that the capital programme has on the revenue account. Caroline Holland said that the cost of borrowing is shown in the revenue account (on the treasury/capital financing line on page 33) and that every effort was made to maximise grants and other capital receipts in order to minimise this impact. The cost is accounted for as a 4% repayment on capital debt, as directed by government – this is a complicated issue and discussion is taking place with the council’s external auditors to explore options for treating it differently.

Medium term financial strategy

The table on page 33 of the agenda sets out the draft medium term financial strategy (MTFS) 2017-21. Caroline Holland explained what each line represented and how the figures had been reached.

In response to questions, Caroline Holland confirmed that the draft MTFS currently shows a balanced budget for 2017/18 and 2018/19 and that this is reliant on the delivery of all planned savings and use of the departmental reserves and the Balancing the Budget Reserve. Departments have been given savings targets for 2019/20 and proposals that begin to balance 2019/20 will be brought forward to scrutiny in January 2017.

Members discussed the contribution that would have been made to the overall budget situation if council tax increases had been applied in previous years. Caroline Holland said that the autumn statement was expected to set out the maximum permitted level of council tax increase that could be taken without triggering a referendum. The autumn statement may also include the options on the adult social care precept.

Referral from the financial monitoring task group

The Chair presented the referral made to the Commission by the financial monitoring task group at its meeting on 10 November 2016 and sought the Commission’s agreement to forward this to Cabinet for consideration at its meeting on 12 December.

Members discussed the referral and were mindful of the impact that savings in adult social care were having on service users (demonstrated by representations to the Healthier Communities and Older People Overview and Scrutiny Panel)  as well as the impact than an increase in council tax would have on hard pressed residents.

In response to a question about the recent consultation on council tax and council spending, Caroline Holland shared preliminary results from over 2,000 respondents. She said that there had been broad agreement with the July 2011 priorities and that a majority of respondents would support an increase in council tax in 2017/18 and 2018/19.

Members noted that the Merton Clinical Commissioning Group (CCG) has indicated that it is not minded to continue the current level of  Better Care Funding if the council does not take the adult social care precept for 2017/18.  Caroline Holland confirmed that other London CCGs had indicated they were reducing  the BCF funding to councils and that one of these councils had successfully challenged this. She added that the financial standing of the CCGs was not know. Members said that they hoped that the council would provide a robust challenge to the CCG on this matter.

The Commission RESOLVED to make a reference to Cabinetasking Cabinet to be mindful of the financial monitoring task group’s discussion when reviewing the draft  Business Plan 2017-21, in particular:

1.         The potential impact of the predicted overspend in 2016/17 service budgets of almost £10m;

2          The statement given to the task group by the Director of Community and Housing in response to a question on whether it would be possible to achieve all of the previously agreed savings. The Director said that it was his professional advice that given the scale of the predicted overspend in 2016/17 he does not believe that it will be possible to retrieve the overspend and achieve all of the  previously agreed savings as well as meeting the council’s statutory duties in relation to adult social care;

3.      Upcoming negotiations between the council and Merton Clinical Commissioning Group about the level of Better Care Funding for 2017/18.