To receive a presentation from the Leader of the Council, the Executive Member for Finance and Investment, and the Corporate Director of Finance and Systems.
The Executive Member for Finance delivered the presentation which had been circulated with the agenda to the Committee. They drew attention to the large levels of spend in adult and children’s services and the fact that a significant proportion of those services were demand led services which were high risk as demand could increase unexpectedly.
The Committee were informed that the Council no longer received any money from central government as over the last 10 years that money had reduced to the point where it was no longer part of the budget. The Committee were then shown a slide which depicted how the Council had made savings over the last ten years in order to meet the funding gap. The Executive Member then described to the Committee how the Council was planning to address the gap in next year’s budget. The Committee were also informed that the fair funding review, which was a national reset of business rates, had been delayed and so would not be an issue for this budget although it was expected to impact the Council in the years to come.
The Council was on target to achieve the majority of their savings targets for 2019/20 and the presentation included a breakdown of where they were being achieved. The Executive Member gave a brief overview of the Councils investment portfolio to the Committee and the rates of return that the Council was expecting to see. The Executive Member then discussed the remaining gap and how the Council was planning to tackle it.
Following presentation the Committee asked a series of questions relating to various aspects of the budget. One Member asked about the impact of the reduction of government funding on the Council and was told by the Corporate Director of Finance and Systems that when the Council signed up to the 100% business rates retention pilot that took over from the government funding. The Executive Member added that this made the Council more vulnerable to economic changes which had been seen in previous years where a number of large businesses had been closed for refurbishment.
The Chair noted that the fair funding review had been pushed back again and asked how this was calculated. The Corporate Director of Finance and Systems showed the funding pie chart and explained that in the fair funding regime all business rate growth is taken and redistributed across the Country. The Corporate Director added that as Trafford had gained more than most of the Country in business rates and so the Council would suffer more when the rates were reset.
A Member of the Committee asked what the status of the Council’s reserves was. The Executive Member responded that the Council was still operating with low level of reserves and that about £600,000 would be used in order to cover gaps in funding for the 2020/21 budget. The Executive Member added that the reserves would be listed within the Councils budget documentation. The Chair requested the reserve information to come to the Budget Scrutiny Sessions in December.
Another Member asked whether the money that the Council borrowed as part of the investment portfolio was on a fixed rate for the term of the loan. The Corporate Director of Finance and Systems confirmed that the investments were on a fixed rate and that the government had increased the rate which had impacted the Council’s purchases in Stretford and Altrincham. The Chair stated that Scrutiny wanted to look into the work of the investment fund to ensure that the Council was making secure investments and minimising potential risks. The Chair then requested that a presentation on the fund be given to the committee at a future meeting as a start to scrutinising the fund.
1) That the presentation be noted.
2) That the Executive Member for Finance and the Corporate Director of Finance and Systems be thanked for attending the meeting.
3) That a presentation on the Council’s Investment Management fund be given to the Committee at a future date.