A clean and green environment - Ensuring that for visitors and residents alike, the borough provides a clean, tidy and green environment for all.

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1 Section Two Policy Context and Government Funding Corporate Plan Connecting with the Community 1. The council adopted a five-year Corporate Plan in October During 2013 the council carried out a mid-term review of the plan which reflected on the achievements thus far in delivering against the council s objectives, whilst also taking the opportunity to sharpen the focus in the final two years of the plan given the economic downturn and significant changes to local government financing arrangements experienced since the Plan s adoption. The five strategic objectives of the council being: Community well-being - Working with our communities to improve the safety, health and well-being of the people of Gravesham and celebrate the diverse cultures within the borough. Housing - Providing high quality, efficient council housing, working to meet the housing needs of the most vulnerable in the borough and working with private landlords to ensure housing availability in the borough. A clean and green environment - Ensuring that for visitors and residents alike, the borough provides a clean, tidy and green environment for all. Economic development and regeneration - Working with partners to ensure that Gravesham remains a thriving borough, attracting development opportunities and improving the economic well-being of the borough as a whole. Managing the council s business responsibly - Ensuring the economic, efficient and effective delivery of council services, including the continued delivery of quality frontline services. 2. Performance against the plan is reported through quarterly performance update reports and budget monitoring reports, which include the General Fund Medium Term Financial Plan and HRA Business Plan, which both seek to express the delivery of the Corporate Business Plan objectives in financial terms. Reports received by Members this year show that good progress is being made in delivering against each of the strategic objectives set by the council. Funding for Local Government Local Government Finance 3. On 18 December 2014 the provisional local government finance settlement for was announced by the Department for Communities and Local Government (DCLG). The next table shows that the equivalent government funding for Gravesham Borough Council will be reduced by a further 886,860 in Since the beginning of the austerity measures introduced by the Government which began in , the overall level of Central Government Grant received by this authority has reduced from 7,639,170 to 4,710,590 in , representing a cash reduction of 2,928,580 (38.3%) over the six-year period.

2 General Government Grant Business Rates Retention Baseline Funding Level Revenue Support Grant (RSG) Final Final Provisional 2,590,000 2,640,470 2,690,920 3,893,260 2,956,980 2,019,670 Funding Assessment 6,483,260 5,597,450 4,710,590 Change (to Prev. Yr) -- ( 885,810) ( 886,860) % Change (to Prev. Yr) -- (13.7%) (15.9%) % Change (to ) -- (13.7%) (27.3%) 4. The graph below produced by LG Futures shows that Gravesham Borough Council is to receive the largest percentage reduction in settlement funding for when compared to the various types of local authority. 0% Change in Funding (based on adjusted figures) -2% -4% -6% -8% -10% -12% -14% -16% Gravesham Inner London Boroughs incl. City Outer London Boroughs Metropolitan Districts Shire Unitaries Shire Counties Shire Districts England

3 5. Analysis of the percentage reduction in provisional funding settlements for other Kent district councils shows that Gravesham has received the largest reduction in Kent. 16.0% 15.8% 15.6% 15.4% 15.2% 15.0% Percentage Reduction in Funding Assessment The level of Funding received from Central Government is expected to continue to reduce over the next parliamentary period. Indeed, in the Autumn Statement the Chancellor of the Exchequer announced that Public Sector Expenditure is set to fall at the same rate as between and until 2018 and the party conference announcements signal the potential for an even tighter squeeze on Local Authority budgets over the next parliament. For Gravesham, the percentage reduction in central government funding received between and in cash terms was 26.7%. 7. The Independent Commission on Local Government Finance (the Commission) was established in 2014 upon request of the Local Government Association (LGA) and Chartered Institute of Public Finance and Accountancy (CIPFA) to examine the system of funding Local Government in England and bring forward recommendations on how it can be reformed to improve funding for local services and promote sustainable economic growth. 8. An interim report titled Public money, local choice was released in October The report states that by business rates and council tax revenues will exceed local government s projected funding. This will come about by further reductions in government funding which will see public sector funding fall to around 37 per cent of national income and the need for local government to become self-sufficient. The Commission states that the current grant system is so complicated and has been altered many times that it no longer provides a rational basis for funding. New Homes Bonus Scheme 9. In addition to the Funding, the council receives New Homes Bonus (NHB) funding each year based on the number of new homes built in the district and the number of empty homes brought back into use. NHB funding achieved in each year is received for a six year period, with being Year 5 of the Scheme. The government funds the scheme by top slicing the RSG available for local authorities. Therefore councils that are not delivering new housing are, in effect, funding those which do. As far as is possible, the council has actively sought to maximise the NHB it receives, and this has secured indicative NHB funding for of 1,628,090.

4 10. It should be noted that none of the political parties have committed to continuing NHB funding in its current form in the next parliamentary period. 11. The Commission reports that during the review a number of respondents suggested that New Homes Bonus should be reformed. Business Rates Retention Scheme 12. The Business Rates Retention Scheme was introduced by government to incentivise councils to deliver growth through encouraging business development and new business set-up. Under the scheme, the council retains a proportion of locally generated business rates; previously the council would pay over all business rates collected to the government for redistribution in the form of central government grant. 13. When reviewing the Business Rates Retention Scheme the Commission s view is that the incentive of encouraging economic growth through retaining a significant portion of the taxes raised in their area is distorted by a complicated system of tariffs and top- ups which undermines the incentives. 14. The baseline need value for retained business rates in for the council is 2,690,920. This figure is assessed by Government as set out in the table below. Business Rates Baseline Funding Level 000's Assessed Business Rates Yield for Gravesham 22,725 Central Government Proportion (50%) 11,362 Kent County Council Proportion (9%) 2,045 Kent Fire Proportion (1%) 227 Gravesham Borough Council Proportion (40%) 9,090 Less Tariff to Government 6,399 Baseline Need 2, The Council has been approved as a partner in the Kent business rates pool for The Kent pool is a partnership between Kent County Council and most of the Kent Districts with the primary objective of promoting growth within the respective partner areas. The establishment of the pool delivers the benefit of enabling the levies on business rates growth payable by the districts to be offset by the tariff payable by the County Council and Kent Fire, thus enabling more business rates income to be retained locally (membership of the pool is estimated to reduce the levy payable to Government on growth above the baseline need level to 1%, rather than 50%). There is, however, the risk associated with the pool that should a council s business rates decline to a level below their respective safety net level, it will receive no national support to reduce its losses. In recognition of this, the pool agreement distributes any levy saved between the Council, the County Council and a Growth Fund in equal shares and a small percentage to fund a safety net provision.

5 16. The estimate of actual business rates retained income is subject to a number of risks and assumptions, primarily in relation to the number of open appeals being considered by the Valuation Agency (VOA), and the level of bad debt provision. Conclusion 17. The uncertainty of New Homes Bonus, complexity of the Retention of Business Rates System and need for the Council to be self- sufficient through the continued reduction of Central Government funding provides uncertainty in financial planning. The future will depend upon who forms the new government in the outcome of the elections. 18. It is imperative that in order to plan effectively and deal with the many financial challenges that the Council faces, a prudent level if reserves is maintained.