The proposed decisions are in accordance with the statutory requirements outlined within this report and the legal summary below.

The Local Government Act 2003 (as amended) requires Council to adopt the annual budget which is recommended by Cabinet. The Council has a statutory obligation to set a balanced budget differentiated by services, which is sufficient to meet estimated revenue expenditure, levies, contingencies, any deficits estimated to be brought forward from previous years, and any amounts required to be transferred between funds required under the Local Government Finance Act 1992 and related legislation.

In compliance with the principles of administrative law, members are required to consider relevant considerations and disregard irrelevant ones. Any decision made must be one that only a reasonable authority, properly directing itself could have reached. Members must act prudently considering the professional advice of officers, in particular the statutory obligations placed upon the Chief Finance Officer (the S151 officer). The wider duties placed on the Council relating to its financial affairs must be considered. This includes the distinction between revenue and capital expenditure specified within the Local Government and Housing Act 1989. The Local Government Act 1972, S151 grants the Chief Finance Officer responsibility for the Council’s financial affairs, which entails budget oversight throughout the financial year.

The Local Government and Finance Act 1988, section 114, (as amended) also requires the Chief Finance Officer to report to the Cabinet and to all Members of the Council if there is or is likely to be unlawful expenditure or an unbalanced budget. The Chief Finance Officer also has a duty to report to Council under section 114(3) if it appears that the expenditure of the Council incurred and proposed to be incurred, in a financial year, is likely to exceed the resources (including sums borrowed) available to the Council to meet that expenditure.

On receipt of a S114(3) report, the Council shall decide whether it agrees or disagrees with the views contained in the report and what action (if any) it proposes to take in consequence of it (regarding the setting of the budget). A S114 report may also be referred to Cabinet in relation to expenditure proposed or to be incurred by or on behalf of Cabinet.

The Chief Finance Officer’s statement outlines the Council’s position in relation to the section 25 duties, S114 implications and related matters.

It is a criminal offence for a member with arrears of Council Tax which have been outstanding for two months or more to attend any meeting of the Council or one of its committees at which a decision affecting the budget is to be made – the Local Government Finance Act 1992, section 106. To avoid criminal liability, relevant members must make a declaration at the outset of the meeting that he or she is in arrears and will not be voting on the decision for that reason. The member concerned must then abstain from voting.

Subject to the recommendations being approved, having set a budget for the new financial year, the Council is under a duty to monitor that budget during the year and to take remedial action if at any time it appears likely that expenditure will exceed available resources.

Fees and charges: section 93 of the Local Government Act 2003 - and guidance issued in 2006 pursuant to section 96(3) of the Act - empowers the Council to charge for discretionary services. A discretionary service is defined in the guidance as being one where the Council has the power to provide it but is not obliged to do so. However, this power cannot be used where the Council is under a duty to provide the service, or where charging is prohibited or where a specific legislative charging regime applies.

Section 93 requires that for each discretionary service which a charge is made, there is a duty to secure that, taking one year with another, the income from charges for that service does not exceed the costs of provision.  Any over or under recovery that results in a surplus or deficit of income in relation to costs in one period should be addressed by the Council when setting its charges for future periods so that over time income equates to costs.