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Agenda Item No. 3

 

The Vale of Glamorgan Council

 

Shared Regulatory Service Joint Committee: 17th December 2015

 

Report of the Head of Finance/Section 151 Officer

 

Draft Budget Proposals 2016/17

 

Purpose of the Report

  1. To gain Joint Committee's approval of the Proposed Budget for 2016/17.

Recommendations

It is recommended that:

  1. The Joint Committee approve the Proposed Budget for 2016/17.
  2. Individual Authorities are requested to approve in writing the Proposed Budget for 2016/17 by 10th March 2016.

Reasons for the Recommendations

  1. To seek agreement of the Joint Committee in line with the Joint Working Agreement.
  2. To allow the budget to be finalised prior to the start of 2016/17.

Background

  1. A joint working agreement (JWA) setting out the particulars for operating the collaborative service and the creation of the Regulatory Shared Service Joint Committee was signed by Cardiff Council, Bridgend Council and the Vale of Glamorgan Council on 10th April 2015 and the service commenced operation on 1st  May 2015.
  2. The JWA states that the Joint Committee should agree the draft annual budget, which is referred to as the Proposed Budget, by the 31st December prior to the commencement of the Financial Year to which the Proposed Budget relates and that the Proposed Budget should be submitted to each of the Authorities for approval.
  3. Included as part of the JWA was a Business Plan which set out the detailed financial model that sits behind the shared service and gave projections of expenditure for the first 3 years of operation. The Proposed Budget should be drawn up to reflect the applicable Business Plan.
  4. The service is split into Core services and Authority Specific services. The Core service is operated on behalf of all Authorities and the JWA outlines the agreed percentage contribution to be made. Authority Specific services are paid for by individual Authorities and cover Pest Control (Vale), Additional Licensing (Vale), Night Time Noise Pollution and HMO Cathays and Plasnewydd (Cardiff), Licensing (All) and Port Health (Cardiff), Student Liaison (Cardiff), Kennelling and vets fees (Bridgend and Vale) and Illegal Money Lending Unit (IMLU) is fully grant funded (via Cardiff).

Relevant Issues

Budget Assumptions

  1. The largest element of the budget is staffing. Some 170 staff transferred from Bridgend and Cardiff Councils to the Vale of Glamorgan Council on the 1st May 2015 to create this shared service. The post transfer restructuring consultation process was completed between June and August 2015 as part of the refining of the new staffing structure and the finalising of job descriptions. Populating the new structure is nearing completion, however, it has not yet been finalised prior to the production of the Proposed Budget for 2016/17 and therefore some assumptions have been made regarding certain levels of the structure and the level of salary protection required as part of the TUPE provisions. These assumptions have been based on the original Business Plan for the service.
  2. In line with the Business Plan assumptions, the projections include an assumed pay award of 1% for 2016/17 and no increase for other price inflation.
  3. In addition, there has been a need to build in the impact of the increase in employers National Insurance which takes effect from April 2016, which for this service is in the region of £125,000 (excluding IMLU which is 100% grant funded).
  4. In line with the Joint Working Agreement, the population figures have been updated in this report to match the population figures as quoted in Welsh Government's Green Book.
  5. In line with the Joint Working Agreement, income budgets are the responsibility of each Partner Authority and are not included in the analysis laid out in this report.
  6. While it was anticipated that further savings would be achieved by the shared service, no additional savings have been included in the Proposed Budget for 2016/17 as it is considered that the new service needs a period of consolidation to allow its operation to be assessed prior to the identification of extra savings.

Proposed Financial Contributions

  1. The Business Plan, included as part of the JWA, projected that the gross expenditure for the Core services for 2016/17 would be £6.445m. The gross expenditure of the Core services for 2016/17 is now projected to be £6.173m. The reduction of £0.272m is due in part to now treating Student Liaison and Additional Licensing as Authority Specific budgets (for Cardiff and Vale respectively). The original business plan allocated savings to the Authority Specific budgets. However, as many are self-funding, those savings would not materialise so they have now been fully allocated to the core budget where they will be achievable. The contributions due from each Authority for Core services are analysed in the table below, using the population basis of apportionment as agreed in the JWA, updated to reflect the Welsh Government's Green Book 2015/16.

Core Services

 

Original

Proposed

Variance

Authority

Updated %

£000

£000

£000

Bridgend

22.47

1,454

1,387

67

Cardiff

57.23

3,676

3,533

143

Vale of Glamorgan

20.30

1,315

1,253

62

Total Core Services

 

6,445

6,173

272

  1. The Business Plan also projected that the gross expenditure for Authority Specific services for 2016/17 would be £2.392m. The gross expenditure on Authority Specific services for 2016/17 is now projected to be £2.610m. The increase of £218k is due to the inclusion of Student Liaison (Cardiff) and Additional Licensing (Vale) as well as reversing the original apportionment of savings to the Authority Specific budgets, as outlined above. Grant funding for the IMLU service has been reduced by some 25% for 2016/17 and by costs which will be incurred and claimed directly from the grant by Cardiff. The resultant in-scope IMLU budget is estimated at £379k. The charge to each Authority for these services is illustrated in the table below.

Authority Specific Services

 

Original

Proposed

Variance

Authority

 

£000

£000

£000

Bridgend

 

318

360

-42

Cardiff

 

1,642

1,698

-56

Vale of Glamorgan

 

432

552

-120

Total Authority Specific Services

 

2,392

2,610

-218

        

A more detailed breakdown of Authority Specific budgets is shown in Appendix 1 of this report. The analysis shows how each service is funded - where they are grant funded or recovered via fees it can be assumed that additional income will be achieved to cover the increased costs. Some services are however not externally funded so Authorities will need to net savings made in the core off by these amounts.

  1. The Business Plan included projections for implementation costs that would be incurred during 2016/17 and totalled £127k. The total cost of implementation in 2016/17 is now projected to be £404k. The difference of £277k is due to re-profiled ICT expenditure for the project, mainly relating to the new £400k software solution for the Shared Service (which had originally been profiled to be spent in 2015/16) which will now be spent over 2016/17 and 2017/18, at an estimated £200k each year. As such, Partner Authorities should anticipate a further charge in 2017/18, based upon the agreed allocation basis.
  2. The contributions due from each Authority for implementation costs for 2016/17 are analysed in the table below, using the population basis of apportionment as agreed in the JWA, updated to reflect Welsh Government's Green Book 2015/16.

Authority

 

Original

Proposed

Variance

   

£000

£000

£000

Bridgend

 

      29

    91

-62

Cardiff

 

      72

  231

-159

Vale of Glamorgan

 

      26

    82

-56

Total Implementation Costs 2016/17

 

   127

   404

-277

 

Next Steps

  1. Following a decision by this Committee to approve the Proposed Budget, the next stage is for each Authority to approve their contribution for 2016/17.
  2. The JWA says that each Authority shall notify the Clerk to the Joint Committee no later than the 10th March prior to the commencement of the Financial Year to which the Proposed Budget relates to confirm the approval of the Proposed Budget.
  3. In the event that the Proposed Budget is not approved by any Authority, the Joint Committee shall meet as soon as practicable to formulate a revised budget for approval by the Authorities.
  4. If the revised budget is not approved by all of the Authorities by the 31st March 2016, the Authority or Authorities who do not approve the revised budget will be treated as if they have given notice of intention to withdraw from the Agreement.
  5. In previous years, the final Revenue Support Grant settlement was received from WG during December. This year due to the timing of the UK Government's Spending Review, Welsh Government will not know their Budget for 2016/17 until 25th  November 2015 and consequently will not publish their Provisional Budget until 8th December 2015 and the Final Budget on 1st March 2016. Local Authorities are due to receive their Final Settlement on 2nd March 2016, however, the Final Budget will be debated by WG on 9th March 2016. Even with this challenging timetable, it is considered that Authorities should be able to confirm agreement to the 2016/17 budget by 10th March 2016.

Resource Implications (Financial and Employment)

  1. The following table summarises the 2016/17 gross expenditure budget as outlined above. Figures exclude implementation costs, illustrated above.

Authority

Original

£000

Proposed

£000

Variance

£000

 

Bridgend

1,772

1,748

24

Cardiff

5,318

5,231

87

Vale of Glamorgan

1,747

1,805

-58

Total Gross Expenditure 2016/17

8,837

8,783

54

  1. In addition, an analysis of anticipated income is also provided in order to ensure that increased Authority Specific budgets can be offset by income. The following table summarises the 2016/17 net position (excluding implementation costs) once estimated income for each Authority has been included.

Authority

Original

Proposed

Variance

 

£000

£000

£000

Bridgend

1,387

1,374

13

Cardiff

3,047

3,023

24

Vale of Glamorgan

1,374

1,410

-36

Total Net Expenditure 2016/17

5,808

5,807

1

  1. In relation to Licensing income there is an element of uncertainty in prediction as licenses can now be purchased up-front to cover 1, 3 or 5 years. The Licensing income position will be reviewed in order to ensure that full cost recovery is achieved. Fee setting reports will be taken to relevant Licensing Committees.
  2. When the Proposed Budget is approved by each Authority in writing then it will become the Approved Budget for the Financial Year to which it relates.
  3. The population of the structure is due for completion by mid December 2015. All costs relating to redundancy and the organisational restructuring will be shared between the partner Authorities on the agreed percentage basis after a period of 12 months following the commencement date of 1st May 2015. Any costs occurring in the first 12 months after the commencement shall be borne by the Authority with whom the relevant employee was employed immediately prior to the transfer date.

Sustainability and Climate Change Implications

  1. The promotion of sustainability and action to arrest climate change is central to the work of the Council and a key consideration when allocating scarce resources to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Legal Implications (to Include Human Rights Implications)

  1. Any legal implications are contained within the body of the report.

Crime and Disorder Implications

  1. None.

Equal Opportunities Implications (to include Welsh Language issues)

  1. Any budget proposals have due regard to the requirements of the Council's Strategic Equality Plan including the Equalities Act 2010 and Public Sector Equality Duty for Wales. Equality Impact Assessments will be completed when appropriate.

Corporate/Service Objectives

  1. The key service and improvement objectives contained in the Business Plan identify and link to the Corporate Plans of each Council.

Policy Framework and Budget

  1. This report will require the necessary approval by each Authority in line with its own Constitution.

Consultation (including Ward Member Consultation)

  1. Each Authority's Section 151 Officer has been consulted on this report.

Relevant Scrutiny Committee

  1. Relevant Scrutiny Committees relating to each Council.

Background Papers

Joint Working Agreement

Contact Officer

Carolyn Michael, Operational Manager - Accountancy

Officers Consulted

Shared Regulatory Services Management Board

Section 151 Officers

Responsible Officer:

Carys Lord, Section 151 Officer

 

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