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Agenda Item No. 5

 

The Vale of Glamorgan Council

 

Shared Regulatory Service Joint Committee: 20th  December 2016

 

Report of the Head of Finance/Section 151 Officer

 

Draft Budget Proposals 2017/18

 

Purpose of the Report

  1. To gain Joint Committee's approval of the Proposed Budget for 2017/18.

Recommendations

It is recommended that:

  1. The Joint Committee approve the Proposed Budget for 2017/18.
  2. Individual authorities are requested to approve in writing the Proposed Budget for 2017/18 by 10th March 2017.

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 2017/18.

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, the JWA outlines methodology to determine the percentage contribution to be made. Authority Specific services are paid for by individual authorities and include Additional Licensing (Vale), Burials (Vale), Pest Control (Vale), Kennelling and Vets Fees (Vale & Bridgend), Licensing (All), HMO Cathays and Plasnewydd (Cardiff), IMLU which is fully grant funded (via Cardiff), Night Time Noise (Cardiff), Port Health Authority (Cardiff) which is funded by precepts via Cardiff and Student Liaison (Cardiff).

Relevant Issues

Budget Assumptions

  1. 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 was completed in 2015-16, with the structure fully populated during 2016-17. As a direct result of the TUPE provision consideration for the resulting salary protection has been built into the budget. These assumptions have been based on the original Business Plan for the service.
  2. The 2016-17 budget was increased to accommodate an unanticipated increase of National Insurance costs of £125,000.
  3. The 2017-18 projections include an assumed pay award of 1% of £71,000, with no increase for other price inflation.
  4. As a direct result of an unforeseen change in the economic climate, the £190,000 additional income that was budgeted to be achieved in 2016-17 and 2017-18 is now considered to be unachievable, and has been achieved via other efficiencies within the 2017-18 gross expenditure budget.
  5. The net effect of the adjustments detailed above on the draft proposed 2017-18 budget, is that the budget requirement is £6,000 lower that the £8.836m stated as being the budget requirement in the 2017-18 Business Plan.
  6. In line with the JWA, the population figures have been updated in this report to match the 2017-18 projected population as quoted in Welsh Government's Green Book.
  7. In line with the JWA, income budgets are the responsibility of each Participant Authority and are not included in the analysis laid out in this report.
  8. 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 2017/18 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 additional savings.
  9. Management Overheads are reallocated based on information provided by the senior management team and are based on the consumption of the service. All other overheads continue to be recharged out based on the value of budget held.

Proposed Financial Contributions

  1. The Business Plan, included as part of the JWA, projected that the gross expenditure for the Core services for 2017/18 would be £6.445m. The gross expenditure of the Core services for 2017/18 is now projected to be £6.252m. The reduction of £0.193m is the result of changes in treatment between Core and Authority-Specific as detailed in the 2016-17 budget proposals. 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 2017/18.

Core Services

 

Original

Proposed

Variance

Authority

Updated %

£000

£000

£000

Bridgend

  22.46

1,454

1,404

 50

Cardiff

  57.34

3,676

3,585

 91

Vale of Glamorgan

  20.20

1,315

1,263

 52

Total Core Services

 

6,445

6,252

193

         
  1. The Business Plan projected that the gross expenditure for authority specific services for 2017/18 would be £2.391m. As a consequence of a change in the treatment of services in the 2016-17 budget , there is a net increase of £0.187m in the revised gross expenditure on authority specific services for 2017/18 which is now projected to be £2.578m. The remaining £0.006m of the revised gross budget ceases to be a budget requirement.
  2. A mini re-structuring within the Vale's Licensing section, a reduction in the number of Pest Control vehicles in conjunction with a realignment of staffing within the Vale's Additional Licensing has resulted in a £0.069m reduction in cost from the 2016-17 budget. The 2017-18 IMLU Grant funding will not be confirmed until 1st February 2017, however the unit has been led to believe that there will be no change to the 2016-17 award of £0.634m. The grant is claimed directly by Cardiff, with some of the costs remaining the responsibility of Cardiff. The resultant in-scope IMLU budget is estimated at £0.382m. 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

   365

 -47

Cardiff

 

1,642

1,730

 -88

Vale of Glamorgan

 

   431

   483

 -52

Total Authority Specific Services

 

2,391

2,578

-187

         
  1. A more detailed breakdown of Authority-Specific budgets is show 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 offset savings made in the core to cover some authority specific costs.

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 2017-18.
  2. The JWA states 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 2017, 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. The 2017-18 Welsh Government (WG) Budget was set in the autumn of 2017. Local Authorities were advised of their provisional 2017-18 Revenue Support Grant settlement in October, with the final settlement details to be received from WG during December. Therefore, it is considered that authorities should be able to confirm agreement to the 2017/18 budget by 10th March 2017.

Resource Implications (Financial and Employment)

  1. The following table summarises the 2017/18 gross expenditure budget as outlined above.

Authority

Original

Proposed

Variance

 

£000

£000

£000

Bridgend

1,772

1,769

3

Cardiff

5,318

5,315

3

Vale of Glamorgan

1,746

1,746

0

Total Net Expenditure 2017/18

8,836

8,830

6

       
  1. In addition, an analysis of anticipated income in order to ensure that increased Authority-Specific budgets can be offset by income. The following table summarises the 2017/18 net position using income budgets provided by the respective Authorities.

Authority

Original

Proposed

Variance

 

£000

£000

£000

Bridgend

1,384

1,384

0

Cardiff

3,026

3,107

-81

Vale of Glamorgan

1,375

1,370

5

Total Net Expenditure 2017/18

5,785

5,861

-76

       
  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.

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

Section 151 Officers

Responsible Officer:

Carys Lord

Section 151 Officer