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Agenda Item No.

 

 

THE VALE OF GLAMORGAN COUNCIL

 

CABINET: 6TH OCTOBER, 2014

 

REFERENCE FROM SCRUTINY COMMITTEE (CORPORATE RESOURCES): 16TH SEPTEMBER, 2014

 

 

MEDIUM TERM FINANCIAL PLAN 2014/15 – 2017/18 (REF) –

 

Cabinet had, at its meeting on 11th August 2014, referred the draft Medium Term Financial Plan to the Scrutiny Committee for information.  The Head of Finance stated that the purpose of the Medium Term Financial Plan was to link the Council’s strategic planning process with the budget process, to ensure consistency between them, to inform Members and to suggest a way of dealing with the future financial pressures facing the Council. 

 

The draft Medium Term Financial Plan for 2014/15 – 2017/18 was attached at Appendix 1 to the report.  The Plan attempted to identify the main financial implications resulting from the increased pressure falling upon Council services, including pay and price inflation, legislative and demographic changes, and to estimate the reduced financial resources that would be available to the Council to meet these demands in light of the letter issued on 24th June 2014 by the Minister for Local Government and Government Business to all the Welsh Local Authorities regarding future funding settlements.  The Plan also attempted to match the predicted expenditure and resources and provide a framework to develop a financial strategy towards achieving a balanced budget for the next three financial years.  An Executive Summary was included at pages 2 – 6 of the Plan with the exception of the Minister’s letter, Welsh Government had also not yet given any indication of local government funding levels for 2015/16 to 2017/18. 

 

However, it was noted that the Council’s timeframe for the budget process necessitated the use of the best available information at the time if a balanced budget was to be achieved by the statutory date.  The assumptions made in the Plan were, therefore, based upon the contents of the Minister’s letter and the subsequent views of key commentators (including the Welsh Local Government Association) and the prospects for local government funding over the next few years.

 

Initial estimates presented the following picture which showed a projected savings target between 2015/16 and 2017/18 of £32m, comprising of £18m of savings already identified and £14m yet to be allocated. 

 

 

 

 

Matching Predicted Resources to Expenditure

2015/16

£000

2016/17

£000

2017/18

£000

Real Term Decrease in Resources

9,210

8,170

5,070

Cost Pressures

1,303

6,316

3,422

Identified Savings

(8,857)

(8,706)

(645)

Costs to be met within Schools

(362)

(371)

(380)

Additional Shortfall

1,294

5,409

7,467

 

The matching exercise indicated that there remained £1.3m of savings to be identified for 2015/16 and this was after already identifying £8.8m.  The achievement of the identified savings was by no means guaranteed, but failure to deliver this level of savings would significantly impact on the Council achieving its required financial strategy which would now be based on an estimated reduction of £32m by 2017/18.

 

As a result of the high level of savings required, there would be difficulties in maintaining the quality and quantity of services without exploring opportunities for collaboration and alternative forms of service delivery.  The only realistic option facing the Council in future years was to commence a programme of reshaping and transforming services.

 

To ensure that the budget set for 2015/16 continued to address the priorities of Vale residents and the Council’s service users, the budget setting process would incorporate in-depth, targeted engagement with a range of key stakeholders.  This would be a process of collaboration – with staff, trade unions, public sector partners, the voluntary sector, service recipients and the Vale’s communities (including its Town and Community Councils).  

 

A key outcome from the 2014/15 budget process was to re-examine the relative priorities between different services given the financial challenges which lay ahead and to reaffirm the specific financial strategies for Education & Schools and Social Services.  In light of the level of savings to be found by 2017/18, a further review would be necessary in order to ascertain whether it was viable to continue with these financial strategies.  

 

Other options recommended within the Plan for exploration as part of the 2015/16 budget process were:

 

·                Consider the results of the budget engagement process in determining priorities for future savings and service delivery

·                Review the appropriateness of the current financial strategies for Education and Schools, Social Services and Other Services

·                Review feasibility of increasing  the use of the General Fund Reserve as part of the financial strategy

·                Further reviewing the level of cost pressures with a view to services managing and reducing demand and mitigating pressures

·                Services funding their own residual cost pressures through reviewing their existing budgets and revised / alternative means of service provision

·                Services meeting their own pay and price inflation, superannuation increase etc., through reviewing their staffing structure in line with changes to service delivery and workforce planning requirements

·                Reviewing the priorities for funding statutory and non-statutory services, including establishing minimum levels of services provision

·                Pursuing options for reshaping services including means of alternative service delivery in order to attempt to maintain the level of service while reducing the cost of provision. 

 

In presenting the report the Head of Service advised that the Council was aware of certain issues that may impact on the Plan, for example the Housing (Wales) Bill, but that there could be others that the Council may not know about, although as soon as any new information was received the Plan would be amended as appropriate.  The Head of Service also tabled a presentation slide which referred to the Council’s current financial context i.e. where we are, the £61m savings required over 8 years, excluding schools, and future funding.  On the reverse the document detailed a graph highlighting future funding and spending for the average local authority in Wales as published by the WLGA.

 

In recognising that the next agenda item on the Committee’s agenda related to Reshaping Services, the Head of Service advised that the Council could not continue as it was and needed to look at how it provided services now and in the future to address the situation. 

 

Members queried the possibility of the Council being able to consider the use of the   Education budget as part of the process, as they felt that all service areas should be included in the budget planning process and many had in their view “been cut to the boneâ€.  Members also asked whether there was anything that they could do to assist with achieving the required savings.  In response the Head of Service stated that there would be hard decisions to make in the future for Members about service provision but that with regard to schools it was anticipated that Welsh Government would continue to direct the Council into how it spent that budget.  Members however, considered it was important that Education and Social Services took full part in the process and in particular it was essential that all staff be involved in the reshaping services exercise, as they may be able to offer suggestions for ways forward in the future.  Aware that many services were mandatory services, Members considered that the actual processes of how they were undertaken could be challenged and reviewed.

 

In referring to other savings suggestions for example energy aware that these were ongoing they also queried water consumption with the response that a report was currently being prepared for Cabinet and Scrutiny Committee on this matter.

 

Following consideration of the report it was subsequently

 

RECOMMENDED –

 

(1)       T H A T the quarterly monitoring reports to the Scrutiny Committee include reports on the savings achieved to date and future savings identified for each service area.

 

(2)       T H A T Cabinet be asked to ensure that the information outlined in Recommendation (1) is reported to Scrutiny Committees and Cabinet on a quarterly basis. 

 

(3)       T H A T the remaining resolutions of Cabinet be endorsed.

 

Reasons for recommendations

 

(1&2)  To allow for consideration by Members.

 

(3)       In view of the contents contained within the draft Medium Term Financial Plan.

 

 

 

 

 

 

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