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THE VALE OF GLAMORGAN COUNCIL

 

CABINET:                11TH JANUARY, 2016

 

REFERENCE FROM SCRUTINY COMMITTEE (CORPORATE RESOURCES): 8TH DECEMBER, 2015

 

"                INITIAL REVENUE BUDGET PROPOSALS 2015/16 (MD) -

 

Committee was informed that the Scrutiny Committees had previously considered the Initial Revenue Budget proposals on the following dates:

 

Scrutiny Committee (Social Care and Health): 30th November, 2015

Scrutiny Committee (Economy and Environment): 1st December, 2015

Scrutiny Committee (Housing and Public Protection): 2nd December, 2015

Scrutiny Committee (Lifelong Learning): 7th December, 2015.

 

The Scrutiny Committees (Social Care and Health) and (Lifelong Learning) had subsequently recommended the following to Corporate Resources as the lead Scrutiny Committee and a copy of the recommendations was tabled at the meeting for Members' consideration:

 

Scrutiny Committee (Social Care and Health) -

 

"(1)                T H A T the amended revenue budget for 2015/16 be noted.

 

(2)                T H A T the Scrutiny Committee (Corporate Resources) agree the Committee's request that all the cost pressures as detailed in Appendix 3 of the report are fully funded.

 

(3)                T H A T the Scrutiny Committee (Corporate Resources) notes that the cost pressures as detailed in Appendix 3 of the report could increase in view of the requirement to carry out further work on the impact of the National Living Wage and the new costs associated with the payment of 'travel time' by independent care providers. In addition it was clear that there may be other additional costs, above those already identified in the cost pressures, as a result of the introduction of the Social Services and Well Being Act.

 

(4)                T H A T the Cabinet be requested to make three separate written representations to Welsh Government on the following:

 

i.                The additional costs incurred by the Council as a result of the UK Government's introduction of the National Living Wage and the requirement for domiciliary care providers to pay travel time.

ii.                The fact that the Social Services and Well Being Act was not cost neutral and that the Council has incurred substantial additional costs as a result of the introduction of this Welsh Government legislation.

iii.                The fact that the Council now has to fund much of the integration agenda in view of the cessation of RCF and the transfer of the ICF to health boards, and that the Council is also having to fund elements of the Supporting People Programme.

 

Reasons for recommendations

 

(1)                To advise the Committee of amendments to the 2015/16 budget.

 

(2)                To advise Scrutiny Committee (Corporate Resources) of the Committee's views that the cost pressures shown in Appendix 3 should be fully funded.

 

(3)                To ensure that the cost pressures are accurate.

 

(4)                To advise Welsh Government of the substantial additional costs that the Council has incurred, that are completely outside the Council's control, which as such should be funded by Welsh Government."

 

Scrutiny Committee (Lifelong Learning) -

 

"(1)                T H A T the amended revenue budget for 2015/16 be noted.

 

(2)                T H A T the Cabinet be requested to give consideration to making available an additional £4m revenue funding specifically for secondary sector schools in the Vale of Glamorgan and to increase the Education Revenue Base budged by this amount in future financial years.

 

Reasons for recommendations

 

(1)                To advise the Committee of amendments to the 2015/16 budget.

 

(2)                In acknowledgement that secondary schools were under severe pressure and scrutiny and had the responsibility for academic achievement."

 

The Council was required under statute, to fix the level of Council Tax for 2016/17 by 11th March, 2016 and in order to do so, would have to agree a balanced Revenue Budget by the same date. The Head of Service presented the report which detailed that a statement on the timing of the Welsh Government's (WG) Budget for 2016/17 was released by the Minister for Finance and Government Business on 6th October, 2015. This also stated that the late timing of the UK Government's Spending Review presented WG with significant challenges for the preparation and publication of the Draft Budget 2016/17. WG will not know their Budget for 2016/17 until 25th November, 2015. WG is facing unprecedented levels of uncertainty and consequently would not publish the Draft Budget for 2016/17 until 8th December, 2015 and the Final Budget on 1st March, 2016.

 

A timetable received from the Minister for Public Services and the Leader of the Welsh Local Government Association on 26th October, indicated that local authorities would be advised of the Provisional Settlement on 9th December, 2015 and of the Final Settlement on 2nd March, 2016. However, the Final Budget would be debated by WG on 9th March, 2016. They considered that the proposed timetable did not result in any legal or financial impediment to the budget process, however, they acknowledged that the timetable presented challenges.

 

To be in a position to meet the statutory deadlines and the requirements for consultation set out in the Council's Constitution, much of the work on quantifying the resource requirements of individual services needed to be carried out before the final Revenue Support Grant (RSG) settlement was notified to the Council.

  

With regard to the revised budget for 2015/16, Appendix 1 to the report set out the revised budget for 2014/15 together with the necessary adjustments to the original budget.

 

Asset rent, International Accounting Standard (IAS) 19, transfers and recharges - these related to accounting items and expenditure outside the control of services. They reflected charges to Services for the use of capital assets, changes to the inter-service recharges, transfers and adjustments in respect of pensions to comply with accounting standards. Also included, were transfers of functions and responsibilities between Directorates as detailed below:

 

Education

£150k from Development Services in respect of the Arts Development.

Managing Director and Resources

£210k from Development Services in respect of Coroner Services.

 

The following table compared the amended budget with the projected outturn for 2015/15.

 

 

Directorate/Service

2015/16

Amended

Budget

£'000

2015/16

Projected

Outturn

£'000

Variance

 (+)Favourable

 (-) Adverse

£'000

Learning and Skills

     

Education and Schools

92,524

92,816

-292

Libraries

2,311

2,311

                           0

Adult Community Learning

263

263

                           0

Youth Service

1,030

1,030

                           0

Catering

1,788

1,788

                           0

Art Development

150

150

                           0

Social Services

     

Children and Young People

14,540

14,090

                    +450

Adult Services

37,579

38,329

                     -750

Business Management and Innovation

304

304

                           0

Youth Offending Service

679

679

                           0

Environment and Housing

     

Visible Services

21,707

21,707

                           0

Transportation

5,178

5,178

                           0

Building Services

0

0

                           0

Regulatory Services

2,107

2,107

                           0

Council Fund Housing

1,116

         1,116

                           0

Managing Director and Resources

     

Resources

558

            558

                           0

Regeneration

2,562

2,562

                           0

Private Housing

11,308

11,308

                           0

Development Management

1,063

1,063

                           0

General Policy

18,088

17,496

                    +592

Total

214,855

214,855

0

Met from General Reserve

(2,500)

(2,500)

0

Grand Total

212,355

212,355

0

 

Budgets in respect of each service area set out the budget position below:

 

Learning and Skills

 

The projected outturn for the Learning and Skills Directorate is an adverse variance of £292k when compared to the amended budget. The paragraphs below highlight variances within each service.

 

School Improvement and Inclusion - This service was projecting an adverse variance of around £706k, however, this amount could be offset by £65k funded from the Excluded Pupils reserve and therefore an adverse variance of £641k was currently projected at year end. An adverse variance on alternative curriculum placements of £65k is projected due to increased demand for the service; however, this would be funded from the Excluded Pupils reserve. An adverse variance of £457k was anticipated on inter authority recoupment income. Increased demand for Vale pupils requiring placements in Ysgol Y Deri had resulted in fewer placements being available for other authorities to purchase. An adverse variance of £197k was projected on pupil placements in independent schools and other authorities due to an increase in the number of pupils with significant needs that are unable to be met at Ysgol Y Deri. These overspends would be offset by a favourable variance of £13k on staffing costs due to part year vacancies within teams. The Directorate was seeking ways to mitigate this overspend as part of the longer term Reshaping Services agenda.

 

Strategy and Resources - This service was anticipating a favourable variance at year end of £326k. There were favourable variances on the transport budget of £196k, £52k on salaries due to part year vacancies, £49k due to payments to private nurseries as a result of a reduction in non-maintained nursery settings and £29k on other supplies and services. There were however significant pressures in relation to the Schools Long Term Supply scheme with an adverse variance of £270k anticipated and the Early Retirement and Voluntary Redundancy scheme also projecting an adverse variance of £196k. Both these overspends would be funded from the respective reserves. It was anticipated that there will also be transfers from the Rationalisation Reserve of £161k to fund the increased rates bill at St. Cyres Comprehensive School and £115k to fund one off amalgamation costs at Llantwit Learning Community and Penarth Learning Community.

 

Service Strategy and Regulation - It was anticipated that this service would outturn with a £7k favourable variance due to efficiencies within the Business Support section.

 

Schools - The delegated budget relating to schools is expected to balance as any under/over spend is carried forward by schools.

 

Children and Young People's Partnership - It was anticipated that this service will outturn with a favourable variance of £16k due to a part year vacancy in the team.

 

Provision had been made within the budget to make unsupported borrowing debt repayments in relation to the Schools Investment Strategy of £698k per annum. Any favourable variance on debt repayments would be directed into the Schools Investment Strategy reserve.

 

Libraries - The Libraries Service was projecting to outturn at budget after a transfer from the Libraries reserve of £113k to fund one off costs in relation to the implementation of the Libraries Review.

 

Adult Community Learning - It was anticipated that the Adult and Community Learning Service would outturn at budget after a £93k transfer from the Adult and Community Learning reserve. The transfer from the reserve was required due to redundancy and notice payments to staff, which had arisen as a result of reductions in funding from Welsh Government and Cardiff and the Vale College.

 

Youth Service - It was anticipated that the Youth Service would outturn at budget after a transfer of £40k from the Youth Service Reserve. The transfer from the reserve was required to fund ongoing NEETS and Gateway To Engagement work in schools.

 

Catering - The Catering budget was anticipated to outturn at budget after a transfer of £222k from Catering reserves. The transfer from reserves would fund the final payment of the cashless catering system and the conversion of dining centres into kitchens in four primary schools.

 

Social Services

The projected outturn for the Social Services Directorate was an adverse variance of £300k when compared to the amended budget.  The paragraphs below highlighted variances within each service.

 

Children and Young People's Services - This service was anticipated to outturn £450k under budget at year end. The key issue for this service continued to be managing the demand for the Joint Budget for Residential Placements for Looked After Children, however, currently it was forecast to outturn with a £250k underspend at year end. Work had been ongoing to ensure that children are placed in the most appropriate and cost effective placements, however, it was noted that due to the potential high cost of each placement, the outturn position could fluctuate with a change in the number of looked after children. There were potential underspends elsewhere in Children's Services of £65k on staffing budgets and £135k on alternative means of provision and accommodation costs required for the current cohort of children.

 

Adult Services -This service was currently anticipated to outturn £750k over budget at year end. This was due to a projected overspend on Community Care Packages of £950k as a result of increased demand for services, particularly for frail older clients. There was continued pressure on this area of the service to manage demand, not only to avoid a further increase in the overspend, but also to reduce the overspend. Whilst every effort would be made to improve this position, it could not be guaranteed that this position would not deteriorate further by year end as this budget was extremely volatile and there was a continued increase in demand for services. The annual deferred income budget for 2015/16 had been set at £739k and as at 30th September 2015, income received to date was £74k under-recovered. It was currently being projected that this budget will outturn at £50k over budget by year end and this adverse variance was included as part of the projected overspend for care packages. It was anticipated that there would be underspends of £200k elsewhere in the budget which can offset part of this overspend with £165k from staffing, £20k from Transport and £15k from premises.

 

Environment and Housing

 

The projected outturn for the Environment and Housing Directorate was a balanced budget when compared to the amended budget.  The paragraphs below highlighted any variances within each service.

 

Highways and Engineering - It was projected that the Highways and Engineering section will have a balanced budget at year end. It was projected that the employee's budget will be £338k underspent due to vacant posts currently within the service. However, due to the number of vacant posts, the anticipated spend on subcontractors was over budget by £262k. As previously reported, Highways and Engineering had an estimated shortfall on car parking income, which was currently estimated to be £340k. The introduction of additional car parking charges was to be consulted on further; therefore, new charges are unlikely to be introduced within this financial year. There was also a projected overspend on street lighting energy costs of £106k, due to the slight delay in the introduction of part night lighting, which commenced in July 2015. Vehicle costs were projected to be £120k over budget which is mainly due to the increased cost of the newer Winter Maintenance fleet. It was anticipated that other income received by the Highways and Engineering section will be £374k higher than budgeted. This was mainly due to the amount of Highways capital works schemes undertaken for other departments. Departmental support costs for Highways and Engineering had also reduced by £116k.

 

Waste Management - It was projected that the Waste Management section would have a balanced budget at year end. Employee costs were projected to be over budget by £256k. The main reason is that some of the planned savings for 2014/15 and 2015/16 had been delayed as detailed in Appendix 2. A re-routing exercise was currently underway and the service was also being reviewed by Waste Resource Action Programme (WRAP) with a view to making efficiency savings. Vehicle costs were projected to be £207k over budget, again due to the delay in planned savings. To offset these delayed savings, a considerable underspend of £577k was expected on waste disposal costs mainly due to the interim contract entered into with Viridor. The department had also projected a spend of £48k on contract monitoring costs for Prosiect Gwyrdd and £25k on the Joint Organics Procurement with Cardiff Council for which there was no budget. The service also had reduced insurance costs which were £34k under budget. Income to the section was also £75k less than budgeted, which was mainly as a result of the shortfall in income for the Special Collection service due to the level of concessions that were currently offered.

 

Leisure - It was anticipated that the Grounds Maintenance section would achieve a breakeven position at year end. Employee costs were projected to be £92k under budget due to vacant posts within the service. However, this had been offset by increased supplies and services costs which were £119k over budget mainly due to additional works undertaken by subcontractors. Transport costs were projected to be £31k over budget; however, Parks were currently reviewing the level of vehicles they used and had identified those that were surplus to requirements. This was offset by savings of approximately £25k on the maintenance of conservation zones. The anticipated level of income from other departments was also £33k greater than budgeted. The Sports service was operating well within reduced grant funding budgets. The provision of Play Activities was being funded from various sources such as Town Councils and s106 monies and costs were being monitored closely to ensure that they were contained within the funding available. The year end projected spend shows a nil variance against the revised budget.

 

Transportation - The expenditure on public transport was being carefully monitored in order to provide an appropriate service within the approved budget. There was an agreement with Bridgend and Cardiff Councils regarding the recharging of Cross Boundary bus services and this would alleviate pressures on fare-paying school services which were presently over budget. It was hoped that this agreement would continue into 2016/17. S106 monies was being utilised to fund the community bus service, Greenlinks. The year end projected spend on Transportation showed a nil variance against the revised budget.

 

Building Services - The Building Maintenance and Building Cleaning and Security Services were presently expected to outturn on target.

 

Regulatory Services - This budget represented the Vale's contribution towards the Shared Regulatory Service which was formed on 1st May, 2015. Although anticipated savings for 2015/16 would be slightly reduced by the one month delay in populating the staffing structure, the effect was mitigated by the reduction in anticipated staffing costs due to the number of staff leaving the Shared Service pool before going live. At this stage it was therefore projected that this service would outturn within target

 

Council Fund Housing - The Council Fund Housing budget was likely to outturn at £250k underspent based on current trends. The variance was due to savings being made on the use of temporary accommodation for the homeless. Due to the uncertain pressures for the remaining part of the financial year on the homeless budget it was felt appropriate at this time to show a balanced budget.

 

Managing Director and Resources

 

The projected outturn for the Managing Director and Resources was a balanced budget when compared to the amended budget.  The paragraphs below highlighted any variances within each service

 

Resources - Resources was anticipated to outturn within budget although there was a possibility of a shortfall on Council Tax court income. The service would manage any shortfall from within existing resources.

 

Regeneration - Whilst occupancy of the Authority's workshops was higher than recent years, and therefore income was higher, any underspends would be utilised to refurbish the workshop/office space stock, aiming at generating further increased occupancy levels in order to meet the higher levels of income required in the 2016/17 budgets. This service was currently projected to outturn within target. The projected outturn for Countryside Services showed a nil variance against the revised budget. Delays in relation to the decision on car parking fees within country parks would mean that targeted savings for the Division had not been achievable. A budget virement from Planning covered the shortfall on car parking and various other measures including refurbishment works on the reception area at Cosmeston, thatching works at the Medieval Village and marketing costs for the new Commercial Opportunities Officer. As such, the service was currently projected to outturn within target.

 

Private Housing - As there had been additional demand for Disabled Facility Grants (DFGs) this year, the fee income will exceed target. Income targets for the Renewal Area had not currently been achieved so will offset the DFG increase. As such, this service is projected to outturn within target by year end.

 

Development Management - The year end projected spend on Planning showed a nil variance against the revised budget. As planning income had been ahead of profile so far this year a virement had been made from Planning into the Countryside budget in order to fund several refurbishments within that service (as detailed above). Should the demand on the Planning Service so require, an additional temporary staffing resource would be considered. As such it was anticipated that Planning Services would outturn on target.

 

General Policy

 

The projected outturn for Policy was a favourable variance of £592k when compared to the amended budget.

 

It was projected that there would be a favourable variance of £1.292m relating to capital charges and given that the collection of Council Tax continues to be effective, a positive variance of £1.5m is predicted. It was also anticipated that the sum included to support recharge imbalances for capital of £300k would not be required, as full recovery from capital schemes was projected. It was proposed that £2.5m be used to fund capital projects covering the Council's priorities. £1.65m would be transferred into the Schools Investment Strategy reserve and £850k would be transferred into the Disabled Facilities reserve to increase the funding available over the next two years for Disabled Facilities grants. Details of the schemes were contained in the Initial Capital Programme Proposals 2016/17 report.

 

The Cabinet approved the Budget Strategy for 2015/16 on 27th July, 2015 and, as in previous years, required all Directors to make the following provisions:

  • Supplementary estimates would only increase the base budget if Council had given specific approval to this effect. Increases met by virement within a year would not be treated as committed growth.
  • Directors should find the cost of increments and staff changes from their base budget unless the relevant specific approval had been given for additional funding.
  • The effect of replacing grant from outside bodies that had discontinued would not be treated as committed growth. In addition, before any project or initiative that was to be met either wholly or partly by way of grant may proceed, the exit strategy must be approved.
  • Certain items of unavoidable committed growth would continue and these included the effect of interest changes and the financing cost of the Capital Programme, increases in taxes, increases in levies and precepts charged by outside bodies and changes to housing benefits net expenditure.
  • Services would be expected to achieve savings already approved by Cabinet as part of the 2015/16 final budget proposals and Directors were asked to continue to progress the Reshaping Service Programme.
  • It is envisaged that the costs of service development will need to be met from within the respective Directorates.

Having regard to the above, it was, therefore, proposed in respect of the 2016/17 Budget Strategy that Directors be instructed to prepare initial revenue budgets for 2016/17, in accordance with a timetable agreed by the Managing Director with collaboration on the following basis:

  • Capital charges, central accommodation costs and central support costs to be estimated centrally.
  • Services to prepare baseline budgets on current service levels as set out in the 2015/16 final revenue budget report including detailed Cost Centre Analyses.
  • Budgets to be broken down subjectively and objectively in as much detail as deemed appropriate by the Managing Director.
  • Budget reports to include revised estimates for 2015/16.
  • Full account to be taken of the revenue costs, other than debt charges, of new capital schemes coming into use.
  • Minimum savings targets to be met initially as detailed in the 2015/16 Final Revenue Budget report. Any savings made directly by services over and above individual service targets to count towards future saving targets.
  • Directors will continue to draw up Service Plans that set out the aims and objectives for the service and any possible future developments and efficiencies.
  • As stated previously, it is expected that the revenue costs of service development will need to be met from within the respective services (in particular, from the savings made). As such, no revenue bids are initially to be made. However, services may still be asked to identify and prioritise any burgeoning revenue cost pressures for consideration.
  • The Medium Term Financial Plan (MTFP) 2015/16 to 2018/19 is to be presented to Cabinet on 14th December, 2015, to coincide with the presentation of the Draft Corporate Plan.
  • The 2015/16 Final Revenue Budget Proposals set savings targets between 2016/17 and 2017/18 of £17.822m (excluding schools). This was based on the anticipated reduction in funding from WG of 4% in 2016/17 and a further 2% in 2017/18, which was in line with the assumptions made in the latest MTFP.
  • The latest Plan factored in a managed level of cost pressures, a notional increase in Council Tax of 2% each year, price inflation of 1% and annual pay awards of 1% each year from 2016/17.
  • It assumed that the Minimum Funding Commitment (MFC) for schools, equivalent to 1% above the WG's block grant settlement would continue.

To ensure that the budget set for 2016/17 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.

 

The engagement with residents and service users would be facilitated by Council officers and conducted in line with the corporate standards set out in the Vale of Glamorgan Council Public Engagement Framework.

 

Consultation with town and community councils, the voluntary sector and the Council's Local Service Board partners would also take place, in order to inform the final budget proposals.

 

The Council had not yet received the provisional settlement from WG. This would not be published by WG until 9th December, 2015. The Council was unable to wait until this date to commence its budget preparation for 2016/17 and therefore this report had been based on the projections previously used as part of the Medium Term Financial Plan 2014/15 to 2017/18.

 

Based on the projection of a 4% reduction in funding from the WG in real terms, the Council is projected to receive £111.537m from WG as RSG and a share of the Non- Domestic Rates (NDR) of £34.845m. Together these figures constituted the Council's projected Aggregate External Finance (AEF) of £146.382m. It should be noted that a 1% change in AEF equates to around £1.5m.

 

At this stage, no transfers in or out of the RSG had been assumed.

 

As part of these initial proposals, it had been necessary to revisit the cost pressures facing services in order to build up a complete and up to date picture of the financial position of the Council and an updated list was shown in Appendix 3 to the report. These were not shown in any order of priority. A new cost pressure had been included for the introduction of the National Living Wage from 1st April, 2016, which would provide for a minimum hourly rate of £7.20 for workers aged 25 and above. There would be further pressure in future years when it continued to increase to at least £9.00 per hour by 2020. This change also had a significant effect on services the Council commissions from external organisation. The main area affected is Social Services and a cost pressure had been included to reflect this.

 

Details of the proposed areas for savings for 2016/17 to 2017/18 are attached at Appendix 4. The savings did not include the cost of any potential redundancies. As part of the Budget Strategy 2016/17 Directors were requested to continue to progress the Reshaping Services Programme. Detailed work on business cases was currently ongoing and they would review the potential level of savings that could actually be achieved.

 

A summary of the overall base budget for 2016/17 was attached at Appendix 5 to the report. This had been arrived at by adjusting the 2015/16 budget for items such as inflation and unavoidable growth, but did not include identified cost pressures or savings. These were shown as a note to the table and are further detailed in Appendices 3 and 4 respectively. Adjustments shown included the following:

 

Asset Rents, International Accounting Standard (IAS) 19 - Related to accounting items outside the control of services. They reflected charges to services for the use of capital assets and adjustments in respect of pensions to comply with accounting standards.

 

Recharges / Transfers - Related to changes in inter-service and inter-Directorate recharges. The Original Budget had been adjusted to reflect the reorganisation of Development and Visible Services. Included were transfers of functions and responsibilities between Directorates as detailed below:

 

Education - £113k from Development Services in respect of the Arts Development.

 

Managing Director and Resources - £210k from Development Services in respect of Coroner Services.

 

Budget Adjustment - There was a net total of £505k and relates to £600k for the reversal of one off funding previously provided to services, less the £1.105m reduction in the use of the Social Services Fund in 2016/17.

 

Inflation - The total figure for inflation of £1.613m related to general price increases (£1.005m) and a 1% allowance for pay awards (£608k). These figures did not include schools inflation which amounted to £649k for pay and £389k for prices.

 

Committed Growth - This totalled £2.557m and £477k reflected the Minimum Funding Commitment for schools, £930k related to the increase in employers' national insurance (excluding schools), £1m related to the reduction in use of the Council Fund and £150k had been allocated for capital charges.

 

Once the base budget for 2016/17 had been established, it must then be compared to the funding available to identify the extent of any shortfall. With a projected AEF of £146.382m and Council Tax at a current level of £59.874m, total available funding would be £206.256m. When compared to a base budget of £217.030m, this would result in a funding deficit for 2016/17 of £10.774m. This deficit was mainly attributable to a reduction in funding from WG and an increase in pay and price inflation.

 

If all identified cost pressures were funded, this would increase the shortfall to £18.601m. If all proposed savings were achieved, the shortfall would be reduced to £6.431m as shown in the table below.

 

Projected Budget Shortfall 2016/17

 
 

£000

Funding Available

 

Projected AEF (Assumes 4% reduction)

146,382

Council Tax (Assumes no increase) *

59,874

Projected Funding Available

206,256

   

Base Budget

217,030

   

Projected Shortfall Against Base Budget

10,774

   

Assume all Cost Pressures Funded

7,827

   

Projected Shortfall with Cost Pressures funded

18,601

   

Assume all Savings Achieved

(12,170)

   

Projected Shortfall for 2016/17

6,431

 

* This assumed no increase in Council Tax at this stage.

 

This shortfall was already based on the requirement to achieve a high level of savings in 2016/17 and there is still uncertainty about the continuation of the MFC for schools beyond that date.

 

The above projections included an assumed pay award of 1% for 2016/17 and the impact of the National Living Wage. It also included the increase in employers' National Insurance which would take effect from April 2016. If any further changes were agreed to pay conditions, they would be assessed as part of the Final Budget Proposals report.

 

Further work would be undertaken by the Budget Working Group (BWG) in order to achieve a balanced budget for the final budget proposals for 2016/17. This would include a review of the use of reserves, a possible increase in Council Tax, a review of all cost pressures, possible changes to the approved saving targets, a review of the inflation assumptions and the current financial strategies. The BWG would also consider the results of the budget engagement process in determining priorities for future savings and service delivery and the impact of the revised Corporate Plan.

 

There would be difficulties in maintaining the quality and quantity of services in the future without exploring opportunities for collaboration and alternative forms of service delivery. The Council had already commenced a programme of reshaping and transforming services, as approved by on Cabinet on 11th August, 2014.

 

The BWG held a series of meetings during November. Any recommendations from this Group would be submitted so that the Cabinet could make its final budget proposals by no later than 22nd February, 2016. Before making its recommendations, the BWG would consider the comments made by Scrutiny Committees, together with the results of the budget engagement process.


The Cabinet's final budget proposals would be considered by Council on 2nd March, 2016.

 

In presenting the report, the Head of Finance advised that the detail of the Local Government figures for the financial settlement would be known by the Authority on 9th December 2015, therefore the draft budget had been drafted assuming a 4% reduction in funding from WG. The figures would have to be revised when the settlement from WG was known. Reference was made to the cost pressures associated with the Learning and Skills and Social Services Directorates during 2015/16, with an overspend now being predicted for Social Services in the current financial year. Some overspends would also have to be met from reserves. It was hoped that the Council would make £6.8m savings in the current year, however there were savings from previous years that had not yet been found.

 

Members, in commenting on the report, acknowledged that the report advised that the same level of Council Tax was being reported as currently and they sought clarification in relation to the impact of the minimum Living Wage and the two figures contained within the report. The Head of Service advised that £51,000 related to staff employed by the Local Authority and the £1.3m referred to staff employed in the independent sector within social care e.g. delivery of domiciliary care.

 

With regard to Appendix 2, Members were of the view that the table should include more detail as to why savings had not been progressed. Although the Leader of the Council confirmed that details were contained within the report, Members considered that the Appendix itself should outline more detail.

 

In referring to the level of savings that had been made elsewhere within services which had then been utilised in other parts of Directorates, the concern raised by Members was whether or not the savings outlined would be achievable. Specific reference was made to the Prosiect Gwyrdd contract which had been implemented earlier than originally planned and resulted in savings in the current financial year. These savings had then been utilised by the Directorate to fund other overspends. Members considered that in Directorates where shortfalls had been identified, officers should be asked to attend the Scrutiny Committee to provide further detail and to provide information in relation to how these shortfalls were proposed to be met. The Head of Service confirmed that discussions were being undertaken on a regular basis with Directorates as to the projections for future savings and whether they were achievable, which would be taken into account when the final budget was prepared for March.

 

In referring to out of county placements and provision at Ysgol Y Deri, a Member felt that the adverse variance was attributable to inaccurate budgeting as the issue should have been addressed earlier in the process. The Head of Service advised that the Department was fully aware of the children and young people who had to be supported via this provision however, there had been a reduction in the number of placements made by other Local Authorities which had resulted in reduced income for the school. The Member was concerned with this position in that, in their view, the Council should have been aware of its future projections.

 

The Cabinet Member for Children's Services and Schools, with permission to speak, stated that there was no inaccurate budgeting, there had been projections when the school was being built, but other Local Authorities e.g. Cardiff and Bridgend, were also involved in their own Reshaping Services Agendas and were not supporting pupils into out of county placements at Ysgol Y Deri and the income had therefore been substantially reduced. The Vale's current Reshaping Services Programme would be looking at the provision as part of the ALN service review.

 

In response to a further suggestion that senior officers were making different statements at different meetings, the Cabinet Member advised that, in his view, that was not the case and at previous meetings where he had been in attendance, including the recent meeting of the Scrutiny Committee (Lifelong Learning), the information provided to Committee was, in his view, the correct information and he requested that should the Member have any issues with the officers regarding reference to differing views , that his concerns be put in writing in order for the Cabinet Member to investigate.

 

In response to the queries, the Leader of the Council also stated that there were a number of reasons why the budget was now showing an overspend, which was not only due to out of county placements but also due to the number of children in the Vale having been assessed to require this service. In addition, the Council could not bring any Vale children in out of county placements back to the Vale because there were no vacancies at the school. The Cabinet Member further advised that assessments were undertaken on pupils each term, some may be statemented and internal review panels could also request that a child is moved to meet its needs at any time which had significant implications for the Department and the places at Ysgol Y Deri.

 

In referring to the references tabled at the meeting from the Scrutiny Committees (Social Care and Health) and (Lifelong Learning), as the lead Scrutiny Committee members of the Committee considered it important to obtain feedback from the Leader of the Council and the Head of Service as to the viability of such proposals. However, the Committee did itself consider that the recommendations from each of the Scrutiny Committees were premature, as the Council did not have the full current figures regarding the settlement. Both the Head of Service and Leader of the Council agreed that as the full detail of the information on the settlement had not yet been received, it was difficult to say at this point whether the cost pressures would be met or not. The Leader advised that funding all of them would be difficult and could result in the Council either having to raise the Council Tax or reserves. The Leader stated that in an ideal the Council would fund all the cost pressures but this was not financially viable. The BWG would therefore consider all the cost pressures in detail once the Council knew what money was available.

 

All Members concurred that this was the best way forward as there were also other cost pressures within other Directorates that would also require consideration.

 

Having fully considered the report, the references and in light of the Council's budget situation, it was subsequently

 

RECOMMENDED -

 

(1)                T H A T no action be taken with regard to the recommendations from the Scrutiny Committees (Social Care and Health) and (Lifelong Learning) in view of the cost pressures facing the Council overall and as the details of the financial settlement from WG had not yet been received.

 

(2)                T H A T the amended budget for 2015/16 as set out at Appendix 1 to the report be noted.

 

(3)                T H A T the views of the Scrutiny Committee be referred to Cabinet.

 

(4)                T H A T the Committee notes that a sum of £1.65m has been be set aside in the Schools Investment Strategy reserve and £850k the Disabled Facilities reserve, funded by the projected underspending on revenue in 2015/16, with further details in the Initial Capital Programme proposals 2016/17 report.

 

Reasons for recommendations

 

(1)                In view of the overall cost pressures facing the Council and that the detail of the financial settlement had not yet been received.

 

(2)                In order that the changes to the 2015/16 budget can be incorporated.

 

(3)                To advise Cabinet.

 

(4)                To use revenue funding to carry out additional capital schemes.

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