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Agenda Item No. 10(g)

 

THE VALE OF GLAMORGAN COUNCIL

 

COUNCIL MEETING: 1 MARCH 2017

 

REFERENCE FROM CABINET:  20 FEBRUARY 2017

 

 

C3469         FINAL PROPOSALS FOR THE REVENUE BUDGET 2017/18 (L) (SCRUTINY COMMITTEE – CORPORATE PERFORMANCE AND RESOURCES) -

 

Cabinet was asked to consider the final proposals for the Revenue Budget 2017/18, before making their final recommendations to Council.

 

The Council was required under statute to fix the level of Council Tax for 2017/18 by 11 March, 2017. The final decision on the budget could not be delegated and must be made at the meeting of Council scheduled to be held on 1 March, 2017.

 

The proposed budget for 2017/18 had been set in line with the current financial strategy and a summary of the overall position was attached at Appendix C to the report.

 

Asset rentals were accounting adjustments reflecting charges to services for the use of assets. They did not constitute “real” expenditure and were reversed out and replaced by the cost of capital within Policy. Similarly IAS 19 changes were technical accounting adjustments to the costs of pension contributions, which were reversed out in Policy. Neither of these adjustments were therefore a part of the total expenditure of the Council.

 

Recharges/Transfers related to movements in charges between internal Council Services and the transfer of functions. Overall there was a neutral impact on the budget. 

 

Budget Adjustments related to the £320k reduction in the use of the Social Services Fund in 2017/18.

 

Inflation (excluding schools) totalled £1.637m of which £844k related to general price increases and a 1% allowance for pay awards amounts to £793k.

 

The Budget Working Group (BWG) had reviewed and updated the cost pressures. Those which could not be mitigated or reduced were included within the Net Growth figure of £5.192m. The breakdown of this sum was shown at Appendix D attached to the report.

 

The savings had also been reviewed by the BWG. It would not be possible to implement some of the larger Reshaping Services savings in full during 2017/18 as they would require further time to be implemented and therefore the targets of some of the savings had been reprofiled over the 3 year period. For 2017/18 proposed savings total £4.017m and details were included at Appendix E attached to the report. 

 

As part of the Initial Revenue Proposals report presented to Cabinet on 14 November, 2016 it was projected that the outturn for Policy for 2016/17 would be a favourable variance of £4m. Cabinet resolved "That the sum of £4 million be set aside to the General Fund and consideration be given for that allocation to be used to offset the shortfall in the revenue budget and/or used for capital schemes, the details of which would be considered by the budget working group before the final revenue proposals were presented to Cabinet and Council for approval".

 

Options for the funding had been considered by the BWG. In light of the results of the consultation, £1m would be transferred into the Visible Services fund and used to carry out additional road and pavement resurfacing works over the next 2 years. The consultation exercise also demonstrated the value placed on Visible Services by residents and therefore £500k would be transferred into the Visible Services fund to support capital projects. Under the Local Development Plan, site provision had to be made for Gypsy Travellers. Further work would need to be undertaken as to the final requirements however it was proposed that £1m would be set aside in a fund for a Gypsy/Traveller site scheme. It was also proposed that £500k would be placed in the Council Building Fund to generally finance schemes included in the proposed capital programme. Further details of the schemes were contained in the Final Capital Programme Proposals 2017/18 report. There was pressure on the Education recoupment income budget and while the base budget would be increased in 2017/18 this would not be by the full cost pressure requested. However, it was proposed that £200k be transferred into the Schools Placements reserve to cover any potential shortfall while further Reshaping work and assessment was undertaken.

 

During the year it had been reported that the planning fee income budget was unlikely to meet its target. This was considered to be due to uncertainty in the construction market as a result of the referendum for the United Kingdom’s exit from the European Union and a cost pressure was submitted by the department. It was very difficult to forecast the level of Planning fee income in the near future and therefore in order to cover a possible shortfall, £100k had been transferred into a Planning Fee reserve.

 

As already stated, it would not be possible to implement some of the larger Reshaping Services savings in full during 2017/18 as they would require further time to be implemented and therefore the targets of some of the savings had been reprofiled. This would result in a shortfall in the revenue budget for 2017/18. As recommended by Cabinet at the initial budget proposal stage, part of the 2016/17 projected underspend would be set aside to the General Fund to be used to offset a shortfall in 2017/18. A sum of £700k would be held in the General Fund and would be used to fund the revenue budget in 2017/18.

 

Services

 

Learning and Skills

 

 

Schools

Strategy, Culture, Comm Learning &   Resources

Achieve-ment for All

School Improve-ment

Strategy & Reg

Total

 

 £’000

£’000

£’000

 £’000

£’000

£’000

Budget 2016/17

 

 

 

 

 

99,359

Recharges/Tfrs

 

 

 

 

 

(496)

Changes in Asset Rentals/IAS 19

 

 

 

 

 

168

Inflation

 

 

 

 

 

175

Restructure

81,684

12,135

3,982

1,162

243

99,206

Net Growth

831

19

473

0

0

1,323

Savings

(78)

(357)

(165)

(40)

0

(640)

 

Budget 2017/18

 

82,437

 

11,797

 

4,290

 

1,122

 

 

243

 

99,889

 

WG no longer required Councils to provide a Minimum Funding Commitment for school funding, which had been equivalent to 1% above the change in the Assembly’s block grant funding allocation from the UK Government.

 

A breakdown of the net growth was attached as Appendix D of the report. Even though the Education SSA had decreased by £696k from 2016/17, additional funding had been allocated to the service. The BWG had decided to fund the one off additional pay cost pressures for schools on the same basis as the rest of the Council i.e. full funding for the increase in non-teaching staff employers superannuation contributions and 50% of the Apprenticeship Levy. £689k had also been provided to contribute towards other cost pressures.

 

During the year it had been reported that there had been pressure on the inter authority recoupment budget and the out of county placements budget with projected overspends of £793k and £268k respectively. Part of the overspend was being offset by some budget underspends within the Directorate and as part of the 2015/16 closing report, £500k was set aside in a Schools Placements reserve which would be fully utilised during 2016/17. The BWG acknowledged the pressures in the area and had allocated recurring funding of £450k and had transferred £200k into the Schools Placements reserve. The BWG requested that further work should be undertaken in the area through the Reshaping Service programme to mitigate the position.

 

A breakdown of the savings target was shown in Appendix E as attached to the report. Reshaping savings targets were included in 2017/18 to be achieved from the Additional Needs and the Strategy and Resources services. Work was ongoing, not only to achieve this saving, but to reduce the pressure in the services. It was acknowledged by the BWG that further time was needed to implement changes and therefore the savings targets had been reprofiled over a 2 year period.

 

It was suggested that the Schools Budget Forum be consulted before any final decision was made on the split of the funding between Central Education and the Schools. It was recommended that delegated authority be given to the Interim Director of Learning & Skills to determine the split in the light of that consultation. It was also planned that as part of the 2017/18 budget setting process the budget for Catering Services would be delegated to Schools.

 

After the changes above the Education budget would be substantially above the Indicator Based Assessment (IBA).

 

Social Services

 

 

Children & Young People

Adult

Services

 Business Mgmt. &

Innovation

YOS

Total

 

£’000

£’000

£’000

£’000

£’000

Budget 2016/17

14,858

39,906

295

696

55,755

Recharges/Tfr

(4)

4

(68)

(6)

(74)

Adjustments

115

205

0

0

320

Inflation

133

529

30

11

703

Net Growth

19

1,606

10

0

1,635

Savings

             0

(335)

0

0

(335)

Changes in Asset Rentals/IAS 19

3

(5)

0

0

(2)

Budget 2017/18

15,124

41,910

267

701

58,002

 

The latest projected outturn for Social Services in the current financial year indicated an overspend of £600k. There remained continuing pressures on the service, particularly in relation to the cost of adult care packages which could outturn this year up to £1m over budget and the full year effect of this year’s commitments would further increase the figure. This overspend related mainly to domiciliary care packages provided for frail elderly clients.

 

A breakdown of the net growth was shown in Appendix D attached to the report. Having regard to the current financial pressures and the results of the budget consultation, where concerns were raised by the Social Care and Health Scrutiny Committee and residents over the support for older people, the BWG acknowledged that there were significant issues in the area. Not only was there an increase in the population, but clients were increasingly frail with complex needs. There was a ‘knock on’ effect from pressures within Health and work was being undertaken to ensure integration between the two services.

 

However, this was an ongoing process. There were also pressures on the service from changes in legislation such as the Social Services and Well-being (Wales) Act 2014 which came into force on 1 April, 2016. Fees paid to residential and domiciliary providers during 2016/17 were increased by above the level of inflation to allow for the introduction of the National Living Wage. Providers had also requested an above inflation increase in 2017/18, due to the continuing impact of the National Living Wage. However, the Social Services SSA for 2017/18 had decreased by £262k from 2016/17. The BWG had taken all these factors into account and it was proposed that an additional £1.25m should be included in the budget for Adult Services. In addition, it had been announced by WG that the maximum weekly charge for non-residential care was due to increase from £60 to £70 per week and this should generate up to £250k of additional income for the service.

 

The Council for the past 3 years had received Delivering Transformation Grant from WG. The grant had been used to implement the introduction of the Social Services and Well-being (Wales) Act 2014. This funding would be transferred into the RSG in 2017/18 to enable the continuation of work required to fully implement the Act. Previously the Council had worked in collaboration with Cardiff Council to implement the changes required, with the Vale of Glamorgan Council acting as host authority and receiving grant funding for both authorities. It was proposed that the collaborative working between the authorities continued in 2017/18 with the Vale of Glamorgan Council continuing to act as the host.

 

The Intermediate Care Fund (ICF) grant would continue to be provided to Health by WG and the Service would work with Health to ensure the monies were spent in the most cost effective way.

 

On 5 January, 2017 the Minister for Social Services and Public Health announced an additional £10m funding for Social Care. The new investment was to form part of a three-way agreement to be established between the Welsh Government, local government and social care employers to work together to create a more stable social care workforce. The funding was to help to meet the extra costs associated with the introduction of the National Living Wage. How this funding would be transferred to local authorities was not yet known, however, if it was allocated on the basis of the Older Persons Residential and Domiciliary Care SSA formula then the Council could receive around £370k.

 

A breakdown of the savings target was shown in Appendix E attached to the report. There had previously been a saving included of £270k to be achieved from a review of the way in which domiciliary care was procured, however, the BWG understood the pressure on this service and while the service needed to continue to review and implement alternative ways of working and managing demand, the saving had been removed.

 

During 2012/13, the Social Services Budget Programme was established which outlined a series of savings for future years and provided the required funding for the managed reduction of the budget, via the setting up of the Social Service Fund. The following table showed the continued use of the Social Services Fund.

 

Financial

Year

Use of

Fund

 

£’000

2017/18

650

2018/19

330

 

 

TOTAL

980

 

 

 

 

 

 

 

 

 

The Director of Social Services would continue to review the Social Services Budget Plan and take the necessary action to achieve the level of savings required in accordance with the above timeframe. It was also essential that tight control over expenditure was achieved.

 

Environment and Housing

 

 

Visible

 

Transport

Building

Regulatory

Council Fund Housing

Total

 

£’000

£’000

£’000

£’000

£’000

£000

Budget 2016/17

20,068

4,834

0

2,056

744

27,702

Recharges/Tfr

338

(20)

(9)

84

182

575

Adjustments

0

0

0

0

0

0

Inflation

265

46

9

19

10

349

Net Growth

308

3

0

8

190

509

Savings

(819)

(22)

0

0

0

(841)

Changes in Asset Rentals/IAS 19

(246)

0

0

(1)

0

(247)

Budget 2017/18

19,914

4,841

0

2,166

1,126

28,047

 

A breakdown of the net growth was shown in Appendix D attached to the report. As part of the consultation process, residents commented on the Waste Collection service and, therefore, the BWG thought it appropriate to support some of the increased costs and pressures on the Waste Collection and Recycling services. 

 

A breakdown of the savings target was shown in Appendix E attached to the report. A Reshaping Services savings target of £1.9m had been included for 2017/18. A report also on the agenda outlined proposals for the way in which part of this saving would be achieved, however, it would not be possible to implement the full level of this saving during 2017/18. The saving target had therefore been reprofiled over 2 years. 

 

Managing Director & Resources

 

 

Resources

 

Regen

Develop Mgt

Private Hsing

General Policy

 

Total

 

£’000

£’000

£’000

£’000

£’000

£000

Budget 2016/17

920

2,172

958

11,262

16,660

31,972

Recharges/Tfr

1,296

(101)

(9)

(428)

(763)

(5)

Adjustments

0

0

0

0

0

0

Inflation

227

20

16

107

40

410

Net Growth

59

8

5

62

91

225

Savings

(1,769)

0

(2)

0

(430)

(2,201)

Changes in Asset Rentals/IAS 19

(5)

(8)

0

0

94

81

Budget 2017/18

728

2,091

968

11,003

15,692

30,482

 

A breakdown of the net growth was shown in Appendix D attached to the report. The implementation of the Cardiff Capital Region City Deal was beginning to progress. A sum of £50k had been included in the 2017/18 budget to contribute towards regional working in this area. A budget of £60k had been included for staff costs as part of the Renewal Area budget, which was required to support the capital bid which had been included as part of the final capital programme proposals. 

 

A breakdown of the savings target was shown in Appendix E attached to the report. Included as part of the Tranche 2 Reshaping Services programme was £1.4m which was to be achieved from the Corporate Workstream in 2017/18. The implementation of this review had already commenced however a full saving would not be achieved in 2017/18 and therefore the saving had been reprofiled over the next 2 years.

 

Delivering Well Being

 

In setting the revenue budget, the Council needed to consider its corporate priorities as set out in the Corporate Plan 2016-2020 through the 4 well-being outcomes which were shown below with examples of how the Council was providing support through the 2017/18 revenue budget. 

  • An Inclusive and Safe Vale - Funding had been allocated to support the continuation of the Renewal Area which improved the quality of housing;
  • An Environmentally Responsible and Prosperous Vale - Funding had been allocated for the commencement of the Cardiff Capital Region City Deal which would maximise opportunities for economic development and job creation and through the provision of additional funding for waste recycling;
  • An Aspirational and Culturally Vibrant Vale – Funding had been provided for schools; and
  • An Active and Health Vale – Funding had been provided to support Social Services and collaborative work will continue with Health as part of the ICF grant funding.

These outcomes demonstrated the Council’s commitment to the Well-being of Future Generations Act which aimed to improve the social, economic, environmental and cultural well-being of Wales and ensured that the needs of the present were met without compromising the ability of future generations to meet their own need. Even with reductions in funding, where practical, the Council would strive to maintain services which contributed to this agenda.

 

In developing the Corporate Plan, the Council had reflected on the way it worked and had stated 5 principles it would follow. These budget proposals reflected the new approach to working. The 5 ways of working were:- 

  • Looking to the long term - The budget proposals were a means of planning for the future and took a strategic approach to ensure services were sustainable and that future need and demand for services was understood.
  • Taking an integrated approach - The budget proposals highlighted and encouraged ways of working with partners.
  • Involving the population in decisions – As part of the budget proposal process there had been engagement with residents, customers and partners.
  • Working in a collaborative way – The budget proposals recognised that more could be achieved and better services could be provided by collaboration and it encouraged this as a way of working in the future.
  • Understanding the root cause of issues and preventing them – The budget process was proactive and allowed an understanding of the financial position so that issues could be tackled at the source.

Financial Strategy for 2018/19 to 2019/20

 

The 2014/15 final budget proposals were informed by a budget review exercise that included the reappraisal of the Council’s financial strategy. Consequently, separate strategies were put in place for Education & Schools, Social Services and all Other Services.

 

The BWG had continued to have regard to the continued appropriateness of these strategies given the significant level of savings that now had to be found, the relative size of the Education & Schools and Social Services budgets as a proportion of the Council’s net budget requirement and the pressures on the services.

 

Education & Schools increases should at least match the overall percentage change in the Council’s budget as amended for adjustments to the council tax reduction scheme (CTRS) and the council tax base. The Council would continue to strive to ensure that the budget for Education would be the same proportion of the Council’s total budget as the Education SSA was to the total SSA where it was feasible to do so. This would be dependent on future settlements.

 

The BWG considered that the principles applied above to Education & Schools also continued to apply to Social Services. It was proposed that the financial strategy for all Other Services remained in place. This would require services to manage downwards or meet the bulk of their cost pressures through additional savings. For the purpose of these projections, it had been assumed that the financial strategies set out in the report for Education & Schools and Social Services would continue to be applied.

 

WG had not provided the Council with indicative settlement figures for 2018/19 onwards. The MTFP was based upon a cash reduction of 3% in both 2018/19 and 2019/20. Each 1% change in AEF affected the Council by approximately £1.5m. It was assumed that the same levels of reduction were used for these projections.

 

Pay and price inflation (excluding schools) was estimated at £3.323m over the two years based upon a 1% per annum uplift for both areas. This assumption would be reviewed again when the next iteration of the MTFP was produced.

 

In November 2014, Cabinet agreed to commence a Reshaping Services strategy and change programme. This programme was the Council’s proactive response to central government’s austerity drive that had created a period of unprecedented financial pressure in the public sector. The savings targets set as part of this programme were large and challenging, and required substantial input for their achievement. As detailed by service area above, some of the targets had been reprofiled over a number of years to ensure their successful and considered implementation.

 

Cabinet as part of the initial budget setting process for 2016/17 agreed to the commencement of Tranche 3 of its Reshaping Services programme. As part of the work recently completed with Price Waterhouse Cooper, areas of savings for 2018/19 onwards had been identified. They were currently not allocated to individual services but identified for the Council as a whole. Appendix F attached to the report included the proposed savings for 2018/19 and 2019/20, including the Tranche 3 Reshaping Services programme.

 

Cost pressures for future years had been considered and assessed by the BWG and totalled £4.616m for 2018/19 and 2019/20. Details were attached at Appendix G to the report. This included a possible level of funding for schools which was estimated at £986k over the 2 years and potential pressures on Social Services as a result of increased demographic growth and further increases in the National Living Wage. Any further cost pressures would need to be managed down or mitigated by Services in order to avoid further savings targets being required. An allocation had been included for Housing as recognition of the possible reduction in transition grant funding and in order to support homelessness prevention services.

 

Previously there were no plans to use the Council Fund reserve in future years after 2016/17, however, this budget proposal recommended the use of £700k to support the 2017/18 budget on a one off basis, leaving a balance of £8.572m in the fund as at 31 March, 2018. However, there was considerable uncertainty on the effects of Britain’s exit from the Europe Union and there was a distinct possibility that inflation would increase in the coming years. Coupled with that, the Reshaping Services savings may not be achieved in the short term. That being the case, it had to be assumed that the Council Fund could be used to support the budget in the coming years, while at the same time, being mindful that the Section 151 Officer required a balance of £7m to be maintained as a minimum balance for this particular fund.

 

Assuming a council tax increase in each of the two years of 2% and adjustments for ‘one-off’ items flowing from the 2017/18 budget, the table below showed the projected shortfall for the period. It was emphasised that these projections were based upon information available at the current time and they would be subject to change e.g. changes in AEF. The projection was also based upon the assumed achievement of a high level of savings. The position would be reassessed as part of the MTFP and future year budget setting processes, to identify if these savings were not achieved or were not implemented in the year required, or additional cost pressures were not mitigated.

 

Financial Projections to 2019/20

2018/19

2019/20

Total

 

£’000

£’000

£’000

Assumed Decrease in AEF (3% and 3%)

4,487

4,352

8,839

Cost Pressures (inc Schools)

2,642

1,974

4,616

1% Pay and 1% Price Inflation (excl.   schools)

1,653

1,670

3,323

Net Savings Targets

(5,226)

(2,270)

(7,496)

Assumed 2% Gross Council Tax Increase

(1,323)

(1,350)

(2,673)

Adjustment for ‘One Off’ Items *

320

330

650

(Surplus)/Shortfall in Savings Required

2,553

4,706

7,259

 

Reserves

 

Reserves were a way of setting aside funds from budgets in order to provide security against future levels of expenditure and to manage the burden across financial years. Funds no longer required may be transferred to the Council Fund and then set aside for other purposes or used to reduce council tax.

 

The Council had always taken a prudent approach with regard to Specific Reserves and used them to mitigate known risks (financial and service) and contingent items, e.g. Insurance Fund. Other Reserves had been established to fund Council priorities, e.g. Visible Services and in particular the Capital Programme, e.g. School Investment Reserve, Project Fund, Building Fund. This was important as the Council had limited capacity to realise sufficient sums from the sale of assets for capital investment. Sums had also been set aside to assist in budget management. The Housing Revenue Account Reserve was ring-fenced to Housing and the majority would be used to fund improvements to the Council’s housing stock.

 

The Council benefited from a reasonable level of reserves, however, they were not inexhaustible and had taken years of careful financial management to develop to their current position. After several years of real term reductions in funding and with the continuation of austerity measured into the foreseeable future, there was reducing contingency in the normal operational council budgets and the management and use of reserves would become increasing important to be able to continue to provide services and to mitigate risks, while still trying to deliver corporate priorities.

 

The level of reserves had to be considered in the context of the financial risk facing the Council over the coming years.

 

One of the main risks to the Council’s financial planning was the uncertainty as to the level of funding to be received from WG in future years. No indication had been provided by WG after 2017/18. Projections had been based on the assumed cash reduction in AEF of 3% in both 2018/19 and 2019/20. Each 1% change in AEF affected the Council by approximately £1.5m.

 

Projecting forward on this basis, there was a gap in funding in the coming years that would need to be identified. Savings of £18.772m needed to be achieved over the next 3 years, of which £11.513m had been identified. This figure was extremely challenging and there was significant pressure on services to deliver these existing savings in full and on time. There was a risk of non-achievement of these savings and the ability to identify and implement further savings given the already high level of savings previously delivered by services. Reserves had been set up where possible to facilitate this process e.g. Early Retirement Fund, Reshaping Services Fund.

 

There were risks in the budget and the most significant of these were set out in the report. Social Services care packages budget was currently overspending. Even though additional funding had been proposed for 2017/18, further action would need to be undertaken by the Director of Social Services to achieve a balanced budget. The budget recovery plan for Social Services required an estimated £980k from the Social Services Fund to cover revenue expenditure over the next 2 years to give the Service time to plan and implement remedial action, in order to bring their expenditure within their base budget.

 

Pay and price inflation was a further risk. From 2017/18 onwards, provision had been made in the budget at a rate of 1% for each element. The Consumer Price Index had been gradually increasing and for the 12 months to December 2016 it rose by 1.6%. Services would need to manage spending as costs rises about the 1% included in their budgets.

 

Details of all specific grants had not yet been finalised and there was a risk that should grants be cut and it was not possible to reduce expenditure correspondingly, the Council could overspend. This risk was mitigated by the fact that Services had in place “exit” plans for any specific grant ceasing and were usually aware of likely developments in the level of grant. In the first place each Service would be expected to fund any shortfall from its revenue budget. There were however some reserves held to cover future grant reductions but these could only be seen as a contingency in the short term e.g. Adult Community Learning and Youth Offending reserves. The payment of redundancy costs, when a grant ceased, was not normally allowed as eligible expenditure to be set against the grant and therefore it was for the Council to set aside funds to cover this eventuality. A Grant Exit Strategy reserve was being held under the Social Services heading to fund such costs if they arose and in the main related to the Flying Start grant.

 

Legislative changes provided a major risk to the Council. The impact of the introduction of the Social Services and Well-being (Wales) Act 2014 was continuing to be assessed and the Social Services Legislative Changes reserve could be used to mitigate issues in the short term. Any increase in the National Living Wage would put further pressure on staffing budgets. There was uncertainty for future recycling costs as a result of Article 11 of the Revised Framework Directive which were yet to be confirmed. In addition, the impact of changes to welfare reforms were at present not clear and a reserve was held for this purpose. With the introduction of the new Housing (Wales) Act in April 2016 Welsh Government secured transitional funding for all local authorities to help mitigate the potential significant challenges of the Act and the number of additional statutory duties within the Act. As the funding was transitional and was likely to reduce in the future, the authority needed to ensure that it could fund its new duties from within its future resources.

 

There were risks associated with climate change, in particular energy costs and the Council held an Energy Fund to implement energy saving initiatives. The effect of adverse weather conditions increased the cost of running and maintaining the Council’s infrastructure and provision needed to continue to be set aside to fund works over and above that held in the normal operational revenue budget, as covered for instance by the Bad Weather reserve.

 

Whilst covered by a separate report on the agenda, it was important to point out that a large proportion of the reserves were held for capital expenditure as well as for revenue purposes. There was a large commitment required for the future development of local schools and for the risks in maintaining aging premises. Also, the Council relied heavily on its IT infrastructure and the Wales Audit Office had recommended that a corporate technology development fund should be held.

 

The Council also held funds to enable it to fulfil its priorities set out in the Corporate Plan through the 4 well-being outcomes. The Council had to demonstrate its commitment to the Well-being of Future Generations Act and ensure that the needs of the present were met without compromising the ability of future generations to meet their own need, thus ensuring that funding was available in the long term through sound financial planning.

 

As part of the usual Budget process, an examination of the level of reserves was undertaken to ascertain their adequacy and strategy for use. The reserves were examined with a view to their level (i.e. whether the amount held in the fund was sufficient to requirements) and purpose (i.e. whether the need to hold the fund was still relevant).

 

The requirement for each specific reserve had also been considered in light of the Council's priorities and it had been deemed necessary to move funding from lower priority areas to higher priority areas.

 

The Regulatory Improvements reserve was set up several years ago and covered the previous Public Protection service which included Private Housing. Part of this reserve related to Private Housing and therefore the allocation of £284k now needed to be transferred to a separately identifiable reserve for that service. Also the reserve currently included the repayment to the Council of its proportion of the underspend achieved by the Shared Regulatory Service in 2016/17 which was £142k. It was proposed that the Regulatory Improvements reserve was set at the level of the repayment from the Shared Regulatory Service and that the remaining balance be transferred into the Visible Services fund.

 

The estimated level of the Council Fund Reserve at 1 April, 2017 was £9.272m, with £700k being used to fund the revenue budget in 2017/18.  This left a balance as at 31 March, 2018 of £8.572m.

 

The Section 151 Officer’s view was that the minimum level for the Council Fund Reserve was £7m. This was considered sufficient to cover unforeseen expenditure whilst, in the short term, maintaining a working balance. Unforeseen expenditure could be substantial and several instances could occur in a year. Whilst there was no set requirement for the minimum level for the Council Fund Reserve, some commentators used 5% of the net budget as a guide. For the Vale of Glamorgan this was currently about £10.8m. However, in view of the prudent approach the Council took with regard to Specific Reserves, £7m was considered a reasonable minimum.

 

The Schools Balances were unspent budgets delegated to individual schools. It was projected that the aggregate nursery, primary and secondary balances would be £705k in surplus at 31 March, 2017. Attached at Appendix H to the report was a schedule showing the reserves and the anticipated balances at 31 March, 2017, 2018, 2019 and 2020. The Appendix set out the title of the reserve together with its purpose. A summary of the position was set out below:

 

Summary of   Estimated Reserves Projected to 2019/20

Est. Bal.

31/3/2017

Net

Movement

Est. Bal.

31/3/2020

 

£’000

£’000

£’000

General   Reserves

9,272

(700)

8,572

Specific   Reserves :

 

 

 

-         Insurance   Fund

1,743

0

1,743

-         Capital   Reserves

26,483

(14,851)

11,632

-         Other   Specific Reserves

23,566

(11,071)

12,495

Total Council Fund Reserves(excl. Schools)

  61,064

(26,622)

34,442

 

It was projected that there would be a large fall (44%) in the level of reserves over the 3 year period as substantial calls on funds were made. However, these were still deemed to be adequate as known risks were largely covered and the Council Fund Reserve was at a reasonable level, not expected to fall below £7m.

 

At the meeting, the Leader highlighted paragraphs 14 and 93 of the report. These stated that confirmed reductions in funding from Welsh Government of £1.786m equated to a 2.8% change in Council Tax, or £31.14 for Band D properties. The Leader stated that any rise in Council Tax had to strike a balance between financial pressures facing Council taxpayers and the growing pressure on services, particularly in light of reduced funding from Central Government being received by the Welsh Assembly. Finally, the Leader noted that the average Council Tax set by Councils in Wales for 2016/17 at Band D was £1,127, whilst the Vale of Glamorgan’s was £1,111.23, and other Local Authorities were planning much higher rises in Council Tax this year.

 

This was a matter for Executive and Council decision

 

Cabinet, having considered the report and all the issues and implications contained therein

 

RESOLVED –

 

That the following be recommended to Council:

 

(1)       T H A T the budget for 2017/18 be fixed at £215.72 million including a provision of £200k for discretionary rate relief to rural shops and post offices and charitable organisations.

 

(2)       T H A T the budgets for 2017/18 as set out in Appendix C as attached to the report and the totals as set out below be approved:

 

 

£’000

Schools

82,437

Strategy, Culture, Community Learning & Resources

11,797

Strategy and Regulation

243

Achievement for All

4,290

School Improvement

1,122

Children & Young People

15,124

Adult Services

41,910

Business Management & Innovation

267

Youth Offending Service

701

Visible Services

19,914

Transportation

4,841

Building Services

0

Regulatory Services

2,166

Council Fund Housing

1,126

Resource

728

Regeneration

2,091

Development Management

968

Private Housing

11,003

General Policy

15,692

Council Fund Reserve

(700)

Grand Total

215,720

 

(3)       T H A T the recommendations regarding Net Growth for 2017/18 as set out in Appendix D attached to the report and Savings for 2017/18 as set out in Appendix E attached to the report be approved.

 

(4)     T H A T the Council Tax for 2017/18 be set for its own purposes (excluding Police and town and community council precepts) at the following levels:

 

Band

Council Tax

     £

A

761.58

B

888.51

C

1,015.44

D

1,142.37

E

1,396.23

F

1,650.09

G

1,903.95

H

2,284.74

I

2,665.53

 

(5)       T H A T the proposed draft report on Education Budget and Indicator Based Assessment (IBA) attached at Appendix A to the report be endorsed and the Interim Director of Learning and Skills make arrangements for it to be forwarded to the School Budget Forum.

 

That the following be approved by Cabinet:

 

(6)       …………….

 

(7)       …………….

 

(8)       …………….

 

(9)       …………….

 

(10)     …………….

 

Reasons for decisions

 

(1)       To set the 2017/18 budget in line with statutory requirements.

 

(2)       To allocate budgets to services.

 

(3)       To reduce risk to services and balance the budget.

 

(4)       To set Council Tax levels for 2017/18.

 

(5)       So that the report could be presented to the Schools Budget Forum.

 

(6)       …………….

 

(7)       …………….

 

(8)       …………….

 

(9)       …………….

 

(10)     …………….

 

 

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