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Agenda Item No. 7

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Corporate Resources): 10th December 2013

 

Report of the Managing Director

 

Initial Revenue Budget Proposals 2014/15

 

Purpose of the Report

1.         To advice Scrutiny Committee of the amended budget for 2013/14, the initial revenue budget proposals for 2014/15 and the treatment as to the funding of a proportion of the cost of union duties within Building Services.

Recommendations

It is recommended that:

 

1.         The amended budget for 2013/14 as set out in Appendix 1 be noted.

2.         Any recommendations on the initial revenue budget proposals for 2014/15 be referred from this Committee to Cabinet for consideration.

3.         It be noted that a contribution of £31k for 2013/14 and £32k for 2014/15 is to be made from Policy to Building Services towards employee costs in carrying out union duties.

4.         It be noted that Vale Viewpoint will be consulted to ascertain the public's priorities in order to inform the budget process, as well as consultation being undertaken with the Local Service Board, Town and Community Councils and Vale businesses.

Reasons for the Recommendations

1.         To incorporate changes to the budgets.

2.         To enable Cabinet to consider the comments of Scrutiny Committee.

3.         To be aware of the contribution to the costs of union duties within Building Services.

4.         To obtain the comments of external consultees before Cabinet makes a final proposal on the budget. 

Background

2.         The Council’s budget is determined largely by the Revenue Support Grant (RSG) settlement set by the Welsh Government (WG). The provisional RSG settlement was received from WG on the 16th October 2013.  The final settlement is likely to be received in December 2013.

3.         The Council is required under statute to fix the level of council tax for 2014/15 by 11th March 2014 and, in order to do so, will have to agree a balanced revenue budget by the same date. 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 needs to be carried out before the final RSG settlement is notified to the Council.

Revised Budget 2013/14

4.         A number of employees in the Building Services section undertake a substantial amount of duties on behalf of the respective unions. The time spent is 'lost time’ to the section and causes particular difficulties as Building Services is a trading account and has to recover its expenditure.  It is therefore proposed to make a 50% contribution towards these costs from Policy of £31k for 2013/14 and £32k for 2014/15. If approved, the contribution will be reviewed in 2015/16.

5.         Appendix 1 to this report sets out the Amended Budget for 2013/14, together with the necessary adjustments to be made to the original estimate.  These adjustments have no overall effect on the net budget of the Council and are as follows:-

Asset Rents, International Accounting Standard (IAS) 19, Transfers and Recharges - These are accounting adjustments largely outside the control of services. They reflect charges for the use of capital assets, changes to inter-service recharges and transfers and pensions adjustments to comply with accounting standards. The overall impact on the Council is nil.

6.         The following table compares the amended original budget with the projected outturn for 2013/14.

 

2013/14

2013/14

Variance

 

Original

Amended

Projected

 (+)Favourable

Directorate/Service

Budget

Outturn

 (-) Adverse

 

£’000

£’000

     £’000

Learning and Skills

 

 

 

Education and Schools

93,879

93,879

                           0

Libraries

2,606

2,606

                           0

Lifelong Learning 

193

193

                           0

Youth Service

1,127

1,127

                           0

Catering

1,743

1,743

                           0

 

 

 

                           

Social Services

 

 

 

Children and Young People

14,660

14,660

                           0

Adult Services

36,124

36,124

                           0

Business Management and Innovation

298

298

                           0

Youth Offending Service

653

653

                           0

 

 

 

 

Visible Services and Housing

 

 

 

Environment and Visible Services                  

18,393

18,290

                     +103

Parks and Grounds Maintenance

3,477

3,580

                    (103)

Building Services

0

0

                           0

General Fund Housing

           1,150

         1,000

                     +150

 

 

 

 

Development

 

 

 

Public Protection

2,564

2,564

                           0             

Private Housing

11,270

11,270

                           0

Planning and Transportation

           5,329

         5,329

                           0

Leisure

           4,085

         4,085

                           0

Economic Development

950

950

0

 

 

 

 

Managing Director

 

 

 

Resources

              130

            130

                           0

Corporate and Customer Services

379

379

                           0

General Policy

21,224

20,344

                    +880

Total

220,234

219,204

+1,030

Met from General Reserve

-1,500

-1,500

0

Grand Total

218,734

217,704

                  +1,030

 

7.         Education and Schools – Overall, the Education Budget is projected to outturn on target. The budget includes a transfer of £320k, previously approved by Cabinet on 17th June 2013 min no. C1370, from Education to Social Services for the education element of the cost of jointly funded Looked After Children residential placements. The figures also include a transfer of £546k to the Schools Investment Strategy reserve (including a sum of £44k for other local authorities contribution to the Penarth Learning Community) and £170k to reserves in respect of the Voluntary Redundancy and Early Retirement scheme, which is made up of £273k received from schools to repay arrangements made in previous years less £103k required to finance new arrangements under the scheme.

8.         The overall balanced budget is mainly made up of the following movements:

9.         There is an adverse variance of £34k on School Improvement which is due to a projected inability to achieve a £20k budgeted vacancy provision, additional support required by the School Improvement Service for post and pre inspection consultancy £12k and additional hours worked in Governors Support £2k. This is offset by a £34k favourable variance from the Access and Inclusion service as a result of additional recoupment income generated from other authorities out of county placements of £249k, offset by adverse variances against Learning Support Assistants £67k, children’s placements that do not form part of the Joint Placements budget £97k and Education's contribution towards the overspend on the jointly funded budget for Residential Placements for Looked After Children £51k.

10.      The Strategic Planning and Performance and Service Strategy and Regulation Budgets are currently projected to outturn on budget.

11.      Social Services - The current forecast is an overspend of £140k, however, further work is being undertaken this year to address this position and a balanced budget is forecast at year end.

12.      Children and Young People's Services - The major issue is the need to manage continued pressure on the children’s placements budget.  The current projected outturn for the jointly funded Residential Placements budget for Looked After Children is an overspend of £518k.  Any overspend at year end will be funded in proportion to the original contributions made to the joint budget i.e. £467k (90%) Social Services and £51k (10%) Education.  In addition to the joint budget, a high cost placement provision of £1.46m was established as part of the budget setting process for 2013/14.  To date, £223k of the provision has been committed, which is in addition to expenditure incurred within the joint budget.  There are potential underspends elsewhere in Childrens Services of around £310k which could be used to offset this position.  The increase in expenditure on the joint residential budget has resulted in a reduction in expenditure of £170k on alternative means of provision and accommodation costs required for the current cohort of children.  In addition, other areas of underspend are £50k on the legal expenses budget, £50k additional adoption income and £20k on administrative staff.  The BMI division is anticipated to underspend and any variance is apportioned to the service areas, therefore £20k of the underspend will be allocated to Adults Services.  It is currently anticipated that there will be a £157k overspend.

13.      Adult Services - The major issue is the continuing pressure on Community Care Packages, the Division's most volatile budget and the one most dependent upon levels of service demand which are not entirely within the Council's direct control.  At present, the projected year end position is an overspend of £829k which is after the reduction in budget to accommodate the savings target for the year of £685k. This overspend is also after the approval to release £646k from the £1.5m cost pressure allocated to Social Services, as part of the budget setting process for 2013/14.  This follows the decision by Welsh Government to provide funding of this value for the First Steps Initiative for 2013/14.  First Steps funding will be transferred into the RSG in 2014/15 however it will be at a reduced level of £119k.  Actions, therefore, still need to be taken to review all processes and to address this shortfall.   There are potential underspends elsewhere in Adults Services of around £553k which could be used to offset this position.  These areas are £237k following the closure of Bryneithin, £226k on staffing and £41k on Premises.  With the levels of savings required for 2014/15 and 2015/16, budgets are being re-examined during 2013/14 with a view to their possible realignment as part of the consideration of new models of service delivery . Future savings are planned for these areas and some positions and premises costs are lower than expected as a result of the commencement of some of these plans ahead of schedule.  The BMI division is anticipated to underspend and any variance is apportioned to the service areas, therefore £49k of the underspend will be allocated to Adults Services.  This results in a currently anticipated overspend of £276k.

14.      Areas of savings have been identified this year which are £293k over the required target.  This can be used to offset the overspends identified above and with further work being undertaken to address the remaining £140k, a balanced budget is projected for year end.

15.      Visible Services and Housing – The projected outturn for the Visible Services and Housing Directorate is a favourable variance of £150k when compared to the amended original budget.

16.      Highways & Engineers – It is projected that the Highways & Engineers section will have an adverse variance of £82k. The Premises & Repairs budgets are projected to be overspent by £372k, which is partly due to the ongoing projected overspend on repairing potholes and Street Lighting Energy costs. It is anticipated that the expenditure on potholes will reduce at some stage, however, this is heavily dependant on the weather over the winter months. The projected overspend on street lighting energy costs is due to anticipated savings not yet being made.  This overspend will be offset by the use of £150k from the Visible Services Reserve for additional expenditure on potholes and another £150k to offset the street lighting energy overspend. There is also a projected adverse variance of £220k as a result of a shortfall in income due to a delay in the rollout of car park charging.  Again £220k of reserves is to be used to offset this position.  Both the Street Lighting energy costs and Car Park charging will be the subject of reports to Cabinet, by the Director of Visible Services and Housing, in the near future.  Transport costs have a projected adverse variance of 10k, partly due to the increased cost of a newer fleet.

17.      Waste Management - It is projected that the Waste Management section will have a favourable variance of £33k. Employee costs are projected to have a favourable variance of £86k due to vacant posts. Income has decreased by £218k due to the reduction in the Sustainable Waste Management grant from Welsh Government.  This has been offset by reducing the budget for the purchase of food waste bags by £180k for this financial year. There are various other small overspends which total £15k.

18.      Support – It is estimated that there is a £152k underspend compared with the budget. This budget is used to meet pressures that arise throughout the financial year and is to be held to offset the pressures above.

19.      Parks and Grounds Maintenance - It is estimated that overall the Grounds Maintenance section will have an adverse variance of £103k. The main reasons for the projected overspend are additional expenditure and the end of the HLF grant for Victoria Park causing an overspend of £43k, projected expenditure of £35k at Rhoose Point for which there is no budget, a projected £18k overspend on Bowling Greens due to high utility costs and other small overspends that total £7k.

20.      Building Services – The Service is expected to out turn on target.

21.      General Fund Housing - There is a projected year end favourable variance in the sum of £150k.  Employee costs are projected to be £50k underspent due to vacant posts and staff changes and expenditure on Emergency Temporary Accommodation is estimated to be £100k under budget.

22.      Public Protection - This service shows a balanced budget, however, there continues to be pressure on the Coroners service in relation to mortuary fees.

23.      Housing Benefit/Council Tax Reduction - The year end projected position is a balanced budget. There is currently a favourable variance which is attributable to an underspend on the Council Tax Reduction Scheme of £200k, as the estimate allowed for an increase in claimants which has not occurred and an underspend of £100k on Housing Benefit subsidy receivable on recovered overpayments. This is a volatile budget and additional pressures could materialise in the remainder of the year which is why it is considered prudent to report a balanced budget at this stage.

24.      Planning and Transportation - The year end projected outturn for this service shows a balanced budget.  Welsh Government grant fund all of the costs of the Cardiff Airport Express Service.

25.      Leisure – The projected outturn for this service shows a balanced budget. There are additional costs for supplies & services, however, these are matched by an increase in grant income.

26.      Economic Development – The projected outturn for this service shows a balanced budget.  Although there is a projected £36k overspend within Employment and Training Services, this will be offset by Communities First Management fees.

27.      Resources - The Finance & ICT service is projected to outturn on budget; although there could be pressure on the budget should Council Tax court income decrease.

28.      Policy - The projected outturn is a favourable variance of £880k.  A sum of £880k is included in Policy as a provision for the incremental effect of job evaluation. These costs have been largely funded and as the Council's financial strategy is for services to fund the cost of increments, the budget is, therefore, no longer required.

29.      A sum of £1.3m is to be provided for capital works.  £650k is for Education to fund Additional Learning and Skills Building Asset Renewal Schemes, as approved by Cabinet on 9th September 2013, min no. C2015.  The remaining £650k is for Environmental and Visible Services works at Cross Common Road Bridge and approval for this funding is requested in the Initial Capital Programme Proposals 2014/15 report also on this agenda.  The schemes are to be funded from an underspend on the net cost of capital included in the Policy budget.

30.      There is an estimated Council Tax surplus for 2013/14 of £2.5m which after deducting £470k use of reserves (estimated use of reserves £1.5m less £1.03m surplus in year) results in an estimated General Fund Reserve as at 31 March 2014 of £11.858m.

Budget Strategy

31.      Cabinet approved the Budget Strategy on the 29th July 2013 min no. C1427.

32.      The Budget Strategy for 2014/15 outlines that in order to establish a baseline, Services should prepare initial revenue budgets for next year based on the cost of providing the current level of service together with any approved policy decisions and including any net savings target. This means the cost of price increases and pay awards should be included.

33.      Increases to budgets approved during the course of a financial year can restrict the freedom the Council has to allocate its resources to priorities during the following budget cycle when it is aware of all the competing demands. Consequently:

Supplementary estimates will only increase the base budget if Council has given specific approval to this effect. Increases met by virement within a year will 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 has been given for additional funding.

 

The effect of replacing grant from outside bodies that has discontinued will not be treated as committed growth. In addition, before any project or initiative that is 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 will continue and these include 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 will be expected to achieve savings already approved by Cabinet as part of the 2013/14 final budget proposals and Directors are asked to consider bringing forward the implementation of these savings ahead of the scheduled date and also to consider areas for further savings.

 

It is envisaged that the costs of service development will need to be met from within the respective directorates.

 

34.      Having regard to the above, it was therefore, proposed in respect of the 2014/15 Budget Strategy that Directors be instructed to prepare initial revenue budgets for 2014/15, in accordance with a timetable agreed by the Director of Resources. Preparation should be 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 2013/14 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 Director of Resources.

 

Budget reports to include revised estimates for 2013/14.

 

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 2013/14 Final Revenue Budget report. Any savings made directly by services over and above individual service targets to count towards future saving targets.

 

Individual services 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.

 

Some of the consultation work carried out for the Community Strategy / Corporate Plan will assist in informing the budget decision-making process. Scrutiny Committees may wish to refer to these consultations when considering the budget or conduct consultations of their own.

 

Medium Term Financial Plan 2014/15

35.      The Medium Term Financial Plan (MTFP) 2013/14 to 2016/17 was approved by Cabinet on the 7th October 2013 min no. C2042.

36.      The 2013/14 Final Revenue Budget Proposals set savings targets between 2014/15 and 2016/17 of £14.399m (excluding schools).  Even with these savings in place, the MTFP estimated a further revenue shortfall of £9.2m in 2014/15 and some £25.7m for the 3 year period 2014/15 to 2016/17.  This assumed that all cost pressures identified by services at that time were met and that the impact on schools was taken into account.

37.      The Plan was based on the anticipation of a substantial reduction in funding from WG and assumed a 4% decrease in cash terms per annum.  This was a significant reduction from the assumptions made as part of the 2013/14 budget setting process, which assumed a funding increase in cash terms of 0.7% in 2014/15 (as indicated by WG at that time) and no increase in 2015/16 and 2016/17.

38.      The Plan also factored in a notional increase in council tax of 2% each year, price inflation of 2% and annual pay awards of 1% per annum each year from 2014/15.

39.      It assumed that the minimum funding commitment for schools, equivalent to 1% above the WG’s block grant settlement, would only continue until 2014/15, which was the WG requirement at that time.

Provisional Settlement 2014/15

40.      The Council's provisional settlement was announced by WG on 16th October 2013.

41.      WG has advised the Council that it's provisional SSA (Standard Spending Assessment) for 2014/15 is £214.384m.  SSA represents WG's view of the relative resources needed to provide a standard level of service in each local authority in Wales and its primary use is to allocate RSG to these authorities.

42.      The Council will receive from WG Revenue Support Grant of £118.834m and a share of the Non- Domestic Rates (NDR) of £38.941m.  Together these figures constitute the Council’s provisional Aggregate External Finance (AEF) of £157.775m. WG reports that this represents a cash reduction of 4.5% (£7.4m) for 2014/15.  This is a larger reduction than the 4% projected in the MTFP.

43.      The Council will also receive a sum provisionally set at £1.236m via the Outcome Agreement Grant (OAG) for 2014/15. The OAG is an unhypothecated grant (i.e. not earmarked for particular services).  The Council is not guaranteed to receive the full amount of the grant as it depends on the extent to which the Council meets its obligations under the outcome agreement.

44.      There were transfers into the RSG settlement for 2014/15 as follows:

First Steps Improvement Package - £119k.  Additional funding in respect of the £50 per week cap for non residential service charges.

Council Tax Reduction Scheme Administration Subsidy - £177k. This was previously received as a direct grant from the Department for Work and Pensions.

45.      In addition, WG have stated that the provisional settlement for 2014/15 includes the transfer in of the Council Tax Reduction Scheme "Top Up" of £788k and an adjustment for the third year funding of the Local Government Borrowing Initiative (LGBI) for Highways of £152k.

46.      It is the Council's contention that, a comparative adjustment is required to account for the Council Tax Reduction Scheme "Top Up" received as part of the 2013/14 settlement.  Also, the 2014/15 AEF does not recognise the third year funding of the LGBI for Highways as an additional burden falling on the Council.  When taking both these adjustments into account, there is an actual cash reduction to the Council of 4.9%.  Pay and price inflation results in a much higher decrease in real terms. The September Consumer Price Index stood at 2.7%.  As part of the consultation process on the provisional settlement, the Leader is responding to WG on these issues.

47.      WG has provided an indicative settlement figure for 2015/16 which shows a further cash reduction of 1.63% (£2.6m).  The MTFP was based on a cash reduction of 4%.  In addition, the minimum funding commitment for schools is expected to continue until at least 2015/16, while in the MTFP the commitment ended in 2014/15.  WG has not given any indication as to the level of settlement for 2016/17, however the MTFP was based on a further 4% cash reduction.  The assumptions made in the MTFP will, therefore, be reconsidered by the Budget Working Group (BWG) as part of the final budget proposals.

2014/15 Initial Budget Proposals

48.      As a result of the reduction in the provisional settlement, the Authority will now have to identify additional savings to those originally approved for 2014/15.  It has also 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.  The updated list of cost pressures is shown in Appendix 2.  These are not shown in any order of priority.

49.      When approving the Budget Strategy for 2014/15, Directors were asked to consider bringing forward the implementation of future years savings ahead of the scheduled date.  This message was reinforced by Cabinet when approving the MTFP, where Directors were also asked to identify additional areas for savings.

50.      The 2013/14 budget included approved savings targets for the years 2014/15 to 2016/17.  Directors have assessed future year savings in order to establish those that can be brought forward to supplement the 2014/15 savings.  In doing so, regard has been given to those savings which are time bound and cannot be accelerated (e.g. commencement of Prosiect Gwyrdd waste disposal facility).  Details of the approved areas for savings for 2014/15, together with proposals for savings to be brought forward are attached at Appendix 3.  The savings do not include the cost of potential redundancies.

51.      A summary of the overall base budget for 2014/15 is attached at Appendix 4. This has been arrived at by adjusting the 2013/14 budget for items such as inflation and unavoidable growth, but does not include identified cost pressures or savings.  These are shown as a note to the table and are further detailed in Appendix 2 and 3 respectively.   Adjustments shown include the following:

52.      IAS 19 /Asset Rents - Relate to accounting items outside the control of services. They reflect charges to services for the use of capital assets and adjustments in respect of pensions to comply with accounting standards.

53.      Recharges/Transfers - Relate to changes in inter-service recharges and from the transfer of functions and responsibilities between services. Included is the previously approved transfer of £320k from Education to Children's Services in respect of the joint budget for residential Looked After Children.

54.      Budget Adjustment - Included in Policy is a sum of £880k as a provision for the incremental effect of job evaluation. These costs have been largely funded. The Authority's policy is for Directorate's to fund their own increments and, therefore, the £880k has been removed from Policy's estimates as it is no longer required.  There is also an adjustment of £119k for the First Steps Improvement Package as it was previously included in the base estimate.   The £167k reduction in the use of the Social Services fund for 2014/15 is also included under this heading.

55.      Inflation - The total figure for inflation of £2.252m relates to general price increases (£1.649m) and a 1% allowance for pay awards (£603k). These figures do not include schools inflation which amounts to £489k for pay and £336k for prices.

56.      Committed Growth - This totals £1.042m of which £198k reflects the minimum funding commitment for schools, £216k relates to Landfill Tax, £152k to LGBI and £180k to capital charges. It also includes the transfers into RSG of £177k for Council Tax Reduction Scheme Administration Subsidy and £119k for First Steps Improvement Package.

57.      Once the base budget for 2014/15 has been established, it must then be compared to the funding available to identify the extent of any shortfall.  With a provisional AEF of £157.775m and Council Tax at a current level of £53.567m, total available funding would be £211.342m.  When compared to a base budget of £221.196m, this would result in a funding shortfall for 2014/15 of £9.854m.  This shortfall is mainly attributable to the reduction in funding from WG, an increase in pay and price inflation and the requirement to fund committed growth.

58.      If all identified cost pressures were funded, this would increase the shortfall to £15.838m.  If all proposed savings were achieved, the shortfall would be reduced to £8.539m as shown in the table below.

Projected Budget Shortfall 2014/15

 

 

£000

Funding Available

 

Provisional AEF

157,775

Council Tax

53,567

Provisional Funding Available

211,342

 

 

Base Budget

221,196

 

 

Provisional Shortfall Against Base Budget

9,854

 

 

Assume all Cost Pressures funded

5,984

 

 

Provisional Shortfall with Cost Pressures funded

15,838

 

 

Assume all Savings Achieved

(7,299)

 

 

Provisional Projected Shortfall for 2014/15

8,539

59.      This level of shortfall is unprecedented.

60.      Further work will be undertaken by the BWG when formulating the final budget proposals for 2014/15, which will include a review of the use of reserves, a possible increase in Council Tax, a review of all cost pressures, possible savings and the current financial strategies, in order to achieve a balanced budget.  The BWG will also look at the impact on the 2015/16 budget.

61.      It will be extremely difficult in the short term to meet all of the budget shortfall through further savings next year.  This may require consideration of the use of substantial levels of reserves in 2014/15, thus allowing a more thorough review of options for savings and their implications, alternative methods of service delivery and collaborative ventures.

62.      As previously indicated under the Revised Budget 2013/14 section of this report, the General Fund Reserve as at 31st March 2014 is projected to stand at £11.858m.  The 2014/15 base budget proposal includes the use of £1.5m from the General Fund reserve.  Cost pressures for 2014/15 include £500k for a reduction in the use of reserves, in line with the existing financial strategy.  A further reduction of £500k is also scheduled for 2015/16.  In light of the unprecedented funding shortfall, this strategy needs to be reviewed.  At this stage, it is proposed that a use of reserves to a maximum of £3.5m could be used in 2014/15.  The Section 151 Officer believes that the minimum balance on the General Fund Reserve should be no less than £7m.

63.      The use of reserves to fund recurring expenditure can only be countenanced as part of a specific strategy to achieve a balanced budget in future years.  The consequence of such actions will be to increase the level of savings required in 2015/16 onwards. 

Next Steps

64.      Corporate Resources Scrutiny Committee is the lead Scrutiny Committee and will consider both the Initial Revenue Budget Proposals and any recommendations that other Scrutiny Committees have made. The responses of Scrutiny Committee must be made no later than the 13th December 2013.

65.      The Cabinet Budget Working Group have held a series of meetings in November 2013 with the relevant Cabinet Members and officers to consider the budget proposals. They will submit their recommendations so that the Cabinet may make its final budget proposal no later than the 24th February 2014.  Before making its recommendation, the Budget Working Group will consider the comments made by Scrutiny, together with the results of consultation.  The final proposals to Cabinet will include a review of the financial strategies required to achieve a balanced budget, which is sustainable in future years.

66.      Cabinet’s final budget proposals will be considered by Council at a meeting to be held on 5th March 2014.

67.      The timetable for the 2014/15 Budget Process is shown below.

            Timetable for 2014/15 Budget Process

To be completed no later than

Cabinet considers the initial budget proposals

 

18th November 2013

Lead Scrutiny Committee responds to consultation and makes comments on budget proposals

13th December 2013

Cabinet make its final proposals on the budget

 

24th February 2014

Meeting of Council to consider budget and council tax resolution

 

5th March 2014

Resource Implications (Financial and Employment)

68.      Based on the assumption that all cost pressures will be funded in full, the estimated funding shortfall for 2014/15 will be £15.838m.

69.      WG has indicated further reductions in funding for Local Government in 2015/16, with no indication received as yet for changes thereafter.  It is therefore important that Directors achieve approved savings and look to mitigate further cost pressures through alternative means of service delivery and collaborative ventures.

70.      As reserves are a non-recurring means of funding, they can only be used as part of a specific financial strategy.  Each year the purpose, nature and level of earmarked reserves are reviewed and will again be reviewed as part of the 2014/15 Budget Process.  Appendix 5 sets out the Authority’s estimated reserves as at 31st March 2014.

71.      The impact on staffing levels of the identified savings could be a potential reduction of up to 76 Full Time Equivalents (FTE).   Not all of the identified savings relate to staffing.  However, if the remaining projected shortfall of £8.539m was met solely by staff reductions, based upon an average salary of £25k, this would equate to a further reduction of 342 FTEs.  The trade unions will be consulted on the details of any possible redundancies once known.  This figure does not include the staffing implications relating to budget pressures within schools, as details need to be considered by individual governing bodies.

72.      The 2014/15 initial budget process is supported by Cost Centre Analyses (CCAs), which is attached at   Appendix 6 and which provides details for each service area including:

Comparisons of the 2011/12 outturn, 2012/13 budget and actual outturn, and 2013/14 budget.

 Separation of the largely controllable (e.g. salaries and wages) and uncontrollable (e.g. recharges from other departments) elements of income and expenditure.

Identification of the cost centres within Service Areas.

Sustainability and Climate Change Implications

73.      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)

74.      The Council is required under statute to fix its council tax by 11th March 2014 and in order to do so will have to agree a balanced revenue budget by the same date.

Crime and Disorder Implications

75.      The obligations of the Council with regard to Section 17 needs to be fully considered in the budget decision making process.

Equal Opportunities Implications (to include Welsh Language issues)

76.      These initial 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. The subsequent development of individual strategies for achieving savings will require the completion of Equality Impact Assessments. This involves systematically assessing the likely (or actual) effects of policies on people in respect of disability, gender, sexuality (including gender identity), age, Welsh language, and racial equality.

Corporate/Service Objectives

77.      Contributes to the corporate priority of Community Leadership by the provision of sound financial management.

Policy Framework and Budget

78.      This report is following the procedure laid down in the Constitution for the making of the budget and so does not need to be referred to Council. However, the final 2014/15 budget will require the approval of full Council

Consultation (including Ward Member Consultation)

79.      The Corporate Management Team has been consulted on this report. The initial budget proposals will be the subject of consultation with Scrutiny Committees.  The Trade Unions and Schools forum will also be consulted.

80.      Externally, Vale Viewpoint, the Citizen's Panel for the Vale, will be consulted to ascertain what the public's priorities are in order to inform the budget process.  The Local Service Board, Town and Community Councils and Vale businesses will also be consulted.

Background Papers

Medium Term Financial Plan 2013/14 to 2016/17

Budget Strategy 2014/15

 

Contact Officer

Robert Ingram

Principal Accountant

 

Officers Consulted

The Corporate Management Team has been consulted on this report

 

Responsible Officer:

Sian Davies

01446 709202

 

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