Top

Top

 

Agenda Item No. 4

 

THE VALE OF GLAMORGAN COUNCIL

 

SCRUTINY COMMITTEE (CORPORATE RESOURCES): 16 SEPTEMBER 2014

 

REFERENCE FROM CABINET: 11 AUGUST 2014

 

C2432         MEDIUM TERM FINANCIAL PLAN 2014/15 TO 2017/18 (L) (SCRUTINY COMMITTEE – CORPORATE RESOURCES) -

 

Approval was sought for the draft Medium Term Financial Plan 2014/15 to 2017/18.

 

The budget strategy for 2015/16 was approved by Cabinet on 30 June, 2014 (Minute No. C2363). This established a baseline for services to prepare initial revenue budgets for 2015/16 based on the cost of providing the current level of service and approved policy decisions and including any net savings targets set. It also set out the timetable to be followed and required Directors to review savings already approved, with a view to implementing them ahead of the target date and to consider areas for further savings.

 

The purpose of the Medium Term Financial Plan was to link the Council’s strategic planning process with the budget process and to ensure consistency between them. It was a mechanism that attempted to match future predicted resources and expenditure, identify potential shortfalls and provide the financial framework for the next 3-5 years. It was not the budget setting process that allocated detailed budgets for services. Its purpose was to inform Members and to suggest a way of dealing with the future financial pressures facing the Council.  The draft Medium Term Financial Plan for 2014/15 to 2017/18 was attached at Appendix 1 to the report.

 

This Medium Term Financial Plan, therefore, attempted to:

  • Identify the main financial implications resulting from the increased pressure falling upon Council services, including pay and price inflation, legislative and demographic changes;
  • Estimate the reduced financial resources that would be available to the Council to meet these demands in light of the Minister's letter;
  • Match the predicted expenditure and resources and provide a framework to develop a financial strategy towards achieving a balanced budget for the next 3 financial years.

 

The draft Medium Term Financial Plan covered, for revenue, the period 2014/15 to 2017/18. An Executive Summary was included at pages 2 – 6 of the Plan, as attached at Appendix 1 to the report. With the exception of the Minister's letter, Welsh Government had not yet given any indication of local government funding levels for 2015/16 to 2017/18. However, the timeframe for the budget process necessitated use of the best available information at the time if a balanced budget was to be achieved by the statutory date. The assumptions made in the Plan were, therefore, based upon the contents of the Minister's letter and the subsequent views of key commentators (including the Welsh Local Government Association) as to the prospects for local government funding over the next few years.

 

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

 

Matching Predicted Resources to Expenditure

2015/16

£000

2016/17

£000

2017/18

£000

Real Term Decrease in Resources

9,210

8,170

5,070

Cost Pressures

1,303

6,316

3,422

Identified Savings

(8,857)

(8,706)

(645)

Costs to be met within Schools

(362)

(371)

(380)

Additional Shortfall

1,294

5,409

7,467

 

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

 

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

 

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

 

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

 

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

 

  • Consider the results of the budget engagement process in determining priorities for future savings and service delivery
  • Review the appropriateness of the current financial strategies for Education and Schools, Social Services and Other Services
  • Review feasibility of increasing  the use of the General Fund Reserve as part of the financial strategy
  • Further reviewing the level of cost pressures with a view to services managing and reducing demand and mitigating pressures
  • Services funding their own residual cost pressures through reviewing their existing budgets and revised/alternative means of service provision
  • Services meeting their own pay and price inflation, superannuation increase etc through reviewing their staffing structure in line with changes to service delivery and workforce planning requirements
  • Reviewing the priorities for funding statutory and non-statutory services, including establishing minimum levels of services provision
  • Pursuing options for reshaping services including means of alternative service delivery in order to attempt to maintain the level of service while reducing the cost of provision.  This was considered further in a separate report on this agenda entitled Reshaping Services – A New Change Programme for the Council.

 

At the meeting, the Leader commented that with regard to paragraph 23 on Social Services in the report, he wanted to clarify for Members that the resultant use of the Fund would be £2.199M in 2014/15 as already approved and amended to £2.075M in 2015/16, £970K in 2016/17,  £650K in 2017/18 and £330K in 2018/19. The recommendation on the changed profile for use of the fund should be referred to Council. As a consequence, recommendation 3 would be amended below.

 

This was a matter for Executive and Council decision

 

RESOLVED –

 

(1)       T H A T the contents of the draft Medium Term Financial Plan for 2014/15 to 2017/18 as attached at Appendix 1 to the report be endorsed and referred to Scrutiny Committee (Corporate Resources) for information.

 

(2)       T H A T delegated authority be granted to the Managing Director, in consultation with the Leader, to finalise the process and timetable for engagement with stakeholders regarding the budget.

 

(3)       T H A T Council be requested to approve the change to the Social Services Budget Programme to rephase the £970k Service Remodelling saving to £320k in 2017/18, £320k in 2018/19 and £330k in 2019/20 and agree the use of the Social Services Fund of £2.075M in 2015/16, £970K in 2016/17, £650K in 2017/18 and £330K in 2018/19.

 

(4)       T H A T Council be requested to agree the proposal to use a minimum of £4m of the General Fund Reserve between 2016/17 and 2017/18, but up to a maximum use which does not result in the balance on the reserve falling below a reasonable level as determined by the Section 151 Officer.

 

Reasons for decisions

 

(1)       To facilitate the integration of medium term financial planning into the corporate planning and budget process.

 

(2)       To enable the engagement process to be progressed.

 

(3)       To amend the Social Services Budget Programme.

 

(4)       To provide adequate resources to fund future revenue budgets as part of the financial strategy.

 

Attached as Appendix – Report to Cabinet – 11 AUGUST 2014