Top

Top

 

Agenda Item No

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Social Care and Health) 28th November 2011

 

Report from the Director for Social Services

 

Initial Revenue Budget Proposals 2012/13

 

Purpose of the Report

1.             To submit for consultation the initial budget proposals for 2012/13 and to inform Scrutiny Committee of the amended original budget for 2011/12 for services which form part of this Committee's remit.

Recommendations

It is recommended that:

1.             The amended budget as set out in Appendix '1' be noted.

2.             The initial revenue budget proposals for 2012/13 be considered and any comments passed to Corporate Resources Scrutiny Committee as the lead Scrutiny Committee

3.             It be noted that the Director of Social Services takes the necessary action to bring expenditure in line with the base budget.

Reasons for the Recommendations

1.             To facilitate monitoring of the budget.

2.             In order that Cabinet be informed of the comments of Scrutiny Committees before  making a final proposal on the budget.

3.             To bring Social Services expenditure in line with the base 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 18th October 2011 (and the final settlement is likely in December/January).

3.             The Council is required under statute to fix the level of council tax for 2012/13 by 11th March 2012 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.

4.             SSA (Standard Spending Assessment) 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. WG has advised the Council that its provisional SSA for 2012/13 is £204.895M.

5.             The Council's provisional RSG is £114.128M and its share of the Non- Domestic Rates (NDR) is £36.744M together these figures will constitute the Council’s provisional Aggregate External Finance (AEF).

6.             The Council will also receive a sum provisionally set at £1.253M via the Outcome Agreement Grant (OAG) for 2012/13. 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 Improvement Agreement Grant. The proportion of the grant eventually received in 2012/13 is determined by a ratings score of the Council's performance in achieving its 2011/12 Outcome Agreement targets.

Revised Budget 2011/12

7.             Appendix ‘1’ to this report sets out the necessary transfers to the original estimate for 2011/12, which are required to be made as follows (there is no overall effect on the net budget of the Council).

·               Asset Rents, International Accounting Standard (IAS) 19, and Recharges etc - these relate to accounting items and expenditure outside the control of Services. They reflect charges to Services for the use of capital assets, changes to inter service recharges, superannuation increases not required and adjustments in respect of pensions to comply with accounting standards.

·               Transfers - to reflect mainly transfers of functions and responsibilities between services. This relates to

-  transfer of £35k from Children's Services and £74k from Service Strategy to Adult Services £109k to reflect the recharge from the Service Strategy heading to the individual budget heads.

8.             The following table compares the amended original budget with the projected outturn for 2011/12.

 

2011/12

2011/12

Variance

 

Amended

Original

Projected

 (+)Favourable

Directorate/Service

Budget

Outturn

 (-) Adverse

 

£’000

£’000

     £’000

 

 

 

 

Social Services

 

 

 

Children and Young People

13,509

14,780

(-)1,271

Use of Provision

(210)

(+)210

Adult Services

33,004

35,404

(-)2,400

Use of Provision

(465)

(+)465

Service Strategy

297

297

0

Remedial Measures

(2,996)

(+)2,996

Total Social Services

46,810

46,810

0

 

 

 

 

9.             Children Services – The projected overspend position for this service is £1.3m.  An analysis of this position is shown in the table below.  This overspend can be offset by a Children’s Services provision of £210k resulting in £1.1m of savings to be found by the Service this financial year.

Area Of Spend

£000

Note

Childrens Placement

1,114

There is an increased number of high cost placements

Foster Carers

157

Increased payments to Foster Carers due to the introduction, by the Welsh Government, of the National Minimum Allowance for Foster Carers, which came into force from April 2011

GROSS DEFICIT

1,271

 

Use of Provisions

(210)

 

NET DEFICIT

1,061

 

 

 

 

10.        Adult Services – The projected overspend position for this service is £2.4m.  An analysis of this position is shown in the table below.  This overspend can be offset by an Adult Services provision of £465k, resulting in £1.9m of savings to be found by the Service this financial year.

Area Of Spend

£000

Note

Care Home Fees

465

An increase in fees required to pay Care Homes over and above the 2% inflation already included in the budget

2011/12 Savings

286

Savings identified for the year but not being achieved

Community Care Packages

2,370

This is made up of both an increase in demand and as a result of the introduction of the Welsh Government First Steps Improvement Package Initiative which introduced a £50 charge cap per week for non residential services.

Underspends within Adult Services budget

(721)

This is largely due to staff vacancies

GROSS DEFICIT

2,400

 

Use of Provisions

(465)

 

NET DEFICIT

1,935

 

 

11.        Service Strategy – This budget is anticipated to outturn on target.

12.        Social Services – Overall, it is projected that the Social Services budget as a whole could overspend by £3.7m this year.  There are provisions available to offset this position to the value of £675k thus resulting in a net overspend of £3.m.  Remedial measures will need to be undertaken in order to reduce this deficit and these are identified in a separate report elsewhere on the agenda.

Base Budget 2012/13

13.        Cabinet approved the Budget Strategy and the Medium Term Financial Plan on the 20th July 2011.

14.        The Budget Strategy for 2012/13 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.

15.        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 identify and achieve recurrent efficiency and other savings, including (but not restricted to) those identified in this Medium Term Financial Plan.

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

16.        Having regard to the above, it was proposed that in respect of the 2012/13 Budget Strategy, Directors were instructed to prepare initial revenue budgets for 2012/13, in accordance with a timetable agreed by the Director of Finance, ICT and Property. 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 2011/12 final revenue budget report;

·               Budgets to be broken down subjectively and objectively in as much detail as deemed appropriate by the Director of Finance, ICT and Property;

·               Budget reports to include revised estimates for 2011/12;

·               Full account to be taken of the revenue costs, other than debt charges, of new capital schemes coming into use.

17.        A summary of the overall base budget for 2012/13 is attached at Appendix '2'. This has been arrived at by adjusting the 2011/12 budget for items such as inflation and unavoidable growth.

18.        Asset Rents, IAS 19, and Recharges etc - these relate to accounting items and expenditure outside the control of Services. They reflect charges to Services for the use of capital assets, changes to inter service recharges, superannuation increases not required and adjustments in respect of pensions to comply with accounting standards.

19.        Transfers - to reflect mainly transfers of functions and responsibilities between services. This relates to:-

- transfer of £35k from Childrens Services and £74k from Service Strategy to Adult Services £109k in order to reflect the recharge from the Service Strategy heading to the individual budget heads.

20.        Adjustment - this is made up of an adjustment to remove the estimated April 2011 pay award for employees earning less than £21,000 which did not materialise.

21.        The total figure for inflation relates to general price increases and a 1% allowance for pay awards.

22.        Committed Growth totals £50k and relates to the change in insurance charges due to increased premiums and change in methodology to reflect a greater emphasis on claims value / number.

23.        The Medium Term Financial Plan includes savings targets for Services for 2012/13.to 2014/15.

Annual Efficiency Savings Targets

2011/12

2012/13

2013/14

2014/15

TOTAL

 

     £000

     £000

     £000

     £000

     £000

Social Services

    1,634

       754

    1,847

    1,333

    5,568

 

24.        The savings of £754k for 2012/13 as shown above are included in the estimates and were approved by Council on the 28th February 2011 (minute 957).

25.        A list of 2012/13 cost pressures as identified by the Service is attached at Appendix 3. These are not shown in any order of priority. 

26.        Attached at Appendix '4' are the proposed 2014/15 savings. More detail is required on these savings and their impact will be considered as part of the budget review following the elections in May 2012.

Next Steps

27.        The next stage is for the estimates to be considered by this Scrutiny Committee. Corporate Resources Scrutiny Committee is the lead Scrutiny Committee and will consider both the Initial Revenue Budget Proposals and any comments that other Scrutiny Committees have made. The responses of Scrutiny Committee must be made no later than the 20th December 2011.

28.        It is also proposed to consult on the initial budget proposals with Local Service Board partners.

29.        The Cabinet Budget Working Group will hold a series of meetings in November 2011 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 29th February 2012. Before making its recommendation, the Budget Working Group will consider the comments made by Scrutiny.

30.        Cabinet’s final budget proposals will be considered by Council at a meeting to be held by the 7th March 2012.

Resource Implications (Financial and Employment and Climate Change, if appropriate)

31.        It is important that Directors balance their budgets and Social Services need to take immediate action to address the projected overspend.

32.        Each year the purpose, nature and level of earmarked reserves are reviewed and will again be reviewed as part of the 2012/13 Budget Process. Appendix '5' sets out the Directorate's estimated reserves as at 31st March 2012.

33.        The pressure on spending totals £11.297m, comprising net Inflation (£2.798m), net growth (£1.455m) identified and cost pressures (£7.044m). Each 1% increase in Council Tax will yield approximately £509k additional income.

Legal Implications (to Include Human Rights Implications)

34.        The Council is required under statute to fix its council tax by 11th March 2012 and in order to do so will have to agree a balanced revenue budget by the same date.

Crime and Disorder Implications

35.        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)

36.        Additional finance improves the Council’s opportunities for assisting disadvantaged members of society

Corporate/Service Objectives

37.        Contributes to the corporate priority of Corporate Resources by the provision of sound financial management.

Policy Framework and Budget

38.        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 2012/13 budget will require the approval of full Council

Consultation (including Ward Member Consultation)

39.        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.

Relevant Scrutiny Committee

40.        The lead Scrutiny Committee is Corporate Resources.

Background Papers

Finance Department Papers

 

Contact Officer

Carolyn Michael

Senior Group Accountant

 

Officers Consulted

The Corporate Management Team has been consulted on this report.

Responsible Officer:

Phil Evans Director for Social Services

Share on facebook Like us on Facebook