Agenda Item No

The Vale of Glamorgan Council

Scrutiny Committee (Lifelong Learning): 30th November 2009

Report of the Director of Finance ICT and Property

Initial Revenue Budget Proposals 2010/11

 

Purpose of the Report

1.             To submit for consultation the initial budget proposals for 2010/2011 and to inform Scrutiny Committee of the amended original budget for 2009/2010 for services which form part of this Committee's remit.

Recommendations

It is recommended that:

 

1.             The amended original budget for 2009/10 as set out in the table at paragraph 8 be noted.

2.             Education Service to transfer the £464k saving from business rates into the School Improvement Investment Strategy Reserve in 2009/10.

3.             The initial revenue budget proposals for 2010/11 be considered and any comments passed to Corporate Resources Scrutiny Committee as Corporate Resources Scrutiny Committee is the lead Scrutiny Committee.

4.             The Director takes the necessary steps to ensure a balanced budget for 2009/10 and identify measures to achieve their savings targets for 2010/11.

Reasons for the Recommendations

1.             To facilitate monitoring of the budget.

2.             To build up the reserves available for funding improvement to school buildings.

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

4.             To ensure a balanced budget and measures to achieve savings targets.

Background

2.             The Council’s budget is determined largely by the Revenue Support Grant (RSG) settlement set by the Welsh Assembly Government (WAG). The provisional settlement was announced on the 13th October 2009 with details of the final settlement expected in December 2009.

3.             The Council is required under statute to fix the level of council tax for 2010/2011 by 11th March 2010 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 Welsh Assembly Government’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. For 2010/11, the Council’s provisional SSA has been notified as £202.381m.

5.             The Council has been provisionally advised that, for 2010/11, it will receive from WAG, RSG of £119.159m and Non- Domestic Rates (NDR) of £33.002m. Together, these sums constitute the Council’s Aggregate External Finance (AEF). The AEF represents an increase of £3.475m, which is equivalent to 2.4% over that received for 2009/10 (after adjusting for transfers into the settlement).The provisional settlement includes additional resources of £106,000 in respect of new responsibilities for Learner Travel.

6.             The Improvement Agreement Grant (IAG) will be in the sum of £1.252m. The IAG 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 2010/11 is determined by a ratings score of the Council's performance in achieving its 2009/10 Improvement Agreement targets.

7.             WAG has advised the Authority of transfers from and to the General Settlement as shown below:-

Transfer Out
Precept to Sea Fisheries	£41k
Transfers In (Previously paid as specific grant)
Schools Special Grant- Improving Education outcomes	£392k
Energy Costs for schools	£71k
Fairer Charging Policy - payable to Adult Services for income lost in implementing Policy	£235k
Deprivation grant	£167k
Disabled Children - Payable to Children and Young Peoples Service for short breaks for families.	£54k
CYP Act Implementation - payable to Children and Young Peoples Service to discharge duties under the Act.	£18k

 

Revised Budget 2009/10

8.             Appendix ‘1’ to this report sets out the necessary transfers to the original estimate for 2009/10, which are required to be made as follows (there is no overall effect on the net budget of the Council).

·     Asset Rents – Movement is due to changes in net charges for asset rentals.

·     Recharges etc - Movement in charges between internal Council services.

·     Adjustments - Budget adjustments reflect transfers of functions and responsibilities between services.

·     The following table compares the amended original budget with the projected outturn for 2009/10.

 

	2009/10	2009/10	Variance
	Amended Original	Projected	(+)Favourable
Directorate/Service	Budget	Outturn	(-) Adverse
	£’000	£’000	£’000
Learning and Development
Education and Schools	88,190	88,109	(+) 81
Libraries	2,619	2,619	0
Lifelong Learning	1,995	2,076	(-) 81
Catering	1,102	1,102	0
Total	93,906	93,906	0

 

9.             Education and Schools – Overall the Education Budget is projected to outturn with a surplus of £81k which will be used to offset the projected overspend on Lifelong Learning. Due to uncertainty associated with predicting the demand from other local authorities for places in the Vale’s Special Schools recoupment income is £321k over budget and reflects the volatile nature of the Additional Needs budget. £240k of this income has been offset by additional expenditure on Learning Support Assistants as a result of increased demand for individual support and a further £40k in relation to the Pupil Referral Unit. At present, school transport is forecast to underspend by £194k however the position could change during the remainder of the financial year as a result of fluctuations in specialist placements. It is proposed that the savings accruing between now and the end of the year will in the first instance be set against the predicted overspend on the Lifelong Learning budget and the balance transferred to Education Reserves. Provision has been made within the budget for the annual cost of financing the School Strategy Investment of £500k. As these repayments have not yet commenced this sum will be transferred to the School Improvement Strategy Reserve. In addition the Revenues and Benefits Manager within the Finance, ICT and Property Directorate has negotiated a reduction in the rateable value of schools within the Vale, which has resulted in a one off back payment of £464k. It is proposed that this is also transferred to the School Improvement Strategy Investment Reserve.

10.        Lifelong Learning – It is projected that this service will out turn with an adverse variance of £81k which will be funded by the predicted underspend in the Education budget. The adverse variance is due to delays in meeting efficiency savings and changes to the payment timescales of the new Training Contracts.

11.        Catering - This service is anticipated to outturn on budget. However external factors and continuing requirements to meet WAG nutritional guidelines can affect the outturn for the service.

Base Budget 2010/11

12.        A budget review was conducted as part of the 2009/10 Budget Process and the results of this were endorsed by Cabinet on the 1st April 2009. The resulting strategy was subsequently incorporated by the Medium Term Financial Plan and Budget Strategy approved by Cabinet on the 29th July 2009.

13.        The Budget Strategy for 2010/11 outlined that:

·     In order to establish a baseline, services should prepare initial revenue budgets for 2010/11 based on the cost of providing the current level of service and approved policy decisions. This means the cost of price increases and pay awards should be included as provided for in the 2009/10 Medium Term Financial Plan.

·     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 savings including (but not restricted to) those identified in the 2009/10 Medium Term Financial Plan.

 

14.        The Medium Term Financial Plan set savings targets for Services  for 2010/11 as follows:

	Efficiency                      £000	Other              £000	Total                 £000
Learning and Development	1,310	231	1,541

 

15.        The Directorate is working to identify savings to meet the above targets.

16.        A summary of the overall base budget for 2010/11 is attached at Appendix ‘2’. This has been arrived at by adjusting the 2009/10 budget for items such as inflation, unavoidable growth and it reflects a greater proportion of recharges falling on the General Fund of £347k.

17.        Asset Rents, Deferred Government Grant FRS 17, and Recharges - 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 and adjustments in respect of pensions to comply with accounting standards.

18.        An adjustment to the 2009/10 base has been made as the agreed pay award for April 2009 (excluding Teachers) was approximately 1% lower than estimated.

19.        Budget Transfers - Budget adjustments to reflect transfers of functions and responsibilities between services.

20.        The figure for inflation (£1.401m) relates to general price increases, the teachers pay award (2.3%) and non- teaching staff in schools (1%). No allowance is included for pay awards for other staff. A 1% increase in pay for all the Authority staff (excluding Schools) amounts to approx £700k.

21.        A list of 2010/11 cost pressures as identified by the Services is attached at Appendix '3'. These are not shown in any order of priority. These total £3.833m for the Directorate. For the whole Authority they total £9.443m and some will need to be met for some services. They exclude the cost of redundancies, which may be incurred in order to maintain the budget within the resources available. These costs could be significant.

22.        To provide Members with more background information on the Service's budgets, Cost Centre Analyses are attached at Appendix '4' which provide details for each cost centre within the service area including:

·     Comparisons of the 2008/09 budget, actual outturn and current year budget over the different types of expenditure and income.

·     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 activities provided and the relevant Service Head / Operational Manager and budget holder where different.

·     Objectives for the range of activities provided under that cost centre.

·     Where appropriate other relevant information to supplement the financial information e.g. staffing, outputs.

Next Steps

23.        The next stage is for the estimates to be considered by Scrutiny Committee and for comments to be submitted to Corporate Resources 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 15th December 2009.

24.        The Cabinet Budget Working Group will hold a series of meetings in November 2009 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 2010. Before making its recommendation, the Budget Working Group will consider the comments made by Scrutiny. 

25.        Cabinet’s final budget proposals will be considered by Council at a meeting to be held by the 3rd March 2010.

Resource Implications (Financial and Employment)

26.        Each year the purpose, nature and level of earmarked reserves are reviewed and will again be reviewed as part of the 2010/11 Budget Process. Appendix '5' sets out the Authority’s estimated reserves as at 31st March 2010.

27.        The provisional settlement indicates an increase of £3.475m in AEF funding over the 2009/10 as set out in this report. Against this, pressure for increased spending totals £16.108 million, comprising net Inflation (£2.415m), net growth (£4.250m) identified and cost pressures (£9.443m). Each 1% increase in Council Tax will yield approximately £470k additional income.

Legal Implications (to Include Human Rights Implications)

28.        The Council is required under statute to fix its Council tax by 11th March 2010 and in order to do so will have to agree a balanced revenue budget by the same date.

Crime and Disorder Implications

29.        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)

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

Corporate/Service Objectives

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

Policy Framework and Budget

32.        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 2010/11 budget will require the approval of Full Council.

Consultation (including Ward Member Consultation)

33.        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

34.        The lead Scrutiny Committee is Corporate Resources.

Background Papers

Finance Department Papers

Medium Term Financial Plan 2009/10 – 2012/13

The Corporate Management Team has been consulted on this report

Contact Officer

Sian Keen, Senior Group Accountant, 01446 709255

Officers Consulted

The Corporate Management Team has been consulted on this report

Responsible Officer:

Sian Keen, Senior Group Accountant, 01446 709255