Agenda Item No. 4

 

The Vale of Glamorgan Council

 

Shared Regulatory Service Joint Committee: 19th  December 2017

 

Report of the Head of Finance/Section 151 Officer

 

Draft Budget Proposals 2018-19

 

Purpose of the Report

  1. To gain Joint Committee's approval of the Proposed Budget for 2018-19.

Recommendations

It is recommended that:

  1. The Joint Committee approve the Proposed Budget for 2018-19.
  2. Individual Authorities are requested to approve in writing the Proposed Budget for 2018-19 by 10th March 2018.

Reasons for the Recommendations

  1. To seek agreement of the Joint Committee in line with the Joint Working Agreement.
  2. To allow the budget to be finalised prior to the start of 2018-19.

Background

  1. A Joint Working Agreement (JWA) setting out the particulars for operating the collaborative service and the creation of the Regulatory Shared Service Joint Committee was signed by Cardiff Council, Bridgend Council and the Vale of Glamorgan Council on 10th April 2015 and the service commenced operation on 1st May 2015.
  2. The JWA states that the Joint Committee should agree the draft annual budget, which is referred to as the Proposed Budget, by the 31st December prior to the commencement of the Financial Year to which the Proposed Budget relates and that the Proposed Budget should be submitted to each of the Authorities for approval.
  3. Included as part of the JWA was a Business Plan which set out the detailed financial model that sits behind the shared service and gave projections of expenditure for the first 3 years of operation (2015 -17). That programme has been completed and all the savings proposed are on course to be delivered.
  4. The service is split into Core and Authority Specific Services. The Core Service is operated on behalf of all Authorities; the JWA outlines methodology to determine the percentage contribution to be made.
  5. Authority Specific Services are paid for by individual Authorities and include Additional Licensing (Vale), Burials (Vale), Pest Control (Vale), Kennelling and Vets Fees (Vale & Bridgend), Licensing (All), HMO Cathays and Plasnewydd (Cardiff), Night Time Noise (Cardiff), Port Health Authority (Cardiff) which is funded by precepts via Cardiff and Student Liaison which is partially funded by 3 Universities (Cardiff).
  6. The Illegal Money Lending Unit is fully grant funded, with the SRS now being the recipient. Therefore, this element of the service is now shown within Core with a nil variance.
  7. For the period 2018 -21, the Partner Councils have provided an indication of budget savings and proposed a programme that will see a reduction on the core budget of 5% recurring for the 3 years; this equates to a reduction of some £830k on the Core services budget. This does not include consideration for an inflationary pay rise or any enforced adjustment to the salary on-costs.
  8. The magnitude of a cumulative 5% reduction over the next 3 years will require a review of the organisational structure, and consequently consultation with the staff and trade unions. This process will take some time; therefore it is proposed to implement a phased programme of savings, with the majority of the savings being delivered during financial year 2019-20. The SRS management team will develop proposals for delivering those savings and apprise the Committee in due course.
  9. This report outlines the 2018-19 position and sets out how the first tranche of the budget savings will be delivered.

Relevant Issues

Budget Assumptions

  1. 170 staff transferred from Bridgend and Cardiff Councils to the Vale of Glamorgan Council on the 1st May 2015 to create this shared service. As a direct result of the TUPE provision consideration for the resulting salary protection has been built into the budget. These assumptions have been based on the original Business Plan for the service.
  2. The net effect of the budget adjustments detailed below in respect of the draft proposed 2018-19 budget is that the budget requirement is £407k lower than the £8.830m agreed budget for 2017-18. Of which, £340k is directly attributable to the change in treatment of IMLU, as detailed below.
  3. As a result of the IMLU grant now payable directly to the SRS, with no additional contribution sought from the Partners, the Cardiff Authority Specific budget has been reduced by £340k to reflect the inclusion of this income source. The unit is now sited within Core as a ring-fenced trading account. This has also instigated a realignment of the Management Overheads which are driven by budget quantification.
  4. Agreed budget savings of £166k for 2018-19 have been included within the recharged Management Overheads, and from within Core. The component parts of the savings are £54k Staffing plus £112k from Supplies and Services budgets.
  5. The 2018-19 Proposed Budget includes a provision of £1,000 to reflect the 0.04% increase in Employer's Superannuation contribution to 23.10%.
  6. Also included within the 2018-19 projections is an assumed pay award of 1% which has a value of £98,000, with no increase for other price inflation.
  7. In line with the JWA, the population figures have been updated in this report to match the 2018-19 projected population as quoted in Welsh Government's Green Book.
  8. In line with the JWA, income budgets are the responsibility of each Participant Authority and are not included in the analysis laid out in this report.
  9. Management Overheads are reallocated based on information provided by the senior management team and are based on the consumption of the service. All other overheads continue to be recharged out based on the value of budget held.

Proposed Financial Contributions

  1. As a result of consideration given to the agreed savings and pay adjustments appertaining to Core, the gross expenditure budget relating to Core Services in respect of 2018-19 is £6.202m. The full impact of the agreed 2018-19 savings being assigned to the Core Budget. The contributions due from each Authority for Core services are analysed in the table below, using the population basis of apportionment as agreed in the JWA, updated to reflect the Welsh Government's Green Book 2018-19.

Core Services

   

      2017-18

Current

2018-19

   Proposed

Change in

   Contribution

 

Updated %

 

£'000

£'000

£'000

Bridgend

22.39%

 

1,404

1,388

(16)

Cardiff

57.51%

 

3,585

3,567

(18)

Vale of Glamorgan

20.10%

 

1,263

1,247

(16)

           

Total Core Services

   

6,252

6,202

(50)

           
  1. In light of no additional pressures relating to the proposed Authority Specific Services budget, the 2017-18 gross expenditure budget for Authority Specific Services of £2.578m has been used as a base for the proposed 2018-19 budget.
  2. Adjustments made to the proposed Authority Specific budget consist of consideration of the assumed 1% pay inflation, a 0.04% increase in the employer's superannuation contribution; these are then offset by the transfer of the IMLU unit to Core resulting in a subsequent budget reduction for Cardiff.
  3. The charge to each Authority for these services is illustrated in the table below.

Authority Specific Services

    2017-18

Current

    2018-19

Proposed

Change in

    Contribution

 

£'000

£'000

£'000

Bridgend

365

369

4

Cardiff

1,730

1,363

(367)

Vale of Glamorgan

483

489

6

       

Total Authority Specific Services

2,578

2,221

(357)

       
  1. A more detailed breakdown of Authority Specific budgets is show in Appendix 1 of this report. The analysis shows how each service is funded - where they are grant funded or recovered via fees, it can be assumed that additional income will be achieved to cover the increased costs. Some services are however not externally funded so Authorities will need to offset savings made in the core to cover some Authority Specific costs.
  2. Following a decision by this Committee to approve the Proposed Budget, the next stage is for each Authority to approve their contribution for 2018-19.
  3. The JWA states that each Authority shall notify the Clerk to the Joint Committee no later than the 10th March prior to the commencement of the Financial Year to which the Proposed Budget relates to confirm the approval of the Proposed Budget.
  4. In the event that the Proposed Budget is not approved by any Authority, the Joint Committee shall meet as soon as practicable to formulate a revised budget for approval by the Authorities.
  5. If the revised budget is not approved by all of the Authorities by the 31st March 2018, the Authority or Authorities who do not approve the revised budget will be treated as if they have given notice of intention to withdraw from the Agreement.
  6. The 2018-19 Welsh Government (WG) Budget was set in the autumn of 2018. Local Authorities were advised of their provisional 2018-19 Revenue Support Grant settlement in October, with the final settlement details to be received from WG during December. Therefore, it is considered that Authorities should be able to confirm agreement to the 2018-19 budget by 10th March 2018.

Resource Implications (Financial and Employment)

  1. The following table summarises the 2018-19 gross expenditure budget as outlined above.

Gross Expenditure Budget

    2017-18

Current

    2018-19

Proposed

Change in

    Contribution

 

£'000

£'000

£'000

Bridgend

1,769

1,757

(12)

Cardiff

5,315

4,930

(385)

Vale of Glamorgan

1,746

1,736

(10)

Total Gross Expenditure

8,830

8,423

(407)

       
  1. In addition, an analysis of the budgeted anticipated income has been provided by the Partners to enable identification of the level of budgets after the offset of income. However, it should be noted that the income budgets may be subject to amendment as a result of the final budgets being set by the Partners after this report has been written. The following table summarises the 2018-19 net position using income budgets provided by the respective Authorities.
 

    2017-18

    2018-19

Change in

Net Expenditure 2018-19

Current

    Proposed

    Contribution

 

£'000

£'000

£'000

Bridgend

1,374

1,311

(63)

Cardiff

3,365

3,352

(13)

Vale of Glamorgan

1,393

1,395

2

       

Total Net Expenditure 2018-19

6,132

6,058

(74)

         
  1. The Pest Control draft income budget at the Vale of Glamorgan has been reduced by £10k to reflect historical performance.
  2. In relation to Licensing income there is an element of uncertainty in prediction as licenses can now be purchased up-front to cover 1,3 or 5 years. The Licensing income position will be reviewed in order to ensure that full cost recovery is achieved. Fee setting reports will be taken to relevant Licensing Committees.
  3. When the Proposed Budget is approved by each Authority in writing then it will become the Approved Budget for the Financial Year to which it relates.

Sustainability and Climate Change Implications

  1. 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)

  1. Any legal implications are contained within the body of the report.

Crime and Disorder Implications

  1. None.

Equal Opportunities Implications (to include Welsh Language issues)

  1. Any 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. Equality Impact Assessments will be completed when appropriate.

Corporate/Service Objectives

  1. The key service and improvement objectives contained in the Business Plan identify and link to the Corporate Plans of each Council.

Policy Framework and Budget

  1. This report will require the necessary approval by each Authority in line with its own Constitution.

Consultation (including Ward Member Consultation)

  1. Each Authority's Section 151 Officer has been consulted on this report.

Relevant Scrutiny Committee

  1. Relevant Scrutiny Committees relating to each Council.

Background Papers

Joint Working Agreement

Contact Officer

Carolyn Michael

Operational Manager - Accountancy

Officers Consulted

Section 151 Officers

Responsible Officer:

Carys Lord

Section 151 Officer