Agenda Item No
The Vale of Glamorgan Council
Cabinet Meeting 19th November 2012
Report of the Leader
Initial Revenue Budget Proposals 2013/14
Purpose of the Report
1. To gain Cabinet’s approval for the amended budget for 2012/13 and the initial revenue budget proposals for 2013/14, so that they may be submitted to Scrutiny Committees for consultation
It is recommended that:
1. It be agreed to transfer in 2012/13 £180k from Policy to Leisure Services to cover the additional costs incurred by Leisure Centres and Dyffryn House and Gardens.
2. The amended budget for 2012/13 as set out in Appendix '1' be approved.
3. The initial revenue budget proposals for 2013/14 are approved for consultation with Scrutiny Committees.
Reasons for the Recommendations
1. To fund the increased costs in respect of the Leisure Centres and Dyffryn House and Gardens.
2. To incorporate changes to the budgets.
3. In order that Cabinet be informed of the comments of Scrutiny Committees before making a final proposal on the budget.
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 2012 (and the final settlement is likely in December/January).
3. The Council is required under statute to fix the level of council tax for 2013/14 by 11th March 2013 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 2013/14 is £218.838M.
5. The Council's provisional RSG is £125.934M and its share of the Non- Domestic Rates (NDR) is £37.752M together these figures will constitute the Council’s provisional Aggregate External Finance (AEF).
6. The Council will also receive a sum provisionally set at £1.246M via the Outcome Agreement Grant (OAG) for 2013/14. 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. The proportion of the grant eventually received in 2013/14 is determined by a ratings score of the Council's performance in achieving its 2012/13 Outcome Agreement targets.
7. Transfers into the RSG settlement are as follows:
Blue Badge Scheme (Adult Services) - £16k
The scheme provides a range of parking concessions for people with severe mobility problems who have difficulty using public transport.
Appetite for Life Grant (Catering) - £103k
This grant supported dietetic/nutritional posts in collaboration with Cardiff Local Health Board, staff training in nutritional requirements and new equipment. The funding could also support trials offering new foods.
School Counselling Grant (Education & Schools) - £201k
The specific grant funds were accessible for counselling services for secondary school pupils, year 6 pupils in primary school and 16-18 year olds
School Breakfast Grant (Catering) - £621k
This grant funded the Breakfast Club Initiative within 31 primary schools, increasing to 36 partaking schools by the end of 2012/13.
Local Government Borrowing Initiative (Highways) - £304k
The objectives of the scheme are to boost the Welsh economy and improve the local highway asset. The WG will provide an annual amount over 22 years to meet revenue pressures in order to free up the Local Authority’s own resources to undertake prudential borrowing for capital highway improvement investment over the 3-year period 2012/2015.
Post 16 SEN in Mainstream (Education & Schools) - £38k
Transfer of responsibilities for additional learning support for post 16 pupils with special educational needs in Mainstream schools and other related provision previously funded by a specific grant
Post 16 SEN Special School Out of County (Education & Schools) -£820k
Transfer of responsibilities for post 16 Education in the Vale’s three Special Schools and also for specialist placements out of county and at independent schools previously funded by a specific grant.
Learning Disabilities Resettlement Grant (Adult Services) - £1.235M
This grant was used for supporting clients with learning difficulties in the community
8. New responsibilities transferred to the Authority is Council Tax Support £7.514M
The existing Council Tax Benefit Scheme will cease on the 31st March 2013. The overall funding will be transferred from the Treasury to the Welsh Government. The provisional RSG settlement includes an allocation of funding to each authority within the block grant. The Council’s share of this funding is £7.514M.
Revised Budget 2012/13
9. Appendix ‘1’ to this report sets out the necessary adjustments to the original estimate for 2012/13, 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, 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 functions and pensions adjustments to comply with accounting standards. The overall impact on the Council is nil.
· A virement (transfer) of £150k from Policy to Leisure to reflect additional costs (staff cost arrears of £55k and income in advance of £95k) made to Leisure Centres. These arise from a change in the timing of their charging to account as a result of the transfer to Parkwood Leisure.
· A virement of £30k from Policy to Leisure to fund the shortfall in the saving target which will not be achieved as a result of the delay in the transfer to the National Trust. Both virements can be funded by savings within Policy.
10. The following table compares the amended original budget with the projected outturn for 2012/13.
Learning and Skills
Education and Schools
Children and Young People
Business Management and Innovation
Youth Offending Service
Visible Services and Housing
Environment and Visible Services
Parks and Grounds Maintenance
General Fund Housing
Private Sector Housing
Planning and Transportation
Corporate and Customer Services
Met from General Reserve
11. Education and Schools – Overall, the Education Budget is currently projected to balance as at the end of March 2013, however, this is after transferring £144k from Education Reserves. Any savings identified between now and the end of the year will be available to reduce the use of reserves, or to re-direct into the School Investment Strategy or other reserves.
12. This is due to projected overspends against School Improvement £29k and Additional Learning Needs (ALN) £211k offset by a projected underspend against Strategic Planning and Performance of £96k. ALN is an extremely volatile budget and various options for offsetting any potential overspend are being investigated.
13. The overspend against School Improvement of £29k is due to adopting an amended funding approach for the WJEC subscription which had been previously proposed as a saving £42k, and also additional costs for subscriptions and licences paid on behalf of schools £11k. This is offset by a reduction in the projected cost of the Joint Education Service in year £10k and in addition income has been generated in year and vacancy savings made within the service £14k.
14. Strategic Planning is projecting an underspend of £96k due to the vacant Director post £53k, savings against the pensions budgets £46k, there is also an underspend against salaries budgets £54k. This is offset by a projected overspend of £15k for Schools Rates and a projected overspend against Maternity costs met on behalf of schools of £80k. The outturn for maternity is difficult to project accurately and was overspent by £195k in 2011/12 and, therefore, it will need to be monitored carefully. There is a projected underspend of £38k against the Schools ICT and Data budget due to delays in recruiting to posts, additional income generated in year and the introduction of an SLA with Cardiff and Vale college to manage the data in relation to Adult enrolments.
15. Additional Learning Needs is projecting an overspend of £211k this is due to an overspend against the budget for children’s placements in independent schools £257k this is partly offset by additional recoupment income of £63k. ALN is also projecting an overspend of £200k against the one to one LSA budget this has been offset in year by £244k found as a result of de-committing expenditure including specific budgets for secondary behaviour support due to the overspends projected elsewhere in the ALN budget. There is also an overspend in ALN of £61k due to the refurbishment costs of the Pupil Referral Unit (PRU) prior to inspection and lower than projected Age Weighted Pupil Unit contributions from schools towards pupils placed in the PRU.
16. Provision has been made within the budget for the annual cost of financing the School Investment Strategy of £600k. This sum will be transferred to the School Investment Strategy Reserve.
17. In addition to finance the School’s contributions to the ER/VR scheme Education is projecting to transfer £66k from Education Reserves this will be repaid by participating schools over 2013/14 and 2014/15.
18. Catering - Although anticipated to out turn on target, the service is exposed to external pressures.
19. Social Services - The overall Social Services budget is at present projected to outturn on target at year end. There are variances in individual services as set out below resulting in a net favourable variation of £49k. However this sum, should it arise, will be used to reduce the use Social Services make of their fund.
20. Children and Young Peoples Services - The year end projected outturn is an overspend of £260k. An underspend in the Social Services Business Management and Innovation Division will reduce the recharge to Children and Young Peoples Services and thus reduce the overspend. The service itself is actually projected to overspend by £302k. Children’s placements could outturn £192k over budget, which is due to a recent increase in the number of residential placements following the breakdown of the children’s existing placements with foster carers. There is also a projected overspend on the adoption budget of £76k. This is due to a family relocating to the Vale, who have a high cost post adoption support package. The Fifteen Plus LAC and Sections 17 budgets are experiencing increased pressure from several sources and is anticipated to overspend by £129k, due mainly to accommodation costs for young people aged 16 to 18. These overspends are offset by underspends of £95k on team budgets which includes staffing and travel costs. It should be noted that this budget is extremely volatile, with the potential cost of placing a child being several thousand pounds per month and any increase in the number of children becoming looked after by the Council or changes in children's circumstances over the coming months could significantly impact on the services.
21. Adult Services – The year end projected outturn is an underspend of £309k. An underspend in the Social Services Business Management and Innovation Division will reduce the recharge to Adult Services and therefore increase the underspend. The service itself is projected to outturn £219k under budget. The underspend is due to a projected increase in deferred income of £108k, with the remainder of the underspend relating to staffing budgets, partly due to the fact that the budget includes a provision for a 1% pay award which will not be paid this year. The remainder of the year will be a testing time for the service and, consequently, this position could change. The annual uplift for the care home fees has yet to be agreed and could impact on the final outturn. Talks are ongoing with the Welsh Government regarding the impact of the £50 cap for non-residential services.
22. Business Management and Innovation - The year end projected outturn is an underspend of £132k however this will be recharged to other areas of Social Services showing a breakeven position under this heading. The reason for this underspend is mainly due to staff vacancies being held under the Protection and Policy heading pending a review of service provision.
23. The volatility of expenditure, particularly on children’s placements and community care packages can mean that the above position could change prior to year end.
24. Visible Services and Housing – The projected out turn for the Visible Services and Housing Directorate shows a net zero variance when compared to the amended original budget. Even though the overall budget has been balanced there are variances within individual Services.
25. Highways & Engineers – It is projected that the Highways & Engineers section will have a favourable variance of £15k. It is projected that the employee’s budget will be £88k overspent within the Highways & Engineers service. This is mainly due to an overspend on agency staff in Engineers. However, the majority of agency staff time is charged to capital schemes. Premises & Repairs budgets are projected to be overspent by £426k which is mainly attributable to the level of repairs required to the highways network as a consequence of previous severe winters. To offset this, the Income estimate has increased by £529k mainly due to the increased level of work done for capital schemes.
26. Waste Management - It is projected that the Waste Management section will have a favourable variance of £48k. Employee costs are projected to have a favourable variance of £123k due to vacant posts. The Supplies & Services budget has a projected overspend of £189k mainly due to payments made for the new litter enforcement service. However the majority of this expenditure is offset by increased income from fines. The revised income estimate has a favourable variance of £114k.
27. Parks and Grounds Maintenance - It is estimated that overall the Grounds Maintenance section will have a favourable variance of £17k. Employee Costs are projected to be £30k underspent due to vacant posts. Premises costs are projected to be £25k overspent however this is largely due to repair of the Beachcliff Wall at Windsor Gardens. Transport costs are projected to be £47k overspent due to the high number of vehicles required during the summer season. Supplies & Services budgets are estimated to be overspent by £55k. This is mainly due to increased levels of work done for other departments, which is offset by additional income. The income estimate is projected as a favourable variance of £114k to the original budget.
28. Support – It is estimated that there is a £80k overspend compared with the original budget. This is due to the transfer of staff into the support section from elsewhere within Visible Services.
29. Building Services – The Service is expected to out turn on target. Overall the recharge to Building Services clients for management costs has reduced by £19k.
30. Planning and Transportation - The projected outturn for Planning and Transportation shows a favourable variance of £59k when compared to the amended original budget.
31. This is because of savings on employee costs of £100k and internal recharges of £17k. There is also a net increase in Government grant and other grant income of £45k due to the inclusion of the current level of grant funding in the estimates. Internal recharge income has increased by £4k.
32. This is offset by a £55k net reduction in contribution to funds due to a £31k reduction in the anticipated drawdown from the planning fees reserve and the need to make a revenue contribution to capital of £24k. There is an increase in Support charges of £26k in order to provide maternity cover. There is a net reduction in income of £21k. Supplies and Services have increased by £5k which reflects an increase of £64k grant expenditure now included in the estimates offset by savings of £59k found from within the division.
33. Leisure – The projected outturn for Leisure shows an adverse variance of £168k when compared to the amended original budget.
34. There is increased expenditure of £243k on supplies and services primarily due to the inclusion of anticipated expenditure not previously reflected in the estimates, mainly relating to corporate events and grants. Customer receipts have fallen £103k. There is an increase on third party of £4k and on internal recharge expenditure of £3k.
35. This is offset by savings on employee costs of £104k. There is an increase in grant income of £81k as it was not previously fully reflected in the accounts. There is an increase in contributions from reserves of £53k.an underspend on premises costs of £50k and savings on transport costs of £14k. Additional internal recharge income totals £13k.
36. In addition there is a further adverse variance of £130k in relation to the Leisure Centres. This is due to increased employee costs of £89k, reduced income of £56k, increased supplies and services costs of £34k, a net increase in premises and contributions to funds of £22k and increased transport costs of £4k this is offset by a saving of £75k relating to third party management payments.
37. Part of the adverse variance within Leisure will be met from the savings from Planning and Transportation £59k.
38. Economic Development – The projected outturn for Economic Development shows an adverse variance of £36k when compared to the amended original budget.
39. Within Economic Development there is a favourable variance of £4k.There is a net increase in internal recharge income and expenditure of £31k and an increase on customer receipts of £25k.
40. This is offset by increased expenditure on premises of £22k and on supplies and services of £6k having taken into account the increased use of reserves. There is also an increase of £24k on employee costs in relation to capital grant funded positions.
41. Community Enterprise Centre, Employment & Training Services and Communities First grant funding transferred from Lifelong Learning to Economic Development during this financial year. It shows a £40k adverse variance against the amended original budget. There is a projected staffing adverse variance (£28k) within Community Enterprise Centre following the withdrawal of the Community services provided within the Centre, this variance is to be funded from reserves and partial use of the Communities First Management fee. In addition, the Employment Training Service is projected to outturn with an adverse variance of £120k due to a shortfall in income receipts from the Work Programme contract resulting from lower than anticipated job outcomes to date, this variance will be partly offset by provisions and reserves of £80k set aside in previous years. A review is being conducted in this Service to improve performance.
42. Resources - it is anticipated that this service will out turn on target but there is pressure on Council Tax court income and land charges receipts.
43. Policy - the estimated underspending of £250k has been generated from Member allowances savings £102k (after funding disabled parking bays), lower recharge in respect of Housing strategy £18k (after funding virement to Leisure) and financing charges £130k.
44. All other budgets are anticipated to out turn on target.
45. There is an estimated Council Tax surplus for 2012/13 in the sum of £1M. Depending on the final year's position this will be transferred to the Council Fund.
46. General Reserves as at 1st April 2012 amounted to £7.993M.
Base Budget 2013/14
47. Cabinet approved the Budget Strategy and the Interim Medium Term Financial Plan on the 9th July 2012.
48. The Budget Strategy for 2013/14 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.
49. 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 the Medium Term Financial Plan.
· It is envisaged that the costs of service development will need to be met from within the respective directorates.
50. Having regard to the above, it is, therefore, proposed in respect of the 2013/14 Budget Strategy that Directors be instructed to prepare initial revenue budgets for 2013/14, 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 2012/13 final revenue budget report;
· 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 2012/13;
· Full account to be taken of the revenue costs, other than debt charges, of new capital schemes coming into use.
51. A summary of the overall base budget for 2013/14 is attached at Appendix '2'. This has been arrived at by adjusting the 2012/13 budget for items such as inflation and unavoidable growth.
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.
54. Budget Adjustments - comprise 3 main items. The estimated April 2012 pay award did not materialise and an adjustment of £569k has been made to remove this sum from Service budgets. The transfer of a sum of £745k into Services to fund the impact of job evaluation. An adjustment to reflect the fact that £303k of Social Services savings will be used to reduce their use of the Social Services fund in line with the approved strategy. Consequently, the amount of the Social Services fund to be used in 2013/14 to balance Social Services to its base budget is estimated to be £2.241M. The net impact of the adjustments is £303k and reflects this last change which in effect offsets the total savings.
55. The total figure for inflation of £2.778M relates to general price increases (£1.769M) and a 1% allowance for pay awards (£1.009M).
56. Committed Growth totals £12.164M of this £916k relates to the Individual Schools Budget, £216k to landfill tax and £180k capital charges. It includes £7.514M for the new Council Tax Support scheme which is the sum included in the WG settlement as a new responsibility and £3.338M for transfers into RSG as follows:
· Blue Badge Scheme – £16k
· Appetite for Life Grant – £103k
· School Counselling Grant - £201k
· School Breakfast Grant - £621k
· Local Government Borrowing Initiative - £304k
· Post 16 SEN in Mainstream - £38k
· Post 16 SEN School Out of County - £820k
· Learning Disabilities supported Housing - £1.235M
57. The total of the Committed Growth in the Individual School Budget (ISB) amounts to £916k. Together with a provision for pay awards and inflation of £675k, this constitutes the minimum increase in ISB required by WG (2.08% increase)
58. The savings total £3.75M. This sum is made up of £120k saving arising from a reduction in members allowances, £165k additional saving arising from the senior management restructure, removal of one-off items included in the 2012/13 budget of £110k for local elections, £120k (Dyffryn) for Leisure and £60k (reduced rent for 2yrs) for Economic Development. The largest sum of £3.175M arises from the target for efficiency savings set in the 2012/13 budget.
59. The Final Revenue Budget proposals for 2012/13 included corporate savings targets for Services to 2014/15 of £6.125M.
Efficiency Savings Targets
Learning & Skills (excl. schools)
Social Services Budget Plan
Visible Services & Housing
Total Required for the Year
A detailed list of the savings targets shown above are attached at Appendix 3.
60. A list of 2013/14 cost pressures as identified by Services is attached at Appendix 4. These are not shown in any order of priority. Altogether these total £9.442M 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.
The implications of the Westminster Government's Welfare Reform agenda will be significant.
61. The UK Government’s Welfare Reform agenda represents a shift in the administration of welfare benefits in the UK and will have a significant affect on the Council.
62. Significant changes will apply from April 2013, as follows –
· The introduction of the localised Council Tax Support Scheme (CTS) to replace Council Tax Benefit
· The uprating of the Local Housing Allowance in line with the Consumer Price Index (previously Retail Price Index).
· The introduction of benefit limitation based on over accommodation in terms of the number of bedrooms required.
· The overall cap on benefits, to be operated through housing benefit
· The devolution of the Social Fund to the Welsh Government (being contracted out by the WG)
· From June 2013 the introduction of the Personal Independence Payment (PIP), to replace the Disability Living Allowance for new claimants, with reassessment of existing claimants on to PIP from October 2013. This will continue to be administered by the Department for Work and Pensions (DWP)
· From October 2013 the UK government will introduce the Universal Credit for working age claimants. Where claimants are eligible for housing benefit this will in most cases be paid direct to the claimant as part of the Universal Credit
· From October 2014, the Pension Credit will include an element for housing rent costs. Again this will be paid direct to the claimant in most cases.
· By October 2017 it is planned that all housing benefit will be paid through the Universal Credit and the Pension Credit.
· Introduction of the Council Tax Support Scheme
63. Council tax support has been devolved to the Welsh Government. The Welsh Government is currently in the process of making regulations for a national CTS scheme for Wales. There will be limited areas for discretion in the scheme, which will need to be agreed by the council.
64. The overall funding will be transferred from the Treasury to the Welsh Government. The provisional RSG settlement includes an allocation of funding to each authority within the block grant. This is based on a provisional allocation nationally of £214M. The Council’s share of this funding is £7.514M. It is understood that the final allocation to the Welsh Government will be set by the Chancellor of the Exchequer in the Autumn Statement. This will allow the Welsh Government to set the discount rate (i.e. the maximum percentage of the council tax bill to be met by CTS) to be applied to council tax bills within the scheme regulations.
The estimated rate of the discount ranges from 10% to 20%. For the purposes of the Initial Budget Proposals a discount of 15% has been used to establish the approximate cost of the scheme, based on the current claimant count. The cost will be affected by the claimant count and the level of council tax. In future the affect of changes in the number of claimants and their entitlement to support will impact directly on the Council.
65. It is anticipated that administering the above will require an increase in staffing in the Council Tax Section, to deal with additional queries, process additional reminders and final notices and recover this debt. Initially it is suggested that additional temporary staff are recruited until it can be established that the additional resources are cost effective in terms of future revenues collection.
66. Even with the increased activity in council tax it is anticipated that there will be a higher level of losses on collection as more council taxpayers will have greater difficulty in making payment. Provisionally it has been assumed that the reduced level of support will mean 50% of these council taxpayers receiving benefit will fall into recovery. This could result in a loss on collection in year of about 1.5%. The increased financial risk facing the council means we need to consider whether there is a need to increase the level of revenues balances (reserves) held to deal with the impact of welfare reform.
Changes to Housing Benefit
67. The changes to housing benefit will reduce the level of benefit payments generally and will have an impact on tenants’ ability to pay rent. Tenants on benefit are also likely to be affected by the requirement to contribute to their council tax bills. This is likely to lead to greater numbers of tenants getting into rent arrears. This would lead to more tenants being at risk of losing their tenancy and more demands on the homelessness service. Consideration therefore needs to be given on what the homelessness budget should be increased to in order help manage this additional demand.
68. The use of Discretionary Housing Payments (DHPs) can help alleviate the impacts in individual benefit cases as they can be used to tide tenants over until they become eligible for a higher level of housing benefit. DHPs are supported by grant up to a certain level. Above this level councils can spend to a ‘permitted total’ but this is not supported by grant. The permitted total for 2012/13 is £314,748. It is suggested that the DHP budget should be increased to the ‘permitted total’. Spending at the permitted total may result in increases in the level of grant supported DHP in future years. To spend to the permitted total will require a budget increase of £215k.It should be noted that DHPs cannot be used to support shortfalls in council tax support and are only a short term solution in individual cases
69. As a landlord, the ability of tenants to pay their rent will affect the councils own rent collection function. This is likely to lead to increases in the level of rent arrears and the need to increase the provision for bad and doubtful debts in the Housing Revenue Account. The housing service will also be affected by the bedroom restriction as the pattern of housing provision does not necessary match the requirements of tenants. This may be alleviated to an extent by the use of DHP where appropriate. The allocations policy, rent levels and arrears policy may need to be review in the light of these changes.
Money Management and Advice
70. As the Universal Credit is introduced there will be changes in the way in which benefit is paid. Payment of different benefits will be grouped together and paid as a lump sum payment akin to a monthly salary. Such payments will be paid to a nominated person in the household. Changes to the way in which benefit is paid are likely to lead to increases on the demands for services such as money management and debt advice. Investment in such services may alleviate debt issues. Officers are currently analysing the current money management and debt advice services in the Vale to establish the current coverage and funding arrangements.
71. The 2012/13 Final revenue Budget Proposals set initial corporate savings targets for 2013/14 and 2014/15 of £3.175M and £2.950M respectively with the exact level of savings required, together with their impact from 2013/14 onwards, to be considered as part of a Budget Review to be undertaken following the Council elections in May 2012.
72. The results of the Budget Review process will, therefore, inform the 2013/14 Budget Process. The purpose of the review is to ensure:
· A sustainable budget is achieved within predicted funding levels
· The budget is aligned to the Council’s priorities as set out in the Corporate Plan
· Best value for money is being obtained, i.e. identifying efficiency savings, opportunities for income generation and better use of external grants
73. The outcome of the review will be to put in place a 4-year financial strategy for the period to March 2017.
74. The 2013/14 Review is supported by Cost Centre Analyses (CCAs) which provide details for each service area including:
· Comparisons of the 2010/11 outturn, 2011/12 budget and actual outturn, and 2012/13 current year 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 costs centres within Service Areas
· A copy of the Cost Centre Analysis is attached at Appendix 5.
75. Each cost centre has been awarded a rating that measures its relative risk (based on the Council’s risk management strategy) and corporate priority. This is attached at Appendix 6. The following tables show the criteria used for the risk and corporate priority rating:
Risk Assessment Matrix
Impact of Risk
VERY HIGH (VH)
VERY LOW (VL)
Likelihood/Probability of Risk Occurring
Commitments and areas where the Council has no control over the expenditure, e.g. contractual and legal commitments, absolute minimum statutory service, taxes, etc.
Political Priority (publicly announced commitment e.g. items included in the Community Strategy, Corporate Plan)
“Invest to Save” and preventative expenditure
Statutory expenditure above the absolute minimum
76. The Budget Working Group (BWG) is responsible for completing the Budget Review. In coming to its conclusions, the BWG will also use high-level information on the comparative spending levels of individual services across Wales together with the financial information included in the Cost Centre Analyses. The results of the relative risk and corporate priority assessment will also be factored in as part of this process. Service developments in all areas will be dependent upon the eventual level of resources available.
77. The shortfall in the 2013/14 budget is £8.426M assuming all cost pressures are met. Future resource requirements have also been assessed having regard to the likely future revenue settlements and cost pressure information provided by services to 2016/17 as shown below:
Matching Predicted Resources to Expenditure
Real Term decrease in resources
Existing Corporate Savings Targets
The initial projections show a cumulative shortfall of some £25.981M by 2016/17 including the shortfall on 2013/14. In view of the difficulty in predicting future levels of inflation and cost pressures, the above table needs to be treated with a degree of caution and the eventual position may be better or worse than stated. In particular, changes in future settlements from WG have a significant impact. The projection assumes the level of increase in 2014/15 in Aggregate External Finance (AEF) will be in line with the forward indication received from WG. However, for 2015/16 and 2016/17 no future indications have been received and so it has been assumed that there will be no increase. For each 1% difference in this assumption the impact on a year's shortfall would be £1.6M. So, for example, if the Council's AEF was 1% lower than predicted in both 2015/16 and 2016/17 the cumulative shortfall would increase by £3.2M.
78. The Review will further develop the above projections. In addition it will examine the cost pressures to determine which will require funding.
79. As a starting point to assist in dealing with the funding gap the savings areas previously put forward by Directors to meet the 2013/14 and 2014/15 targets are being analysed with a view to their implementation with effect from April 2013. These are included at Appendix 3.
80. Clearly however, these will be insufficient. Consequently it is proposed to request Directors to formulate additional options for savings, additional income etc. over the next 4 years. This includes outlining the service implications and estimated HR implications (including potential redundancies, reductions in headcount and FTEs).
81. In order to provide some guidance to Directors it is suggested that a target be set for each Director. Initially, it is proposed each Director should identify savings equivalent to their pro rata share of the shortfall based on their controllable expenditure. Over the 4 year period, this approximates to an average annually recurring reduction of about 6.5%. It is extremely unlikely that this will be the eventual outcome of the budget review but it should help officers focus and provide members with options. Schools have been excluded from the target and will be looked at during the review. The target sums are set out in the table below, and are in addition to existing targets:
Annual Saving Target
Learning and Skills
Visible Services and Housing
Corporate and Communication Services
82. An update of the progress on the Budget Review will be reported to Corporate Resources Scrutiny Committee in January 2013. Comments of Scrutiny Committee will be considered by the BWG prior to preparing the final budget proposals for initial consideration by Cabinet and Council in February/March 2013.
83. Due to the 2013/14 Budget Process running in tandem with the review of the Corporate Plan it is essential that services have regard to the targets, objectives and key tasks contained within the Draft Plan when considering future cost pressures and options for savings.
84. The next stage is for the estimates to be submitted to Scrutiny Committees for consultation. 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 2012.
85. It is also proposed to consult on the initial budget proposals with the Public, Local Service Board partners, Town and Community Councils and the Business sector.
86. The Cabinet Budget Working Group will hold a series of meetings in November 2012 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 2013. Before making its recommendation, the Budget Working Group will consider the comments made by Scrutiny.
87. Progress on the Budget Review will be reported to Corporate Resources Scrutiny Committee in January 2013.
88. Cabinet’s final budget proposals will be considered by Council at a meeting to be held by the 11th March 2013.
Resource Implications (Financial and Employment)
89. It is important that Directors balance their budgets. In particular Social Services need to take the necessary action to meet their approved Budget Plan.
90. Each year the purpose, nature and level of earmarked reserves are reviewed and will again be reviewed as part of the 2013/14 Budget Process. Appendix '7' sets out the Authority’s estimated reserves as at 31st March 2013.
91. Each 1% increase in Council Tax will yield approximately £450k additional income. This is less than in other years as under the new Council Tax Support regime part of any increase is reduced by a corresponding increase in Council Tax Support.
Sustainability and Climate Change Implications
92. 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)
93. The Council is required under statute to fix its council tax by 11th March 2013 and in order to do so will have to agree a balanced revenue budget by the same date.
Crime and Disorder Implications
94. 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)
95. 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.
96. Contributes to the corporate priority of Corporate Resources by the provision of sound financial management.
Policy Framework and Budget
97. 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 2013/14 budget will require the approval of full Council
Consultation (including Ward Member Consultation)
98. 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
99. The lead Scrutiny Committee is Corporate Resources.
Interim Medium Term Financial Plan
The Corporate Management Team has been consulted on this report