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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 06/12/2005
Financial Strategy 2006/07 - 2008/2009



Summary & Purpose
This report presents the 2006/2007 draft General Fund Revenue Estimates for consideration by the Executive. The Executive is informed of the comments made by the Overview and Scrutiny Committees during the November cycle of meetings. The Executive is advised of the latest minimum estimated shortfall in revenue funding at this stage of the Budget process.

The provisional Revenue Support Grant Settlement is due to be announced on 5th December. The Executive will be advised of the updated position following the announcement.


Environmental implications:

There are no direct environmental implications as a result of the recommendation of this report. However, the estimates do include services that have very significant environmental benefits.

Social / community implications:

There are no direct social/community implications as a result of the recommendation of this report. However, the estimates do include services that have very significant social/community benefits.

E-Government implications:

The Estimates contain budgets to enable the delivery of Waverley’s E-Government Strategy.

Resource and legal implications:

There are no direct legal implications as a result of the recommendation of this report. Resource implications are contained throughout the report.

Introduction

1. On 31st October, the annual Finance Seminar took place at Cranleigh Arts Centre. All Members were invited to attend with copies of the presentation sent to those not in attendance. The seminar covered an update of the Financial Strategy and particularly focused on issues regarding the Council’s draft Budget for 2006/2007. It also focused on the Corporate Plan and the links between the two.


2. The draft Budget includes the overall savings arising as a result of the new contracts commencing on 1st November 2005. The draft Budget also allows for the appropriate initial costs and reduced contract costs of alternate weekly collection in line with previous approvals, but for 2006/2007 the effect of these will be neutral with any difference accounted for by the use of balances. However, from 1st April 2006 the Government is introducing free bus travel for the over 60s and the cost of this is unknown as is the level of any associated grant. The net additional cost to Waverley could be significant.

3. The Council is currently balloting its tenants on the option of Stock Transfer. The outcome of this vote will have an impact on the General Fund Budget. The result of the ballot will be known on 9th December. For now, the draft 2006/2007 Budget has been prepared on basis of the status quo position. The Revenue Support Grant Settlement 4. The provisional Revenue Support Grant Settlement for 2006/2007 is due to be announced on 5th December. The details of the Settlement and the updated Budget position will be reported to the Executive following the announcement. 2006/2007 Draft Revenue Estimates 5. A copy of the draft General Fund Revenue Estimates for 2006/2007, including proposals for variations to the base-level Revenue Estimates, is attached at Annexe 1. (with summary pages being distributed to non-Executive Members) Based on the Council’s existing financial strategy and assumptions detailed at the Finance Seminar, the shortfall is approximately 280,000, even before any allowance is made for the new concessionary fares regime. The key assumptions made in compiling the draft budget are that the base-level of Government Grant will not increase beyond 3%; the capping regime will not be relaxed; interest rates will remain at current levels for the year ahead; the managed staff savings will continue at 300,000 pa; and that the use of balances will accord with the Financial Strategy; 6. A figure has been included on the Budget summary for the staff pay award due on 1st January 2006 based on the offer made, which is broadly in line with inflation. An equivalent allowance has also been made for the 2006/2007 element of the award due on 1st January 2007. 7. Growth items are identified as variations to the base estimates and are shown on pages 1a for each portfolio. A comprehensive list of these variations in included at Annexe 2 to this report. The Executive is asked to give special consideration to these items, particularly in the context of the overall budget situation. 8. Applications for grants under the Sponsored Organisation Scheme for 2006/2007 will be the subject of a separate report to this Committee. At this stage, the detailed estimates for 2006/2007 relating to each organisation have been left blank. However, a global figure based on existing amounts has been included within each portfolio summary in order to show the overall budget situation. A figure of 18,000 has been included within the draft inflation provision in order to allow for a possible increase to the Sponsored Organisations Scheme in 2006/2007.

Budget Reductions

9. In addition to the environmental contract savings referred to above, officers have implemented further Budget reductions exceeding 100,000 in the course of compiling the Base Budget for 2006/2007. These include savings on the cost of line rentals for Information Technology, recovery of overpaid benefits, additional Building Control income and additional Property income. The overall net Budget variances from 2005/2006 to 2006/2007 reflect net savings in the region of 480,000.

10. The Chief Officer Group has commenced the process of examining the draft Budget for further possible reductions and advice will be offered to the Executive on 10th January.

Analysis of Shortfall

11. The following table provides an overview of how the shortfall of some 280,000, as reported to the Executive, has arisen:

,000
Net Expenditure 2005/2006
12,500
Shortfall funded from Balances 2005/2006
650
Net Inflation items
528
Proposed Variations
537
Less Budget Variances
-480
New Net Expenditure 2006/2007
13,735
Funded By:
Balances
580
Revenue Support Grant (assuming 3% increase)
5,302
Council Tax (assuming 3% increase)
7,573
Shortfall *
280

Statutory Services

12. Each budget page contains an indication of whether the service provided is statutory, discretionary, or a mixture of the two. There are some statutory services where the level of service provided is greater than that required by law. This analysis will assist Members in giving consideration to the resources allocated to the various services. There will of course be other factors, such as the Council’s approved aims and objectives, public demand and political priorities.

Planning Delivery Grant

13. For 2005/2006 Waverley’s share of Planning Delivery Grant is 480,000, of which 25% has to be spent on capital items, with the remaining 360,000 covering revenue expenditure. Council has approved expenditure during 2005/2006 which is covered by the grant of 360,000. This level of expenditure is included in the base budget for 2006/2007 and likewise the existing level of grant has been assumed. However, Waverley’s Planning Delivery Grant for 2006/2007 has yet to be announced and the amount is still uncertain.

Community Transport

14. The Budget includes a one-off grant of 125,000 in 2006/2007 towards the cost of the Hoppa Shopper service, to be met from the Revenue Reserve Fund; subject to review of Hoppa’s Business Plan and approval by Council.

Fees and Charges

15. It is the Council’s practice to review its fees and charges each year with effect from the forthcoming 1st April. Proposals for changes to the car park tariffs in specific car parks are detailed elsewhere on this Agenda, and the figure of 90,000 arising from the changes and which is broadly in line with inflation, has been included on the Budget summary. Planning and Building Control fees are largely determined by statutory Government guidelines. In other areas, increases in charges in line with delegated authority have been allowed for within the draft Estimates. However, in some areas it may be necessary to recommend further increases and these will be subject to consideration during the subsequent Committee cycle.

Proposed Service Variations

16. Democratic Representation – an increase in the Members’ hospitality budget of 1,250 is sought following the reduction in budget provision offered up for 2005/2006.

17. Corporate Management - 2,000 is sought as a contribution towards the setting up of a District Council’s Special Interest Group in the Local Government Association.

18. Licensing – 23,800 for a legal resource re Licensing.

19. Community Safety LPSA – 20,000 is sought as a contribution towards the Domestic Violence Service following the merger with Guildford Borough Council.

20. Concessionary Fares – no provision has been made for the cost of free bus travel to the over 60s as the figure is not yet known but could be in the range of 200,000 to 1million.

21. House Inspections – the Housing Act 2004 requires Houses in Multiple Occupations (HMO) inspections, the costs of these will be covered by charges.

22. Emergency Services – 46,000 is included for the continuation of the Civil Contingencies Bill (a further 24,000 is included in the Information Technology estimates). This was agreed by the Executive on 8th November.

23. Information Technology – the estimates provide for an Information Technology resource of 34,000 and 38,000 for Joint Working Surrey e-partnership. These items were previously included in the Capital Programme. The running costs associated with the new Capital projects amount to 49,250, this includes staff costs of 15,000 for Choice Based Lettings.

Planning and Major Developments Portfolio

24. Development Control – variations are sought for:
- advice on Contaminated Land 20,000
- contribution to Waverley Community Mediation for High Hedges 2,000
- contribution for Planning and Housing co-ordinator: Gypsy & Travellers 1,000
- Joint Surrey Chief Executives and Surrey Planning Officers’ Association work 5,000 Environment Portfolio

25. Animal Control – 10,000 is sought for the 24 Hour Dog Service, for which responsibility is passing to Waverley from the Police from 1st April 2007.

26. Waste Recycling – 20,000 for Waste Minimisation (post WRAP Project). This is to enable promotional work to continue which has previously been covered by external funding.

Culture and Leisure Portfolio

27. Godalming Leisure Centre – a potential deficit requirement of 150,000 has been identified. Full reports on the future of Godalming Leisure Centre and the JSJ Trust have been presented to the Executive, covering possible revenue and capital expenditure.

28. Recreational Open Space
Grounds Maintenance - variations are sought for Permanent Staffing 37,900, Weekend Roving Staff 48,500 and Security Patrol 5,400.

29. Play Equipment Repairs - 16,000 is requested for repairs to playgrounds.

30. Leisure Development Officer – An opportunity exists following the resignation of the part-time Arts Manager to use this saving of 31,200 with an additional 7,500-12,500 to fund a dedicated Leisure Development Officer with a remit for progressing and delivering the Council’s statutory requirements under the Children’s Act.

Budget Variances

31. In general, no unavoidable growth in expenditure has been permitted within the draft 2006/2007 base estimates. However, there are areas where budget variances have arisen. These may result from such matters as contractual commitments, changed levels of use, changes to manpower allocations, or updated asset charges. A brief explanation of each significant budget variance within the remit of this committee for 2006/2007 is given below:
32. Corporate Management (page 3) – the budget for Audit fees has increased by 10,000 to cover extra work on grant claims.

33. Interest and Finance Expenses (page 7) – a reduction in interest earned on Capital Receipts of 25,000 is budgeted reflecting interest rates.

34. Licensing (page 8) – the budget includes an additional 78,000 income as a result of the new Liquor Licensing Act.

35. Miscellaneous Properties (page 15) – an element of Farnham Depot is used for corporate storage accommodation, this was rented back from Arkeco for an annual rent of 20,000. The rent being charged to the Environment and Leisure Department for use of the depot, included within the income estimate, is net of this for 2006/2007.

36. The income estimate for Miscellaneous Properties also includes rent income for the use of Montrose House by the Housing Department.
37. Community Transport Initiative (page 3) – the cost of the Hoppa Shopper service amounts to 125,000 and will be met from the Revenue Reserve Fund.

38. Homelessness (page 8) – a number of leased properties will be handed-back following the refurbishment of Cedar Lodge for use for homelessness, therefore, the estimate shows a reduction in rental costs of 40,000. The estimate for the cost of Bed and Breakfast Accommodation has increased by 25,000 based on current levels of usage.

39. Rent Rebates (page 10) – an income estimate has been introduced to separately identify the recovery of overpaid benefit, previously taken by deduction to payment made. Finance and Human Resources Portfolio

40. Collection Fund Interest (page 6) – Interest receivable is budgeted to be 10,000 less than the current year reflecting interest rates.

41. Emergency Services (page 8) – the ‘Out-of Hours Standby’ of 20,000 is being met from the Civil Contingencies Bill budget.

42. Cemeteries (page 9) – the cost of Closed Churchyards has increase by 14,000 due to the fixed costs of the new Grounds Maintenance contract.

Planning and Major Developments Portfolio

43. Land Charges (page 2) – the lower income estimate reflects a reduced demand for the service.

44. Building Control (page 3) – additional fee income of 35,000 is anticipated. This includes 5,000 for Electrical Engineers fees to offset the expenditure incurred.

45. Development Control (page 5) – Planning fee income for 2006/2007 is forecast to be 120,000 less than the 2005/2006 budget, this reflects an overall reduction in the number of applications especially those of high value.

Environment Portfolio

46. Animal Control (page 4) – the Asset Charges relate to the new animal control vehicles.

47. Environmental Cleaning (page 6) – the reduction in Hired and Contract Services of 192,000 reflects the savings achieved from re-tendering the contract.

48. Refuse Collection (page 7): - The Hired and Contracted Services estimate includes savings of 420,000 arising as a result of re-tendering the contract.

49. Waste Recycling (page 9):
50. Car Parks (page 11) – the increase in Asset Charges arises as a result of routine revaluations.

Culture and Leisure Portfolio

51. Cranleigh Leisure Centre (page 9) – Asset Charges have increased significantly following a routine revaluation.

52. Recreational Open Space (page 15) – the estimates reflect the additional cost of the Grounds Maintenance contract.

53. Countryside (page 17) - the estimates reflect the additional cost of the Grounds Maintenance contract.

54. Tourism (page 20) – the estimate reflects no provision of the Tourist Information Service by Waverley Borough Council from 1st April 2006. Observations from Overview and Scrutiny Committees

Community

55. The Committee noted the draft Revenue Estimates for the services within its remit, but had no particular comments that it wished to be relayed to the Executive.

56. The Committee was concerned at the net cost of Waverley Training Services (WTS) particularly since it was considered that the income should offset any operating costs and create a break-even situation at the year-end. It was clarified by officers that the financial situation set out was based on a financial year when WTS calculate their accounts on an academic year.

57. The Committee also received clarification about the street furniture budget in terms of capital provision and revenue costs, and the cost of the word processing budget, given that individual PCs were now predominantly used across the authority. A further observation to the Executive related to the cost of the staff restaurant and it was noted that the budget provision for this service was likely to be reconsidered should stock transfer proceed and an ensuing accommodation review occur."

Environment and Leisure

58. The Committee went through each page of the Estimates and made a number of observations including:- On the Development Control section of the Planning and Major Developments Portfolio, Members noted that the mediation service provision for High Hedges was very good and that the grant should be given to Waverley Mediation Services, rather than Surrey Mediation. Members noted that income from land charges had decreased and that this could be exacerbated in the future with the advent of the homebuyers’ pack and that also there had been a reduction in planning applications over the last few months.

In the Budget Variations section of the Environment Portfolio, officers reported that responsibility for the 24-hour dog service which in the past had been shared with the police, would be the responsibility of the Council. In the Waste Recycling section, Members heard that a better rate for recycling income had been negotiated by the Environment and Leisure Department.

In the Leisure and Culture portfolio section, Members commented that there had been a lack of promotional activity for holiday schemes at Farnham Sports Centre in recent months. Officers explained that these schemes were under new management and noted the comments.

Conclusion

59. The Government’s provisional Revenue Support Grant Settlement for 2006/2007 is due to be announced in early December and the implications of this will be reported on 6th December. The Chief Officer Group will offer further advice to the January meeting when the Settlement has been examined in detail. The Executive and the Overview and Scrutiny Committees will give further consideration to the Budget in January with the final decisions being made at Council on 21st February 2006.

Recommendation

It is recommended that the Executive notes the work being undertaken by the Chief Officer Group to:
examine the variations in detail; and
identify further savings to be achieved;

and gives further consideration to the General Fund Budget for 2006/7 at its meeting on 10th January 2006.

Background Papers (DoF)

Provisional Local Government Finance Settlement 2006/7 (imminent); Financial Strategy 2006/7 – 2008/9; Finance Seminar slides; draft Service Plans 2006/7; Community Strategy; Revenue Budget 2005/6.


CONTACT OFFICER:

Name: Brian Long Telephone: 01483 523253

E-mail:blong@waverley.gov.uk

Comms/exec/2005-06/217