Waverley Borough Council Home Page Waverley Borough Council Home Page


Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 06/01/2004
Financial Strategy 2004/2005 - 2006/2007 : Budget Strategy 2004/2005 : Draft General Fund Capital Programm 2004/2005



Summary & Purpose
This report updates the Executive on the latest position regarding the General Fund Budget. It contains proposals for increases in income and reductions in expenditure that could restrict the potential Council Tax increase. The Executive is requested to give consideration to these and to agree a Budget strategy for 2004/2005.

The proposals from the Executive will be the subject of consideration by meetings of the Overview and Scrutiny Committees on 13th January 2004. The Executive will give final consideration to the Budget on 3rd February, including the comments reported from the Overview and Scrutiny meetings, before making recommendations to Council on 17th February.

Quality of Life Implications
Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe Communities
Local Economy
Natural
Resource Use
Pollution
Prevention and Control
Biodiversity
and Nature
Local
Environment
Social
Inclusion
Safe, Healthy
and Active
Communities
Local
Economy
Positive
Positive
Positive
Positive
Positive
Positive
Positive


APPENDIX B.2

WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 6TH JANUARY 2004

Title :
FINANCIAL STRATEGY 2004/2005 – 2006/2007

BUDGET STRATEGY 2004/2005
DRAFT GENERAL FUND REVENUE ESTIMATES 2004/2005
[Wards Affected: N/A]

Summary and Purpose

This report updates the Executive on the latest position regarding the General Fund Budget. It contains proposals for increases in income and reductions in expenditure that could restrict the potential Council Tax increase. The Executive is requested to give consideration to these and to agree a Budget strategy for 2004/2005.

The proposals from the Executive will be the subject of consideration by meetings of the Overview and Scrutiny Committees on 13th January 2004. The Executive will give final consideration to the Budget on 3rd February, including the comments reported from the Overview and Scrutiny meetings, before making recommendations to Council on 17th February.

E-Government implications:

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

Resource and legal implications:

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

Introduction

1. The draft 2004/2005 General Fund Revenue Estimates were presented to the Executive on 2nd December 2003, together with details of the provisional Revenue Support Grant Settlement and its effect on Waverley.

The Revenue Support Grant Settlement

2. The provisional Revenue Support Grant Settlement for 2004/2005 was announced on 19th November. The Government stated that the minimum increase for each shire district is 2.2% and that Waverley’s increase should be 2.4%.

3. As reported in December, the original Budget projections assumed an overall increase in grant for 2004/5 of 3%. The provisional Settlement resulted in a deterioration of this position by 183,000. This would either increase the Budget shortfall or represent an additional 3% increase in Council Tax.

4. In mid-December, the Government announced revised figures for the provisional Settlement, which for Waverley meant an improvement of 39,000.

5. The Government reimbursement to cover Housing Benefits and Council Tax Rebates is being entirely removed from the Formula Grant calculation from 2004/2005. Instead, the direct grant reimbursements to the services will be increased from 95% to 100%. The additional direct grant that may be anticipated based on full reimbursement is 494,000. Unfortunately, the Government’s corresponding reduction in grant is based on a formula rather than actual figures and is some 630,000. Even after allowing for the additional direct grant announced in December, total Government support for Waverley will only be 20,000 higher than in the current year.

6. The consequence of the revised Settlement is that the Government is saying that it has given all District Councils at least a 3% increase in their funding. However, in reality, Waverley is receiving additional grant of just 20,000, which is less than 0.3%. Officers have already made representations to the ODPM and the DWP about this issue and will be doing so again before the consultation period ends on 16th January 2004.

7. Other Surrey Districts are affected broadly in the same way and a joint representation is also planned from Surrey Treasurers.

8. The shortfall in Government funding, adjusted to take account of the revised settlement figures announced in mid-December, is 144,000; this is equivalent to a council tax increase of 2.2%

2004/2005 Draft Revenue Estimates

9 A copy of the latest draft General Fund Revenue Estimates for 2004/2005, including proposals for variations to the base-level Revenue Estimates, is attached at Annexe 1.

10. The figures are the same as those reported in the last Committee cycle apart from the following exceptions:

an improvement of 55,000 in the Waverley Training Services income position;
the new communications post cost of 33,000 to be offset by reductions in line with the decision of the Executive;
additional interest of 45,000 to reflect current rates; and
allowance for 100% reimbursement of Housing Benefits in line with the advice in the Local Government Finance Settlement.

11. Growth items arising from service plans in line with the Community Strategy and Council priorities are identified as variations to the base Estimates. A comprehensive list of these variations in included at Annexe 2 to this report. This list now includes the additional Communications post agreed by the Executive in December to be offset by compensating reductions and proposed additional Environmental Health staff, the subject of a specific report on this agenda.

New Legislation

12. For 2002/2003 and 2003/04, the Council agreed to fund new legislation through a higher level of Council Tax where it could be demonstrated that the additional expenditure had not been covered by additional Government Grant. The Financial Strategy provides for this practice to continue for 2004/2005. The new legislation is detailed at Annexe 3; it totals 558,000 and includes 88,000 for waste recycling which in 2003/2004 was financed from a one-off use of balances carried forward from 2002/2003.

Potential Reductions

13. Following the meeting of the Executive on 2nd December, Officers have given consideration to measures that could be taken to reduce the budget shortfall in order to restrict the potential council tax increase. The resultant suggested reductions are listed at Annexe 4. These measures include the generation of additional income, or accommodation of growth items, as well as reducing existing expenditure to help meet the Council’s priorities.

Budget Strategy

14. The overall Budget position following the provisional Local Government Finance Settlement is shown at Annexe 5. On the basis that new legislation is funded through an increase in Council Tax, the remaining shortfall would be in the region of 960,000. If the reductions list were to be implemented in full, this shortfall would reduce to some 440,000. The adverse Settlement represents a council tax increase of 2.2% and if this course of action were to be taken, the shortfall would reduce by a further 144,000.

15. Options to address the remaining shortfall in 2004/5 include additional superannuation buyback and increased use of Balances. Superannuation buyback will result in a revenue saving of 106,000 for each 1m capitalised. In view of the stated aim of keeping 1m within the General Fund Balance as part of the Financial Strategy, increased use of the General Fund Working Balance is not considered an option. However, further use of the Revenue Reserve Fund beyond the current assumption of 145,000 will be an option to consider in February after the Overview and Scrutiny Committees have offered their comments on the Budget. A further option, subject to any capping limitations, would be to consider higher increases in Council Tax.

Council Tax Levels

16. The Council Tax increase required to cover inflation, new legislation and the effects of the Settlement would be approximately 14%. If Members decide to raise council tax to fund more of the Budget shortfall, they should note that 65,000 equates to a 1% increase in Council Tax.

Council Tax Capping

17. As part of this year’s Grant Settlement the Deputy Prime Minister has made a statement about his intention to use council tax capping. In his news release he states:-
Conclusion

18. The precise Budget position will not be known until the final Local Government Finance Settlement is announced at the end of January.

19. The Overview and Scrutiny Committees will give further consideration to the Budget at their meetings on 13th January. Comments made at this meeting will be reported to the next meeting of the Executive on 3rd February. Final recommendations will then be made to Council on 17th February 2004.

Recommendation

It is recommended that the Executive:

Background Papers (DoF)

Provisional Local Government Finance Settlement 2004/5; Financial Strategy 2003/4 – 2006/7; Finance Seminar slides; draft Service Plans 2004/5; Community Strategy; Revenue Budget 2003/4.

CONTACT OFFICER:

Name: Mr B Long Telephone: 01483 523253

E-mail: blong@waverley.gov.uk

comms/executive/2003/04/422