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Waverley Borough Council Committee System - Committee Document

Meeting of the Environment and Leisure Overview and Scrutiny Committee held on 26/11/2007
Budget Issues 2008/09




G/Bureau/comms/o&S3/261107/appendixF
APPENDIX F

Waverley Borough Council

ENVIRONMENT AND LEISURE OVERVIEW AND SCRUTINY COMMITTEE

26th NOVEMBER 2007
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Title:
BUDGET ISSUES 2008/09
[Wards Affected:All]
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Summary and purpose:

This report outlines the approach that the Executive proposes is taken to the 2008/2009 Budget. Members are reminded of the extent of the likely shortfall and the need to achieve savings as indicated within the Financial Strategy. Members are invited to comment on issues that fall within the remit of this Committee.
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Environmental implications:

The Budget provides the resources to fulfil the Council’s environmental aspirations. There are no specific implications arising from this report.

Social / community implications:

The Budget provides the resources to fulfil the Council’s Social / community aspirations. There are no specific implications arising from this report.

E-Government implications:

The Budget provides the resources to fulfil the Council’s E Government aspirations. There are no specific implications arising from this report.

Resource and legal implications:

All decisions made with regard to the Budget will impact on Waverley’s resources
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Introduction

1. The report outlines the financial background to producing the Council’s four-year Financial Strategy and outlines the proposed approach to be taken to the 2008-2009 Budget. It includes key financial and topical issues; reporting dates to Members; a forecast of the expected Budget position; and details of the proposed ‘Star Chamber’ process to examine budgets closely in order to identify potential savings.

General Fund Background

2. The Council currently budgets to spend 600,000 more than it gets in income. The Council has budgeted to use 450,000 from the General Fund balance and 150,000 from the Reserve Fund. In the medium term this is not sustainable.


3. In addition, there are significant budget pressures facing the Council: Over the next 4 budgets it is estimated that the Council will need to save 3m from its base General Fund Budget; (See Annexe 1 for 4 -Year Projection)
In 2008/09 alone, it is estimated that around 800,000 (before the pay award and agreeing a council tax increase and reducing the dependency on balances) will need to be saved.
The Government have, as expected, announced tight financial rules as part of the Comprehensive Spending Review 2007 that will limit financial support to local authorities.
Targeted cashable efficiency savings of 3% have been confirmed.
Council tax capping remains with assumed council tax increases of less than 5% anticipated.
Local Authority Business Growth Incentive Grant (LABGI) is being reduced to 150m nationally over 3 years, compared to 1bn in the last spending round.
Specific Grants will generally be delivered through Local Area Agreements (LAAs) including LABGI.
Concessionary Fares Grant of 212m will be paid nationally, possibly payable to County Councils in the first instance.

Budget Issues

Waste Contract

4. The Council has agreed to move to fixed-day collections. This will require additional spending on the service. It is expected that this amount will be agreed shortly.
Leisure Contract

5. The Council agreed to award a 15-year leisure contract with one contractor, subject to satisfactory contractual terms, providing services at the 5 leisure centres. Taken together with the major capital investment at the facilities, primarily Farnham and Godalming, and netting off the business rate relief on the community leisure element will require growth in the next two years. In addition, Council agreed to increase spending on services for the disabled and on improved contract management.

Development Control

6. During the current year, a significant increase in Development Control Costs has been reported as part of the Budget Monitoring process. The total projected increase is 135k, partly offset by additional Planning Delivery Grant of 60k. It seems likely that pressures the Development Control budget will continue into 2008/09. Additionally, possible changes to the Planning process within Waverley could have further cost implications.

Land Charges

7. With the introduction of Home Improvement Packs (HIPs) and an expected slackening in the housing market, together with new guidance from the Home Office, budget reductions of approximately 100,000 are anticipated.

Concessionary Fares

8. The national scheme to be introduced from 1st April 2008 will be extremely challenging for District/Borough Councils in administrative terms and in financial terms when grant is allocated from Government. Previous changes to the scheme have resulted in authorities winning and losing because grant allocations have not matched the extra costs authorities have had to meet.

Pensions

9. The statutory Local Government Superannuation scheme requires a triennial review of the Council’s pension fund that is managed and incorporated into the Surrey County Council scheme. Given increasing longevity of pensioners and the turbulence in markets and poor performance increased contributions are assumed.

Increases in Fees and Charges

10. Where Waverley has discretion over fees and charges these will be reviewed as part of the budget process, however the working assumption is that fees and charges will be increased by an amount equivalent to the Retail Price Index, (currently 3.8%).

Inflation 11. Inflation continues to be a major variable in the Council’s budget. Whilst the Council negotiated contracts away from industrial indices, which tended to be very expensive, the current indexation of RPI+1% still accounts for the largest element of the inflation provision.

Pay Awards

12. No estimates have been assumed. The local pay round is about to commence.

Reduced Use of Balances

13. The need to reduce the use of balances is fully recognised by the Council. Officers have modelled the reduction to start from 2010/11, recognising the service pressures in years 1 and 2 of the Financial Strategy.

Government Grant

14. No increase in government grant has been assumed in the next 4 years. The current assumption is that spending targets will offset any additional grant payable.

Council Tax Increase

15. No assumption on the increase in council tax has been made, although capping remains and the Government once again expect increases to be kept below 5%.

Other Issues

16. There are a number of other significant issues to consider for the 2008-2009 Budget. These include the following, although the likely cost, or even the final proposals, within several of these areas is not yet known: Restructuring proposals
Capital Requirements

Other Service Improvements

17. The Financial Strategy assumes 200k pa for other service improvements beyond those specifically identified above. This figure will be refined during the Budget process. Members may wish to suggest service areas for improvement.

Proposed Budget Reviews

18. In recent years continual marginal reductions have been made to the Budget and in 2005 substantial savings were achieved following re-tendering of the environmental contracts. There is therefore a need for alternative ways to meet the level of savings identified.

19. It is proposed that during November, ‘Star Chamber’ sessions will take place with the Chief Executive, Finance Portfolio Holder, Directors and Service Managers to examine operational and staffing budgets in detail.

20. The aims will be:-

a. Challenge 2007/08 budgets for robustness;
b. For each Director to justify their 2008/09 budgets;
c. Identify options for savings at 3%, 5%, 8% and 10% targets;
d. Identify opportunities for Investing to Save;
e. Identify opportunities for external income;
f. Make a case for any growth.

21. As part of the process Service Managers will be asked to:-

a. Complete a savings pro forma, and
b. Present benchmarking data to support their budgets Budget Timetable

22. The dates for reporting to Members during the 2008-2009 budget process are:

The Finance Seminar will be on 29th October 2007.
Budget paper to Executive on 6th November 2007.
Budget paper to Overview & Scrutiny outlining overall position with growth pressures and opportunities for savings.
Community 12th November 2007
Corporate 19th November 2007
ELOS 26th November 2007

Budget detail to Executive on 4th December 2007.
Presentation to Executive Briefing on ‘Star Chamber’ findings 20th December.
Budget update to Executive 8th January 2008
Overview & Scrutiny Committees detailed Budget consideration.
Community 14th January 2008
ELOS 15th January 2008
Corporate 21st January 2008 February 5th Executive recommends council tax and council house rents.
February 19th – Council agrees Budget.

Recommendation
Comment on the approach to be taken to the 2008-2009 Budget preparation process and, in particular, the highlighted issues that fall within the remit of this Committee. Consider whether they wish to support the Executive in any representations to be made to the Government.

Indicate areas within the remit of this Committee where they may wish to see a high priority for increased expenditure, or areas that may be identified as lower-priority.

Background Papers (DoF)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
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CONTACT OFFICER:

Name:
Brian Long Telephone:01483 523253 ......... E-mail blong @waverley.gov.uk