ࡱ > \ { '` V bjbjLULU P .? .? OI v + & & & : l l l 8 l | 6m : * Nn dn ( n n n r $ h / B & n B n n W n ( & n 2 & j n Bn % l z J d m 0 ( B P j j v & B B N j : : : 8 A * : : : A : : : 2. BUDGET DELIVERY FRAMEWORK Early in 2010, the Council established an innovative and unique terms of reference that would provide a stable framework to assist the authority to set a balanced budget. In May 2010, the Executive Committee approved the new budget delivery framework. It consisted of eight workstreams as illustrated in the following diagram; SHAPE \* MERGEFORMAT A considerable amount of work was undertaken during 2010 on the above workstreams. This work paid considerable dividend during the recent budget setting process for 2011/12 where nearly 2,000,000 of efficiency measures were identified to help the Council balance the budget. Extensive work was especially undertaken on the staff suggestions, innovation, and lobbying workstreams this is referred to in more detail later in this report. Although the budget delivery framework provides a mechanic for the actual deliver of changes to the council budget there are a number of very important overarching guiding principles that govern the Council's high level financial strategy. These comprise three inter-related sets of principles -the Medium Term Financial Strategy (MTFS) Guiding Principles, the Modelling for Recovery Principles and the Budget Containment Strategy. The three elements of the financial strategy are set out below for ease of reference: - MTFS Guiding Principles: Revenue balances should not fall below 1m and overall revenue reserves should not fall below 10% of net revenue expenditure; In setting the Council Tax, members should consider the medium term to ensure that a sustainable budgetary position is preserved (with due regard being given to any penalties that might apply); The level of household Council Tax to increase each year in line with inflation at least, where the budget is in deficit, to ensure resources remain consistent with budgeted costs; When setting the Capital Programme, consideration is given to allocating capital resources to schemes that are beneficial to the Councils overall revenue budget position; To maximise the resources available to the Authority, the Council will actively lobby the Government on relevant issues (e.g., grant distribution/ planning fees). Modelling for Recovery principles: Wherever possible, continue with all planned investments and programmes, to protect the local economy and lever in other investments; Given that we currently have no long-term debt, we should be prepared to consider debt-funding as a means of programme delivery or stimulus if this can be shown to be sustainable and have a wider economic benefit; Organise our fiscal structures and business models to attract and retain the maximum amount of revenue within the local economy; To ensure all possible avenues are used within procurement rules to source locally; Protect the performance of Council services which come under particular strain; Work closely with partners in the voluntary, public and private sectors, to ensure optimum efficiency Budget Containment Strategy: Where a specific grant which funds a specific service is withdrawn, the service stops; Where grant funding reduces, which Kettering Borough Council passports through to another organisation, the reduced sum continues to be passported, providing the end recipient organisation feels it can still provide a value-added service at that funding point. Where a function is transferred to another provider, the Council leaves all service-provision discussions, including any top-up funding, with the new provider; The Council would ordinarily neither seek to buffer nor profit from tax changes. The Council should not substitute itself as the provider/funder of services when another public provider cuts such a service. This overall strategy provides the cornerstone on which the Council's long-standing success in both setting a balanced budget and delivering within budget are founded. The Council's established policy position has been key in providing a stable point of reference this was recognised at the previous meeting of the Executive Committee on 6th April 2011 when the following resolution was approved; the same methodology be applied to the formulation of the 2012/13 budget as it applied to the 2011/12 budget, with particular reliance on:- - the existing guiding principles - the existing modelling for recovery principles - the existing budget containment strategy - the existing eight workstreams SUCCESS OF THE COUNCIL'S FINANCIAL STRATEGY The Council has an impressive track record of delivering against its financial strategy. Members and Officers have worked diligently for many years to ensure that the Councils budget plans are turned into reality and that ongoing efficiencies are made wherever possible. For information, the following table illustrates the Council's performance in delivering efficiency measures over the past few years; Just over a year ago when the Council set its budget for 2010/11, it did so by identifying 550,000 of budget reductions that would need to be delivered during the year. Part way through the year, this figure increased to 1,250,000 due to some immediate grant reductions that the new coalition government introduced in June 2010. Despite the size of the task, the Council's innovative approach resulted in the required level of savings being identified and delivered during 2010/11 without impacting on front line services. When the Council recently considered the budget for the current year (2011/12), the budget delivery framework needed to identify nearly 2m of additional efficiency measures to set a balanced budget for the year. This was primarily to deal with the impact of reduced central government core grant. Despite the enormity of the task, the Council was able to set a balanced budget, the following table is an extract from an earlier budget report that shows how the budget gap was closed; The above table illustrates that, through close engagement with front-line staff, the amount of savings generated through staff suggestions / innovation for 2011/12 is approaching 1m (equating to roughly half of the required savings). Although there has been no reduction in front line services, a significant reduction has already been made to the Council's manpower budget which can be added to the reductions made over the past few years through the Council's Next Steps programme of organisational improvement. The positive engagement with staff will remain a key factor moving forward if we are to remain successful in meeting the budget challenges that we face our recent experience is testament to the advantages of remaining a flexible and nimble organisation that is light on its feet. The following case study about the changes that we recently introduced to the generic warden service highlights the fact further; Generic Wardens Case Study The Council has sought to remove artificial barriers to service delivery, by asking its staff to take an holistic approach to their work. An example of this is the way we have created a generic warden team, which has required officers to take a creative approach to working within existing legislative constraints. Like most local authorities, the Council originally had a series of small teams each dealing with car park enforcement, dog fouling, litter enforcement, pest control and dog warden duties. The Council was also gearing up to introduce more residents' parking schemes which would also need a new resource to properly enforce them. By combining all these functions into a single team, we were able to absorb the new residents parking enforcement work, and reduce the overall cost of the combined service, whilst at the same time, hugely increase its coverage, so that we are now able to have an enforcement presence for 84 hours a week, rather than 40. This has meant we can be 2.5 times more efficient than we were. Separate Teams Generic Teams Staff No. 10 8 Operating Times 9am 5pm Mon Fri 8am 8pm 7 Days Total Hours 40 84 Functions Abandoned Cars Dogs Pests Litter etc Car Park (off street) Abandoned Cars Dogs Pests Litter etc Car Park (off street) Residents Parking The table in section 3.4 also highlights the successful lobbying approach that the Council has undertaken. The work that members and officers did to help shape the Governments New Homes Bonus Scheme has brought immediate benefits for the Council. The Council's highly commended approach to setting fees and charges continues to help make a positive and important contribution to the required savings, as does the continued implementation of the Council's partnership policy that has seen the Council strengthen existing partnerships (including licensing, legal, audit, financial systems) whilst establishing new partnerships for the immediate benefit of our customers (such as with the Tax Office and the NHS) whilst also relieving the service pressures being felt by our public sector partners. In terms of setting a balanced budget, the Councils strategy to date has been successful. It must however be stressed that the budget setting process is only a paper exercise it still needs to be turned into reality. Careful monitoring of the progress toward delivery is therefore needed whilst the Council's track record is excellent, the scale of savings is of a different order. Consequently, this report suggests a new more transparent mechanism for in-year tracking (see section 5). MEDIUM TERM FINANCIAL FORECAST The Medium Term Financial Forecast that Council approved in February 2011 is reproduced below; Looking at the above budget model, Members will see that the figure shown at line 4 for 2011/12 of (1,906,000) is the same figure that was included in the analysis table in section 3.4 of this report. This is the sum of savings that are currently being realised to ensure that the Council's budget position remains in balance. Looking at the years after 2011/12, line 6 shows the estimated level of savings that are likely to be required in future years. This is a result of the known continued reduction in government grant for 2012/12 (line 2) and the assumed level of reductions in the years thereafter. It should be stressed that the figures that are included in the model for government grant from 2013/14 onwards are estimates only we will not know the actual figures until the Government has concluded their current resource review of local government funding, this has the potential to have a significant impact on our resource planning (as discussed further in section 6 of this report). The budget model included at section 4.1 uses a notional level of council tax increase of 3.5% for future years. This is in line with the likely level that national council tax capping may operate (using the parameters that were applied recently). This model was approved before the recent local elections and therefore may require updating if ultimately a different level of council tax is sought. The Council is currently busy on the detailed process of closing the accounts for 2010/11. This is a very technical process that requires much care and attention and is being completed against a new statutory timescale this year the draft accounts must be compiled by the end of June so that they can be submitted for external audit validation. Once audited they are then reported to members for information. The process of closing the accounts is on track and will be complete in accordance with the statutory timescales. The outturn figures will be reported to this committee as part of next months durable budget report significant work is still ongoing to ensure that the correct figures are validated for big money items such as benefits subsidy and internal cost allocations prior to a technical assessment of provisions such as debt provisions. Early indications are encouraging in that there are some items of a one-off nature that the Council have benefitted from towards the end of the year an example of this is some excellent work that staff undertook to recover some historic VAT payments following a national court ruling, widely referred to as the Flemmings case. The Flemmings case effectively removed the previous three year time limit on retrospective vat claims as such we were able to claim back monies from as far back as 1973. A number of claims were submitted, initially without success due to the difficulty in proving the claims that went back so far in time due to the age of the claims officers have had to think innovatively for the claims to be substantiated. Officers worked very hard and substantiated the claims through detailed analysis of much historical data. The time and effort invested has paid off, the Council initially received a payment of approximately 150,000 in settlement of one of the claims and has recently received a further 150,000 for the settlement of elements of some of the other claims. Of this total of 300,000, about half of the amount relates to recovered interest charges an area that the Council fought hard to receive. Officers will continue to progress the other claims that are still outstanding if successful these will result in further one-off monies for the Council. It is also expected that a number of the on-going framework savings that are required to balance the budget in 2011/12 have started to be delivered early during the 2010/11 financial year. These are currently being analysed and will be reported further in the July report. 5 BUDGET REPORTING (2011/12) Recognising that the level of savings that need to be realised and delivered (initially for 2011/12 and 2012/13) are of a different magnitude to that required in earlier years, a more robust system of reporting is suggested to members. It is suggested that the Council should initially concentrate on 2011/12 and 2012/13 (given that we know what our level of government grant funding is likely to be) and that the Executive Committee receive more detailed monitoring data on delivery of the savings required. Commencing with the next durable budget report, it is suggested that charts are included within the report that tracks the delivery of savings against a profiled target for the year the following illustrations are included to show the type of information that could be provided (they are both based on straight line projections as illustrations only at this point) and it will be supplemented with additional information about the savings items. Although still early in the year, the savings required to deliver the 2011/12 are broadly on track. As mentioned in section 4.7, it is anticipated that a number of the savings required to balance the budget for 2011/12 have started to be delivered early towards the end of 2010/11 further analysis is being done on this as part of the routine closedown process. Further work is required on the profiling of the required savings in the above chart. This will be given further consideration before the report to the next meeting. The above chart illustrates the early win that the Council has already secured against the savings target for 2012/13 due to the cancellation of the public conveniences contract. As previously agreed by the Executive, the contract notice has been served (12 months) and will take effect early 2012/13. The improved monitoring information will commence from the next durable budget report. This will provide sufficient time for the out-turn figures to be finalised and therefore treat any of the early ongoing savings in the appropriate manner. It should be stressed that the previous use of the swing-o-meter will continue in relation to the monitoring of the big ticket budget items. BIG TICKET ITEMS - UPDATE During the budget process, members were informed of a number of big ticket items. These are typically items of large value that could have a disproportionate impact on the Council's budget if they moved in an adverse fashion. Consequently these are monitored very closely and members and officers may occasionally try to influence (through lobbying) any changes that may take place especially when such changes are triggered through changes in national policy. The following table provides an update on some of these big ticket items; ISSUE UPDATE & ACTIONGovernments National Resource Review: Core Grant Business Rates The Government have issued a terms of reference for the review but no detailed consultation as yet. Officers are working hard to influence the work that the civil service are undertaking both through the District Councils' Network and also the Local Government Association. Planning Fees The Government announced at the beginning of 2011 that from April 2011 planning fees would be set at a local level rather than nationally. We are still awaiting for the regulations to be set to allow the change to take place members and officers have been lobbying the Government and the LGA to make sure that this is done as soon as possible since this is having an adverse impact on council tax payers. New Homes Bonus Scheme This new scheme is now in place and the payments and data source is resolved. However, it still requires careful tracking because future payments could be top-sliced from core government grant therefore the implications of this, together with the resource review, require careful thought / monitoring. Housing Finance; Debt levels Servicing the debt A new system of housing finance will start from April 2012. This will result in the Council having to take on debt approaching 70m consideration needs to be given to how this debt is made-up and how it can be serviced. There are also serious implications for the Council's treasury management activity which will now be of a significantly different scale. We are currently exploring the extent to which this can be delivered within existing resources. National Economy; Inflation Interest rates Housing market Development market Changes in the national economy can have a significant impact on the Council's budget things like inflation and interest rates have an impact because the Council has to make budget assumptions about what may happen in the year. POLICY IMPLICATIONS There are no direct policy implications as a result of this report. USE OF RESOURCES The implications on the Councils resources will be considered throughout the durable budget reports. Background Papers: Previous Reports/Minutes: B O R O U G H O F K E T T E R I N G CommitteeEXECUTIVE Item 10Page PAGE 9 B O R O U G H O F K E T T E R I N G CommitteeEXECUTIVEItem 10Page PAGE 1 Report Originator Strategic Management Team Fwd Plan Ref No: A11/001Wards AffectedAll15th June 2011 Title MAINTAINING A DURABLE BUDGET Portfolio Holder: Cllr A Wiley 1. PURPOSE OF REPORT The purpose of the report is to: Provide members with a reminder of the Council's Budget Delivery Framework including the guiding principles that underpin the medium term financial strategy Highlight the success of the Council's financial strategy Illustrate the latest budget model and the estimated level of budget savings that may be required over the next few years Suggest an improved format for monitoring the delivery of savings during the year that will be used in subsequent durable budget reports to this committee Provide an update on the big ticket budget items 9. RECOMMENDATIONS The Executive Committee is recommended to Note the contents of this report Endorse the changes to the budget monitoring arrangements (as outlined in section 5) Cumulative Efficiency Measures total 5m Budget Delivery Framework Lobbying Partnership Working Staff Suggestions Innovation Group Prioritisation Fees and Charges Review Service Plans Capital Review EMBED Excel.Sheet.8 EMBED Excel.Sheet.8 5 6 8 H ` a b ) g i ü絬؝{nhbhbhb\hb hBX CJ hUP CJ h- CJ j h}u h}u CJ U"j h}u CJ UmH nH tH u j h}u CJ U hGk CJ h}u CJ h" T 5>*CJ hGk 5>*CJ h9 5CJ h 5CJ h 5CJ hZ 5CJ h5 5CJ h\~t CJ h\~t 5>*CJ h\~t 5CJ !j h5 5CJ UmH nH u $ 7 8 $ &F a$gd9 $a$gd