Committee and Date IE Review Panel 5 September 2008 14:00

Item

Paper

8 D
Public

REVENUE BUDGET 2009/10

Lead Members: Cllr Malcolm Pate, Chair of the Implementation Executive Member Champions: Cllr Malcolm Pate, Cllr Keith Barrow Responsible Officer e-mail: Laura.rowley@shropshirecc.gov.uk

Tel: 01743 252007

Fax : 01743 255901

Summary
This report sets out the financial parameters within which the first Revenue Budget for the new unitary, Shropshire Council, can be developed jointly in the coming months by Members and Officers of the 6 constituent authorities. The key parameters within which the first Revenue Budget would be developed are set out within the One Council business case submitted to the Department for Communities and Local Government. Whilst some of the financial information used in the development of the business case needs updating (for example Councils have set 2 Council Tax increases since the initial development of the business case), the key principles remain the same (for example Council Tax increases for the first year of the unitary were set at between 0% and 3 % in the business case). This report identifies only those elements of savings and growth that relate directly to the business case (eg support service staffing savings). At this early stage the report does not seek to identify specific growth or savings proposals for specific service areas, nor does it attempt to be a detailed operational budget built up service by service.

Resources Sub-Committee, IE, JIT, CMT, Cabinet and IE Review Panel - Revenue Budget 2009/10

Rather, the report sets out the resources that are available and the spending levels that are affordable consistent with the principles and planning assumptions in the Business Case. This report builds on the key assumptions with the Business Case including:Savings of 7.8m in support services to be delivered from day one of the unitary. The equalisation of former District services to the level of the best over the first 3 years of the unitary. the equalisation of Council Tax over the first 3 years of the unitary. The financial aspects of the business case were quite detailed and as a reminder for Members, a summary of the financial case submitted to the DCLG is provided at Appendix A. The financial parameters set out within this report are consistent with the delivery of the targets and objectives within the Business Case.

Recommendations to the Implementation Executive

A. Members are asked to approve the financial parameters set out within this report as a basis on which to develop, in the coming months, the 2009/10 Revenue Budget for the new Unitary Shropshire Council.

Recommendations to All Committees

Members are asked: B. To consider and comment upon the key financial parameters set out within this report. To note that further reports will be brought forward in September/October as work on the development of the 2009/10 revenue budget progresses.

C.

Detail
1. The resources available for Shropshire Council in 2009/10 can be estimated with a reasonable degree of accuracy as set out in Table One below.

Contact: Laura Rowley on 01743 252007

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Resources Sub-Committee, IE, JIT, CMT, Cabinet and IE Review Panel - Revenue Budget 2009/10

TABLE ONE SHROPSHIRE COUNCIL RESOURCE PROJECTIONS 2009/10 90,144,503 145,946,403 126,250,461 400,000 362,741,367 126,215,131 88,007,989 576,964,487

Revenue Support Grant/Business rate Dedicated Schools Grant Council Tax (0% to 3 % increase) Collection Fund Surplus Available Resources (Before Specific Grants and Income) Specific Grants Income Total Projected Available Resources

The total available resources for 2009/10 are estimated at 577m. This estimate is based on a number of assumptions which are set out below. Revenue Support Grant/NNDR 2. The estimate for Revenue Support Grant/NNDR is simply the sum of the allocations that the Government has already announced for each of the 6 predecessor authorities and is not expected to change.

Dedicated Schools Grant 3. The Dedicated Schools Grant is based upon the latest available grant allocation and pupil projections made by Children and Young Peoples Services. This figure takes account of the final allocations received for 2008/09 and therefore lowers the previously reported DSG projection reported to Cabinet on the 9th April 2008.

Council Tax 4. The estimated income from Council Tax of 126,250,461 is based upon:Equalising Council Tax over the 3 years 2009/10 to 2011/2012 with increases limited to between 0% and 3.5% for each of those years in accordance with the business case. The 2008/09 Council Tax base. Current collection rates achieved by District Councils remaining the same during the transition period. A surplus being achieved on the Collection Fund of 400,000.
Contact: Laura Rowley on 01743 252007
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Resources Sub-Committee, IE, JIT, CMT, Cabinet and IE Review Panel - Revenue Budget 2009/10

Specific Grants 5. The Specific Grant projections are based on the latest published grant allocations from the Government for all six authorities.

Income 6. The estimate included for income is based on the 2008/09 budgeted income figures for fees and charges for the County Council and the 2007/08 budgeted fees and charges income for the District Councils. The income projections are based on the individual authoritys scale of charges for activities and a further exercise will need to be completed to establish the financial effects of equalising these fees and charges as and when services are equalised. The effects of such changes will be reported in future Budget Strategy reports.

Spend Projections 7. The base budget expenditure projections are based on the accumulation of the 2008/09 base budgets for the district authorities and the County Council. These budgets have been uplifted for pay inflation of 3%, price inflation of 2.7% and pensions increases of 1.1%. The cost of equalising pension contributions across the authorities has been calculated as a total cost of 300,000 and this has been built into the projections for 2009/10. The projected net budget for Shropshire Council in 2009/10 can be established after accounting for the anticipated savings and costs arising from the transition to the unitary council. The budget is set out in Table Two below.

8.

Contact: Laura Rowley on 01743 252007

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Resources Sub-Committee, IE, JIT, CMT, Cabinet and IE Review Panel - Revenue Budget 2009/10

TABLE TWO 2009/10 Base Budget before Growth & Savings Savings/Required Per Unitary Business Case Support service staff Members Allowances ICT Contracts Insurance (6,022,000) (680,000) (800,000) (100,000) (200,000) (7,802,000) Transition Costs/Service Equalisation/Improvement Per Unitary Business Case: VER/Redundancy Costs Local Joint Committees Contribution to Shrewsbury Town Council 3,000,000 500,000 415,000 367,132,367

Direct service staff

2,236,000 6,151,000

Contribution from Balances Projected Net Expenditure (including schools) Expenditure Funded from Specific Grants Expenditure Funded from Income

(2,740,000) 362,741,367

126,215,131 88,007,989 576,964,487

Support Service Staff 9. Detailed work and consultation on the new structures has been taking place during April and early May which resulted in some minor amendments to the staffing structures which have been approved by the Implementation

Contact: Laura Rowley on 01743 252007

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Resources Sub-Committee, IE, JIT, CMT, Cabinet and IE Review Panel - Revenue Budget 2009/10

Executive. The costing of these new structures has resulted in net support staffing savings of 6,022,000 as agreed by the Implementation Executive. Members Allowances 10. The assumption within the business case for savings was 680,000. This target remains the same at present as an accurate assessment of the future cost of Members Allowances and associated costs cannot be made until after the Independent Remuneration Panel has completed its consultations and arrived at a proposal for the future.

ICT 11. Further work is currently being undertaken to establish the likely savings that will be generated from ICT contracts. This will continue over the coming weeks as we receive firm indications over the costs of ICT contracts for key systems such as planning and revenues and benefits. For the purpose of budget projections, the savings have been included in line with the business case at 800,000. Future budget reports will provide a more accurate projection of these savings.

Contracts 12. The contract savings of 100,000 have been generated through internal audit contracts that Bridgnorth District Council and South Shropshire District Council currently hold. The Audit and Consultancy staffing structure will be able to accommodate the workload associated with the unitary authority, enabling the costs of these contracts to be saved.

Insurance 13. Detailed work has been undertaken to establish the likely insurance savings that would be generated through the unitary authority. This is currently projected at 200,000.

Local Joint Committees 14. The business case for the unitary authority set out proposals to set up 29 local joint committees to engage at a local level with the community and enable each committee to spend a set budget on key priorities for each area. The 500,000 growth included within this budget builds on previous budget allocations of 200,000 in 2007/08 and 220,000 in 2008/09 to take the total budget to 920,000.

Contribution to Shrewsbury Town Council 15. Members will be receiving a separate report on the proposals for Shrewsbury Town Council and the budget for 2009/10 will need to reflect the outcome of that report.

Contact: Laura Rowley on 01743 252007

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Resources Sub-Committee, IE, JIT, CMT, Cabinet and IE Review Panel - Revenue Budget 2009/10

VER/Redundancy Costs 16. The anticipated VER/redundancy costs from the transition to the unitary authority were estimated at 6.1million, of which it is anticipated that 5.1million will be required for 2009/10. This figure will be revised once consultations on the staff assimilation process are complete.

Direct Service Staff 17. The staffing structure approved by the Implementation Executive included a number of posts that will either equalise or improve direct service delivery across the County area. This budget reflects the cost of these decisions previously made by the Implementation Executive.

Contribution from Balances 18. The unitary business case anticipated a contribution to be made from balances to help fund the costs of transition. The business case also provides for this contribution to be repaid from savings in years 2 and 3. The budget for 2009/10 reflects this.

Overall Position 19. The overall revenue budget position for 2009/10 is consistent with that set out in the unitary business case and hence our agreed savings targets, funding allocations for service improvements, service equalisation and Council Tax projections for 2009/10 remain consistent with those in the unitary business case.

Contact: Laura Rowley on 01743 252007

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Resources Sub-Committee, IE, JIT, CMT, Cabinet and IE Review Panel - Revenue Budget 2009/10

List of Background Papers (This MUST be completed for all reports, but does not include items containing exempt or confidential information) Budget Strategy 2008/09 Cabinet 10th October 2007 Medium Term Financial Plan Cabinet 23rd May 2007 Human Rights Act Appraisal There are no conflicts with the provision of the Human Rights Act. Environmental Appraisal Risk Management Appraisal The County Council must set its Council Tax in accordance with the provisions of the Local Government Finance Act 1992. Community / Consultations Appraisal There will be a public consultation process in the Autumn. This is likely to involve Local Joint Committees, public meetings, meetings with stakeholders and other members. Leading Member Councillor Malcolm Pate, Chair of the Implementation Executive Finance Champions Councillor Malcolm Pate, Councillor Keith Barrow Local Member All Appendices Appendix A: Summary Financial Business Case as Submitted to DCLG Appendix B: Resource Projections as at June 2008 Appendix C: Budget Strategy 2009/10 Base Budget Build Up Appendix D: Potential Savings Between Old Structures and New Structures Appendix E: Council Tax Equalisation

Contact: Laura Rowley on 01743 252007

g:\anne\ie review panel\reports\050908 revenue budget 2009-10.doc