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ITEM LC6

LEARNING & CULTURE SCRUTINY COMMITTEE –
2 DECEMBER 2003

REVENUE AND CAPITAL EXPENDITURE PROPOSALS 2004/05 – 2008/09

Report by Head of Finance

1. This report is number A6 in a series that informs members on the budget process and issues for 2004/05 and the medium term. It should be filed in numerical sequence on your Budget & Oxfordshire Plan 2004/05 green binder.
2. The last report (A5) taken to the Executive on 28 October 2003 sets out the known position at that time. It revisited some of the previously published data and provided an update on the previous report in July, along with the latest information on the Council’s financial position. It also updated the information on the likely central government funding for 2004/05 and the medium term, as far as could be ascertained at that time and explained the requirements for schools’ funding. The recommendations invited Scrutiny Committees to advise on the expenditure proposals and on the relative priorities of the proposals.
3. Information for Scrutiny will be provided in two parts. This report provides an indicative 2004/05 base budget in the Service Analysis budget book format and shows where the revenue proposals previously reported would be added. The capital expenditure proposals are also included.
4. A further complementary paper will be issued to all members after the Local Government Settlement. This will explain the impact of the settlement and the requirements for school budgets as set out by Charles Clarke in his July and October statements along with further information about the impact of the teachers’ pay award and specific grants, for example.

2004/05 Base Budget

5. Subject to further refinement during the budget process Annex 1 (download as .xls file) (shows an indicative 2004/05 base budget position for each Service Area before adding any 2004/05 expenditure proposals. Based on the assumptions in the published Medium Term Financial Plan 3.0% inflation has been added to all budgets along with the ongoing effects of expenditure proposals accepted in 2003/04. Gross expenditure and income has also been adjusted for known changes to specific grants and also for function changes. These occur when our funding is adjusted for a change in our responsibilities. For example, the flood defence levy will no longer be our responsibility from 2004/05, and our funding will be adjusted downwards accordingly.
6. The published Medium Term Financial Plan assumes we will make efficiency savings of £3m in 2004/05. £11m contingency is available to allocate to new expenditure proposals.

Efficiency Savings

7. 2004/05 efficiency savings identified to date against the £3m are as follows:

Directorate	£’000
Learning & Culture	255
Social & Health Care	331
Environment & Economy	490
Community Safety	215
Resources	397
Unachievable Savings in MTFP (Energy Contract)	-107
Total	1,581

A short report will follow in due course that will give further detail on these proposals.

Revenue Expenditure Proposals

8. Annex 2 and 3 set out the latest position on the revenue expenditure proposals from the Directorates presented by Programme Area as follows:

Annex 2: (download as .xls file) Schools Block Expenditure Proposals

Annex 3: (download as .xls file) Other Services Expenditure Proposals

Significant work has been undertaken by CCMT to put these proposals into priority order and they are shown split into the resulting A/B/C categories. These were based on dividing the overall proposals for each Directorate into approximate thirds by monetary value. Each Scrutiny Committee will need to look at the proposals for their area and confirm the relative priority of each proposal.

9. To help show which service areas are affected each proposal has been annotated with the relevant service area sub reference(s) as used in the detailed Medium Term Financial Plan – Service Analysis budget book to show where it would be added.

Capital Expenditure Proposals

10. The Capital Programme report to the Executive on 11 November 2003 includes expenditure proposals for 2004/05 to 2008/09. Annex 4 (download as .xls file) shows these proposals which total £68m after adding Local Transport Plan schemes to the previously reported items.
11. The introduction from April 2004 of the new Prudential Guidelines for capital should allow us to undertake additional borrowing above the Government supported level to help fund the Capital Programme from 2004/05. A separate briefing will be issued once the capital financing information for 2004/05 is received from the Government. It is not expected that the detailed Education capital settlement will be notified to us until January 2004.
12. Each Scrutiny Committee is invited to review the schemes in their Programme Area and to advise on their relative priority.

Priority Framework

13. The Council has agreed a limited number of critical areas for improvement that it will treat as priorities. These include ten service and budget priorities and three partnership priorities These need to be taken into account when agreeing the budget for 2004/05 and later years. Where relevant the expenditure proposals have been annotated to show the link to one of the thirteen priorities. Some of the remaining proposals are pressures that whilst not directly linked to the priorities have been prioritised into the A/B/C categories.

Process and Timetable

14. There will be a seminar on Monday 8 December that will explain the impact of the Local Government Finance Settlement along with other budget issues. The Executive will firm up their budget proposals and propose the Revenue and Capital Budget for 2004/05 – 2008/09 on 14 January 2004. This will be considered by Corporate Governance Scrutiny on 20 January, and the Executive will finalise their proposals to Council at their meeting on 27 January.

RECOMMENDATIONS

15. Each Scrutiny Committee is invited to:

1. advise on the revenue expenditure proposals for their programme areas and on the relative priorities of the proposals as set out in Annex 2 and 3 to this report;
2. advise on the capital expenditure proposals for their programme area and on the relative priorities of the proposals as set out in Annex 4 to this report;
3. make comments on the other programme areas if they wish.

CHRIS GRAY
Head of Finance

Background Papers: Nil

Contact Officers: Jenny Hydari Tel: (01865) 815401

Kathy Wilcox Tel: (01865) 816087

November 2003

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