BUDGET PRESSURES AND RECOMMENDATIONS
FROM SCRUTINY COMMITTEES

1. This annex considers the pressures affecting both services and the Council generally that have been included within the tables of budget pressures included with the report. It also considers recommendations from Scrutiny Committees.
2. The table of budget pressures includes a summary by category of pressure. The categories are as follows:

1. Abnormal Inflation – the draft MTFP includes provision for inflation at 2.4% on all non-pay items in 2002/03 and 3% for future years. For those expenditure heads which are likely to incur inflation above this figure an estimate of the additional costs has been included within this category.
2. Unavoidable Expenditure Pressures – expenditure on these items is either committed or is considered unavoidable if the service is to be maintained at its current level.
3. New Statutory Duties – funding required to implement new statutory duties.
4. Other Pressures/Savings – other expenditure pressures/savings or bids to provide additional services.
   
   

General Budget Pressures Corporate Pressures

Restoration of balances

3. Advice on the level of general balances is contained within the Strategic Overview. A preliminary figure of £1.5m for the restoration of balances has been included within corporate pressures.

ICT

4. The need to implement E-Government although not in the Financial Plan emerged later in the year as a priority for the Council, and was endorsed by the Executive in its Budget Strategy. A key plank to this was the installation and running of Broadband (Oxfordshire Community Network). However, in order to proceed with Broadband, a decision needed to be taken to commit £0.8 m in 2001/02 after taking account of grants and other contributions. This decision was taken by Council on 11 December, and therefore Broadband is a commitment for future years with estimated costs of £2.5m in 2002/03 and 2003/04 and £1.9m from 2004/05. A provision of £1.5m per year towards the net costs of the project has been included within corporate pressures, with the balance of funding to be met from other sources.
5. In addition to the resources available in the New Technology Fund, budget provision needs to be made for implementing other strands of the E-Government Strategy. Provision needs to be made in the MTFP subject to the confirmation of the costs of introducing a contact centre. Provisional figures for the costs of the contact centre and the other customer facing elements of the E-government strategy have been included within corporate pressures.

Other Corporate Initiatives

6. The Chief Executive’s agenda for change as set out in ‘Raising our Performance’ puts pressure on the corporate centre of the Council in a number of areas. It is proposed to establish a Modernisation Fund of £2m over 4 years (£0.5m per annum) against which bids can be made for proposals to modernise the Council’s activities and services. Bids for 2002/03 totaling £0.437m have been included within the report to the Corporate Governance Scrutiny Committee, leaving a net balance of £0.063m for other bids.

  Revaluation of the Pension Fund

7. A report has now been received from our actuary on the performance of the Pension Fund and the required increase in employer’s contributions. The revised figures in the report are a stepped increase of £0.650m in 2002/03 rising to £1.35m in 2003/04and £2.0m thereafter. These figures are net of those for Education, for which the equivalent increases in costs of £0.268m, £0.558m and £0.834m will be met from within the Education Budget.

Reduction in VAT reclaim

8. The European Court of Justice has declared the reclaim of VAT on the fuel element of car mileage payments to be unlawful. The County Council reclaims about £0.12m from this source each year and therefore this represents an unavoidable expenditure pressure.

Job Evaluation

9. The job evaluation exercise, which began in October, is estimated to add between 1% and 3% to the total pay bill. The financial implications have been assumed to apply from 2003/04 and the mid-point has been assumed as an expenditure pressure, which equates to around £2.2m.

Service Pressures

10. The unmet service pressures have been updated and reported to the relevant Scrutiny Committees in December. These have changed little from the November report. These are considered in turn for each service area.

Community Safety Scrutiny Committee

11. Community Safety pressures total £0.5m for 2002/03, which primarily relate to additional fire appliance renewal costs and retained firefighters pay. Pressures rise to £1.0m in 2004/05 due to the need to upgrade Bicester Fire Station. Since the report to Scrutiny Committee, £28,000 has been included in unavoidable expenditure pressures for the potential increase in the Thames Valley Magistrates Courts Committee contribution.
12. The Community Safety Scrutiny Committee on 3 December recommended that the expenditure pressures and savings options identified in Medium Term Financial Plan report submitted to them should be revised as follows:

"Equalities Advisor (Home Office Recommendation)" – amend from Priority 2 to Priority 3

This has been taken into account in producing the table of pressures included within the booklet. A second revision agreed at that meeting - to amend the "Emergency Planning Relocation Costs" from Priority 1 to Priority 3 - was rescinded at the Committee’s subsequent meeting, on 10 January 2002.

Environment Scrutiny Committee

13. The net pressures on the Environmental budget total £2.4m for 2002/03, made up of £1m on-going Policy and Budget Plan savings (proposals to address this are contained within para 21 of the report), £0.2m waste management pressures and £1.2m relating to highways and public transport. Waste management expenditure pressures rise steeply in subsequent years to £1.3m by 2005/06.
14. The Environment Scrutiny Committee advised the Executive that the Committee:

1. Welcome the proposal in the Executive’s Draft Budget Strategy to prioritise certain aspects of Environmental Services, particularly the wish to pursue the elimination of potholes and improvement of pavements and of public transport and to allocate additional funding of £1m to the base budget;
2. The Environment Scrutiny Committee also acknowledge the need to make use of flexibility between revenue and capital funding as outlined in the Draft Budget Strategy but advise the Executive that if any capital funds are diverted from the transport block to assist with the revenue budget pressures in 2002/03, these will need to be repaid to the transport capital programme within the term of the Local Transport Plan if the objectives of the Plan are to be met and highway safety will not be compromised;
3. Accept the Director of Environmental Service’s advice that the unfunded pressure in respect of TravelWise campaign work should be regarded as "unavoidable";
4. Advise the Executive that the Committee considers the following very important unfunded pressures to be of equal high priority for the allocation of additional funding:

• Better Ways to School – continuation of funding
• Local Transport Plan monitoring
• Highway Maintenance – additional staff for Network Management;

15. The Education pressures total £5.1m in 2002/03. Abnormal inflation, unavoidable expenditure pressures and new statutory duties have been included within the draft Medium Term Financial Plan. The biggest element of other service pressures (£4m) relates to ICT in schools.
16. Pressures totalling £0.6m have been reported for Cultural Services, rising to £1.4m in 2003/04. Half of the £1.4m relates to the costs of achieving DCMS Library Standards.
17. The Learning and Culture Scrutiny Committee met on 18 December 2001 and received the draft Medium Term Financial Plans and updated Financial Reports for Education and Cultural Services.
18. The Scrutiny Committee resolved to offer no advice to the Executive on its overall budget strategy, and to offer no advice to the Executive with regard to the priorities assigned to the expenditure pressures and savings options identified in Annex 3 to the Cultural Services draft Medium Term Financial Plan.

Social & Health Care Scrutiny Committee

19. Excluding HOPS, Social Services unavoidable expenditure pressures total £4.6m in 2002/03 rising to £6.8m in 2003/04. This includes estimates from the implementation of CareConsult recommendations for improved financial management of £0.1m for 2002/03 and 2003/04 and £0.5m per annum to fund improvements in departmental ICT. There are other service pressures of around £6m.
20. The Social and Health Care Scrutiny Committee met on 19 December 2001 and agreed:

1. That whilst this committee endorses the management action proposed to reduce the overspend, as detailed in the Updated Financial Report, the Executive are urged to take account of the various concerns expressed within it regarding the implications of that action;
2. Subject to 1) above, to note the Draft Revenue Budget and Medium Term Financial Plan for 2002/03 to 2005/06 together with the Updated Financial Report and to agree that this Committee is not in a position to offer any comment until further information is made available as to how the gap may be closed; and that a further meeting of this committee be held prior to the 22 January 2002 meeting of the Executive, to consider any additional information and to advise accordingly.

The outcomes of this meeting will be reported to the Executive on 22 January 2002.

  HOPs

21. The revenue shortfall on the HOPS externalisation is £2.4m in 2002/03, £2.1m in 2003/04, £1.1m in 2004/05 and £1.9m in 2005/06. To minimise the costs falling on the revenue budget it is proposed that the shortfall is met using the surplus capital resources on the HOPS project. A proposed method of funding the HOPS project is included as an Annex to the Strategic Overview report. This shows revenue implications of £1.6m for 2006/07 and 2007/08 rising to £2.1m from 2008/09. The stepped contribution of £0.25m a year into a reserve is no longer considered appropriate.

Corporate Governance Scrutiny Committee

22. Pressures totaling £1.8m for 2002/03, rising to £3.6m by 2005/06 were reported to the Corporate Governance Scrutiny Committee. Since then additional bids totalling £0.1m for Modernisation Fund monies have been quantified. In addition to the Modernisation Fund bids, there is an unavoidable expenditure pressure of £0.3m relating to the County Council’s Contribution to the Youth Offending Team budget and £30,000 for unfunded members allowances costs. The biggest element of the pressures relate to repair and maintenance of buildings, for which a bid of £1m has been included in 2002/03 rising to £3m in 2004/05.
23. The Corporate Governance Scrutiny Committee deferred final consideration on the Executive’s draft budget proposals until its January meeting. An oral update will be given to the Executive on the outcome of that meeting.
    
    
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