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ITEM EX7 - ANNEX 2

EXECUTIVE – 7 SEPTEMBER 2004

REVENUE BUDGET AND CAPITAL PROGRAMME 2005/06 – 2007/08

Comprehensive Spending Review 2004

Formula Spending Shares

  1. National increases for FSS in 2005/06 (5.8% overall) are shown in Annex 2a (download as .xls file). Increases for Education and Children’s Social Services reflect earlier announcements. The increases for other services are generally lower. There is a large increase for capital financing (16.7%), and a 2.5% increase for Highway Maintenance. Environmental, Protective and Cultural Services (EPCS) only increases by 0.6% as a result of function changes. Applying the national increases to Oxfordshire’s FSS figures (Annex 2(b)) gives an overall FSS increase of 6.5% for 2005/06.

    2. Formula Grant Increase

  2. National increases for AEF are 5.4%, 5.5% and 5.1% from 2005/06 to 2007/08. Thus the AEF increase for 2005/06 is 0.4 percentage points lower than the FSS increase. Assuming that Oxfordshire’s grant will increase in line with FSS gives a 6.5% increase. However, as nationally the AEF increase is lower than the FSS increase, we may only get an increase of around 6.1%.

    3. Efficiency Savings

  3. The Gershon Review says that local government can deliver £6.45Bn of efficiency savings by 2007/08 (2.5% per annum). At least half of the Gershon savings are described as ‘cashable’ - releasing resources to the front line or to other priorities. Half are presumably ‘uncashable’ and we consider that the national FSS totals are £3.225Bn lower than they might have been to reflect this.

  4. Thus the Gershon review implies that from the resources in the Spending Review, we can find ‘cashable’ savings of 1.25% of spending that will release resources to the front line or to other priorities.

  5. The £4.9m per annum saving that is being built into our MTFP represents around 1% of our net budget. This is broadly equivalent to the ‘cashable’ saving of 1.25% proposed by Gershon. Thus at this stage, we consider that our MTFP savings plans for 2005/06 broadly encompass the Gershon proposals.

    6. Three Year Settlements

  6. The Government will be consulting local government and other stakeholders on proposals for three year revenue and capital settlements with a view to agreeing local authority finance settlements for 2006/07 and 2007/08 during 2005.

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