Meeting documents

Cabinet
Tuesday, 16 January 2007

CA160107-07-sup

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ITEM CA7 - SUPPLEMENT

CABINET - 16 JANUARY 2007

SERVICE AND RESOURCE PLANNING 2007/08 – 2011/12

REPORT BY CABINET MEMBER FOR FINANCE

Introduction

  1. This report sets out the financial planning process issues for 2007/08 and the medium term on which the Cabinet will base its recommendations to Council when it considers the Budget on 13 February. It should be read alongside the Service and Resource Planning 2007/08 – 2011/12 report by the Chief Executive and Head of Finance & Procurement to the Cabinet on 16 January.

  2. The report takes account of the provisional local government settlement, the views of individual scrutiny committees and the latest information from the Head of Finance & Procurement. The updated financial strategy for the period of the Medium Term Financial Plan is contained in the report of the Head of Finance & Procurement to Cabinet on January 16 (Annex 9). Further adjustments may be necessary when information regarding the confirmation of the local government finance settlement, the declaration by District Councils of any surplus in the collection fund and the precept required by the Regional Flood Defence Committee is known.

    3. Strategy

  3. The Conservative Manifesto, as part of its policy of Lower Taxes, Real Choice, Value for Money, included a commitment to reduce the rate of increase in Council Tax over the four years of this Council to a 4% increase in 2009/10. I am pleased to recommend that the increase in Council Tax for 2007/08 and succeeding years be set at 4%, thus delivering our promise 2 years earlier than planned. We shall continue to manage the financial affairs of the authority with efficiency and effectiveness as our watchwords and while maintaining the level of services required by the people of Oxfordshire, will seek further savings and efficiencies in order to reduce Council Tax increases further in later years if possible.

    4. Expenditure Plans

  4. Efficiency savings and reprioritisations achieved for 2007/08 total £16.8m to meet pressures from directorates of £12.2m and contribute £4.6m for headroom in the budget to fund unavoidable pressures, this is £0.4m less than the proposed £5m efficiency savings in the MTFP due to the exclusion of the Early Years and Family Support target which was deemed to be unachievable. The December Cabinet meeting (Annex 1) (download as .xls file) has already agreed to recommend Council to allocate £4.4m as unavoidable expenditure to School transport £0.7m, Early Years and Family Support £0.6m, Social and Community Services £1.5m for increased numbers of older people and Adults with Physical Disabilities, increased energy costs £0.8m and Fire and Rescue Service £0.7m for additional retained firefighters and training.

  5. Following an increase in the Council Tax base above the estimate in the MTFP which produces an additional £1m income and after the allocation of the £4.4m agreed by the December Cabinet the amount left to allocate is £4.3m of which £0.5m is one off money. It is proposed that a further £2.2m is allocated to Services (Annex 2) (download as .xls file) some of which responds to the views of Scrutiny Committees and includes amounts to restore the grant to Advice Centres, maintains the expenditure for the book fund, retains the Cleaner and Greener funding and continues the Co-responders Service to support the Ambulance Service. New funding is made available for Post 16 Special Needs Education in Special Schools, Carers Service, reducing the Council’s Carbon Footprint and for Social and Community Services for increased client numbers.

  6. Three further allocations totalling £2.1m are proposed:

    1. The Modernisation Fund, currently funded in the MTFP will in future be known as the Change Fund with re-written criteria for application bids. The creation of this fund will provide a structured mechanism for funding specific change projects whether at a corporate level or within directorates with the overall framework set by the Change Management Board, to include ICT investment and other projects to improve the Council’s efficiency. It is proposed to maintain the revenue contribution from the MTFP previously allocated to the Modernisation Fund and add one off sums when needed and are available. For 2007/08 it is proposed to add an additional £0.4m from the revenue one off money and the Corporate Element of the PSA reward grant £1.2m over two years.

    2. The MTFP indicates that the remaining sum to allocate in 2009/10 is lower than desirable, it is proposed to allocate £1.1m in 2007/08 for a budget reserve to maintain flexibility in that year. The Strategic Measures budget assumptions are subject to variance depending on national interest rates, currently 5%, opinion is divided whether they will rise or fall during 2007/08, increases will benefit the Council and conversely falls will reduce income on balances. The use of the £1.5m allocated in (a) and (b) will be kept for use in 2008/09 against the risks to Strategic Measures.

    3. It is proposed to recommend the Council to raise Council Tax by 4% instead of the 4.25% included in the MTFP and reduces the precept by £0.6m. This is consistent with the administration’s desire to deliver lower taxes balanced by the need to provide efficient services.

    Capital Programme

  7. The Capital Steering Group is recommending that schemes in Annex 3 (download as .xls file) are added to the Capital Programme for 2007/08, 2008/09, 2009/10 totalling £3.7m which would leave a shortfall of £0.5m after using the currently unallocated capital resources, it is proposed that any one off sum available from the Collection Fund be allocated to the Capital Programme. The latest information estimates £1.0m being available which covers the above shortfall and the Capital Steering Group will make further recommendations when any balance available is known.

    8. Funding beyond 2007/08

  8. The most significant uncertainty for future years is the Comprehensive Spending Review due July 2007 when the Government will announce national expenditure targets and plans for the Revenue Support Grant totals, it is unclear whether or not the Government will reduce the current level of public expenditure but is currently intimating that efficiency targets of 3% all cash saving may be imposed which would amount to approximately £10m per annum for this Authority and would be difficult for directorates to achieve. It is not clear whether the Council could reinvest these savings or whether the Government would reduce control totals and subsequently the Revenue Support Grant. A further issue is the possibility that specific grants might be transferred into the Revenue Support Grant which would mean as a floor authority we would lose in cash terms. The Lyons inquiry, also due to report in July 2007, may recommend considerable changes to the present system of Local Government finance, but if legislation is required changes would be unlikely before the next General Election.

  9. Expenditure pressures beyond 2007/08 fall into three main areas

    1. Waste Disposal costs in 2010/11 could rise by £2.9m due to the Government’s implementation of the Landfill Directive to reduce the amount of waste going to landfill, this amount could rise even higher depending on the recycling rates achieved in later years as landfill targets become more restrictive.

    2. The costs of providing social care for Children, Adults with Learning Difficulties and Older people are likely to rise significantly due to the cost of provision of care and the number of clients requiring care. Demographic pressures indicate that the over 85 population in Oxfordshire is expected to rise by 25% over the next five years, one in four of this age group will require intensive support from the social and health care systems. Due to medical advances there is an increase life expectancy for clients with learning disabilities who will require support throughout their life.

    3. The Government proposals to retain a reformed final salary local government pension scheme indicate that the cost to this authority would be £2.1m per annum based on the Actuary’s current advice. As £1.5m is already included in the MTFP a further £0.6m will be required from 2008/09. These costs and assumptions are based on 2004 data and are therefore only estimates, figures will be confirmed when the fund is revalued in 2007.

    These areas will need to be reviewed further next year once resources are more certain following the Comprehensive Spending Review.

    Conclusion

  10. These proposals meet the Manifesto commitment of reducing the rate of increase in Council Tax, in fact achieving the 2009/10 target two years early, maintaining sufficient balances and allocating sums available to meet the Council’s priorities. I recommend that the Cabinet accepts these proposals, subject to taking into account the views of the Corporate Governance Scrutiny Committee which will be reported to the meeting and will ask the Cabinet to recommend these proposals to the Council.

Charles Shouler
Cabinet Member for Finance

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