ITEM CC8 COUNTY COUNCIL – 12 FEBRUARY 2008 SERVICE AND RESOURCE PLANNING 2008/09 TO 2012/13 Report by the Leader of the Council Introduction 1 This Administration was first elected in May 2005 on a Manifesto commitment to Low Taxes, Real Choice, Value for Money. The Revenue and Capital Budgets for 2008/09 and the Medium Term Financial Plan 2008/09 to 2012/13 which are now presented to the County Council for approval continue that original manifesto commitment in the third budget of this Administration. 2 The financial background to this revenue and capital budget is one of a very tight Local Government Settlement from central government. Grant increases for Oxfordshire will be 2% for 2008/09; 1.75% for 2009/10 and 1.5% for 2010/11. Because Oxfordshire is a floor authority, these minimal increases represent ministerial decisions. These decisions are derived from a financing system that is now so opaque as to make any coherent analysis impossible and to leave me with the suspicion that it has been designed to minimise transparency and understandability and to maximise the opportunity for political manipulation. 3 Despite the extraordinarily tight financial settlement, this Administration is determined to maintain downward pressure on Council Tax increases and to ensure we continue to deliver real choice to service users by keeping up pressure for value for money. Low Taxes 4 In our May 2005 election Manifesto, we pledged to reduce the rate of increase in Council Tax year-on-year. 5 In our first Medium Term Financial Strategy, we undertook to reduce the Council Tax increase year-on-year with a 0.125% reduction in each year, taking the tax increase down from 4.5% in 2005/06 to 4% by 2009/10. In fact, we did better than that and reduced the Council Tax increase to 4% by 2007/08. 6 For 2008/09, we are proposing a Council Tax increase of 3.875%, continuing the year-on-year downward pressure that we promised when we were elected. Real Choice 7 In offering a low tax regime, we were determined not to do so by reducing citizen choice. We have therefore set our customers at the heart of service delivery. Indeed, our Change Management Board has several current projects, which focus on our customers: (a) Charter Mark: The aim of the Charter Mark Programme is to use the Charter Mark framework to improve internal and external customer service standards across the authority in a consistent and accredited way and become a Charter Mark authority by 31 March 2009. (b) Better Offices: To ensure the Better Offices Programme is managed effectively, a Programme Board has been established and this reports to the Change Management Board. An Implementation Group sits below and reports to the Programme Board and project teams for each of the six project areas report to the Implementation Group. (c) Shared Services: The aim of the Shared Services Programme is to consolidate the activity and resources delivering finance and human resource support within the council to create a centre of excellence that will deliver more streamlined processes, improved performance, efficiency and high quality professional support to all areas of the organisation. (d) Time to Change: The aim of the Time to Change Programme is to deliver the systems and processes that will enable Social & Community Services to deliver cost efficiencies and better services to clients through standardised, auditable and integrated electronic systems which support the operation of social care processes as well as performance reporting. 8 During 2007/08, we agreed to improve parental choice by implementing a change to full-time admission for all reception aged children from January 2009 while working with private and voluntary sector providers to ensure a continued wide range of choice. We also undertook wide consultation on the issue of additional secondary school provision in Bicester, Didcot and Grove/Wantage. We also agreed to consult on plans to end the anomaly whereby children attending special schools in Oxfordshire uniquely cannot stay on beyond 16 and have succeeded in securing tentative agreement from the Learning & Skills Council to provide funding for this change. We have seen the successful establishment of an Academy to replace Drayton School and are well on the way to seeing an Academy replace Peers School; these Academies are part of our strategy to drive up attainment across the county. 9 During 2007/08, we agreed to improve consumer choice in our central library by undertaking a substantial refurbishment in partnership with the Westgate developers and to maintain the Central library provision in temporary accommodation while the refurbishment was carried out. We also entered into an agreement with the Soldiers of Oxfordshire Trust to house their collections in our Museum Resource Centre. 10 During 2007/08, we agreed to improve carer choice with an Extra Care Housing Strategy that will contribute to the prime corporate objective of 'supporting older people to maintain their health and independence'. We also voted £350,000 to improve day care services at Witney. 11 During 2007/08, we have taken steps to ensure real choice extends to all of Oxfordshire’s citizens by revising and re-publishing a number of our Equality Schemes. 12 During 2007/08, we have worked to ensure real choice in health care through joint working with colleagues in the National Health Service, facilitated by our Joint Director of Public Health. 13 During 2007/08, we gained acceptance onto the Regional Transport Programme for funding totalling £62 million (plus £5 million of developer funding and £21 million from Network Rail) for a package of measures known as Access to Oxford, designed to improve rail capacity and combat traffic congestion while continuing to offer real transport choice and improved air quality. Value for money 14 Securing Value for Money is the link between planning for Lower Taxes and continuing to offer Real Choice. If we are to reduce the rate of increase in the Council Tax year-on-year without making radical cuts in services, we need to find better ways of delivering those services. We have achieved this in a number of ways: (a) Tight budget management will enable us to end 2007/08 with spend as close to budget as makes no difference; (b) Our balanced scorecard ensures we monitor four key aspects of performance regularly. They are: Customers, Finance, People and Process. The scorecard operates as a cascade from cabinet and directors throughout the council to provide an integrated performance tool that enables managers at all levels to monitor and manage effectively; (c) Our integrated Service and Resource Planning process ensures service and financial issues are considered as two sides of the same coin and provides constant pressure throughout the organisation to look for improved Value for Money. We have been working on the 2008/09 Service and Resource Planning process since we agreed the 2007/08 budget! Regular briefings, Star Chambers and Fundamental Service Reviews mean that we have left no stone unturned in the search for service improvement and financial stringency. 15 Since this administration assumed control in May 2005, we have delivered efficiency savings totalling £30.2m. These savings have enabled us to deal with spending pressures and left a residue of cashable savings. 16 Against this background, we have been able to meet some unexpected financial challenges during 2007/08: (a) The July 2007 flooding tested our emergency response fully. Successful partnership working with our District Council colleagues, with the police, health, Environment Agency and the voluntary sector enabled us to deal very well with the immediate threat to life and property, to plan for recovery and to identify measures to prevent or alleviate future flooding. However, this will have cost us more than £2 million; a cost that the government will not be refunding. Holding adequate balances is essential if we are to meet such contingencies and we are fortunate that, through prudent management of our cash resources, we had sufficient additional funds to cover this. (b) Publicity for the need to provide support for returning military personnel surfaced during 2007 and the Council agreed to establish a £100,000 fund to assist in welcoming military personnel returning to Oxfordshire from serving abroad and supporting them and their families. Setting the Council Tax 17 It is against this background of Low Taxes, Real Choice, Value for Money, balanced against a need to invest in services and in capital expenditure, that the Cabinet is recommending the Revenue and Capital Budgets for 2008/09. 18 Householders have seen significant rises in the Council Tax since its introduction and this has borne disproportionately on pensioners and others on fixed incomes. We have been determined to honour our Manifesto pledge to reduce the rate of increase in the council tax. Although we achieved our target reduction from 4.5% to 4% two years early, we are determined to set the lowest sustainable Council Tax rate. This year we can set a balanced budget that is prudent, that meets our highest service needs and allows some much-needed capital expenditure but reduces the annual increase by another 0.125%, taking the Council Tax increase for 2008/09 down to 3.875%. 19 For a Band D Council Tax payer, this means the County Council’s share of the total bill will rise from £1,049.10 for 2007/08 to £1,089.75 for 2008/09. This is an increase of just 78 pence per week.
Balance of Funding 20 In 2008/09, we plan to spend £933 million in revenue expenditure before adjusting for recharges. This compares with a 2007/08 gross budget of £918 million, £845m after recharges. Of this 63.5% comes from the Government; 30.5% comes from Council Tax and the remaining 6% from a variety of elements including income from charges. Investment in Services 21 Investment in core services has been made against a background of: (a) Service investment proposals totalling £4.6 million, together with: (b) Priorities and pressures amounting to £14.3 million of which more than half is accounted for in Social and Community Services – predominately the impact of elderly demography; less: (c) Efficiency savings and re-prioritisations off-setting the priorities and pressures by £12.1 million, leaving: (d) Net unmet pressures amounting to £1.3 million. To this must be added: (e) Difficult to achieve savings of £0.9 million. This equates to £6.8 million against an available sum to allocate in January of £7.1 million. Against this background and the need to make difficult decisions about priorities, we are proposing the following investment in services in the Revenue Budget for 2008/09 and later years, plus £0.3m for the lower Council Tax increase. 22 School budgets: The overall level of funding is determined by central government. For 2008/09, the Dedicated Schools Grant (DSG) has increased by 4.5%. For later years, the government has decreed increases of 3.7% (2009/10) and 4.3% (2010/11). Schools should note that the allocation of the total to schools used to be determined by a locally agreed formula. This is changing with central government seeking to move more funding into deprived areas within a local education authority. While additional funding is welcome to drive up attainment, this will happen at the expense of less deprived areas and some schools may find future year’s budgets for their school will not reflect the overall level of increase in the DSG. 23 Children, Young People & Families: Oxfordshire’s school attainment is simply not good enough. Although results are at the national average, a county with our socio-economic characteristics should be performing considerably above the national average and we are determined to drive up attainment. There is also a cycle of deprivation in some areas of the county that prevents young people from attaining their full potential in life. We wish to break that pernicious cycle. To this end, we have invested an additional £0.7 million towards increasing educational attainment. Our Youth Service is an important area; the Chill Out Fund of £0.2m per annum, established in 2006 continues for its third year and we have exciting plans to improve a number of youth centres in our Capital Programme (see para 37 below). 24 Social & Community Services – Adult Social Care: We have recognised the substantial financial pressures caused by demographic changes in future years. These represent both a threat and an opportunity. For 2008/09 we had already built in an additional £0.7m above inflation to cover these pressures and a further £0.7m in 2009/10. We have now added in a further £1.856m for 2009/10 and while not specifically allocating more in 2010/11 we have recognised the need to maintain a higher amount to allocate in this and subsequent years. In addition, we have invested a further £3.2m of which £1.2m is ongoing to redesign the services to support older people living independently for longer. 25 Social & Community Services – Other Services: Despite the considerable demographic pressures, we have been able to fund other areas within this directorate as follows: (a) Cogges Farm Museum: In recognition of the public response to the proposed withdrawal of £0.25m subsidy, we will continue the subsidy at its current level for one more year. It will then be phased out over the next three years. This should allow time for development and implementation of a business plan to eliminate the need for subsidy. A Project Board has been established to oversee this important work. (b) Victoria County History (VCH): An agreement made some years ago by an earlier council leaves us committed to funding the VCH for several more years and we will honour that agreement. However, we cannot continue the subsidy indefinitely and the VCH trustees are on notice to that effect. (c) Library Service Book Fund: We recognise that a reduction in the Book Fund would lead to a reduction in library users’ choice and we have not made it. 26 Environment & Economy: We have funded two unavoidable pressures as follows: (a) Landfill tax: We have provided for an additional £0.6m for the increase in Landfill Tax. Later years include substantial sums for the fines that will be payable if we are unable to reduce the amount of waste that goes to landfill. This will depend on the successful delivery of alternative waste disposal technologies. (b) Flood Defence Levy: This will cost £0.2 million to make permanent the 2007/08 increase, met from balances in 2007/08 plus fund the 2008/09 increase. In addition and in recognition of urgent need, we have put an additional £0.25 million into the base budget for highway improvements. We have also recognised a proposed budget saving of £0.2 million on property repairs and maintenance as a false economy and have not implemented it. We have set aside funds to enable us to manage all the park and rides in Oxford including the provision of free parking. We are also strengthening our economic development role, through the Oxfordshire Economic Partnership with some cash from available one-off funding. 27 Community Safety: In recognition of the status of our Fire and Rescue Service as a highly efficient and cost-effective organisation, we have exempted it from most of the efficiency savings that are required, as a matter of routine, for other service areas. This is also in recognition of the important life-saving responsibilities that the service carries and the rigorous safety and inspection regime that goes with it. We would not wish to endanger our fire fighters in the pursuit of cost savings. Corporate Centre and Cabinet Priorities 28 Given that we have a property portfolio valued in excess of £1 billion, our Capital Programme is pretty small – constrained by central government financing regulations. Our two largest areas for investment are school buildings and highways schemes. These are funded via central government by a cocktail of capital grants and permission to borrow. The latter is termed “supported borrowing” because, in theory, the government allows us to borrow at favourable rates from the Public Works Loans Board and then adds to our annual revenue grant a sufficient sum to pay for the repayments of interest and capital. However, for a “floor” authority (which we are), this annual addition of funds is immediately removed by the mechanism of the floor and leaves us having to fund the repayments out of our own resources or not taking up the borrowing. This is now reflected in our capital programme decisions (see para 34 - 37 below). 29 In addition to our capital programme for schools and transport, there are a number of other important areas with a need for capital investment but no obvious sources of funding. It has become increasingly obvious that our youth centres, libraries, museums, social care day centres, fire stations, environmental schemes and our ICT provision are never going to have adequate capital investment if we simply wait for a change in the government’s financing regime. We have therefore decided to use the Prudential Borrowing scheme to fund these investments. This means we have to build in the revenue costs of repaying capital into our Medium Term Financial Plan. In 2008/09, we are putting £1.35 million into the base budget to fund the borrowing of £25 million over 10 years. 30 To continue our drive for Real Choice and Value for Money requires ongoing investment in ICT. This is both to make public services more accessible in the internet age and to reduce the cost of service provision. Investment in ICT is done through a combination of one-off and on-going spending. We have provided £3m to enable projects to be developed which will aid customer access and improve our processes and another £0.6 million into the base budget to meet the consequent ongoing needs. 31 Finally, we have addressed some Cabinet Priorities in the revenue budget for 2008/09. These are intended to deliver some of our Local Area Agreement targets including: (a) More support for the voluntary sector; (b) Investing in corporate social responsibility including corporate parenting for youngsters in care, apprentices and promotion of staff volunteering (c) Promoting closer working with localities within the county Strategic Measures 32 Our ability to invest surplus funds profitably on the money market has enhanced our interest earned which strengthens our financial position. 33 A review of balances and reserves indicates that we can release some into revenue to support one-off spending. This is notwithstanding the anticipated £2 million cost of dealing with the July flooding. Capital Programme 2008/09 to 2012/13 34 I will consider the Capital Programme under three headings: (a) Schools (b) Transport (c) Other 35 The Schools Capital Programme is funded partly by grant and partly by borrowing and developer contributions. All of it is affordable within our Medium Term Financial Plan. Key issues are: (a) The government’s Primary Capital Programme starts in 2009/10. This year’s allocation will be used for Bayards Hill School and Wood Farm School as exemplar projects in areas of high deprivation. Between 2009/10 and 2012/13, there is planned spending of over £40 million. Our Primary School Review has been piloted in Banbury. It has identified a prioritised list for investment under the government scheme. Contrary to rumours, the Primary School Review is not about identifying small primary schools for closure! (b) The government’s programme for Secondary Schools (Better Schools for the Future) is, unfortunately, not due to start in Oxfordshire until 2016 – we are at the bottom of their list once again! (c) Investment continues in Children’s Centres with £1 million in 2008/09, £3 million in 2009/10 and £1.6 million in 2010/11. (d) Replacement of Primary School Temporary Buildings at Charlton-on-Otmoor, The Grange, Mill Lane, Great Milton and Tackley will cost £3.7 million. (e) Investment in Primary School Improvements/Replacements include Eynsham, Launton, Harwell, Peppard, Combe, St Nicholas (East Challow), Tetsworth, Harwell and Radley. (f) Investment in Secondary Schools includes Oxford Academy (£24 million), Mabel Pritchard (£3 million). Specialist areas are being planned for Chipping Norton, Oxford, Cheney, Larkmead, Marlborough and Chiltern Edge. Modernisation is planned for Bartholomew and Henry Box. (g) Special School Modernisation is planned for Northern House, Woodeaton Manor, Fitzwaryn, Lord Williams Autism Unit, Frank Wise and the development of 16-19 provision at special schools. (h) Provision of school places is planned for Didcot, Witney, Carterton, Marlborough, Hanwell Fields (Banbury), Bodicote, Bicester and Grove/Wantage among others. This is a total investment of some £70 million. 36 The Transport Capital Programme is funded partly by grant and partly by borrowing. Because the government has increased the proportion of borrowing, it is not all affordable within the Medium Term Financial Plan and we have reluctantly decided to take out £6.5 million of highways investment because of its unaffordability. Key projects which are continuing are: (a) Preliminary work on Access to Oxford (b) Cogges Link Road (c) High St Oxford Improvements (d) London Road Headington 37 Perhaps most significant is our planned investment in schemes other than schools or highways through the Prudential Borrowing route referred to earlier. Here are some of the key schemes: (a) Youth Centres at Witney and Berinsfield and additional funding for the scheme at Wallingford (b) Day Service for Adults with Learning Disability at Abingdon (c) Extra Care Housing for Older People (d) Day Centres for Older People at Abingdon, Banbury and Wantage (e) Library Improvements at Headington and Banbury and additional funding for schemes at Thame and Watlington. (f) Adult Learning improvements at The Mill, Banbury (g) Didcot Station Forecourt project where the County Council and South Oxfordshire are funding the scheme shortfall between them. (h) Investment in Countryside Services, including repairs to the Thames Towpath, relocation of the staff team and work on the rights of way network and bridges. (i) Investment in Recycling Centres and the Better Offices programme. (j) Fire Station improvements at Bicester and Thame These planned investments, partly funded through Prudential Borrowing, will represent an investment of £25 million over the next five years. Conclusion 38 This Revenue and Capital Budget for 2008/09 and the Medium Term Financial Plan for 2008/09 to 2012/13 delivers Low Taxes, Real Choice, Value for Money in a prudent and sustainable form and against a background of the worst local government financial settlement for many years. It is a testimony to the strong service and financial planning framework we have established and to the clear vision we have for high quality, customer-focused services that meet the needs of all of the citizens of Oxfordshire. 39 It demonstrates a clear inter-relationship with the Corporate Plan, with investment for our key priorities, making Oxfordshire a better place through:
40 Accompanying this report are the following documents:
RECOMMENDATIONS 41 The Cabinet RECOMMENDS the Council: (a) (in respect of Revenue) to approve: (1) a budget for 2008/09 as set out in Annex 4 and Medium Term Financial Plan for 2008/09 to 2012/13 as set out in Annex 1; (2) a budget requirement for 2008/09 of £365.547m; (3) the Council Tax and Precept calculations for 2008/09 set out in Annex 5 to the report and in particular: (i) a precept of £261.545m; and (ii) a Council Tax for Band D equivalent properties of £1,089.75; (4) virement arrangements for 2008/09 as set out in Annex 6 to the report; (5) the disposition of Dedicated Schools Grant as set out in Annex 13 to the report; (b) (in respect of Capital) to approve: (1) a Capital Programme for 2008/09 to 2012/13 as set out in the capital programme at Annex 8; (2) the Capital Strategy at Annex 9 and Corporate Asset Management Plan at Annex 10; (3) the prudential indicators set out in Annex 11 to the report in respect of:
(c) (in respect of treasury management) to RECOMMEND Council to approve: (1) the Prudential Indicators set out in Annex 12; (2) the continued use of Lender Option/Borrower Option loans restricted to 20% of the debt portfolio; (3) the continued use of forward borrowing limited to £10m in 2008/09; (4) the increased credit limits shown on the proposed matrix in Annex 12; (5) the continued use of the services of SWIP and Investec (6) the Treasury Management Strategy Statement.
Keith R Mitchell CBE FCA FCCA Leader of the County Council
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