A report by the Interim Director of Finance proposed a change in the operation of the Efficiency Investment Fund (EIF), which consequently, would lead to budget savings in 2012-13 and future years.

The proposed improvements sought to respond to the problems with the current regime.  The Cabinet noted the following points:

·  The first proposal was to remove the base budget item which would result in a saving of up to £2.2m in 2012-13 and £4.4m in 2013-14.  This would remove £6 million of growth from the £103 million gap.

·  From the Earmarked Reserves, a fund would be created that would be a rolling resource, with savings paying off the ‘borrowing’.

·  The EIF proposals should be part of the annual budget process that was agreed by Council in March 2013.  In this way, there would be clear prioritisation for limited resources.  Equally, departments would have to ensure there was a payback to the fund, ensuring they took responsibility for the proposal.

·  The criteria would include a short payback period, a maximum of three years and a 10% return.  Partners in the investment world could assist the process.

·  The elimination of the base budget item would remove the possibility of collateral damage to EIFs, from a saving being required, without a replacement scheme to deliver efficiencies.

Appended to the report were three appendices setting out:

·  Efficiency Investment Fund Scheme criteria

·  Problems

·  Terms of Reference.

RESOLVED:

That the Cabinet agrees:

(1)  to the terms of reference set out in Appendix 3 to the report;

(2)  the release of the £2.2m unused 2012-13 fund to general reserves;

(3)  the elimination of the fund from the base budget from 2013-14 (£2.4m base), with a concomitant reduction in the growth target for 2013-14 (£2m) and later years (£4m) totalling £6m over the three years; and

(4)  to receiving a report to its meeting on 29 November 2012 on the creation of a ‘rolling fund’, in the context of the risk level of Balances and the release of ‘spare funds’ from Earmarked Reserves.