Revenue Budget 2014/2017
Decision Maker: Cabinet, Council
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: No
Agree the Budget for 2014/15 and the Projections for 2015/16
A report of the Director of Resources presented the proposed Budget for 2014/2015 and the projections for 2015/2016 and 2016/2017. It indicated that Budget Council was scheduled for 25 February 2014 and the Council had to agree a Budget and set the level of Council Tax for 2014/2015 by 10 March 2014. The Budget Projections 2014/2017 report considered by the Cabinet on 10 December 2013 (minute 114 refers) had set the context in which budget decisions were being made and had indicated a forecast net funding available over the three year period of £780m against a current net spend forecast of £863m – a funding deficit of £83m.
The report highlighted the key issues and the following documents were appended to it –
· Appendix 1A Savings Agreed 2014/2017 – March 2013
Savings approved by the Council in March 2013 as part of the 2013/2014 budget, which impacted into future financial years.
· Appendix 1B Savings Agreed 2014/2017 – December 2013
Savings approved by the Council in December 2013, following the ‘What Really Matters?’ consultation programme.
· Appendix 2 Growth Submissions 2014/2017
Growth bids that had been approved by the Council, where increased demand was placing uncontrollable pressure on safeguarding services for Adult’s and Children’s Services and other services where the Council had a contractual obligation to fulfil.
· Appendix 3 Fees and Charges
A Directory of Fees and Charges, with a recommendation that Delegated Authority be given to the Director of Resources to update the Directory as charges were finalised, prior to publication before 1 April 2014.
· Appendix 4 Level of General Fund Balances
The level of General Fund Balances the Council maintained and the risk based assessment used to determine that the level was sufficient to provide a financial reserve for unanticipated expenditure and/or expenditure that was of an unforeseen emergency nature.
· Appendix 5 Reserves
A mid-year review of the amounts held in balances, provisions and reserves, which recommended the release to the General Fund balance of those provisions and reserves no longer required.
· Appendix 6 Robustness of the Estimates
The report, under Section 25 of the Local Government Act 2003, of the Chief Financial Officer (Director of Resources) on the robustness of the estimates made for the purposes of the Council’s Budget calculations and the adequacy of the General Fund balances and reserves.
The report set out the Budget assumptions for growth in the levies, highlighted the increased costs of the Merseyside Pension Fund and indicated that the Council Tax Base for use in 2014/2015 had been agreed by the Cabinet on 10 December 2013 (minute 117 refers) and approved by the Council 16 December 2013 (minute 57 refers). It referred also to the new Local Government Finance System introduced on 1 April 2013, under which billing authorities retained a proportion of locally raised business rates. However, as the complexity and volatility of business rates brought increased risk, any surplus arising from Business Rates from 2013/2014 would be held in a General Fund reserve, which could then be used to meet any potential deficit from the Collection Fund. As the initial year had yet to conclude, a similar approach would be followed for 2014/2015 – any surplus/deficit to be considered as part of the Collection Fund report in January 2015.
Councillor Phil Davies highlighted the issues and recommendations detailed in the Director’s report, which contributed to enabling the Cabinet to be in a position to recommend a Budget proposal. He introduced the Budget proposal and the following resolution was moved, which was seconded by Councillor Ann McLachlan and agreed unanimously –
(1) That the savings 2014/2017, set out at Appendices A1 and A2 be confirmed.
(2) That the Budget Growth 2014/2017, set out in Appendix 2 be agreed and the detail be built into the Budget.
(3) That the fees and charges be noted and delegated authority be given to the Director of Resources to update the Council Fees and Charges Directory prior to publication before 1 April 2014.
(4) That the level of General Fund balances recommended continues to be based on a locally determined approach to the assessment of the financial risks that the Council may face in the future and that the Council maintains balances at, or above, this level.
(5) That the release of Provisions and Reserves by Directorates be agreed and that a Remodelling/Restructure reserve be created from the reserves released together with the amalgamation of the Budget Support 2014/2015 and Equal Pay reserves.
(6) That the Chief Financial Officer Statement regarding the robustness of the estimates made for the purpose of the Budget and the adequacy of the General Fund balances and reserves (Appendix 6) be noted.
(7) That the following Budget Resolution be agreed and recommended to the Council:
BUDGET RESOLUTION 2014/2015
Wirral Council continues to face unprecedented cuts in its budget by central government. By the end of 2016 the Council’s main revenue grant will have been cut by over 50% since 2010. At the same time, we are facing increasing demand for services such as social care and residents are being hit by the government’s decision to cut welfare benefits, introduce iniquitous measures such as the Bedroom Tax, and allow energy companies to impose huge increases in energy prices. To make matters worse, since May 2010 prices have risen faster than wages. As a result, real wages have fallen by £1,600 since the last election. This amounts to a cost of living crisis for people in Wirral and across the country.
Whilst it is accepted that measures are required to control the national debt, it cannot be fair or equitable that the government has forced through massive cuts to local government funding in areas with the highest levels of deprivation.
A recent, in depth analysis by the Joseph Rowntree Foundation entitled “Austerity” concludes that:
“Cuts in spending power and budgeted spend are systematically greater in more deprived local authorities than in more affluent ones, …. cuts are also generally greater in the North and Midlands than in the south of England, and in the west rather than the east of Scotland.
Reductions in spending tell only part of the story as authorities also have to cope with rising costs and demands.”
Cabinet believes that the scale of cuts required by Wirral Council is not sustainable and reflects no consideration of true need. Authorities with a large proportion of band A to C properties are unfairly disadvantaged by grant reductions as a higher proportion of their income comes from central government compared to those with a high number of band H properties.
Wirral is estimated to lose £627 per person by 2017/2018 compared to those in the South East, where Councils lose £305 per person. A disturbing comparator is the reduction in spending power for Wirral compared to the local authority of the Chancellor of the Exchequer, George Osborne – the very person imposing these swingeing cuts. Based on the spending power figures published by DCLG, whilst Wirral lose 4.2 percent in 2014/2015 and 3.3 percent in 2015/2016; Cheshire East lose 1.7 percent and gain 0.8 percent over the same period. It also cannot be fair that Wirral has lost £152 per person compared to just £2 per head in wealthy North Dorset.
We will continue to lobby government in the strongest possible terms to reverse these disgraceful policies and deliberate targeting of poorer areas.
Our budget gap in the Medium Term Financial Strategy published in March 2013 highlighted a figure of £109 million over the three years to 2016/2017. We are a responsible Administration and have risen to this challenge in the best interests of our residents. To refuse to make the savings forced upon us would be to the longer term disadvantage of our most vulnerable people. Our hard work in identifying savings which protect front-line services as far as possible means this gap is now down to £44.2 million over the next two years following this budget (2015/16 – 17). In December 2013 we agreed a series of savings amounting to £27.5 million to close the gap for 2014/2015. We now have before us the full suite of budget papers to enable us to agree Council Tax and set a balanced budget.
Cabinet is proud of the fact that this Administration has progressed from a situation where we inherited an overspend of £17 million, to a stable, achievable in-year budget.
Link to Strategic Priorities
The 2014/2015 budget has been strongly influenced by the strategic priorities as set out in the new Corporate Plan agreed by Council on 2December 2013:
§ Attracting investment and jobs
§ Protecting vulnerable people and communities
§ Narrowing the gap in inequalities
Our guiding principles for setting the budget have been consistent over the past two years, i.e.
§ We will spend less on the cost of running the Council
§ Those with the broadest shoulders must bear the greatest burden
§ Every effort will be made to mitigate the impact of savings on front-line services
The reports submitted to Cabinet and Council in December 2013 contain the base information for this budget resolution. We agreed the savings in December 2013 and we demonstrated that, despite having to make some difficult decisions, we did listen to the views of the public via the ‘What Really Matters’ consultation exercise on our budget options, one of the largest consultation exercises in the country.
The key measures we announced in December included the following –
Protecting the vulnerable and Reducing Inequality
§ £7.6 million over the next three years to be spent on a range of measures to support older people, young people with learning disabilities and adopters and special guardians
§ £1m over the next two years to be spent on enhancing early intervention and prevention services
§ To progress from being a Living Wage Council to a Living Wage Borough
Responding to the Cost of Living Crisis
§ The vast majority of our older residents will continue to receive a discount on their Council Tax. This will equate to 5% and will apply to properties falling within bands A, B, C and D where all members of the household are aged 70 and over.
§ We will mitigate the government’s Bedroom Tax by investing £100,000 in providing enhanced information and advice services for people on benefits.
§ We will invest £300,000 to ensure that the poorest members of the community do not have to pay an increased proportion of their Council Tax.
Attracting Investment and Economic Growth
§ We will invest £356,000 on the introduction of a Selective Licensing Scheme for private rented properties to ensure that every landlord is required to bring their properties to a high standard before they reach the market.
§ To help unemployed people get back into the labour market we will invest £700,000 in continuing the excellent ‘Reach Out’ scheme.
§ To attract additional investment and jobs to the Borough by investing £200,000 to create an economic development unit.
§ We will further invest in our leisure facilities through £2 million of capital to upgrade Europa Pools, Guinea Gap and West Kirby and £200,000 in developing 2 3G football pitches in Seacombe.
On 5 February the Government announced the Final Local Government Finance Settlement. This confirmed the Provisional Settlement and the grant reductions reported in December and referred to in the Revenue Budget 2014/2017 report. Also confirmed were the Council Tax Referendum principles. A Referendum is required for increases of 2% and over, which could be held with the European Elections on 22 May. It included a simplifying of the calculation on which the 2% is based – a comparison to Band D Council Tax levels between years. It also specifically confirmed that the freeze grant element was included in the base position.
Cabinet is particularly disappointed by a number of items in the grant settlement:
§ Local Welfare Support Funding is ending without consultation or a reduction in the expectation on local authorities.
§ Early intervention grant, which is designed to protect the life chances of our young people, has been reduced by £1m per year.
§ The cost of providing Council tax support and ensuring this keeps in line with inflation now falls on the local authority
§ The timing of announcements by the government, particularly the delay in announcing the referendum level for 2014/2015, makes it inordinately difficult to plan finances in a strategic manner
CONTROL OF THE COUNCIL’S FINANCES
The Financial Monitoring report prepared by the Council’s Section 151 officer, provides further evidence that the Council is managing and in control of its finances. The projections for 2013/2014 show an under spend approaching £1m which is being used to fund the clean-up and repair works to West Kirby and New Brighton following the storms last December and provide funds to support the future Council restructuring costs. Cabinet is concerned that the Council is having to meet the costs of flooding in Wirral in contrast to other areas in the south of the country which are receiving funding from the government. Cabinet instructs the Chief Executive to write to the government seeking equal and fair treatment for Wirral.
The Revenue Budget 2014/2017 report further demonstrates the Council’s desire to address the reductions in Government funding and set a Budget for 2014/2015 which is deliverable and sustainable and take steps to tackle the future years as well.
PLANNING FOR THE FUTURE
The Government has stated that the reductions in funding will continue until at least 2018.
Given the magnitude of Government funding cuts, the current structure of the Council is not sustainable. In order to plan for the future, work is therefore underway to completely remodel the Council. We know that it is sometimes necessary to invest to save money and for this reason we have reviewed our reserve position to create a remodelling reserve of £9.9 million to provide for the costs of the substantial changes we will need to introduce in order to ensure that the Council can deliver its future priorities within a vastly reduced budget.
Waste Development Fund
Merseyside Recycling and Waste Authority has announced that, subject to the successful conclusion of a contract and the collective agreement of all Merseyside Authorities, a ‘one-off’ sum worth £6.7 million to Wirral should be available during 2014/2015. This funding is subject to a memorandum of understanding that it should be used to help achieve the principal targets in the overall Recycling and Waste Strategy.
Clearly, the Council needs to have good financial resilience at a time of increasing financial pressures and in difficult economic times. The level of balances is part of this resilience and there is a commitment to maintain balances in line with the local circumstances.
In December 2013, the Council took early decisions on the savings in the Budget for 2014/2015 and beyond. This followed the extensive consultation and the report details savings of £40 million which are being implemented in 2014/2015 and a further £21 million over 2015/2017. These are summarised in Appendix 1 of the revenue budget report.
Major investment is also proposed to deliver the aims of the Council. The Capital Programme 2014/2017 report includes investment into Extra Care Housing and leisure centres including West Kirby, Guinea Gap and Europa Pool as well as using the successfully bid for Government funds to support businesses and bring investment into Wirral.
New House Building Programme (£1.5 million)
Local authorities have a proud tradition of investing in physical assets which are essential to improving the quality of life of local residents. We know that we have challenging house building targets over the next five years. We also know that we have huge challenges in those disadvantaged areas of the Borough which lost out on new housing when the current Government axed the Housing Market Renewal programme. Cabinet therefore intends to invest £1.5 million from a combination of capital funding/reserves/loans to kick-start a substantial programme of affordable housing to be targeted at areas with the highest levels of deprivation. This funding should generate around 100 new homes. Cabinet asks for a report on this at the earliest opportunity which will set out how such a programme can be delivered.
Reinstate monthly cleaning of entries (£400,000)
In order to address the concerns of many residents that fly-tipping is a significant problem in many parts of the Borough, Cabinet intends to reinstate the monthly cleaning of entries. A two year programme is to be developed to tackle the issue of fly-tipping which is aligned with the work undertaken in taking forward the Recycling and Waste Strategy. This will be funded from the waste development fund.
Further developing Constituency Committees (£200,000)
As referred to in December, Cabinet agrees to the allocation of £200,000 for 2014/2015 to be devolved to the Constituency Committees. This is to enable the new approach to Neighbourhood Working to be further developed. This will be funded from reserves.
Constituency committees are already in a position to influence budgets and services across Wirral. This includes services which are important priorities for our local residents, such as reducing fly tipping and maintaining local parks in the borough, where committees can influence budgets of approximately £600k. The Council will continue over the next few years to focus on ensuring that the Constituency Committees are able to significantly influence spend on services in Wirral.
During the course of the new financial year, Cabinet asks for proposals to be developed to devolve further additional powers and budgets to each of the Constituency Committees.
Re-phasing the savings from Williamson Art Gallery (£100,000 of saving re-phased to 2015/2016)
The engagement of local people and ‘Friends’ groups has been welcomed in exploring new models for funding the Williamson Art Gallery in the future. It is acknowledged that more time is required to develop the proposals. Therefore the saving of £400,000 is to be delivered over the next two years, i.e. £150,000 in 2014/2015 and £250,000 in 2015/2016. Cabinet strongly favours keeping the Williamson open. This will be funded from reserves in 2014/2015.
Schools Crossing Patrols
Cabinet believes the safety of children is paramount. In December Cabinet agreed to ask schools to take over the funding of school crossing patrols. Given the concerns expressed by a minority of schools, officers are instructed to continue discussions with schools with a guarantee that no funding is removed where agreement cannot be reached.
The Schools Forum has been instrumental in helping to prepare the Schools Budget for 2014/2015. Difficult decisions have had to be taken, and will continue in future years, to ensure that the young people of Wirral are able to maximise their potential. The budget report details how the £240 million has been allocated and is approved.
Council Tax to be frozen in 2014/2015
Our proposals in December 2013 assumed a Council tax increase of 2%. In previous years, in common with many other authorities we have felt unable to accept the freeze grant as this was not built into the Council’s base budget and would, if we had accepted it, merely have created a hole in the following year’s budget which could only be plugged by even greater cuts.
Having lobbied the government hard on this issue, there is a very clear reassurance that the freeze element will be part of the base budget for at least the next 2 years. Cabinet therefore proposes that:
§ This Council accepts the Council tax freeze grant (£1.3 million).
§ The cost of implementing the freeze has been funded from the overall benefit derived from the levy levels versus the budget assumptions in December 2013. This has been achieved as a result of prudent financial management by the Labour controlled joint boards. Table 10 of the report on Revenue funding summarises this position and the funding.
§ There will be no increase in the Wirral Council element of Council Tax for 2014/2015.
Although acceptance of the freeze grant is welcome in that residents will see no increase in the overall Wirral Council element of Council Tax, it is disappointing that the level of grant equates to only a 1% rise and that effectively the government has prevented the income base increasing at a time when such significant savings in the next two years are required.
Finally, if the conditions surrounding the Council Tax freeze grant are maintained in 2015/2016 it is the Cabinet’s intention to freeze the Council Tax for a further year following 2014/2015.
In conclusion, although this has been a difficult budget settlement, Cabinet is pleased to be able to freeze the Council Tax for 2014/2015, and hopefully, also for 2015/2016. This will enable us to help the residents of Wirral, many of whom are struggling to deal with the cost of living crisis.
RECOMMENDATION TO COUNCIL
(1) That the proposals as set out in this resolution be agreed by Cabinet and be recommended to Council for approval at its meeting on 25 February 2014.
(2) That Council continues to lobby Government to review the way it allocates funding to local Councils with a view to ensuring that any cuts are distributed in a way which is fair and equitable.
Report author: Director of Resources
Publication date: 26/02/2014
Date of decision: 12/02/2014
Decided at meeting: 12/02/2014 - Cabinet