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MAIDSTONE BOROUGH COUNCIL
RECORD OF DECISION OF THE Cabinet
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Decision Made: |
11 August 2010 |
Budget Consultation
Issue for Decision
To consider the form of consultation on the 2011-12 Council budget.
Decision Made
1. That the consultation timetable and programme, as set out below, be agreed:
i) A 12 week consultation programme with the theme – My Council, What Matters to Me. The programme will raise awareness of the budget situation over the next three years, the statutory services the Council provides and the savings options already considered by Cabinet Members. The final phase of engagement activities will encourage consultees to indicate the non-statutory services which are most important to them and comment on the service options considered by Cabinet Members. A suggested timetable is set out below.
ii) August 2010 – General awareness raising including stakeholder communications, the local media, Borough Update, and staff communications.
iii) Week commencing 6 September – launch event with first engagement activity supported by news releases, website, Facebook and Twitter posts. The Council has 800 followers on Twitter and 250 friends on Facebook. These sites could be used to point people to the Leader’s Twitter site where he could engage with people about the issues facing the Council.
iv) September – October – My Council, What Matters to Me roadshow activities at events and meetings including some of the following as agreed with the Leader of the Council:
The Local Strategic Partnership
Neighbourhood Forums
Cabinet Roadshows
Business Forum
Youth Forum
Older Persons Forum
Transport Users Group and
Individual Ward events
Reasons for Decision
The initial view of the medium term financial strategy for
2011/12 was taken by Cabinet at its meeting in July 2010. That initial view
identified budget pressures for savings and efficiencies of £2.8m in 2011/12,
£1.6m in 2012/13 and £2.2m in 2013/14.
These pressures exceed the level required from this exercise
in previous years by a considerable amount. Recent targets for savings and
efficiencies have been: -
2010/11 £1.6m
2009/10 £1.4m
2008/09 £1.1m
In preparation for this Cabinet has developed a matrix of
services in order to identify those services at three priority levels and at
three investment levels.
Following on from this priority assessment, individual
Cabinet Members have reviewed their services with officers to identify saving
and efficiency proposals for Cabinet to consider in September 2010. The Shadow
Cabinet has also undertaken a similar prioritisation exercise. Agreement has
been reached on a number of topics which will be the subject of joint review
between Cabinet and Shadow Cabinet Members with service officer support.
In developing this initial view, Cabinet has a wealth of
information on public opinion from previous consultation on which it is able to
draw. Details of recent previous consultations are given below.
Previous Budget Consultations
The Council has consulted the public as part of the budget
setting process since 2002-03. Various qualitative and quantitative methods
have been used including a citizens’ panel, focus groups, road shows, meetings,
questionnaires, a Simultaneous Multiple Attribute Trade Off exercise, an online
budget simulator, and last year a market research exercise.
We have consulted to:
· inform residents of the budget setting process, the council’s spending levels and its services;
· find out or check priority areas for spending;
· find out how best to fund schemes or options for specific service elements;
· find out preferences for the funding of service improvements – council tax, increased fees, cuts in services or a combination of all three;
· test support for levels of council tax;
· find out public opinion on future council charges for parking, park & ride, waste removal and the Hazlitt Theatre;
· find residents’ preference for increases in council tax levels or cuts in service; and
· to invite suggestions for cuts in service.
Details of previous consultations and what we have learnt is
set out at Appendix A of the joint report of the Head of Finance & Customer
Services and the Head of Communications.
The 2011-12 Budget Consultation
Last year the Cabinet decided on a strategic approach to
future budget consultation to complement the medium term financial strategy.
It agreed that there should be a shift in focus away from questions that
consider the immediate future to ones that consider the medium term. It agreed
that there should be a rolling programme of subjects and consultation styles
over the period of the strategy to ensure the best use is made of resources.
In order to produce an initial view of the medium term
financial strategy for 2011/12 onwards, Cabinet has already commenced some work
in advance of consultation. For 2011/12 the approach has three stages as
detailed below, which this decision agreed stage three: -
a)
Stage One is raising public awareness of the current financial
situation. There has been wide media coverage of the country’s economic
difficulties, the Government’s and reaction to the situation. The consequences
for Maidstone Council have been outlined via a press statement made by the
Leader. The Leader of the Council and the Leader of the Opposition have spoken
to the Business Forum about the need for savings and they have been widely
reported in the local press. The next issue of Borough update, in August,
includes an article – Massive Savings must be Found;
b)
Stage Two is raising awareness of what the Council does and how it
spends the resources it receives on the services it provides; this information
will be provided via the media and as contextual information at Stage three;
c)
Stage Three is engagement on the choices around where the money is spent
in the future.
What to Consult About
The Government has said that it wants to reduce its spending
by 25% over the next four years to reduce the national annual spending deficit.
At its last meeting the cabinet accepted that based on the
most likely scenario of cuts in grants and other factors the Council will have
to make savings of £2.8m next year, and a total of £6.6m over the next three
years, in order to achieve a balanced budget.
Given that the Council will have to, and the public expect
the Council to have to, make unprecedented savings Cabinet considered if it
wants to consult and engage people to find out the services which are most
important to them. This would offer some assurance that priority services will
be protected.
Alternatively Cabinet Members considered the possibility of
consulting about specific options for savings and spending or on the Council’s
priority for prosperity.
A third option would be to combine the two proposals by consulting in two stages. Firstly, the plans the Council currently has to achieve savings and, secondly, the areas of service that the public would expect to provide the balance of savings required. In this option public opinion could be measured for major proposals under consideration.
Who to Consult
The Cabinet had to decide who to consult. This included
stakeholders such as staff, our local strategic partners, businesses, the
general public and hard to hear groups.
With high levels of public awareness of the need for public spending cuts and with the high level of savings needed by the Council, large scale public engagement is essential.
How to Consult
Given the need for large scale engagement, the Council will have to utilise all its communications channels and undertake a series of engagement events.
The Cabinet roadshows could be utilised and in order to achieve large scale engagement the number of events could be enhanced. The optimum would be to achieve a roadshow event in every ward with involvement of ward members supported by senior officers of the council.
In order to encourage participation and give assurance that priority services will be protected it was recommended that this phase is themed – My Council, What matters to me.
The Council has a modest budget for this consultation exercise and it is recommended that this is used to provide supporting materials including leaflets and display materials and a mechanism at engagement events for members of the public to indicate the services which are most important to them.
Cabinet Members felt it was important that the public are informed during the consultation what services the Council provide that are statutory and the budget associated with these services, together with a list of the non-statutory services the Council provides and the associated budget. Also, the Cabinet felt that this consultation should be used over the next 3 years.
Alternatives considered and why rejected
There are alternative approaches but the options above should complement previous consultations and provide valuable feedback for the council to consider in setting next year’s budget.
Background Papers
None
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Should you be concerned about this decision and wish to call it in, please submit a call in form signed by any two Non-Executive Members to the Head of Change and Scrutiny by: 20th August 2010 |
MAIDSTONE BOROUGH COUNCIL
RECORD OF DECISION OF THE Cabinet
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Decision Made: |
11 August 2010 |
Budget Monitoring - First Quarter 2010/11
Issue for Decision
To consider the capital and revenue budget and expenditure figures for the first quarter of 2010/11.
Decision Made
1.
That the position, as detailed in the report of the Head of Finance
& Customer Services, be noted and further reports be received, at least
quarterly, during the financial year, in a similar format.
2.
That the satisfactory revenue position at the end of the first quarter
2010/11 be noted.
3.
That the proposals for slippage in the capital programme to 2011/12 be
agreed.
4. That the detailed information on treasury management activity be noted.
Reasons for Decision
During 2009/10, the Cabinet received quarterly budget monitoring reports in this format and in line with best practice. The format has been agreed annually by successive Cabinets. It ensures that the Cabinet is aware of matters relating to the current financial activity of the Council that may affect the current or future medium term financial strategy.
The constitution delegates the financial responsibility for individual budgets to the relevant director and the overall responsibility to the Responsible Financial Officer. Previously the Cabinet, whilst agreeing to receive reports in this format, has considered the level of significance for budget variations to be £30,000. Above this value individual analysis has been reported in quarterly monitoring reports. This has not precluded the reporting of other matters where the projection is considered significant in the medium term.
The financial year 2009/10 saw the continuation of the major economic problems that developed in 2008/09 with an effect on the performance of the Council’s budget. The effect was seen in two areas, income generating services that saw a decline in demand and support service that saw an increase in demand. The quarterly monitoring reports during 2009/10 reported these issues to the Cabinet in a timely and concise way, allowing the Cabinet to take the necessary actions to ensure that appropriate control of the Council’s finances was maintained.
It was appropriate in this first quarterly report for Cabinet to consider the future use of the report and, if this method of reporting continues, the extent to which the report covers the areas required by Cabinet and the value of significant variations that warrant individual analysis. One enhancement to the report for 2010/11 relates to the section on treasury management which, in line with the Treasury Management Strategy, has been enhanced to consider performance more fully than in previous years. Due to the success of the reporting format used in 2009/10 to identify and control the effects of the economic downturn, it was recommended that Cabinet continue to receive these reports at least quarterly during 2010/11 in this format.
Revenue
The budget used in the report of the Head of Finance &
Customer Services was the original estimate for 2010/11 as agreed by Council in
March 2010, with the addition of the carry forward budgets agreed by Cabinet in
May 2010. Actual expenditure to June 2010 includes all major accruals for
goods and services received but not paid for by the end of the quarter.
Analysis at a summary level of the full year budget, the
profiled budget and expenditure to June 2010 is set out in Appendix A to the
report of the Head of Finance & Customer Services. The profiled budget
shows the total amount expected to be spent by June 2010 after considering the
expected pattern of spend throughout the year for each budget head.
Members will be aware that in 2009/10 there was a
significant level of variance created by the economic downturn, during last
year Cabinet action and management action together controlled potential
variances of £0.5m. During 2009/10 Cabinet through the budget strategy process
provided ongoing support into 2010/11 of £0.2m.
Appendix A of the report of the Head of Finance &
Customer Services shows a favourable variance of £0.35m which compares to a favourable
variance of £0.05m at the end of quarter one of 2009/10. Past experience
suggests that the first quarter of each financial year contains the most
significant movement in variances and represents the lowest level of spend
activity expected during the year.
A detailed analysis of the variance at cost centre level shows two thirds of all cost centres are reporting minor favourable variances.
A detailed analysis of cross service issues identifies two specific issues of note:
a) A specific analysis of employee costs shows a favourable variance across the Council of £0.16m after allowance for the cost of temporary and agency staff; and
b)
It is good practice to consider areas of adverse variance reported in
previous years in order to identify continued problems. The major area of
difficulty in recent financial years has been income generation. A review of
fees and charges across the Council shows performance is identical to budgeted
expectation of £1.7m. The level of budget is the result of three years of
strategy to reduce budget expectation for income which has therefore been
successful.
Significant favourable variances exist in two service areas
and reports on these areas are given below:-
a)
Parks and Open Spaces – there are variances in expenditure on grounds
maintenance and increased income received for football pitch hire and circus
hires. In total, including other minor variances, the favourable variance for
this service is £33,000.
b)
Planning Policy – activity in this area has had a slow start during
2010/11 due to uncertainty about government intentions. It is expected that
greater activity and higher expenditure levels during the remainder of 2010/11
will ensure this budget is spent. The current favourable variance is £67,000.
One significant adverse variance also exists and is reported
below:-
a)
Armstrong Road Depot – due to the extended period since closure the site
is again subject to non-domestic rates. The current deficit is £74,000.
Management action is expected to identify resources to reduce this budget
pressure during the second quarter.
At this stage the report of the Head of Finance &
Customer Services identified no major risks that require action. The major
adverse variance identified above is expected to be resolved by Management
action during the second quarter.
In addition to the above considerations the budget from
which the report of the Head of Finance & Customer Services is developed
contains a requirement for savings from a number of services that were expected
to be delivered in 2009/10 and have been carried forward to 2010/11. Major
examples include the expected savings from shared services and smarter
procurement. These items will continue to be monitored specifically in future
reports.
Balances
Balances as at 1st April 2010 were £8.3m as
previously reported. The current medium term financial strategy assumes
balances of £3.7m by 31st March 2011. The major reason for the
movement in balances during 2010/11 relates to the use of carry forwards
approved by Cabinet in May 2010.
Within the overall balance given above, the 2010/11 budget
strategy assumes £0.3m of resources set aside for LDF and £0.8m of general
balances will be available.
The issues raised above are considered after allowing for
the minimum level of balances of £2.3m.
Collection Fund
The collection rates achieved for the first quarter, and the
targets set, are shown below. The rate is given as a percentage of the debt
targeted for collection in 2010/11.
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Target % |
Actual % |
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NNDR |
33.6 |
33.9 |
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Council Tax |
30.4 |
30.7 |
In both cases the rate achieved is slightly above target.
Prior year arrears collection is on target and officers will
continue to pursue payment of any developing arrears along with the arrears
from prior years.
The value of Council Tax to be collected is based upon an
assumption about the number of properties in each band during the year. Since
October 2009, when the figures were collated for the calculation of Council
Tax, the number of properties has increased by 0.9% whereas the increase built
into the budget was 0.4%. This additional increase will provide extra resource
to ensure the collection fund does not enter deficit at the year end.
Capital Expenditure
Attached at Appendix B of the report of the Head of Finance & Customer Services is a summary of the current capital programme for 2010/11, as agreed by Cabinet in May 2010. This includes the initial capital programme for the financial year plus amounts carried forward from 2009/10.
The table in Appendix B of the report of the Head of Finance & Customer Services gives the following detail:
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Column |
Detail. |
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1. |
Description of scheme, listed in portfolio order. |
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2. |
Approved budget for 2010/11 after the adjustments detailed above. |
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3. |
Actual spend to the end of June 2010. |
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4. |
Balance of budget available for 2010/11. |
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5 – 7 |
Quarterly analysis of expected spend for the remainder of 2010/11. |
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8. |
Balance of budget that will slip into or from 2010/11. |
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9. |
Budget no longer required. |
Capital expenditure in the first quarter of 2010/11 is shown as £0.6m. The profile of expenditure for the remainder of the year identifies the greatest level of expenditure occurring in the second quarter.
Following the enhanced monitoring process instigated this year to enhance control of the programme officers anticipate that £1.2m will slip into 2011/12. This is detailed in column 8 of Appendix B of the report of the Head of Finance & Customer Services. Given below is an individual report on the major items:
a) Support for grant applications – at this stage it is expected that no support will be offered in 2010/11.
b) Green Space Strategy – A minor balance of this budget is expected to slip into 2011/12.
c) Mote Park Regeneration – the work on this scheme is linked to the Heritage Lottery Fund approval process and this has caused a delay to the start on site date for the scheme.
d) Gypsy Site Improvements – the grant available from central government towards gypsy site redevelopment has ceased and this will mean funding is not available to finance £0.45m of this budget. Commitments exist to spend approximately £50,000 in the second quarter and the balance will be carried forward to 2011/12.
e) Support for Social Housing – this funding is scheduled in accordance with the work programmes of the respective RSLs. Due to timing of the work programmes there is a need to slip part of the agreed funding into 2011/12.
Capital Financing
The agreed capital programme 2010/11 to 2012/13, originally approved by Council in March 2010, identifies sufficient resources to finance the 2010/11 programme. It also identified future need for prudential borrowing of £2.5m.
This programme has been updated for 2010/11, by Cabinet in May 2010, to account for fourth quarter slippage from 2009/10. The current years programme, including slippage, is given at Appendix B of the report of the Head of Finance & Customer Services.
The financing of this programme requires £4.3m in capital receipts £4.7m in grants and contributions and £1.6m in revenue support.
Resources that can currently be confirmed are:
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Funding Source: |
£.m |
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Grants |
4.3 |
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Contributions |
0.2 |
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Capital Receipts |
2.1 |
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Revenue Support |
1.6 |
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8.2 |
However, amongst the grants confirmed above is £1.4m growth point grant. Although the funding for this grant has been confirmed by the government confirmation is dependent upon a number of specific criteria which officers are in the process of confirming to the government at this time.
The balance of resources required to fund the programme but not yet confirmed is £2.3m (£0.2m from contributions and £2.1m from capital receipts). A significant level of interest exists towards the assets that the Council is marketing and officers are taking action to ensure resources are delivered before need for funding is required.
The slippage proposed for approval will mean that £1.2m of
this pressure will be removed from 2010/11. This will mean a need to identify
£0.9m of additional capital receipts within 2010/11.
The identified slippage does not reduce the overall pressure
on the capital programme over the current three year period. Anticipated
funding is still required in full and there continues to be a minimum
expectation of £1.8m in prudential borrowing.
Treasury Management
The Council has adopted and will incorporate into its Financial Regulations, the CIPFA Code of Practice on Treasury Management 2009 (Revised) in Local Authorities. This Code covers the principles and guidelines relating to borrowing and investment operations. In February 2010 the Council approved a Treasury Management Strategy for 2010/11 that was based on this code. This required that Cabinet should be informed of Treasury Management Activities quarterly as part of greater budget monitoring.
This quarterly monitoring report has always reported on treasury management issues to Cabinet however the level of detail will be enhanced to cover levels of activity and current market conditions in more detail.
The Council’s Treasury Management Advisors, Sector Treasury Management, predict a mild and steady improvement in the economy based on the following key factors:
a. MPC [Monetary Policy Committee] inflation forecast being below target in two years’ time.
b. The first bank base rate increase is expected to be in 2011, and will reach 3.75% by March 2013.
c. Long term PWLB rates are expected to steadily increase to reach 5.25% by early 2013.
As at 30 June 2010 the Council held £24.26m in investments. This is detailed in Appendix C of the report of the Head of Finance & Customer Services. The investments with no maturity date shown in the appendix are investments in accounts that can be called immediately and equate to half of the investments held.
During the first quarter of 2010/11 investment income has been above target and totals £98,029 against a target of £92,630.
The average rate of interest received on the Council’s investments over the period has been 2.55%. The target for 2010/11 was set against an assumption of 3.3% average interest during the first quarter of the year.
This reduction in investment rates is offset by an increased level of funds invested which is the reason why, despite lower rates, the interest received is greater than budgeted. Actual average investments over the period totalled £15.6m against an assumption of £11.3m.
Alternatives considered and why rejected
The budget monitoring process could be left to officers.
The Constitution already requires officers to report budget variances to the
relevant Cabinet Member in specific circumstances. The absence of any such
reports would then suggest that no specific items have been identified for
consideration.
If such an approach were taken Cabinet Members would have a reduced financial awareness. This could restrict Cabinet’s ability to meet service requirement and achieve the Council’s corporate objectives.
Background Papers
Electronic budget monitoring and performance reports within financial systems
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Should you be concerned about this decision and wish to call it in, please submit a call in form signed by any two Non-Executive Members to the Head of Change and Scrutiny by: 20th August 2010 |