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MAIDSTONE BOROUGH COUNCIL
RECORD OF DECISION OF THE Leader of the Council
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Decision Made: |
29 January 2010 |
Estimates 2010/11
Issue for Decision
To consider the Revenue and Capital estimates for 2010/11 along with the revised estimates for the current financial year.
Decision Made
1. That the revised
revenue estimates for 2009/10 and the provisional revenue estimates for 2010/11
as contained in Appendices
A, B and C to the Report of the Head of Finance, be approved.
2. That it be noted
that there is no Capital Programme proposed for this portfolio.
Reasons for Decision
At the July meeting, Cabinet considered the initial projection for 2010/11
onwards and agreed the following:
a) That the current Medium Term Financial Strategy as set out in Appendix B of the report of Management Team be noted and that it be updated in line with best practice to integrate service and financial planning for the next 3 year planning period.
b) That the levels of council tax set out in Appendix F of the report of Management Team be used for budget planning purposes but the final council tax level will be set as low as possible.
c) That the “most likely” scenario set out in Appendix F(ii) of the report of Management Team forms the basis of the need to identify savings of £1.4m in 2010/11 and that officers work with Cabinet Members to present proposals for savings at the December Cabinet Meeting.
d) That the current Capital Programme be noted.
e) That the use of public consultation to inform the budget strategy be supported and that officers bring a report setting out the most effective consultation methods to the next Cabinet meeting.
f) That
the timetable for the 2010/11 Budget Strategy, as set out below (in the July
2009 report), be approved.
The initial financial projection was selected by Cabinet as the most likely of three scenarios. The key assumptions from that scenario were:
a) An overall inflation rate of 2.5% per annum over the period.
b) Anticipated grant based on the indicative figures provided by Government in 2007. This allowed for a 0.5% cash increase in the grant received over the level received in 2009/10 followed by 0% increases in future years.
c) Additional resources for the completion of the new recycling contracts and for resolution of other budget pressures following changes to disposal arrangements.
d) A continuation of the annual increase in the national concessionary fares scheme, based on previous trends in take up of the scheme.
e) The use of all available capital receipts to fund the capital programme, reducing the level of investment income. The investment income is also affected by the rate of interest on the current investments, estimated at an average rate of 1.5%.
f) A need to borrow up to £2.0m to finance capital expenditure, creating a need for revenue resources to service the debt.
g) That the current policy to maintain a minimum balance of 10% of net revenue spend is maintained.
h) That Council Tax increase be equivalent to the 2009/10 increase for the purpose of developing the strategy.
i) That no increase in the Council Tax Base be assumed.
A number of risks were identified as part of the initial projection as follows:-
a) The uncertainty surrounding the costs of the national concessionary fares scheme and the future proposals to transfer the function to upper tier authorities in two tier regions.
a) The potential non-delivery of the capital receipts from sale of assets assumed during the programme period, leading to the possible need for borrowing to finance the programme.
b) The potential future loss of HCA grant aid to the Council’s capital programme following the intensive investment programme in 2008/09 and 2009/10.
c)
The continuing risk of income shortfall on the revenue budget due to the
recession.
Following these decisions, further reports, to approve the medium term financial strategy and to agree the approach to budget consultation for 2010/11, were approved by Cabinet.
At its meeting on 16 December 2009, Cabinet considered the latest information relating to the budget strategy for 2010/11 onwards and agreed the following:-
a) That a provisional spending level based upon the revised strategic projection set out in Appendix B of the report of Management Team, incorporating the revisions to growth items as identified in Appendix A of the report of Management Team and the savings as identified in Appendix C of the report of Management Team be agreed.
b) That updates, as soon as available, on progress to achieving the savings targets from staffing as outlined in the report of Management Team be requested.
c) That the updated Capital Programme detailed in Appendix D of the report of Management Team, along with the budget set out therein for 2012/13, be agreed.
d) That the outcome of the budget consultation exercise set out in section 1.11 and Appendix G of the report of Management Team be noted and Cabinet’s gratitude be expressed to all those who participated.
e) That the updated medium term financial strategy as set out in Appendix H of the report of Management Team and its stronger connection to the strategic plan be agreed.
f) That a continued Council Tax strategy which is materially within the Government’s Council Tax capping strategy as outlined in the report of the report of Management Team be agreed.
g) That the Corporate Services Overview and Scrutiny committee be consulted on the budget strategy based on the above decisions.
Revenue Budget 2010/11
Attached at Appendix A and Appendix B to the Report of the Head of Finance are the detailed estimates for 2010/11 along with:-
a)
actual spend for 2008/09;
b)
original estimate for 2009/10;
c) revised estimate for 2009/10.
Appendix A to the Report of the Head of Finance gives
a summary of the net expenditure for each service head which produced a total
of £1,497,950 for 2010/11. This figure will be reported to the Cabinet and
included within the Council’s spending plans for 2010/11 to be considered by
Council on 3 March 2010.
Following the summary of net budget requirement more
detailed estimates for each service head are given at Appendix B to the Report
of the Head of Finance. Each service head details the individual expenditure
requirements analysed between employee expenses, other running expenses,
internal recharges, central recharges and capital costs. The expenditure is
then reduced by income, such as fees and charges, and recharges to other
service heads. Against each service head are notes which identify any special
circumstances relating to that service head and any major items of budget
variance.
The cumulative impact of recent reviews of the structure and the impact of the recession has altered the focus of staff resources. The consequence of this shows in the alterations in internal and central recharges.
Also attached at Appendix C to the Report of the Head of Finance are detailed growth and savings proposals that have previously been considered by Cabinet. These proposals have been incorporated into Appendices A and B to the Report of the Head of Finance in order to properly reflect their potential effect upon the portfolio.
The estimate for 2010/11 totals £1,497,950 an increase of £244,880 (19.5%) on the original estimate for 2009/10. The main reasons for this variation are as follows:-
a) Emergency
Centre – much of the preparatory work on the new emergency plan is now complete
as is the centre at the new depot. In addition the restructure has redirected
staff resources.
b) Corporate Projects
– this service head bears initial internal recharges for major corporate
projects only. There are few such projects in initial development stage at
present.
c)
Corporate
Management – the cost of corporate management of the organisation has been
affected by recent changes of structure.
d) Contingency – the major variance arises from stage 2 of the restructure in February 2009. This cost centre held the assumed saving to be made in 2009/10 and this has now been reflected in the salary estimates. In addition there is an increase in budget to support cost pressures, which will be utilised across all portfolios during 2010/11.
The revised estimate for 2009/10 is £1,260,540 an increase of £7,470 (0.6%) on the original estimate for 2009/10. The major reasons for the variation are:
a) Emergency
Centre, Corporate Projects & Corporate Management have similar variations
with similar explanations to those detailed above.
b) Contingency
– the revised estimate for 2009/10 does not reflect the budget strategy growth
and savings but does incorporate budgets for the use of performance reward
grant by the LSP and the initial receipt of the LABGI resource for 2009/10
which has been set aside against budget pressures in 2009/10.
Capital Budget
Attached at Appendix D to the Report of the Head of
Finance is the proposed medium term capital programme covered by this
portfolio.
The appendix shows that no ongoing schemes exist for this portfolio which is a reflection of the current situation for funding of the capital programme as reported previously to the Cabinet.
Alternatives considered and why rejected
I have previously considered alternatives and they are not
appropriate at this stage of the Budget Strategy process.
Background Papers
Budget working papers file held in Corporate Finance.
Documents can be viewed at the Council offices
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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 Scrutiny Manager by: 5 February 2010. |