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Report to:

Council







Date:

25th February 2015







Report of:

Chief Executive

Report No:
















Contact Officer:

S. Harriss

Tele No:

Ext. 1001







Report Title:

2015/16 and 2016/17 Budget Report













Purpose:

This report provides:


  • the final details of the 2015/16 Revenue Budget

  • options to inform Council Tax setting 2015/16

  • the further details on each of the strategic budget options that were proposed in November 2014 to meet anticipated reductions, viz:

  • 24 service and funding reviews

  • the implementation of a digital, corporate support service

  • establishing an arm’s length company for adult social care provision

  • delivering environmental services in partnership with Wigan MBC.

  • the outcome of consultation with the public and Trades Unions on the proposed high level budget strategy.






















Recommendations:

It is recommended that Council approve:-


  • Strategic budget reduction options for 2015-17

  • One-off revenue allocations

  • The Budget for 2015/16

  • The Council Tax for 2015/16




























Background Doc(s):

Statement on Local Government Finance (England) Revenue Support Grant for 2015/16 and related matters papers dated 3rd February 2015.

Financial Forecast and Budget Process 2015-17: Report to Cabinet, 10 November 2014










  1. INTRODUCTION


Cabinet 16th February 2015

At the meeting of the Cabinet on the 16th February 2015 The Cabinet agreed, that in respect of the Revenue Budget 2015-17, to recommend to the Council the following:



  • That the Council Tax be frozen for 2015/16 with the balance of £0.7m funding to achieve this in addition to the freeze grant to be taken from one-off revenue funding.

  • To provide £2m of one-off revenue funding to support the Octagon Theatre’s ambitious plans for redevelopment which will help lever in potential funds from the Arts Council and other funding sources. The Council’s contribution would be to support access to the Octagon for young people and people with disabilities.

  • That £1.3 of one-off revenue-funding is made available for use over 2015/16 and 2016/17 to improve the environment of the Borough (This will be used in conjunction with the £0.2m additional capital to create a £1.5m fund). The focus of the fund will include the one-off clean-up of neighbourhoods and streets, measures to tackle fly tipping and to enhance the council’s enforcement activities across the borough.

Background

In November 2014 the Cabinet approved an outline budget strategy for 2015/17 as a basis for initial consultation, including:







  • High level strategic options to deal with the scale of reductions anticipated, as a basis for further work and analysis.

The Cabinet asked for further work to be undertaken and reported back on each of the proposed budget options, together with the final financial position and initial feedback from stakeholders on the overarching budget strategy, including the results of a statistically valid survey of local residents.


This report provides the further detail that was requested. In summary the Local Government Finance Settlement has confirmed the scale of budget reductions that were projected for 2015/16 and the assessment for 2016/17 remains the same; the Council must therefore deliver savings of c£43m over the period 2015/17. Further work has therefore been undertaken on the strategic proposals to address this reduction and the final proposed budget strategy is set out in this report.
The purpose of this report is to present to the Council the final details on the 2015/16 Revenue Budget to enable the Council to determine the Revenue Budget and Council tax for 2015/16:


  • The strategy for budget reduction 2015-17

  • The Revenue Budget for Council Tax for 2015/16

  • One-off budget allocations



  1. STRUCTURE OF THE REPORT

This report is structured as follows:




  • Section 3 sets out the overall budget for 2015/17 including:

    • the major variances from the previous year;

    • the transactions on the Collection Fund; and

    • the Financial Arrangements Account for 2015/16.




  • Section 4 provides options for Council Tax levels for 2015/16 in order that the Cabinet may make a recommendation to Council




  • Section 5 includes the further detail on the strategic budget options that were proposed to deliver a balanced budget for 2015/17 as follows:

    • The timetable of individual service reviews

    • The alternative service delivery model for adult social care

    • Digitally enabled support services

    • Joint delivery of environmental services with Wigan MBC




  • Section 6 sets out the consultation feedback on the proposed budget strategy, including the results from a structured survey of local residents and the Trades Unions’ response




  • Section 7 provides an overview of delivery issues and proposals, including the requirement for up to £40m of one-off funding to balance the budget pending delivery of savings; resource the programme and maintain organisational outcomes


3. THE COUNCIL’S BUDGET 2015/17
2014/15 Outturn
The projected 2014/15 outturn expenditure (excluding Schools) is £222.8m and as a consequence of this, available General Fund balances are expected to be approximately £10.66m at the 31st March 2015.

The above projected 2014/15 figures also assume spending delegated to schools will be in line with the budget. School balances, as required by legislation, are carried forward for the sole use of schools.


2015/16 Revenue Support Grant Settlement
On the 3rd February 2015 the Government announced its Revenue Support Grant for Local Government for 2015/16. The Grant figures for 2015/16 announced in the Settlement are in line with those forecast in February and November, and therefore savings of £24.7m are required in 2015/16 to balance the budget. This represents a 28% reduction in Revenue Support Grant compared to the current year (2014/15). Savings at £24.7m are a 15% reduction on the Councils controllable budget (ie excluding schools, precepts and levies and Public Health which is ring fenced) of £170m.
The funding that the Council will receive includes RSG, Business Rates Top-Up, New Homes Bonus, Education Services Grant and Public Health funding and these are included in the table in the section below and also in Appendix A.
Income and costs
The Council projected a series of increases in costs in 2015/16, together with other opportunities to increase income. The full details are set out in the November budget report to Cabinet, attached.
The final analysis confirms the projected increases in cost and income, as set out at the beginning of consultation, with the exception of changes to the Direct Schools and Public Health funding and the impact of the 2014/16 Pay Award.
Expenditure Forecast
An updated expenditure forecast in the context of the likely increased financial demands facing the Council is as follows.





Forecast

Forecast




2015/16

2016/17




£000s

£000s










Previous Year’s Net Budget


477,458

465,099


Additional Public Health Transfer

-116

-










Increases:-







Schools DSG

2,555

-










Non School Services







Inflation

4,249

4,053

WDA / PTA

1,525

1,525

Pensions

804

817

Adult & Children’s Growth

1,000

1,000

National Insurance Changes

-

1,808

Loss of Local Welfare Fund Grant

1,214

-

Savings Required

-23,590

-18,330




-----------

------------

Budget Requirement

465,099



455,972

Resources







Direct Schools Grant

229,036

229,036

Public Health Funding

18,790

18,790

Education Services Grant (ESG)

4,250

4,000

New Homes Bonus

4,036

4,700

Use of Reserves

2,000

2,000

Retained Local Business Rates

43,541

44,401

Council Tax Freeze Grant 2015/16

19,172

19,555

Business Rates Top-Up

1,071

1,071

Council Tax Contribution *

89,984

91,783

Revenue Support Grant

53,219

40,636




------------

------------

Total Resources

465,099

455,972










Council Tax Increase (indicative*)

0%

2%*



2015/16 Reductions and assumptions
The figures above are based upon a Council Tax increase for Bolton Council (including Waste and Transport Levies) of 0%. The overall Council Tax increase, including Police and Fire Precepts, is 0%. Advice to Members to inform Council Tax setting is provided in Section 4.

Funding for the Voluntary Sector
The Council has proposed funding reductions of c£250,000 from corporate voluntary sector grants in the 2015/17 budget, plus potential further amounts from services. The precise level of reductions involved will require a detailed piece of analysis and consultation with funded groups, which will take a period of months to complete.
It will not, therefore, be practicable to bring this option forward during 2015/16 and as such it is proposed that the level of resources allocated to the voluntary sector in 2013/15 will be retained for the next financial year on a transitional basis, pending a full review and reductions to apply from 1 April 2016.

Balances / Financial Risks
Members will be aware that the Borough Treasurer has provided advice on the recommended level of Balances to be maintained previously. The full detail including an identification of financial risks is set out in Appendix D. However, in summary this advice is as follows.
Currently it is estimated that available Balances as at the 31st March 2015 will be £10.66m. The Borough Treasurer’s advice to Members is that, as a minimum, Balances of £10.0m or higher should be maintained based upon the Borough Treasurer’s understanding of the risks and financial issues facing the Council over the next 3 years and the proposals around the Budget, as identified in this report. Should Members wish to agree any additional items for growth or for savings not in this report, then the Borough Treasurer will need to advise Members as to whether or not those proposals would result in an increase in the financial risk facing the Council and therefore a need for a higher level of Balances to be set as a minimum.
The Financial Arrangements Account
This account deals with the strategic financial transactions which fall outside the remit of any one Service.
The transactions on this account are set out at Appendix G along with a brief explanation of major changes.
Parish Precepts
The individual parish precepts are shown below with comparative figures for last year.





2014/15

2015/16




£

£










Blackrod

49,900

53,858

Horwich

185,386

185,836

Westhoughton

129,049

130,750









As required by the Local Government Finance Act 1992, the Parish Precepts need to be added to Bolton’s budget requirement.


Business Rates
The recent Government statement has provided final figures for Revenue Support Grant (£53.219m) and Business Rates Top-up (£19.172m). It should be noted that the National Non Domestic Rate next year is 48.0p in the pound for small businesses and 49.3p in the pound for larger businesses.
A report on the proposed amendments to the Non Domestic Rates: Discretionary Rate Relief Framework in accordance with the amended powers available to the Council under Section 47 of the Local Government Finance Act 1988 is attached as Appendix L.
The Cabinet is requested to approve the inclusion of a local scheme to grant relief on a case by case basis, under Section 47, based on the Government’s 2014 Autumn Statement in relation to the extension of the national transitional relief scheme that billing authorities are being asked to introduce locally.


Use of one-off revenue and capital resources
In the November report the Council highlighted that one of the ways in which it was possible to mitigate the impact of revenue budget reductions was to maximise the use of capital resources. As part of this strategic approach the Council decided to maximise the amount of capital available over the next 12 months by fully utilising borrowings from available revenue support. Coupled with a hard look at maximising efficiencies in the existing capital programme this made available £13m of capital resources.
As Members will be aware, capital funding is only available for capital schemes eg road maintenance, housing etc and as such is not as flexible as the use of one-off revenue which can fund other valuable one-off activity in support of achieving the Council’s objectives or mitigating the impact of budget reductions. Therefore to provide some choice of revenue and capital funding for investment the Borough Treasurer has sought to “swap” available capital funding for one-off revenue where this one off revenue is supporting expenditure that is eligible for capital funding. This amounts to £3m with a further £1m available through other one-off revenue and predicted underspends. This makes available:


  • £4m for one off revenue allocations

  • £10m for allocation from the capital programme.

That in respect of the Revenue Budget 2015-17 the Cabinet recommends to the Council the following in respect of £4m one-off revenue resources



  • That the Council Tax be frozen for 2015/16 with the balance of £0.7m funding to achieve this in addition to the freeze grant to be taken from the one-off revenue funding.

  • To provide £2m of one-off revenue funding to support the Octagon Theatre’s ambitious plans for redevelopment which will help lever in potential funds from the Arts Council and other funding sources. The Council’s contribution would be to support access to the Octagon for young people and people with disabilities.

  • That £1.3 of one-off revenue-funding is made available for use over 2015/16 and 2016/17 to improve the environment of the Borough (This will be used in conjunction with the £0.2m additional capital to create a £1.5m fund). The focus of the fund will include the one-off clean-up of neighbourhoods and streets, measures to tackle fly tipping and to enhance the council’s enforcement activities across the Borough.

That the Cabinet recommends to the Council the following in respect of the £10m unallocated Capital Programme Resources for 2015/16 and £3m unallocated Capital Resources in 2016/17:

  • £0.2m of capital funding to complement the revenue funding provided to improve the environment of the Borough.

  • £5m investment in highway schemes including residential roads and pavements at £2.5m in 2015/16 and £2.5m in 2016/17.

  • £4m contribution to a new Horwich Leisure Centre in conjunction with other funding partners.

  • £1m for other Leisure and youth provision capital investment to enhance sporting and social activities for young people and adults.

  • £1m investment to increase the provision of aids and adaptations in people’s homes to improve their quality of life and enable them to live independently longer at £0.5m in 2015/16 and £0.5m in 2016/17.

  • An additional £1m for investment in Housing and Housing Improvements

  • £0.5m to improve road safety in the vicinity of the borough’s schools including the implementation of 20mph zones and/or other road safety schemes

  • £0.3m to support capital programmes for the voluntary and community sector including via capital projects within the Community Empowerment Fund

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