Isle of Wight Council. Full council, February 26, 2014

8/13/2019 Isle of Wight Council. Full council, February 26, 2014.

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PAPER E

Purpose: For Decision

Committee FULL COUNCIL

Date 26 FEBRUARY 2014

Title MEDIUM-TERM BUDGET STRATEGY 2014/15 2016/17 ANDCOUNCIL TAX SETTING 2014/15

Report of LEADER OF THE COUNCILCABINET MEMBER FOR RESOURCES

EXECUTIVE SUMMARY

1. This report follows on from the budget review that went to council on 18September 2013 and the report to cabinet on 9 January 2014 and council on15 January 2014 that updated the budget position following theannouncement of the provisional local government finance settlement on 18December 2013.

2. It sets out the final position on the overall Budget which indicates an overall

Budget Gap of some 28m over the next three financial years and proposesan overall strategy to deal with this.

3. This strategy has been to consider what services the council will be able todeliver or enable by May 2017 within the resources likely to be available andwhat needs to be done to achieve that position. A high level vision andpriorities is proposed that sets out this position and the overall objectives forthe council and services over the life of the Council. This will form the basis ofthe new corporate plan.

4. The proposed budget strategy directs what resources will be available to meetthese objectives whilst delivering the savings required both in total and ineach of the next three financial years.

5. For 2014/15 a lawful and balanced general fund budget and council tax levelfor 2014/15 needs to be set. The report proposes an overall budget thatdirects resources to the priorities, where savings need to be made and theuse of reserves and balances to help the budget strategy. The final localgovernment settlement for 2014/15 is still awaited but any changes from theprovisional one are likely to be minor.

6. It is proposed that the IW Councils element of council tax is frozen at 2010/11levels for the fourth successive year, meaning that the amount payable willhave been at the same level for five consecutive years in total.


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7. A capital programme with investment to the value of 25.6m is proposed forthe period from 2014/15 to 2016/17. The programme is based on limitingcapital investment to projects funded by external grants and contributions,essential spend, investment in key priorities and projects that deliver improvedeffectiveness and contribute to revenue savings. However the programme

may be increased as additional grants and contributions and capital receiptsbecome available. The property disposal and capital programme sub-committee considered the funded part of the capital programme at its meetingon 10 December 2013, and will be considering the unfunded part at itsmeeting on 11 February 2014 and making recommendations to cabinet.

OUTCOMES

8. To recommend to council the general fund revenue budget, capitalprogramme and council tax level for 2014/15.

9. To recommend to council a continual process to monitor the achievement ofthe 2014/15 budget savings and to develop and progress further savingsoptions and the implementation of savings options identified for 2015/16throughout 2014/15.

BACKGROUND

10. The budget review report to September cabinet and council highlighted thatthe council faces a very significant financial challenge. The projected revenuebudget gap over the financial years 2014/15-2016/17 was 28m. In additionthe ability of the council to increase its resources is extremely limited. Thereport also highlighted a number of budgets that were overspending in2013/14.

11. It was clear, that for the foreseeable future, the council faced a significantbudget gap each and every year as the reduction in government grants plusincreased costs will always substantially outweigh its ability to raise incomethrough council tax or local income.

12. This means that the current level of services and activities are unaffordableand significant reductions will need to be made. It would be wrong to consider

2014/15 in isolation from 2015/16 and future years, given the significant grantreductions that will be faced in the future.

13. The root and branch reviews have provided a basis for considering servicedelivery both in quality terms and opportunities for delivering servicesdifferently. A progress report on the root and branch reviews was reported tocabinet and council in December 2013 and January 2014.

14. A report to cabinet on 9 January 2014 and council on 15 January 2014provided an update on the budget position following the announcement of the2014/15 provisional local government finance settlement and the latest budget

monitoring position. This confirmed that the council faces a revenue fundinggap of some 28m over the next three financial years.


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STRATEGIC CONTEXT

15. A new corporate plan is required that clearly sets out the councils overallvision and priorities that it will follow over the life of the council.

16. This needs to be set in the reality of the resources that will be available andaffordability as well as meeting statutory need and dealing with issueshighlighted through the joint strategic needs assessment. This meansagreeing now what the council will look like and the services it will be able todeliver or enable in May 2017 and what needs to be done to achieve thatposition. The underpinning budget strategy then needs to set out in financialterms the allocation of resources and what needs to be done to achieve anoverall saving of 28m by May 2017 whilst balancing the individual financialyears as well.

17. An overall draft proposed vision and priorities for the council for the next three

financial years is set out in Appendix 1.This has been used as the basis forthe medium-term budget strategy and the investment and savings optionsreflect the end position that the vision and priorities indicate.

18. This is a high level vision and if agreed will form the overarching destinationthat the council is aiming for over the life of this council. Beneath this there willbe a range of actions and outcomes that describe the journey over the nextthree financial years to achieve it. For each area there will be milestones andoutcomes that can be measured and these will also be included within thedetailed corporate plan that will be put before council on 19 March 2014following agreement of the budget strategy on 26 February 2014.

19. The overall Vision is of a council that puts people first:-

Is accessible, transparent and inclusive and works with business, partners,community, residents and visitors in making the Island a better place to live,work and prosper.

20. The seven key Priority themes in delivering this are:-

Keeping children safe

Improving standards of education Delivering person centred, coordinated social care and health

services

Growing the economy and tourism of the Island

Protecting the public

Working in partnership to improve outcomes

Delivering statutory duties and achieving value for money

BUDGET PRIORITIES

21. Although the council needs to make significant savings it also needs to invest

and allocate resources to its priorities and the objectives that underpin theVision. The joint strategic needs assessment provides a comprehensive look


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at the health and wellbeing of Island residents. It identifies a range ofdemographic issues that also have an impact on any resource allocation andwhat prevention strategies are pursued.

22. Within the seven priorities specific actions and activities will be developed in

the context of these and issues highlighted in the joint strategic needsassessment. In overall terms the seven priorities highlighted in paragraph 20the following key aspects are provided for:-

Keeping Children Safe

23. The Council has strongly supported the establishment and development of theStrategic Partnership with Hampshire County Council and has set theimprovements in childrens safeguarding as of critical importance. Throughthe strategic partnership the council has resourced a significant improvementactivity that is already showing signs of success. The council is meeting a

significant overspend in the current financial year in relation to childrenssafeguarding and the budget includes an additional 2.2m over the previousbudget for 2014/15 with no proposals to deliver savings at this stage.

24. The children & young peoples plan 2014-2017 has been considered andagreed at council on 15 January 2014. The childrens safeguardingimprovement programme seeks to ensure that services for children at risk andin care are of a high quality to ensure the best levels of protection and care forthe Islands most vulnerable children.

Improving standards of Education

25. Like keeping children safe the priority of improving standards of education isof critical importance. The budget proposals do not include any savings in thecouncils school improvement activities, provides for extra resource forspecific school improvement support of some 300k and provides resourcesto enable Hampshire County Council to deliver the improvements required sothat education services are of the right quality. This supports the delivery ofthe education improvement plan considered by cabinet on 9 January 2014.

Delivering person centred, coordinated social care and health services

26. The council and its health partners are actively developing a model ofintegrated health and social care for the Island. In December 2013 the cabinetagreed a five year vision for integration which recognised that integrationshould only take place when it is in the best interests of the council and Islandresidents to do so. Over time, these integration proposals will incorporate thepooling of resources.

27. The joint aim of the islands health and social care organisations is to promotelonger, healthier and more independent lives for the people of the Isle ofWight. social care and primary and secondary health care, all have individual

contributions to make to this, but it is important to recognise that the overalleffectiveness and efficiency is dependent upon developing a highly integratedmodel of care between them all.


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28. The Islands population is proportionately older compared with the rest ofEngland; 24.1 per cent of the Island population is aged 65 years and over.Over the next ten years the Islands largest population increase will be in the65 years and over population. A significant proportion of the growth amongover 65s will be among the very elderly (85 years and over). We also know

that the number of people living with physical disabilities on the Island is set toincrease by approximately four per cent over the next ten years. Thischallenging demographic background and the unprecedented financial issuesfacing the council over the next three years and beyond mean that theservices delivered by the council need to focus on prevention and supportself-management in order to deliver improved outcomes for individuals whilstdelivering significant savings when compared to meeting care needs in ahospital, residential or nursing home setting which can be less effective andcost far more. The savings proposals set out in this report for adult social carereflects this preventative approach.

29. To support this approach a new way of working across social care and healthis already underway. The My Life a Full Life programme is collaborationbetween the clinical commissioning group (CCG), IWNHS trust and the Isle ofWight council. This and the wider integration programme will help to ensurepeople can remain as independent as possible, for as long as possible andenjoy a full life.

Growing the Economy and Tourism

Business Growth:

30. The award of Assisted Area Status (AAS) for the whole Island will create anenvironment in which businesses can be encouraged to invest on the Isle ofWight. The work of the council has secured this status for 28 of the Islands 39wards in the Governments draft proposals and the council will continue topromote the case for the inclusion of the remaining wards when the finaldecisions are taken in the early spring. The council will promote the benefitsof AAS as part of its approach to securing inward investment.

31. The council will continue to work closely with key partners to secureopportunities for businesses to develop and grow on the Island. It is actively

working as part of the Solent Local Enterprise Partnership (SLEP) to informthe development of SLEPs economic development plan which will be thebasis of securing Government funds for the Solent area and to attractadditional investment for Island businesses. The Isle of Wight Expansion fundwas launched in January 2014 and makes 2.46 million of grant fundsavailable to Island based businesses, this follows on from the 1.35 millionBridging the Gap 2 fund launched a year ago and which has seen a numberof successful bids from Island businesses. These grant funds arecomplimented by the growing places loan fund (16.74 million) which isavailable to support improvements in business infrastructure. Joining thePartnership for Urban South Hampshire (PUSH) allows the council to co-

ordinate its activities with local government across the south of the region toachieve a more prosperous, attractive and sustainable area. Locally thecouncil is seeking to strengthen its relationships with the chamber of


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commerce tourism and Industry (CCTI) especially in relation to the provisionof information, advice and guidance to business.

Council Investment:

32. The council has commitments of 4 million for the initiation of projects topromote and underpin the Islands economy. The council has matched 1million of private sector investment to create Perpetua Tidal Energy CentreLtd, a joint venture company to develop a tidal energy test facility off StCatherines Point. Work to secure all of the necessary licences and consentsfor the project are progressing well and expected to be completed in the nextfinancial year aided by 750k of EU funding secured by the council.

33. The councils commitment of 3 million for the installation of superfastbroadband has levered in funds of 3 million from the Government and1.56m from the private sector. Works to install the broadband will begin in

the spring and are due for completion in October 2015. These works willensure the Island is one of the best connected areas in the country and willsupport the development of new businesses especially in the knowledgeeconomy. Similar investments in the Islands economy may be considered onthe basis of their impact and return to the Council

Sector Support:

34. The tourism industry is responsible for one third of the Islands economy andover a quarter of residents are employed in the sector. The development ofVisit Isle of Wight (VIOW) has been central to the councils approach tosupporting this key sector with a committed investment of 340,000 perannum to the organisation there are some positive signs for the visitoreconomy in VIOWs first full operating year. Visitor numbers in the peakseason showed an increase and especially in those making overnight stays,its website has outperformed some of the Islands main competitordestinations, work on the launch of Walking with Dinosaurs in associationwith 20th Century Fox provided the Island with a major promotionalopportunity, support from the local sustainable transport fund helped theIsland achieve its first television advert for a number of years and it hassecured significant private sector investment for the organisation and its

campaigns. The council will continue to support and monitor the success ofVIOW to ensure that it achieves as much as it can for this important sector forthe island and will look to consider how other key sectors can be developedfor the islands economic benefit.

Skills Development:

35. The councils work to create employment opportunities for young people hasseen almost 800 people participate in a pre-apprenticeship, apprenticeship orbusiness start-up opportunity and has helped deliver the lowest number ofyoung persons not in education, employment or training (NEET) for many

years. This scheme has been in place for almost three years and despite therecent injection of a further 150,000 of funding continues to beoversubscribed.


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2014/15 Provisional Local Government Finance Settlement

The Final Settlement is still awaited but, as in previous years, it is unlikely thatthis will change significantly from that set out in the Provisional Settlement.The Council submitted a response to the Provisional Settlement and a

delegation of all the councils group leaders and the Islands M.P. met with thelocal government minister Brandon Lewis to set out the case for moreresources to the Island. Although this is unlikely to impact on the grantsreceived through the Settlement there are potentially other ways that theGovernment can give support such as through assisted area status andaccess to other funding streams that may become available.

Better Care Fund

In 2014/15 the council should receive 3.513m via a transfer from healthtowards adult social care costs that deliver outcomes for health and social

care. In 2015/16 there are new arrangements for a pooled NHS and localauthority Better Care Fund. This fund is to enable integration of health andcare services. It is not new money, however, as it is resourced from existingfunding streams and efficiencies in the acute sector of health. The NHS andlocal authorities must agree locally through health and wellbeing boards howthe funding will be spent across health and care services. The provisionalsettlement gives a pooled budget for the Isle of Wight of 10.803m.This is anincrease of 7.290m over the figure for 2014/15. Assuming that half of theincrease is allocated to the council this would give an allocation of 7.158m.This is by no means certain and will be the subject of significant discussionand negotiation with health in formulating the use of the pooled fund. Anumber of national conditions have to be met and some of the funding will beperformance related. In any case there is likely to be an increased need tospend differently and on new initiatives to affect the outcomes required. Inaddition to this the current capital grants received for disabled facilities grantsand adult social care will also be included in the pooled budget. There will bea need to continue investing in grants to fund aids and adaptations etc. andtherefore the council will need to be allocated resources for this as well fromthe Better Care Fund. The process will also be governed by regulation andthe framework set by government.

2013/14 Budget Monitoring position

A summary of the overall revenue budget monitoring position at 31 December2013 is set out in Appendix 2. This shows that the pressures in childrensservices and adult social care are likely to lead to a 4.2m overspend, but arecurrently offset by savings in other budget areas leading to a net forecastoverspend of 1.9m. It is still hoped that in overall terms by the end of thefinancial year there will be no net overspend.

2014/15 cost and income pressures

The key areas of concern from the current years revenue monitoring positionrelate to childrens services and adult social care. The 2014/15 budget,therefore, includes 2.5m additional resources in the childrens services


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budget to respond to the increased cost requirements. From 2016/17 it hasbeen assumed that through delivering improvements and achieving stability ofthe service 1.5m of the increased budget will not be required on an ongoingbasis. An additional 1.8m for adult social care demographic pressures hasalso been added to the budget.

Capital Programme and capital financing costs

The current years capital monitoring position at 31 December 2013 is set outin Appendix 2A. The proposed capital programme for 2014/15 to 2016/17 isset out in Appendix 4 to this report, together with the resultant capital fundingoptions. To fund the overall capital programme for the next three years it iscurrently assumed prudential borrowing of some 5.2m will be required,although there may be scope to reduce the level of borrowing if additionalcapital receipts are generated from the sale of assets. There will be furtheradjustments to the capital programme when capital grants and contributions

are confirmed for future years. The programme includes major investment inthe rural broadband project, sustainable transport, housing projects anddisabled facilities grants, and schools projects.

The treasury management strategy is set out inAppendix 5 and includes the arrangements for the overall management of thecouncils cash flow, investment strategy and borrowing strategy. Any netborrowing requirements after use of the councils own resources continue tobe met by short-term external borrowing at low interest rates of some 1.0%compared to long-term loans of over 4.0%. However, in view of the impact ofcapital financing costs on the revenue budget the councils strategy is to fundcapital expenditure from capital grants and receipts wherever possible toreduce prudential borrowing. From 2015/16 onwards it is likely that long-termexternal borrowing will be required leading to increased capital financingcosts.

The overall treasury management strategy andprudential indicators were considered by the audit committee on 30 January2014 where they were recommended for adoption by the council.

Savings Proposals

The savings proposals that were contained within the report to cabinet andcouncil in January have been further developed and refined. They remainlargely as before and are set out in Appendix 6. The main changes relate to:-

Charges for respite care 150k in 2014/15 and free sitting service 10kin 2014/15 and 10k in 2015/16 which were previously included havebeen removed and replaced with a proposal to review how disregardsare applied in assessing contributions towards home care and othernon-residential services with a saving of 160k in 2014/15 rising to300,000 by 2016/17.

West Wight Sports Centre delay reduction in grant by one year so 25kremoved for 2014/15 and all remaining grant ceases in 2015/16.


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Saving of 30k for removing blue badge concession in car parks notto be implemented.

Additional on-street pay and display charges (total 70k) not to beimplemented in 2014/15 but overall income to be achieved through thisor other measures for 2015/16.

Saving from tightening the remit of environmental officers leading to areduction in posts reduced in 2014/15 from 125,000 to 75,000 toenable more time to review and investigate alternatives with Town andParish Councils.

Saving from reducing the cost of support given to the lord lieutenant bythe council. 25k saving added.

Additional saving of 25k in 2015/16 from management savings

Potential saving from combining or collaborating with another fire andrescue service put in 2016/17 rather than 2015/16 as savings unlikelyto be achievable earlier because of work and processes involved.

Saving of 4,000 on arts spends in 2014/15 and a reduction in apost and associated savings of a further 44,000 in 2015/16added.

47. Taking all these factors into account the updated summary position is:-

2014/15000

2015/16000

2016/17000

Total

Government grantsreduction

(4,941) (6,261)* (3,200) (14,402)

Increased BudgetPressures ChildrensServices

(2,500) 1,500 (1,000)

Net Increased costs (4,432) (5,827) (6,000) (16,259)

Net projected gapbefore any Council taxincrease

(11,873) (12,088) (7,700) (31,661)

Assuming a 2% CouncilTax increase in 2015/16and 2016/17 plusincrease in base

924 1,450 1,500 3,874

10,949 10,638 6,200 27,787

BUDGET OPTIONS

48. In dealing with the revised budget position regard must be had to future yearsand the impact of any decisions made for 2014/15 into 2015/16 and beyondwhen the projected revenue budget gaps are significant.

49. The council on 15 January 2013 agreed that the possible savings options set

out in Appendix F of the Budget report be further developed for considerationby council on 26 February 2014.The final proposed savings for 2014/15 andoutline savings for 2015/16 and 2016/17 are set out in Appendix 6.


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61. The added danger is that although technically the government would add thefreeze grants to the base the overall base is being reduced year on year. Theother factor is that the government have yet to announce the percentageincrease limit for 2014/15 before a referendum is triggered and this could wellbe less than 2%.

62. Although there are benefits to council tax payers by having a freeze thecontinued erosion of a major source of income is a major concern particularlywhen set against the enormity of the cuts in government grants, the projectedthree year gap of 28m and that the Council faces ongoing spend pressuresin childrens services and adult social care.

63. To put it into context a 2% increase on the councils element of council taxwould cost an extra 26 per annum on a Band D property some 50 penceper week. For those on low incomes, who get local council tax support, abouta half are pensioners and if their income supports it they will still get up to

100% support. In addition those classified as working age vulnerable are alsoprotected and can get up to 100 % support. About a third of applicants whoare classified as working age non-vulnerable who would have got 100% underthe old national council tax benefit scheme would have to pay 20%.The 2%increase for these would amount to about 10 pence per week. For otherclaimants who are assessed at less than 100% they would have to pay a 2 %increase on the proportion they pay .For example someone who gets 50%support would pay an extra 25 pence per week on a Band D property.

64. Taking all the factors into account it is proposed that for 2014/15 the counciltax level is frozen for another year. For 2015/16, however, the council mayhave to seriously consider going for a referendum on a higher council taxincrease due to the extent of savings that are required in that year.

BUSINESS RATES

65. The government have announced a number of changes to business ratelevels. These include capping the increase in the business rate multiplier to a2% increase rather than RPI, doubling and extending small business raterelief and introducing a relief of 1000 for businesses with a rateable value ofless than 50,000. Local authorities will be compensated by government for

any loss of income as a result. There are some discretions and the position onthese changes will be reported to cabinet in March 2014.

MEDIUM TERM FINANCIAL STRATEGY

66. The Medium-Term Financial Strategy is summarised in Appendix 3. Thepurpose of the Medium Term Financial Strategy (MTFS) is to set out how thecouncil will resource the key projects, changes and improvements that flowfrom its priorities together with the redirection of resources over time to meetthese priorities, whilst balancing the budget gaps.

67. As part of the budget strategy it is proposed to increase the Budget forChildrens Services by 2.5m in 2014/15.This relates to childrenssafeguarding as well as improving education on the Isle of Wight.


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68. It is clear from the scale of the changes that there will need to be asignificant reduction in the number of staff that the council is able to employ.The council will be looking at voluntary redundancies, reduction in hours,redeployment and other measures that seek to avoid compulsoryredundancies wherever possible. The formal notice (HR1) that sets out the

level of potential staff reductions and redundancies to start the consultationprocess with staff and the Unions was issued on 10 January 2014. FurtherHR1s will be issued throughout the year as further savings options aredeveloped.

69. The actual number of job losses will depend upon the final budget savingsproposals agreed, what services are ultimately stopped or different deliverymodels used.

70. Included in the budget savings options set out in Appendix 6 are savings fromrestructuring senior management and undertaking a review of management

levels throughout the council (excluding childrens services).A seniormanagement structure is proposed that reflects the roles that currently areneeded to be undertaken in delivering the vision and priorities and isaffordable. Following consultation the final proposed structure is set out as anAnnexe to Appendix 6. The structure will need to change as the requirementschange and should be seen as for 2014/15 with further changes beingimplemented for 2015/16 and future years.

71. As part of this the council will need to confirm a number of statutory officerappointments and designations some of which are currently operating on aninterim basis. A separate report on the council agenda deals with the head ofpaid service.

72. The others are:-

Statutory Role CurrentPostholder

Designation ProposedDesignation

Director ofSocial Services

Mark Howell Head ofCommissioningCommunity

Wellbeing

Head of AdultSocial Care andCommunity

WellbeingMonitoringOfficer

Davina Fiore Deputy Director ofResources(CorporateGovernance

Head of CorporateGovernance andMonitoring Officer

Chief FinancialOfficer (section151 officer)

Stuart Fraser Head of FinancialManagement

Head of Financeand Section 151Officer

73. With regard to the director of public health the previous incumbent left thecouncil in July 2013 and now so has the acting director. Public health is a

specialist area and we have been discussing potential arrangements withpublic health England. Realistically the council is unlikely to attract someonedirectly of the necessary experience to undertake the role in the context of the


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population size and scope of the role. Candidates are in short supply and highdemand. Detailed discussions are being undertaken with a view to enteringinto a partnership arrangement with another authority whereby their director ofpublic health becomes the director of public health for the Isle of Wight aswell. The council would employ an associate director based on the Island and

that post and the team would be led and managed through a partnershiparrangement.

74. A Partnership agreement is being worked up and if negotiations aresuccessful will be presented for agreement at cabinet on 29 April 2014.

75. It is also necessary to appoint a responsible officer for election duties. It isproposed that the head of corporate governance and monitoring officer isappointed as the returning officer and electoral registration officer for allelections.

Reserves and General Fund balances

76. The overall position on reserves and general fund balances is set out inAppendix 7 to this report and the overall budget risk assessment is set out inAppendix 8. This demonstrates that the reserves and balances remain at arelatively strong and healthy level. It has already been proposed that 5m ofreserves and balances be used towards the budget strategy. The proposals inthis report entail using 3.520m in 2014/15 and 2.294m in 2015/16 a total of5.814m. Against this, however are the potential risks where the council mayface unbudgeted costs. Once spent they are gone, and they cannot be apermanent source for funding or committed to on-going spend.

CONSULTATION

77. During October 2013 seven budget engagement events were held at venuesacross the Island and an on-line survey was also undertaken. A number ofbudget consultation focus groups were also held in December with a range ofstakeholders.

78. As part of the root and branch review process a council-wide on-line staffsurvey was undertaken as well as a number of staff focus groups.

79. A summary of the outcomes from these has been published on the councilsweb site. Ideas and suggestions raised have and will continue to beconsidered in the development of the overall budget

80. The overview and scrutiny committee is focusing on the budget as part of theirwork and set up a task group on reserves and balances. It has been fullyinvolved in the overall process and the chair and vice-chair of the overviewand scrutiny committee sit on the service and budget review steering group.The chair of the employment committee is also a member of the group thusproviding an important link to staffing related issues.


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81. The overview and scrutiny committee and the scrutiny panels have met toconsider this report and their comments and recommendations will bereported to the meeting.

82. The proposal to introduce passenger charges on the Cowes Chain Ferry, ifagreed, will be the subject of an island -wide public consultation exercise. Theproposals relating to fairer charging disregards will be subject to consultationwith service users. All staffing restructures will be the subject of consultationswith staff and unions.

83. All consultation responses will be used to update the equality impactassessments and the outcomes will be taken into account in making finaldecisions.

FINANCIAL / BUDGET IMPLICATIONS

84. This report is entirely about the overall financial and budgetary position of theCouncil and updates the financial and budget issues that the council is nowfacing following the 2013/14 budget monitoring position to 31 December 2013,budget cost pressures for 2014/15 and the provisional local governmentfinance settlement (LGFS) announced on 18 December 2013.The final LGFSis still to be announced but it is not expected to change much from theprovisional settlement.

85. The overall reserves and general fund balances position is healthy but thebudget monitoring position in 2013/14 indicates that there are a number ofoverspending areas and still a risk that the budget will overspend in total.Despite this it is felt that by 31 March 2013 that any net overspend if any willbe small.

86. The overall updated financial and budget position now shows a projectedbudget gap (the difference between projected income and projectedexpenditure if no decisions to change are made) of 10.949m in 2014/15 andsome 28m in total over the next three financial years. The report proposes astrategy and savings to meet these gaps.

87. The biggest challenge arises for 2015/16 when, compared to now the councilwill need to have identified and implemented some 21.6m in on-goingrevenue budget savings. It is imperative that further savings options aredeveloped and implemented on a continuous basis throughout 2014/15.

LEGAL IMPLICATIONS

88. The council will need to set a lawful and balanced budget and council taxlevel for 2014/15 at the council meeting on 26 February 2014. In developingany proposals the necessary equality impact assessments and consultationprocesses will need to be followed.

89. The implementation of savings will be subject to undertaking the necessarystatutory processes and consultation including equality impact assessments


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where necessary. The consultation responses will inform the equality impactassessments and will be carefully considered and taken into account in finaldecisions.

90. The totality for the scope of the proposed reduction in number of required

posts and therefore potential redundancy of more than 100 employees withina 90 day period means that the council was required to issue a formal noticeunder section 188 of the trade union and labour relations (consolidation) act1992 (as amended) and related regulations, reported through the HR1. Thiswas issued on 10 January 2014. This provides staff and the unions with theopportunity to be consulted upon proposals for staffing reductions and toexplore ways in which redundancy situations might be avoided. As budgetsavings options are developed it will be necessary to issue further notices forconsultation purposes with staff.

PROPERTY IMPLICATIONS

91. There are no specific property implications of this report but the ability tosupport the capital programme is dependant in part on the ability to dispose ofsurplus assets and generate capital receipts. The delivery of the strategicasset management strategy is also essential in driving the councils on-goingrevenue costs down.

EQUALITY AND DIVERSITY

92. The council has to comply with Section 149 of the equality act 2010. Thisprovides that decision makers must have due regard to the elimination ofdiscrimination, victimisation and harassment, advancing equalities, andfostering good relations between different groups (race, disability, gender,age, sexual orientation, gender reassignment, religion / belief and marriage /civil partnership).

93. An equality impact assessment has been completed on the overall budgetstrategy and is set out in Appendix 9 to this report. This needs to beconsidered in reaching a decision on the budget. Specific equality impactassessments will be completed on individual proposals, where relevant butwill include charges for the Cowes chain ferry and fairer charging disregards

and these will be taken into account before final decisions are made.

SECTION 17 CRIME AND DISORDER ACT 1998

94. Section 17 of the Crime And Disorder Act 1998 (as amended by Police andJustice Act 2006) provides that: it shall be the duty of each authority toexercise its various functions with due regard to the likely effect of theexercise of those functions on, and the need to do all it reasonably can toprevent, crime, disorder, anti-social behaviour adversely affecting theenvironment, and substance misuse in its area.

95. As part of the development of any budget proposals the implications andpotential impacts have been assessed in accordance with Section 17requirements.


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CARBON EMISSIONS

96. The proposed medium-term financial strategy, ICT strategy, strategic assetmanagement plan, capital programme, and efficiency savings proposals takeinto account the need to reduce carbon emissions and support the councils

carbon management plan.

97. The Solent Ocean Energy Centre (SOEC) project will contribute to a reductionin the Islands carbon footprint, including that of the council. In addition to thisSOEC will help reduce energy costs. The granting of planning permissions forsolar farms will also contribute to a reduction in the Islands carbon footprint.The re-let of the waste contract will focus on waste as a resource andencourage innovation in the use of waste to create energy. The highways PFIproject requires the contractor to reduce both carbon and water footprints andthis will be enshrined in the contract.

98. Over the last three years the councils projects identified and deliveredthrough the carbon management plan have achieved a 20% reduction incarbon emissions and savings of some 415,000 in fuel cost savings despitethe rising cost of energy. The councils energy consumption is now below thethreshold for inclusion in phase 2 of the carbon reduction commitment whichwill contribute savings of 55,000 per annum from 2015/16. New projects arebeing identified in the latest update of the plan to continue work to reducecarbon emissions and provide further savings for the council.

RISK MANAGEMENT

99. The key budget risks to the council relate to additional reductions in grantsfrom government; budget pressures being even higher than anticipated;savings and efficiencies not being delivered; proposed income levels notbeing achieved; inflation being higher than expected. These risks arecontained in the strategic risk register. The risk assessment set out inAppendix 8 to this report compares the potential financial risks to the reservesand balances available to meet them.

100. General fund balances of at least 5m should be maintained on top ofearmarked reserves. Savings implementation plans will be adopted and

rigorously monitored. Monthly service boards and the member-led budget andservice review steering group will undertake detailed monitoring and review ofsavings and budget monitoring. Quarterly performance and finance reportsare presented to Cabinet and the overview and scrutiny committee, andbudget review reports are received by council in September and cabinet inDecember / January each year.

101. It is important that the council takes a medium-term approach to its budgetsetting. There are still considerable uncertainties over the level of resourcesthe council will receive in 2015/16 and future years.

102. The council faces significant change and needs to implement a substantiallevel of savings over the next three financial years. There is a risk that througha lack of capacity in staffing and financial terms that this will not be achieved


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.The proposed management structure and organisation of staffing and otherresources seeks to mitigate this risk.

EVALUATION

103. The council must agree a lawfully balanced budget for 2014/15 by 11 March2013 at the latest. It also needs to take account of the projected resourcesposition and resultant revenue budget gaps for 2015/16 and future years.

104. In considering the budget options council will need to strike a balancebetween: the need to invest in capital infrastructure to improve services; directrevenue resources to the seven priorities; the level of council tax; the levels offees and charges; and the level of savings and service reductions and use ofany available balances. It also needs to take into account the medium-termfinancial position the council faces.

105. The impact of the options on service users, council tax payers, statutoryduties and the equality impact assessment also needs to be considered incoming to a decision.

106. The options related to bridging the remaining revenue budget gap areessentially varying the level of council tax increase; use of general fundbalances in 2014/15 and the level of further savings that can be implemented.

107. Bearing in mind the effective capping limit of 2% (which may get reduced) andthe availability of a council tax freeze grant of 729k and the impact on counciltax payers in a time of recession a council tax increase are not beingproposed for 2014/15.

108. The budget strategy is focussed on enabling the delivery of the vision andpriorities of the council whilst achieving overall savings of some 28m overthe next three financial years.

109. RECOMMENDATION

THAT Cabinet recommends that Full Council :

(a) Considers the Equality Impact Assessment set out in Appendix 9 to this andconsiders whether the budget proposals are consistent with these and that anypotential adverse impacts are understood and that appropriate mitigating actionsare proposed to be taken.

(b) Considers the overall financial and budget position facing the Council in 2014/15and future years an overall budget and Council Tax strategy and in particular:

(i) The updated Medium-Term Financial Strategy as set out in Appendix 1 to

this report;


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(ii) The overall Capital Programme as set out in Appendix 4 to this report;

(iii) The Treasury Management Strategy, Investment Strategy, BorrowingStrategy, Minimum Revenue Provision and Prudential Indicators as set out

in Appendix 5 to this report;

(iv) To note that due to the very significant level of savings required for 2015/16that serious consideration be given to holding a council tax referendum forthat year at the appropriate time.

(v) The schedule of savings set out in Appendix 6 to this report;

(vi) That 150,000 is allocated to support young people into pre-apprenticeships and apprenticeship and older people (over 50s) to start uptheir own businesses.

(vii) That an Island wide residents parking permit be introduced from 1 April2014 on the basis set out in Annexe B of Appendix 6.

(viii) That the proposed level of fees and charges for 2014/15 in relation torecreation, leisure and public spaces are introduced as set out in Annexe Eof Appendix 6.

(ix) The senior management structure as set out in Annexe C and D ofAppendix 6 and the appointment and designation of the following statutoryOfficer roles;-

a) Nominated Director of Social Services Mark Howell Head of AdultSocial Care and Community wellbeing

b) Monitoring officer Davina Fiore Head of Corporate Governanceand Monitoring Officer

c) Chief Finance Officer and Section 151 Officer Stuart Fraser Headof Finance and Section 151 Officer

(x) That the head of Corporate Governance and Monitoring Officer is appointedto act as the Returning Officer and Electoral Registration Officer for allrelevant elections.

(xi) That the service and budget review steering group be tasked withundertaking a continuous process of monitoring the achievement of the2014/15 budget savings and developing and progressing savings for2015/16 and future years.

(xii) To carry out appropriate consultation exercises in relation to the chargingproposals for the Cowes chain ferry and in relation to the fairer chargingdisregards.


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110. APPENDICES ATTACHED

APPENDIX 1 Vision and PrioritiesAPPENDIX 2 Revenue Budget Monitor to 31 December 2013APPENDIX 2A Capital MonitorAPPENDIX 3 Medium Term Financial StrategyAPPENDIX 4 Capital Programme

APPENDIX 5 Treasury Management StrategyAPPENDIX 6 2014/15-2016/17 Savings Proposals

Annexe A Cowes Chain Ferry chargingAnnexe B Residents Parking PermitAnnexe C and D senior management structureAnnexe E fees and charges

APPENDIX 7 Summary of reserves and general fund balancesAPPENDIX 8 Budget Risk Assessments

APPENDIX 9 Budget Strategy Equality Impact Assessment

Contact Point: David Burbage Telephone:823606 [email protected]

DAVE BURBAGEManaging Director

COUNCILLOR IAN STEPHENSLeader of the Council

STUART FRASERChief Finance Officer and

Section 151 Officer

COUNCILLOR JON GILBEYCabinet Member for Resources

(c) In the event that all precepts are not notified by the time of the council meeting on26 February 2014 that they agree to set up a council tax setting committee with thedelegated authority to consider and approve the overall budget requirement andlevel of council tax for 2014/15 being that element agreed by council for the Isle of

Wight council for 2014/15 plus the notified police precept plus the notified parishand town council precepts.
http://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%201.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%201.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%202.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%202.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%202A.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%202A.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%203.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%203.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%204.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%204.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%205.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%205.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%206.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%206.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%207.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%207.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%208.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%208.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%209.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%209.pdfmailto:[email protected]:[email protected]:[email protected]:[email protected]://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%209.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%208.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%207.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%206.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%205.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%204.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%203.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%202A.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%202.pdfhttp://www.iwight.com/Meetings/committees/mod-council/26-2-14/Paper%20E%20-%20Appendix%201.pdf

Documents

Isle of Wight Council. Full council, February 26, 2014