Item 4 Medium Terms Financial Strategy (MTFS) Report ...moderngov.staffordshire.gov.uk/Data/Cabinet...The Report attached from Andy Burns, our Director of Finance, looks at the Council’s

Item 4

1. The Report attached from Andy Burns, our Director of Finance, looks at the

Council’s Financial Position for the next three years (2008/09 to 2010/11) as a basis for preparing our budget for next year and setting the Council Tax. Our aim is to set a good and balanced budget, and this report demonstrates that we have a sound financial platform to be able to do so.

2. One point from the report that I ought to highlight is the fact that next year

we have been able to identify savings of over £22million. This is a tremendous achievement by all concerned, and is good news for both the Council and Council Tax payers. As well as helping us to limit any rise in Council Tax, we have been able to reinvest some of the money saved into our services (such a keeping some of our residential care homes open).

3. Although the overall picture painted is one of sound and well managed

Council finances, there are still some financial challenges facing the Council over the next few years. One of these is to meet the costs of Job Evaluation which are likely to be in the region of £94.6 million. This is why we need to continue our push for more and better services for less cost, and is why we are going to set further challenging savings targets for next year over and above the £22 million already removed from the budget this year.

4. Recommendations – I recommend that Cabinet agree the

recommendations set out in the attached report.

Cabinet Meeting on the 2nd January 2008 Medium Terms Financial Strategy (MTFS) Report Summary from the Leader of the Council

1

Item No. 4 on Agenda Local Members Interest

N/A

Cabinet – 2 January 2008

Medium Term Financial Strategy (MTFS) - 2008/09 to 2010/11

Recommendations of the Leader of the Council 1. That Cabinet:

(a) Review the Medium Term Financial Strategy (MTFS) 2008/09 to 2010/11 and Council Tax plans in the light of the provisional Local Government Finance Settlement, the outcome of the Service Review process, decisions made on Changing Lives and progress with Job Evaluation;

(b) Consider the implications of the provisional Local Government Finance

Settlement and authorise that the Director of Finance, in consultation with the Leader of the Council and the Chief Executive, make appropriate representations to the Department for Communities and Local Government;

(c) Consider the outcome of the Service Review process;

(d) Consider and make recommendations on the draft service budgets for 2008/09

and budget planning targets for 2009/10 and 2010/11 as set out in Appendix 5;

(e) Consider and make recommendations on the draft capital strategy for 2008/09 – 2010/11 and the allocation for Corporate Priority projects;

(f) Request that the Corporate Policy Scrutiny Committee (supported by the Budget

Working Group) consider the implications of the MTFS and 2008/09 budget strategy including the options for savings and spending pressures generated from the Service Review process and to report comments back to Cabinet on 6 February 2008.

Report of Director of Finance MTFS Overview 2. This report and accompanying appendices provides Cabinet with an update on the main

elements of the MTFS review where the headline messages are:

• The Service Review process has made good progress in delivering savings in the main through efficiencies and support services. Savings totalling £22.2m in 2008/09 have been identified, which is broadly in line with the target, but further work is required to deliver the proposed targets of £12.5m for 2009/10 and £20m for 2010/11.

• The reshaped Adults Services provision, and particularly the future model for residential care agreed by Cabinet in November, will require on-going funding of

2

£1.7m p.a. with potential one-off transitional costs of £1.8m in 2008/09.

• The final Job Evaluation proposals will be considered by Cabinet in the near future. The on-going financial implications have been revised to reflect the agreed model for Changing Lives and changes as a result of revised evaluations arising from the moderation process. As the moderation process is still on-going the figures included in this report are subject to further revisions.

• The Government’s Capital Allocations notified to date total £184m over the plan period. These allocations will be augmented by other funding sources.

• Capital Receipts amounting to £44m from identified asset disposals are anticipated over the plan period. This will be supplemented by 5% top slicing arrangements. After taking into account previous proposals for earmarking and existing commitments some £11m is available to support new projects and this report includes proposals for utilising this sum with the key investment priorities being Building Schools for the Future, Vulnerable Children, Property Maintenance and Information and Communication Technology.

• The Local Authority Business Grant Incentive (LABGI) scheme is being scaled down nationally and the anticipated support available from this source has been revised accordingly.

• The provisional Local Government Finance settlement provides for the first time grant allocations for three years. The provisional settlement is better than anticipated and the County Council should receive grant increases of 7.4%, 4.9% and 4.6% in the next three years which is above the average for Shire Counties and better than the planning assumptions. In announcing the settlement the Local Government Minister, John Healey, stated “We expect the average council tax increase to be substantially below 5% per year. We won’t hesitate to use capping powers for councils with excessive increases”

• The MTFS has been developed on the basis of Council Tax increases of 4%, 3.5% and 3% for the three years of the Plan period and it is recommended that the 2008/09 budget and the financial plans for the following two years continue to be developed on this basis.

• The proposals contained in this report would result in £1m in 2008/09, £4.8m in 2009/10 and £10.2m in 2010/11 being available to support emerging priorities, future demographic and demand led pressures and provide a cushion against the risks and uncertainties facing the authority in the medium term.

Links to Strategic Plan

3. The Council’s Strategic Plan 2007-10, approved in February 2007, sets the overall direction for the MTFS and provides the strategic financial context for revenue and capital budgets, decisions on council tax, savings and investment plans and ensures that resource allocation reflects the key priorities set out in the Plan:

3

• Services for vulnerable people

• The importance of preventative services

• Local delivery of services

• A customer centred organisation

• Moving the balance from supporting structures to the frontline

• Getting the basics right

• Service improvement

• Climate change Underlying Principles 4. Underpinning the planning framework is the Council’s aim of setting a good and

balanced budget:

A balanced budget means that:

• Income equals expenditure

• Savings targets and investment proposals are credible

A good budget also means that:

• It has a medium term focus, supporting the Strategic Plan

• Resources are invested in priority areas

• It is not driven by short term fixes to immediate issues

• It demonstrates how we have listened to consultation

• It is transparent and well scrutinized

• It maintains our financial stability Developing the MTFS - Background 5. The Council’s MTFS approved in February 2007 set out a good and balanced budget for

2007/08 and future years incorporating three year savings targets together with the review of spending as part of the Service Review exercise. The report to Cabinet on 3 October set out how the savings targets had been allocated and the progress made in identifying savings options together with an update on Job Evaluation and Changing Lives.

6. An updated position on the MTFS was presented to Cabinet on 5 December but at that

time details of the provisional Local Government Finance Settlement were not available. Cabinet’s considerations therefore focused on the impact of decisions on Changing Lives, the outcome of budget consultation and the announcement on schools funding.

MTFS and Budget Strategy Update 7. The key elements of the Strategy are:

• Consultation feedback

• Service Review – savings options and spending pressures

• Changing Lives

4

• Job Evaluation

• ICT / other issues

• Reserves and Balances

• Government grant settlement including new Area Based Grant

• Council Tax

• Capital Strategy Consultation Feedback 8. As previously reported two consultation events were held earlier this year one with a

representative sample of adults and the other with a cross section of younger people. The feedback from the adults event established that Staffordshire residents believe the County Council’s main priorities should be:

• Supporting vulnerable people. Notably there has been a sharp increase from 2006 in the number of people who identified this as a priority

• Improving education and lifelong learning

• Making Staffordshire a safer county. 9. The adult consultation established that the main areas for investment should be, the

level of support for older people, support for adults with learning disabilities and support for adults with physical disabilities while they believed the key areas where savings could be made were improving the way fostering and residential service for children were purchased and by re-providing care for older people living in their own homes.

10. Younger people felt that increased investment should be provided in better public

transport, services for young people, care for older people and the level of safety especially in respect of the use of public transport while they believed savings should be made by reducing the amount of money spent on the economy.

11. The feedback from the consultation events has been used to shape the outcome of the

service review process. Service Review 12. The Service Review Board has overseen the process for identifying savings options and

spending pressures. The aim has been to unlock the cash trapped in the base budget through the further development of efficiencies and by reviewing service standards and delivery models to enable the resources unlocked to be redirected towards the delivery of the County Council’s key priorities and addressing the challenges facing the authority.

13. Although good progress has been made towards identifying sufficient savings to achieve

the original targets and provide funding to meet the pressures and challenges facing services further work is required to unlock resources in 2009/10 and 2010/11.

14. The table overleaf summarises the savings proposals being recommended by the

Service Review Board. Appendix 2 sets out the detailed proposals and reveals that in the main the savings will be achieved through a combination of efficiencies and a review of support services and overheads. Appendix 2 also provides details of the proposals

5

rejected by the Board. Appendix 3 provides details of the pressures and challenges services are facing.

Savings Proposals 2008/09 £m

2009/10 £m

2010/11 £m

Children and Life Long Learning 12.141 11.544 12.689 Social Care and Health 5.628 6.799 7.225 Development Services 3.041 3.686 4.845 Strategic Core 1.423 1.757 1.872 TOTAL 22.233 23.786 26.631

15. In light of the success of the service review process and the need to continue to identify

resources that can be released to support the delivery of the County Council’s key priorities and addressing the challenges facing the authority it is proposed that the following new targets for further savings be set for 2009/10 and 2010/11:

2009/10 £12.5m 2010/11 £20.0m

16. It is suggested that the focus for the delivery of future savings should continue to be

through efficiencies, particularly in support services and overheads and by reviewing service standards and delivery models within base budgets.

Changing Lives 17. The future model for residential care agreed by Cabinet on 14 November will require an

additional on-going revenue investment of approximately £1.7m from 2008/09 onwards. There will be further one-off transitional costs of approximately £0.6m per month in 2008/09 as the changes to the service are implemented. It is proposed that these transitional costs estimated at £1.8m are funded from the projected underspending in the current year of £4.6m reported to Cabinet in November.

18. The detailed impact on staffing levels as a result of the reshaping of service provision is

still being developed. Whilst every effort will be made to retrain and redeploy the staff affected, it is inevitable that the proposals will involve redundancies and a worst case estimate suggests that this could involve costs of around £19m. These costs will be spread over 7 years and coupled with the cash flow implications will cost around £3.5m pa.

Job Evaluation 19. Consultation on the new pay structure and transitional arrangements ended on 5

December 2007. Negotiations continue with the unions with a view to reaching collective agreement to the proposals. It is anticipated that the final proposals will be approved by Cabinet in the near future.

20. The estimated costs of implementing the new pay structure have been refreshed based

on the latest November payroll data and the latest evaluations and to take account of the

6

impact of Changing Lives and revised evaluations arising from the moderation process. The Back Pay costs also include the cost of paying back pay to leavers and other refinements in the definition. In overall terms the total cost over the three year implementation period has increased from £85m to £94.6m.

21. The following table compares the latest figures with the previous estimates.

2008/09

(£m) 2009/10

(£m) 2010/11

(£m) Previous Latest Previous Latest Previous Latest On-going Costs 10.9 11.4 13.5 13.9 15.0 15.3 Transitional Costs Back Pay 41.4 50.8 Pay Protection 1.8 1.4 1.4 1.0 1.0 0.8 Total Cost 54.1 63.6 14.9 14.9 16.0 16.1

22. Whilst these revised estimates reflect a worst case scenario as no allowance has been

made for the deletion of posts as a result of restructuring/service review it is considered prudent at this stage to update the MTFS to reflect these increased costs. The following table summarises the implications for the MTFS.

2008/09

(£m) 2009/10

(£m) 2010/11

(£m)

Previous Latest Previous Latest Previous Latest

Ongoing costs 10.9 11.4 13.5 13.9 15.0 15.3 Borrowing costs to cover transitional costs

3.8

5.4

4.1

5.6

4.2

5.8

Total costs 14.7 16.8 17.6 19.5 19.2 21.1

Less base budget funding 3.0 3.0 3.0 3.0 3.0 3.0 MTFS Provision 11.7 13.8 14.6 16.5 16.2 18.1

23. The moderation process has resulted in revised evaluations. As the moderation process

is still on-going it should be recognised that the figures included in this report are provisional. In addition, no allowance has been made at this stage for future employee turnover since it cannot be predicted with any certainty what impact the new pay structure will have on future turnover levels and patterns.

Information and Communications Technology

24. Information and Communications Technology provides the foundation for the provision

of efficient and effective services. The importance of ICT support to the organisation is crucial and it is essential that a high quality service is provided. It is also essential that the County Council continues to develop and improve the technology it uses to support the delivery of services in the most efficient manner. It is therefore proposed that an additional £2m in 2008/09 rising to £2.5m in 2009/10 in subsequent years is targeted towards sustaining the ICT infrastructure. This investment will make the ICT budget sustainable and will be linked to new governance and accountability arrangements.

.

7

Other Issues

25. Following a detailed review of base budgets by Finance staff there are a number of

adjustments that can be made to the MTFS:

Stafford Accommodation The base budget includes provision of £2m for the costs of providing new Stafford office accommodation. The review is still ongoing so the £2m could be taken out at this stage.

JE Project Team Running Costs With many of the JE preparation tasks now complete it is estimated that the budget provision for the costs of the JE Project Team can be reduced by £0.5m in 2008/09 and by £1m in 2009/10 and 2010/11.

Pension Contribution The spending pressures identified through Service Review included an assumed 1% increase in the employer’s contribution as a consequence of the triennial revaluation of the Pension Fund. The actual increase is anticipated to be 0.5% releasing £0.670m in 2008/09, £1.169m in 2009/10 and £1.662m in 2010/11.

Strategic Property Review Based on a working assumption of being able to generate an additional £60m of receipts over the next three years, over and above existing planned receipts, from a strategic Property Review; this would provide additional investment income of £0.5m, £1m and £1.5m respectively.

Reserves and Balances 26. The risk based assessment of general balances undertaken in February 2007 has been

reviewed and suggests that general balances of £17.5m are required to be held. The potential for increased costs for JE remains a key risk but it is expected that the costs will be contained within the funding strategy already agreed.

27. The level of earmarked reserves has also been reviewed and at this stage there is no

scope to reduce the levels to support the MTFS. Provisional Local Government Finance Settlement 28. The provisional settlement was announced on 6 December 2007 and a detailed analysis

of the settlement is attached as Appendix 4. 29. The national headlines are:

• For the first time the settlement provides grant allocations for three years,

• Total Aggregate External Finance (AEF) increases by 4.0% to £70.408bn in 2008/09 and by 4.4% and 4.3% respectively in the following two years.

• Formula Grant (FGA) increases by 3.6% to £27.490bn in 2008/09 and by 2.8% and 2.6% respectively in 2009/10 and 2010/11.

8

• Specific Grants increase by 3.9% to £46.322bn in 2008/09 and by 4.9% and 4.8% respectively in the following two years.

• The provisional settlement reflects a range of changes to the methodology used to allocate grant. For the most part Staffordshire has benefited from these changes

• The Government has continued to use “floors” to minimise the impact of changes on individual authorities. The “floor” is paid for by reducing the grant of every authority above the “floor” for each class of authority. For Education/Social Services authorities the floor is 2% in 2008/09 reducing to 1.75% in 2009/10 and 1.5% in 2010/11. This has meant that Staffordshire’s grant is reduced by £12.9m in 2008/09, £12.6m in 2009/10 and £11.9m in 2010/11.

• In announcing the settlement the Minister stated that “We expect the average council tax increase to be substantially below 5% per year. We won’t hesitate to use capping powers for councils with excessive increases”

30. The headlines for Staffordshire are:

• A Formula Grant Allocation (FGA) of £143.5m in 2008/09, an increase of 7.4% with further increases of 4.9% and 4.6% respectively in 2009/10 and 2010/11. This compares to Shire County average increases of 5.4%, 4.0% and 3.8% respectively.

• The grant allocation is better than our planning assumptions and broadly provides an extra £7.5m over the forecast for 2008/09.

• In addition a number of specific grants have been absorbed into the FGA. This adjustment equates to £12.1m. For comparison purposes the 2007/08 figures have been amended to reflect this adjustment.

• The County Council has, in the main, benefited from the methodology changes. The most significant being the removal of the separate formula damping within the Children’s and Younger Adult Relative Needs Formulae which have taken grant away from Staffordshire in previous settlements.

31. The grant announcement marks the start of a consultation period prior to the

announcement of the final settlement in January 2008. Local Authorities have been asked to submit their views on the provisional settlement by 8 January 2008 and it is suggested that the Director of Finance, in consultation with the Leader of the Council and the Chief Executive, make appropriate representations to the Department for Communities and Local Government.

32. As mentioned above the provisional settlement includes a number of grant and service

adjustments. This means that in future authorities will receive support for these areas of activity through the general grant rather than as a specific or targeted grant. This adjustment amounts to £12.1m with the key areas being the Social Care Access and Systems Grant (£8m) and Delayed Discharges Grant (£1.5m) and the Children Services Grant (£2.1m). It is suggested that these resources are allocated to the relevant services subject to the Service Review Board reviewing these allocations.

9

Area Based Grant 33. The provisional settlement announcement indicated that the County Council would

receive payments in the form of Area Based Grant (ABG) of £31.6m, £33.3m and £32.6m over the next three years respectively. ABG is an amalgam of former Local Area Agreement pooled grants and other specific grants of which a small number are new grants such as the Learning and Disability Development Fund. The ABG is completely un-ring-fenced and can be used to meet the targets set out in the LAA and the national performance framework. ABG is received as a single lump sum but there is an indication of the funding streams included. A full assessment of the funding streams included in ABG is underway together with an exercise to identify how these funding streams link with the emerging priority targets for the new LAA from April 2008 and also targets in other strategies and plans. Furthermore, a number of district councils are also shown as receiving ABG and further investigation is required to understand the basis of these allocations and how they relate to the County Council’s allocations.

Schools Funding Settlement 34. As reported to Cabinet on 5 December 2007, the Department for Children, Schools and

Families (DCSF) have issued provisional DSG allocations based on their own estimates of local authority pupil numbers. It is worth noting that in previous years DCSF pupil estimates have been higher than final pupil counts. Should this be the case again, our final grant figures will be lower than those set out below.

35. The DCSF estimates of pupil numbers, and the resulting estimated grant allocations, are

included below:

2007/08 2008/09 2009/10 2010/11 Cash Table

£m

£m %

Increase

£m %

Increase

£m %

Increase

Base allocation 428.460 434.093 1.3% 439.721 1.3% 447.399 1.7% Ministerial priorities: - Pockets of deprivation - Funding day 6 provision - Increase in personalised learning and SEN

2.459

0.111

5.238

2.491

0.113

8.515

1.3%

1.6%

62.6%

2.535

0.115

14.512

1.8%

1.9%

70.4%

Total 428.460 441.902 3.1% 450.840 2.0% 464.561 3.0% DSCF estimated pupil numbers

119,097 117,035 115,211 113,919

36. The estimated cash increase in the base allocation is relatively low at 1.3% for 2008/09

and 2009/10, with a slight increase to 1.7% in the final year. This is due to the projected reduction in our pupil numbers.

37. The ministerial priorities funding enhances our settlement. Guidance on how this

funding should be used has not yet been made available. However, the Minister’s

10

statement did make it clear that there were “strong expectations” that these additional resources would be directed to schools in line with DCSF aims.

Funding for 14-19 Year Olds 38. Changes announced over the summer will result in responsibility for administering post

16 funding reverting to the local authority from 2010. This will include school sixth form funding and colleges of further education which are currently administered by the Learning and Skills Council. There is very little information available at this stage on the implications of this transfer. An update will be brought to Cabinet in due course.

Other Specific Grants 39. The detailed information in respect of other specific grants is still emerging and further

work is required to assess the implications for the County Council. It is likely though that Social Care and Health will benefit from a new Social Care Reform Grant, a new specific ring fenced grant for adult care. Nationally this is worth £82m in 2008/09, £192m in 2009/10 and £237m in 2010/11 excluding the £2m the Department will top slice to facilitate regional implementation. The indications are that the County Council will receive £1.211m in 2008/09, £2.857m in 2009/10 and £3.549m in 2010/11. The White Paper “Our health, our care, our say” (2006) consultations demonstrated that people want increasing independence and inclusion in communities through early intervention and the promotion of well-being. A radical reform of social care is proposed making personalisation the cornerstone of adult social care, i.e. “every person receiving support in whatever setting, having choice and control over the shape of that support”. The new grant will help redesign and reshape systems to enable councils to deliver this transformation.

Council Tax 40. The MTFS has been developed on the basis of Council Tax increases of 4% in 2008/09,

3.5% in 2009/10 and 3% in 2010/11. The provisional settlement means that the County Council can continue to pursue that strategy whilst maintaining the principles of a good and balanced budget.

Overall Revenue Budget Summary 41. The MTFS approved by County Council included bottom line budget planning totals for

services. These have been updated to take account of the above together with the issues emerging from the service review process. The overall revenue budget position is summarised in Appendix 5 and the budget allocations arising from the Service Review process are detailed in Appendix 6.

42. The proposed approach will result in £1m in 2008/09, £4.8m in 2009/10 and £10m in

2010/11 being available to support emerging priorities, future demographic and demand led pressures and provide a cushion against the risks and uncertainties facing the authority in the medium term.

11

Capital Strategy

43. The Capital Strategy has been to set services capital budget targets that reflect their indicative share of unsupported borrowing but with a 5% ‘top slice’ to augment capital receipts and unsupported borrowing to fund the Corporate Priorities Programme.

44. Capital allocations from Government are still emerging. At this stage the indications are

that the County Council will receive £62m in 2008/09, £63m in 2009/10 and £59m in 2010/11 through a combination of supported borrowing and specific grant.

45. The latest capital receipts forecast reveals that there should be £44m over the plan

period 2008/09 to 2010/11. Taking account of unavoidable costs and earmarking of £20m there are estimated usable receipts of £24m. After taking account of already approved unsupported borrowing, the 5% top slice, anticipated receipts less the costs of existing commitments and projects a total of £11.2m is available for new projects. Further work is ongoing regarding the investment requirements associated with the Changing Lives programme consequently at this stage these figures do not reflect any sale proceeds or investment needs regarding Changing Lives.

46. The Capital Programme Officer Group (CPrOG) have reviewed and prioritised bids from

services for additional capital funding against agreed criteria. It is proposed that the bids are supported.

47. The bids from services, which total £10.988m (excluding considerations from Changing

Lives), are set out in priority order in Appendix 7. Also shown are ‘Invest to Save’ projects totalling £1.175m which if approved will be funded from savings.

Risk Assessment and Robustness of Budget 48. There are several key risks to the MTFS and budget:

• Costs of JE could being higher

• Savings not being achieved

• Spending exceeding budget/income falling short of budget 49. As indicated in paragraphs 19 to 23 above, the estimated costs for JE are provisional

pending completion of the moderation process. The Council has also received a number of equal pay claims and these are being considered as part of the overall strategy for job evaluation. The potential for increased costs for JE remains a key risk but it is expected that the costs will be contained within the funding strategy already agreed.

50. Failure to deliver the savings identified through Service Review will jeopardise the Council’s

MTFS and the delivery of the Strategic Plan. The robust process put in place by the Service Review Board for delivering these savings provides reassurance that this risk will be minimised.

51. With regard to the risk of overspending against budget, thorough budget preparation and detailed monitoring during the year coupled with the clearer accountability arrangements introduced this year minimises any risk with Joint Finance Units being able to identify any

12

concerns at an early stage, advise the corporate body and recommend measures to mitigate the impact. Budget monitoring reports are regularly considered by departmental management teams and by Scrutiny Committees and Cabinet on a quarterly basis.

52. The Corporate Policy Scrutiny Committee’s Budget Working Group has been asked to

consider the implications of the MTFS and 2008/09 budget strategy including the options for savings and spending pressures generated from the Service Review process.

53. The MTFS and budget has also been informed by the separate consultation events undertaken with residents and young people as outlined to Cabinet on 5 December 2007.

54. I also intend to build on the work done this year to strengthen the financial management

framework through further clarifying accountabilities for Members and managers and by providing training and other support to managers.

Conclusions

55. The underlying aim has been to set a good and balanced budget and I believe that the assumptions, processes and recommendations set out in this report demonstrate that this has been achieved in that it is focused on the medium term, supports the achievement of the Council’s priorities, takes account of feedback from consultation, is transparent and subject to scrutiny and maintains our financial stability.

56. Whilst the provisional grant settlement sets out a more favourable financial climate

compared to our earlier planning assumptions there are still some key financial challenges and risks facing the Council over the MTFS period. It remains important that Directorates deliver their agreed savings proposals and that we continue the progress we have made in ‘unlocking’ resources though the Service Review process.

Andrew Burns Director of Finance

13

Appendix 1 Equalities implications: At this stage in the development of the MTFS there are no specific equalities implications presented by this report. Legal implications: At this stage in the development of the MTFS there are no specific legal implications presented by this report. Resource and Value for money implications: The Resource and Value for Money implications are set out in the report. Risk implications: As outlined in paragraphs 48 to 54 of the report. Report author: Author’s Name: Sean Duncan Telephone No: (01785) 276345 Room No: Room 5 Eastgate Street

14

Appendix 2

Service Review Board Summary of Recommended Savings Options

Social Care and Health

Ref Summary of Review Options 08/09 £m

09/10 £m

10/11 £m

Older People

OP1 Transfer of a further 25% of in-house Home Care provision to the independent sector (Subject to Consultation)

0.450 0.450 0.450

OP2 Review of transport services to Day Care centres ( i.e. more efficient use without any detriment to service users)

0.100 0.100 0.100

OP3 Feasibility study of Day Care charges for transportation including maximisation of welfare benefits – potential income

0.080 0.080 0.080

OP4 Ensure the maximum level of income is recovered from service users eligible to pay through a critical examination of Fairer Charging processes across all SC&H client groups

0.100 0.100 0.100

OP5

Review ‘Welfare Rights and Access Developments’ including the maximisation of benefits for service users resulting in greater client contributions to services provided across all client groups

0.150 0.150 0.150

Full year effect of original savings from Changing Lives in 07/08 MTFS

OP6a Re-provision of all Residential Care Homes (Was subject to consultation and now changed as highlighted in core report)

5.600 5.600 5.600

OP7 Home Care - Transfer of 50% of in-house provision to Independent Sector (Subject to consultation)

2.330 2.330 2.330

OP9 Investments back into services to support new model of care and independent sector provision

-4.050 -3.850 -3.850

Learning Disability

LD1 Review of transport services to Day Service centres ( i.e. more efficient use without any detriment to service users)

0.150 0.150 0.150

LD2 Feasibility study of Day Service charges for transportation including maximisation of welfare benefits – Potential income

0.120 0.120 0.120

LD3a Learning Disability residential efficiencies 0.250 0.750 0.750

Physical Disability/ All Client groups

PD1 Review the rates for Direct Payment opportunities across all client groups

0.020 0.020 0.020

Community Services

CS1 Full year effect from 2007/08 management restructure 0.110 0.110 0.110 CS2 Modernisation of Registration – rationalising Sub-Offices 0.050 0.079 0.079

CS3 Registration - Introduction of Chip and Pin and e-payments 0.003 0.006 0.006

CS4 Registration - Income from charges for enhanced service for copy certificates

0.015 0.015 0.015

CS5 Additional efficiency savings from regional partnership working in Scientific Services

0.007 0.040 0.040

15

Children and Lifelong Learning


09/10 £m

10/11 £m

MF1 Increased fee income for HR advisory services 0.115 0.115 0.115

MF2 Joint Finance Unit to delete 2 posts and increase its fee income for traded services.

0.120 0.120 0.120

MF3 A post within ICT development will be funded from specific grant from 2008-09

0.050 0.050 0.050

MF4 Review of schools crossing patrols based on risk assessing individual crossing patrols, particularly at high schools

0.057 0.057 0.057

MF5 Review of schools crossing patrols based on risk assessing the need for individual crossing patrols where fixed crossing facilities exist

0.088 0.088 0.088

MF6 Increase in savings arising from full year impact of prior years savings proposals

0.773 0.911 0.911

MF7 Services have been asked to absorb non-pay related inflation for external contracts

0.424 0.858 1.303

MF8 Services are expected to absorb incremental drift through allowance for savings from turnover or alternative savings

0.700 1.400 2.100

MF9

All severance costs arising in 2007-08 can be financed from the under spend within the Directorate's approved budget. This will generate savings that would otherwise have been used to meet loan payments

0.400 0.400 0.400

MF10

The Directorate is embarking on a comprehensive review of management and administration overheads

0.250

0.250

0.250

LP1

General Sure Start Grant is used to support a range of short term specific projects. A number of the projects will cease with effect from 2008-09 and as a result the grant can be used to fund other eligible expenditure that is currently met by the County Council, thus maximising the use of grant

0.250 0.250 0.250

CD1 Reorganisation of the transport function will enable procurement savings through the development of framework

0.500 1.000 1.000

CS6 Transfer of "Front Office" operations to Corporate Call Centre in Registration Services

0.060 0.060 0.060

CS7 Service efficiency gain within office cleaning 0.009 0.009 0.009 CS8 Service efficiency gain within Community Safety 0.010 0.010 0.010 CS9 Central equipment centre efficiency savings 0.020 0.020 0.020 CS10 Rationalisation of Consumer & Benefits Advice service 0.070 0.070 0.070 CS11 Reduce level of activity in Equalities and social exclusion 0.024 0.024 0.024 CS12 Anticipated future savings to be identified from on-going work 0.000 0.156 0.332

CS13 Community Services severance costs off-set against savings (repaid over a 5 year period)

-0.050 -0.050 -0.050

Management and Support Services

SS1 Targeted reduction in locality and strategic services management costs

0.000 0.250 0.500

TOTALS 5.628 6.799 7.225

16


09/10 £m

10/11 £m

contracts as well as reducing spot purchasing especially in relation to Special Educational Needs transport

CD2 A comprehensive review of the Property Function including asset management and planning is currently being carried out and is anticipated to release significant capacity

0.500 0.500 0.500

AN1

The School Nurses and Occupational Therapists service currently provided is being reviewed in conjunction with Health Authorities. It is intended that the future costs of the services be borne by the dedicated school grant

0.507 0.507 0.507

AN2 Restructure of Assessment Team to delete one Senior Assessment Officer post within the team following retirement in August 2008

0.050 0.050 0.050

AN3

The Portage service is currently funded from the Count Council's budget. Flexibility of the General Sure Start Grant will enable the service to be funded from this grant source in future years. Headroom within the General Sure Start Grant has been created through the cessation of project work within the Early Years Team

0.240 0.240 0.240

AN4

Deletion of a vacant post within the Education Psychology service. This may impact on strategic work in relation to behaviour, bullying, speech & language and SEAL and reduced capacity for partnership working

0.056 0.056 0.056

AN5 It is proposed that the District support team be relocated from Keele to the Seabridge Centre improving service integration and contact with the community

0.060 0.060 0.060

AN6 Review of the management of the Education Welfare Service 0.000 0.055 0.055

AN7

The deletion of the vacant early implementer post in the Tamworth/Burton area. This post is no longer required due to the development of the District Trust Infrastructure and will not therefore impact on front line delivery of services

0.070 0.070 0.070

LAC1

A reduction in the vulnerable children’s budget reflecting a £1.2m saving from the original investment strategy and a further £1m through new proposals. Detailed proposals are currently being developed in the light of current demands being placed on the service. It is anticipated that this will include improving procurement through less spot purchasing and introducing framework contracts.

2.211 2.211 2.211

SI1

It is proposed to move to a system of commissioning consultants from schools and other agencies to support school improvement in some subject areas. This will enable a reduction in the SID establishment

0.150 0.150 0.150

SI2 Increased fee income for SID support services 0.050 0.050 0.050

SI3 A review of the level of administrative support across the division will remove 1 post from the establishment

0.010 0.010 0.010

SI4

The recent development to better integrate provision for care and education in early years through the Early Years Foundation Stage will create opportunities for a more efficient collaborative approach within the Directorate

0.080 0.080 0.080

17


09/10 £m

10/11 £m

DS1 One-off contributions from accumulated trading reserves in 2008/09, with an expected rate of return of 2.5% annually from 2009/10 onwards

1.500 1.000 1.000

DS2 Administrative review reducing the number of posts supporting the Directorate across Performance Management, policy support, PA support, communications, etc

0.105 0.105 0.105

CL1

A review of the cultural services divisional administrative support has taken place and efficiency savings have been realised. The service has been streamlined with duplication removed and lines of responsibility clarified

0.050 0.050 0.050

CL2 Community Library Service Review 0.120 0.160 0.160 CL3 Efficiency review of Bibliographic Service 0.050 0.050 0.050 CL4 School's Library Service increased fee income 0.030 0.030 0.030

CL5

The service is continuing to review the performance of all of its libraries. Where poor performance is identified then alternative arrangements are being evaluated. It is likely that this ongoing review will lead to further savings from 2009-10 and beyond.

0.021 0.021 0.021

BS1 This reflects the net savings generated by the review and re-structure of the former Resources Directorate Business Support Team.

0.500 0.500 0.500

YO1

A reduction in the contribution made by the County Council to the Youth Offending Service through looking for service efficiencies. Details have yet to be discussed across the partnership or finalised

0.090 0.090 0.090

ALL Additional savings identified as part of Service Review Board 0.441

ALL Directorate Savings – one off 2008/09 savings 1.523 0 0

TOTALS 12.141 11.544 12.689

Development Services Directorate

Ref Summary of review options 08/9 £m

009/10 £m

10/11 £m

Highways (H) H1 Review processing of Traffic Regulation Orders *

H2 Ongoing efficiencies from Partnership arrangements through management and administration review

0.115 0.230 0.230

H3 Additional efficiency saving of 2% on maintenance operational budgets (excluding street lighting)

0.420 0.840 1.260

H4 Saving through assuming no inflationary increase against new on-going MTFS investment in highways to replace one-off LABGI funding

0.034 0.068 0.102

H5 Network Management - enhanced income generation opportunities arising from various sources

0.406 0.406 0.406

H6 Reduction of uncommitted Local Transport Initiatives budget to protect the main maintenance budgets with the redirection of £150,000 to preventative 'Weather Maintenance'

0.350 0.350 0.600

18


009/10 £m

10/11 £m

H7 Re-configure the Staffordshire Highways service delivery platform through a complete review (options expected around February 2008)

*

H8 Explore synergies with Accord and County Grounds with regards to works done and the location of storage facilities

*

Road Safety (RS) RS1 Removal of shows and exhibitions budget 0.003 0.003 0.003 RS2 Review arrangements for pedestrian training 0.036 0.036 0.036

Transport and Planning Policy (TPP) TPP1 Transport unit – streamlined structures from review 0.050 0.050 0.050 TPP2 Passenger transport - Savings from annual tendering process 0.050 0.100 0.150 TPP3 Transport – reduced use of consultants 0.025 0.025 0.025

TPP4 Revision to subsidised bus routes with limited public use where communities affected have alternative bus routes

0.050 0.050 0.050

TPP5 Saving through assuming no inflationary increase against new on-going MTFS investment in highways to replace one-off LABGI funding

0.005 0.010 0.015

Economic Regeneration and Shugborough (ERS)

ERS1 Improved efficiencies through the co-location of Property and Economic Regeneration staff

0.028 0.028 0.028

ERS2 General reduction in non statutory Tourism activity and operating budgets

0.036 0.036 0.036

ERS3 Reduction in economic regeneration site maintenance staff and operating budgets

0.016 0.016 0.016

ERS4 Reduce the Sustainable Staffordshire budget 0.040 0.040 0.040

ERS5 Revision in the general marketing and promotional work for the Staffordshire Business Enterprise Network (SBEN)

0.010 0.010 0.010

ERS6 Saving through assuming no inflationary increase against new on-going MTFS investment in highways to replace one-off LABGI funding

0.016 0.032 0.048

ERS7 Reduced contribution to NE Staffs Regeneration Partnership 0.005 0.005 0.005 Development Control and Research (DC) DC1 Charges for pre-application planning discussions 0.012 0.012 0.012

DC2 The Government are currently consulting on proposals to increase planning fees by 25% from 1 April 2008

0.026 0.026 0.026

DC3 Increasing pro-active monitoring will increase current income levels

0.020 0.020 0.020

DC4 Explore recharging for external research work regionally * DC5 Rationalisation of European Policy Work 0.024 0.024 0.024

DC6 Reorganisation of GIS management arrangements 0.015 0.015 0.015

DC7 Business Process Re-engineering of legal services work linked to this service

*

DC8 Removal of vacant post 0.020 0.020 0.020 DC9 Rationalisation of delivery arrangements 0.020 0.020 0.020

DC10 Saving through assuming no inflationary increase against new on-going MTFS investment in highways to replace one-off LABGI funding

0.002 0.002 0.002

19


009/10 £m

10/11 £m

Environment and Countryside (EC)

EC1 Introduce charges for Districts and government agencies for services related to protection of the Historic Environment

0.025 0.025 0.025

EC2 Rationalisation of Historic Environment Service 0.030 0.030 0.030 EC3 Review of Country Park Service provision 0.023 0.023 0.023 EC4 Recycle funding from GreenArc project that has now stopped 0.010 0.010 0.010 EC5 Income generation from Forest of Mercia Innovation Centre 0.000 0.000 0.070 EC6 Income generation from Apedale wind energy 0.000 0.000 0.250 EC7 Savings from Apedale energy generation schemes 0.000 0.000 0.015

EC8 Revision of co-ordination and administration of Apedale Project

0.025 0.025 0.025

EC9 Manage Highgate Common as a Nature Reserve, rather than as a Country Park

0.000 0.000 0.044

EC10 Additional Income from administration charge for supply of Rights of Way information

0.010 0.010 0.010

EC11 Saving through assuming no inflationary increase against new on-going MTFS investment in highways to replace one-off LABGI funding

0.005 0.010 0.015

Waste (W)

W1 Procure new waste contracts (Household waste sites and landfill sites) with a different specification with efficiencies producing a lower cost

0.500 0.500 0.500

W2 Protecting peak opening hours of Household Waste sites through reviewing and re-profiling opening hours on days of lower usage

0.390 0.390 0.390

Organisation Development and Resources (OR)

OR1 Integration of Clarence Call Centre into the Corporate Contact Centre with consequential savings through economies of scale.

0.018 0.018 0.018

OR2 Deletion of BPR role with individual transferred into vacant corporate change role

0.036 0.036 0.036

OR3 Internal charging for Audio Visual work undertaken corporately 0.020 0.020 0.020 OR4 Improved utilisation of County Fleetcare 0.075 0.075 0.075 OR5 Reduce external consultancy support 0.020 0.020 0.020 OR6 Reduction in departmental storage requirements 0.006 0.006 0.006 OR7 Reduction in training budget by 10% 0.014 0.014 0.014

TOTALS 3.041 3.686 4.845

Strategic Core


09/10 £m

10/11 £m

ICT (I) I1. Staff efficiencies stemming from ICT infrastructure investment 0.030 0.030 0.030 I2. Range of minor ad-hoc measures against general ICT budgets 0.080 0.135 0.190

20


09/10 £m

10/11 £m

Legal (L)

L1 Recovery of the cost of conveyencing and other legal sale costs from capital receipts that legal work is associated with

0.130 0.130 0.130

L2 Review of legal costs associated with capital projects. 0.080 0.080 0.080

L3 Range of minor ad-hoc measures against general Law & Governance budgets

0.036 0.036 0.036

L4 Increase in assumed level of staff turnover for legal services 0.042 0.042 0.042 L5 Reduction in the bi-elections budget. 0.110 0.110 0.110 L6 Minor service efficiencies in the Information Governance Unit 0.020 0.020 0.020

Finance (F)

F1 The Authority has become more efficient in the risk management of its resources and it is considered that there is no longer a need for an earmarked central fund for risk issues

0.175 0.175 0.175

F2 Efficiencies stemming from a combination of greater use of technology and policy changes around procurement, invoice payment and income collection processes

0.050 0.050 0.050

F3 Streamlining the Financial & Procurement senior management team from 6 to 4 senior management posts off-set by some reinvestment in strengthening the Procurement Team

0.040 0.040 0.040

F4 Systems Thinking review of financial services provided centrally and across the organisation. Includes 2008/09 investment in capacity in order to deliver the intervention

-0.050 0.100 0.150

F5 Review of the legal support provided by County’s Insurers with a view to utilising more cost effective internal legal services

0.000 0.025 0.025

F6 Expand the schools insurance sickness absence scheme to external customers and review current arrangement e.g. introduce term time working for the Schools Insurance Team

0.050 0.050 0.050

F7 Evaluate the use of the audit ‘hired services’ budget and review audit areas other than those assessed as high risk

0.025 0.025 0.025

F8 Other minor savings expected to be achieved across Finance 0.010 0.010 0.010 Other Corporate Finance (OCF)

OCF1 Reduced external audit fees following updated risk based assessment by external auditors

0.010 0.010 0.010

OCF2 Reduction in corporate management running costs as a result of opportunities identified through a recent review

0.120 0.120 0.120

Chief Executive Office (CX)

CX1

Reducing District Partnership Officer's from 8 to 6 for 2008/09 with the potential to further reduce to 4 from 2009/10. For 2007/08 the DPO is playing a clear role supporting the roll out of the new LAA, which will reduce over the next 3 years. The County Council is also engaging with Districts through Adult Social Services and Children’s Trusts, leaving a much reduced future need for DPO’s specifically linked to individual districts

0.093 0.127 0.127

CX2

Revised approach to deliver equalities as the focus becomes Social Cohesion, including working with partners to enhance the County's equalities agenda and working with the various parts of the Council to advise on equalities issues

0.050 0.060 0.060

21


09/10 £m

10/11 £m

CX3

There has already been a staffing reduction within the HR Shared Service Centre of 6 FTE in 2007/08 through process efficiencies. There is potential through the Systems Thinking exercise for further efficiencies (estimate only though until the review is complete)

0.120 0.120 0.120

CX4 Review of external charges within the HR Shared Services *

CX5 General review of HR advisory functions in response to the changes in the wider organisational needs and structure

0.000 0.050 0.050

CX6 Occupational Health Unit streamlined admin & exploration of additional external income opportunities

0.025 0.025 0.025

CX7 Senior management review resulted in removal of a Deputy Corporate Director post within the Chief Executives Office

0.110 0.110 0.110

CX8 Further restructure of the Chief Executives Offices to release support service savings

0.048 0.048 0.048

Customer First (CF)

CF1 Corporate Contact Centre - reduction in available budget currently not committed

0.010 0.015 0.020

CF2 One-stop-shop - reduction in available budget currently not committed

0.009 0.014 0.019

TOTALS 1.423 1.757 1.872

*The option has been considered, but the financial impact has not yet been quantified

Options Rejected by the Service Review Board or withdrawn by Services


09/10 £m

10/11 £m

Social Care and Health

1. Review Day Care service model/providers and target a 5% reduction through newer more efficient models of provision

0.000 0.200 0.400

2.

Reprovision in-house Residential Care to suitable alternative care and accommodation e.g. supported living in the community. The basis of savings have been predicated on achieving 25% reduction in staffing. Impact for JE and estimated costs of severance have also been factored in

0.285 0.940 1.040

3. Review Service Model and Providers and target a 5% reduction in expenditure through newer more efficient models of provision

0.000 0.350 0.700

4. Assess impact on shared services of reduction in SCH staff (minimum of 4% of workforce)

0.000 0.100 0.100

5. Reduction in landlords Repairs and Maintenance in residential care establishments

0.400 0.650 0.650

Children & Lifelong Learning Directorate

6.

The Youth service is facing significant cost pressures arising from the loss of external funding, delays in implementing previously agreed service review initiative and structural changes. In the light of these pressures there are no proposals to make further reductions at this stage for 2008/09

22


09/10 £m

10/11 £m

7. Possibility of single staff occupancy in small libraries, subject to policy review on single staff occupation by SCC

0.000 0.120 0.120

8. Reduction in area social work posts (2) for Children with Disabilities

0.070 0.070 0.070

9. Reduction in Education Welfare Officers (2) 0.055 0.055 0.055 Development Services Directorate 10. Reduce footway preventative maintenance 0.300 0.300 0.300 11. Reduce carriageway preventative maintenance 0.300 0.300 0.300 12. Reduce reactive highways maintenance budget 0.300 0.300 0.300

13. Reduce Winter Maintenance coverage of network from 43% to 37%

0.300 0.300 0.300

14. Reduce under utilised subsidised bus routes 0.150 0.150 0.150 Strategic Core

15. SCC needs to decide whether it wishes to continue to roll out TRIM as a corporate records management solution, stopping could release these savings

0.000 0.100 0.100

16. Local Member Initiative Scheme – straight reduction of funding available to members annually

0.028 0.043 0.057

17.

Reduce Members Allowances through reducing either the amount of basic allowances, amount of SRAs (Special Responsibility Allowance), number of SRAs, or by a combination of the three. This could reduce the Council's ability to attract and retain high quality councillors.

0.013 0.020 0.026

18.

Reduce Emergency Planning Funding - cuts could be made to the amount of support bought in from the Civil Contingencies Unit. This could result in the CCU ceasing to be viable and may result in the function needing to be brought back in-house

0.015 0.025 0.028

19. Reduce funding for the Coroner Service through an expectation of greater efficiencies

0.002 0.002 0.004

20. Apply efficiency savings to Coroner Service to mitigate incremental pay rises.

0.002 0.004 0.006

21. Reduce or stop subscriptions/funding agreements with external organisations. SRB to more fully review opportunities here

0.000 0.021 0.028

23

Appendix 3 Service Review Board

Summary of Spending Pressures Social Care and Health


09/10 £m

10/11 £m

SC1 Impact of applying a standard inflationary rate of 2.5% on all services including Pay, Prices, Grants and income

3.830 7.760 11.790

SC2 Effect of the national 1% increase in Superannuation rates 0.650 1.320 1.990

SC4 A number of different client groups are subject to increases in excess of the Std inflation – Learning Disabilities (1.5%), Older People, Physical Disabilities and Mental Health (1.0%)

1.100 2.210 3.340

SC5 Full pressure of Adult Social Care price rises in 2007/08 0.140 0.140 0.140

SC6 Demographic changes in Older People 2.000 4.000 6.000

SC7 Effects of children to adults transition from 19 years in Learning Disabilities

2.500 5.000 7.500

SC8 Demographic changes in Physical Disabilities 0.500 1.000 1.500

SC9 Older People delay in implementing required saving plans 0.600 0 0

SC10 All Services, due to the Changing Lives agenda will notice savings.

-3.200 -6.400 -9.700

Total Pressures 8.120 15.030 22.560

Less funded through MTFS 3.252 6.689 13.656

Additional Pressures funded from Savings 4.868 8.341 8.904

Children and Lifelong Learning


09/10 £m

10/11 £m

CLL1 Impact of applying a standard inflationary rate of 2.5% on all services including Pay, Prices, Grants and income

3.339 7.460 11.218

CLL2 Effect of the national 1% increase in Superannuation rates 0.393 0.806 1.239

CLL3 The effect of any additional employee incremental rises. 0.700 1.400 2.100

CLL4 Schools staff premature retirement costs increase due to severance benefit changes

0.286 0.550 0.830

CLL5 Introduction of the Early Years foundation Stage will have an impact on the retirement costs. Unfortunately the true cost of this is not yet known

*

CLL6 Effect of replacing one off saving in Schools transport and providing for additional school days in 2008/09 only

0.670 0.470 0.470

CLL7 Impact of providing for CRB clearance for drivers/escorts in Schools transport.

0.080 0.010 0.010

CLL8 2006/07 savings yet to be achieved – department wide 0.724 0.724 0.724


Less funded through MTFS (0.246) 4.825 10.389


24

Development Services Directorate

DS1 Pressures due to inflation in excess of standard inflation 0.200 0.400 0.600

DS2 Highways network increase of 0.5% 0.150 0.300 0.450

DS3 Due to a number of pressures within Highways, the real terms buying power of the budget has reduced. Pressures include Health & Safety legislation, flooding remedial works, and verge damage.

0.250 0.500 0.750

DS4 Section 38 supervision income levels not sustainable past 2009

0 0.375 0.375

DS5 Winter maintenance increased pressures, as Cabinet rejected service cuts

0.300 0.300 0.300

DS6 Planning and Transportation pressures in excess of Std inflation

0.050 0.100 0.150

DS7 Apedale Energy centre increased running costs 0.030 0.065 0.065

DS8 Landfill demand increase, and rising costs of landfill tax. 2.277 3.985 5.710

DS9 Standard inflation 1.720 3.538 5.448

DS10 Following unsustainable contributions from Winter Maintenance reserves, this cannot remain past 07/08 financial year.

0.175 0.175 0.175

DS11 Additional national 1% increase in superannuation costs 0.150 0.300 0.450


Less funded through MTFS 3.699 7.345 11.131


Strategic Core

ST1 Sports Partnership contribution supporting Staffordshire bid for 2012 Olympics

0.010 0.010 0.010

ST2 Additional Union Officer required in light of increased demand i.e. JE, Changing Lives and Service review.

0.027 0.027 0.027

ST3 Other Corporate services general inflationary increases 0.017 0.031 0.046

ST4 Change team funding gap as a result of cessation of LPSA funding available effective 09/10

0.000 0.075 0.085

ST5 Cost of pay incremental rises 0.078 0.156 0.234

ST6 Cost of 2007/08 Pay award above budgeted inflation 0.025 0.025 0.025

ST7 Pressure from national 1% increase in pension costs 0.049 0.098 0.147

ST8 Inflationary increase and service transfer in Chief Executives Office

0.373 0.498 0.661

CXO Totals 0.579 0.920 1.235

ST9 Impact of rising Stoke Mortuary costs to Coroner Service 0.059 0.059 0.059

ST10 Inquest and Post Mortem cost increases effect on Coroner Service

0.019 0.019 0.019

ST11 Cost of pay incremental rises on Coroner service staffing budgets

0.002 0.004 0.006

25

ST12 General election in 2009/10 0.000 0.400 0.000


ST14 Full implementation of the outcomes of the review of member and democratic services

0.217 0.217 0.217

ST15 Cost of pay incremental rises in law and governance 0.042 0.084 0.126

ST16 Pressure from national 1% increase in pension costs in law and governance

0.024 0.048 0.072


ST18 Inflationary increases in law & governance 0.060 0.121 0.184

Law Totals 0.522 1.124 0.946

ST19 Incremental pay rises in Finance Directorate 0.035 0.060 0.083

ST20 Additional national 1% increase in pension costs 0.030 0.070 0.100

ST21 Reduction in leasing administration income 0.001 0.015 0.023

ST22 Actuarial Pension strain increases 0.002 0.002 0.002

ST23 Rising Council tax leaflet costs 0.005 0.005 0.005

ST24 Increase in budget needed to develop finance staff 0.025 0.025 0.025

ST25 Finance Directorate general inflationary increases 0.063 0.127 0.218

ST26 External income lost due to cessation of Fire Authority treasurer

0.025 0.025 0.025



Finance Totals 0.274 0.821 1.519

ST29 ICT incremental pay rises 0.055 0.110 0.165

ST30 ICT budget gap resulting from the 2007/08 pay award above budgeted inflation

0.025 0.025 0.025

ST31 ICT - additional national 1% increase in pension costs 0.044 0.088 0.132

ST32 ICT – general inflationary pressures 0.026 0.060 0.077

ST33 ICT funding provided in Medium Term Financial Plan from 07/08

0.600 1.200 1.200

ICT Totals 0.750 1.483 1.599 TOTAL STRATEGIC CORE Pressures 2.125 4.348 5.299 Less funded through MTFS 1.297 3.027 3.719 Additional Pressures funded from Savings 0.828 1.321 1.580

26

Appendix 4

Provisional Local Government Finance Settlement 2008/09 1. Introduction 1.1 The provisional 2008/09 Local Government Finance Settlement was announced

by John Healey the Local Government Minister on 6th December 2007. 2. Three- Year Grant Allocations – 2008/09-2010/11 2.1 Following extensive lobbying by Local Government, the provisional settlement

has provided us for the first time grant determinations for a three year period. The statistical data model that derives the basis of the grant has been frozen for the three year period, with estimations of the Taxbase and population figures being made. Three year grant allocations are welcomed as they allow Council’s to strengthen financial management and enhance the quality of forward plans. Council’s are able to commit to project funding for longer and the certainty of funding will potentially offer the opportunity to set three year indicative council tax levels.

3. Background 3.1 The announcement marks the start of a consultation period prior to the

announcement of the final settlement in January 2008. Local Authorities have been asked to submit their views on the provisional settlement by 8 January 2008.

3.2 All year-on-year comparisons are based on adjusting the final figures from last

year’s settlement to take account of changes in funding resulting from changes in service responsibility. This means a true like for like comparison can be made.

4. Grant Distribution System 4.1 The grant system that commenced in 2005/06 has continued into the period

2008/09-2010/11. Authorities Formula Grant is based on a “four – block model” with Formula Grant being the total of the sum of these four blocks.

4.2 Each authority’s grant is made up of the following four blocks:

Relative needs block - formulae similar in structure to FSS which attempt to measure the relative needs of an authority to provide services. Each authority’s RNF are expressed as a ratio of the total block. Resources block - A negative figure to reflect the fact that areas which can raise more income locally need less grant. Central Allocation – Distributed on a per head basis. Damping block – The block protects authorities who have a low increase in grant by there being a floor. Authorities above the floor contribute to the funding of the floor to keep it self financing.

27

5. National Headline Statistics 5.1 The key national headlines are as follows:

2008/09 Provisional

£m

% Increase

2009/10 Provisional

£m

% Increase

2010/11

Provisional

£m

% Increase

Total Aggregate External Finance (AEF)

70,408 4.0 73,484 4.4 76,671 4.3

Formula Grant

27,490 3.6 28,254 2.8 28,996 2.6

Business Rates (NNDR)

20,500 10.8

Revenue Support Grant

2,909 -28.4 24,001* 2.5 24,622* 2.6

Special Grants

46,322 3.9 48,580 4.9 50,930 4.8

* Details of business rate allocations are not announced at time of settlement; with totals of combined totals for RSG and NNDR being provided.

6. Staffordshire Headline Statistics

6.1 Staffordshire’s Formula Grant Allocation (FGA) for 2008/09-2010/11 is detailed

below. These provisional allocations are better than that assumed within the Medium Term Financial Strategy (MTFS). The MTFS assumed grant increases of only 1.9%, which was in line with the Chancellors announcements earlier this year. The table below shows this broken down into RSG and NNDR for 2008/09; however the breakdown between RSG and NNDR is not known at this stage for future years.

2007/08

Adjusted £ million

2008/09 Provisional

£ million

% Change

2009/10 Provisional

£ million

% Change

2010/11

Provisional £ million

% Change

RSG 17.464 17.537 0.4 N/K N/K NNDR 116.167 125.979 8.4 N/K N/K Total Formula Grant

133.631

143.516

7.4

150.562

4.9

157.520

4.6

6.2 The FGA County average increases for years 2008/09 – 2010/11 are shown

below

28

2008/09 2009/10 2010/11 Shire County Average % 5.4% 4.0% 3.8% Highest County increase % 11.8% 7.5% 7.1% Lowest County Increase % 2.0% 1.8% 1.5%

6.3 10 Shire Counties are at the 2% floor in 8/9: Bedfordshire, Buckinghamshire,

Cambridgeshire, Essex, Hampshire, Hertfordshire, Oxfordshire, Surrey, West Sussex, Wiltshire. The floor reduces to 1.75% in 2009/10 and 1.5% in 2010/11.

6.4 Top county increases for 8/9 are: Dorset 11.8%, Derbyshire 10.2%, Lincolnshire

9.8%, Nottinghamshire 9.4% and Norfolk 9.3%. 6.5 The table below shows how the Formula Grant has been built up over the four

blocks.

2008/09 Provisional

£ million

2009/10 Provisional

£ million

2010/11 Provisional

£ million

Relative Needs Amount 125.288 130.651 135.685 Relative Resources -65.010 -68.102 -71.174 Central Allocation 96.164 100.630 104.925 Floor Damping -12.926 -12.618 -11.915 Total Formula Grant 143.516 150.562 157.520

7. Major Changes to Grant Methodology 7.1 The government consulted on a range of changes to the methodology used to

allocate Formula Grant to Authorities for the coming three years. Alongside the settlement the government have issued a summary of the changes they have made. These are positive for Staffordshire and are a significant factor in explaining Staffordshire’s relatively high increase in FGA.

7.2 The most significant change for Staffordshire is the removal of the separate

formula damping within the Children’s and Younger Adult Relative Needs Formulae which have taken grant away from Staffordshire in previous settlements. This is a change we have argued for since they were introduced and must be welcomed. Some updating of data used in the Highways and Older People formulas has also benefited Staffordshire. The proposal to introduce a new indicator of visitor attractiveness which would have seen grant diverted from Staffordshire has not been implemented which is also to be welcomed.

8. Damping Methodology

8.1 Grant “floors” guarantee that no authority will get less than the floor increase in

formula grant support from central government. Separate values are for 4 types of authority. The “floor” will be paid for by reducing the grant of every authority above the “floor” for each class of authority. The table below shows the floor values for each class of authority.

29

Type of Authority 2008/09

% 2009/10

% 2010/11

% Education/Social Services authorities 2.0 1.75 1.5 Police authorities 2.5 2.5 2.5 Fire authorities 1.0 0.5 0.5 Shire Districts 1.0 0.5 0.5

9. Specific and Special Grants 9.1 Specific and special grants usually fund particular services or initiatives that are a

national priority. These grants are distributed separately from Formula Grant using a variety of methods. The table below provides a summary on the national allocation of the major grants:-

2007/08 adjusted £ million

2008/09 provisional £ million*

% Increase/ Decrease





Dedicated Schools Grant

28,031.6 29,137.6 3.9% 30,110.5 3.3% 31,356.1 4.1

Other Education

5,295.7 5,767.3 8.9% 6,533.1 13.3% 7,476.5 14.4%

Adults PSS

113.3 115.8 2.2% 244.8 111.4% 313.5 28.1%

EPCS 913.3 835.7 8.5% 920.2 10.1% 1004.2 9.2% Other 10,782.4 11,142.6 3.3% 11,624 4.32% 11848.2 1.9% Total 45,136.3 46,999 4.1% 49,432.6 5.2% 51,998.5 5.2%

10. Dedicated Schools Grant 10.1 Staffordshire’s indicative allocation for 2008/09 is £441.902 million. The 2008/09

provisional allocation is 2.9% more than the 2007/08 allocation in cash terms. The allocation reflects a per pupil increase of 4.9%. Allocations are based on DfES estimates of falling pupil numbers

11. Council Tax & Budget Capping

11.1 In his statement, Local Government Minister Mr. John Healey states “We expect

the average council tax increase to be substantially below 5% per year. We won’t hesitate to use capping powers for councils with excessive increases”

30

Appendix 5

MTFS Summary

2008/09 2009/10 2010/11

£m £m £m

Net Budget 372.692 390.236 405.478

Capital Financing 31.365 32.126 33.126

Contingency 2.043 2.043 2.043

Sub Total 406.100 424.405 440.647

Pressures/other funding issues

Job Evaluation

- on-going costs (unfunded) 8.400 10.900 12.300

- one off costs 5.400 5.600 5.800

Changing Lives

- Elderly - on-going 1.700 1.740 1.780

- Learning Disability - on-going 0.000 0.500 0.500

- Redundancies 3.500 3.500 3.500

SICT Infrastructure Investment 2.000 2.500 2.500

Sub Total 427.100 449.145 467.027

Other Adjustments

Stafford Accommodation (2.000) (2.000) (2.000)

JE Project Team Running Costs (0.500) (1.000) (1.000)

Pension Contribution (0.670) (1.169) (1.662)

Capital Receipts Interest (0.500) (1.000) (1.500)

Grant and Service Adjustments 12.097 12.097 12.097

Sub Total 435.527 456.073 472.962

Use of Reserves (9.600) (5.500) (2.000)

LABGI (3.500) (0.500) (1.000)

Sub Total 422.427 450.073 469.962

Grant (143.516) (150.562) (157.520)

Council Tax (279.948) (291.774) (302.631)

Headroom / (Shortfall) 1.037 (7.737) (9.811)

Service Review Targets 0.000 (12.500) (20.000)

Available to Support Corporate Priorities 1.037 4.763 10.189

31

Appendix 6

SERVICE REVIEW SUMMARY

Original

Allocation* Pressures Savings Revised

Allocation

£m £m £m £m

2008/09

Children and Lifelong Learning 125.384 6.438 (12.141) 119.681

Social Care and Health 156.871 4.868 (5.628) 156.111

Development Services 72.752 1.603 (3.041) 71.314

Strategic Core 26.181 0.828 (1.423) 25.586

Sub Total 381.188 13.737 (22.233) 372.692

2009/10




Strategic Core 27.911 1.321 (1.757) 27.475

Sub Total 395.072 18.950 (23.786) 390.236

2010/11




Strategic Core 28.603 1.580 (1.872) 28.311

Sub Total 412.081 20.028 (26.631) 405.478

* Note: Initial budget allocation approved by County Council in February 2007 excluding service review savings targets.

32

Appendix 7 Summary of Corporate Priorities Capital Bids

Summary of Bids £000 Rank Existing Projects - Revised Commitments

1,750

Previously accepted as high

priority PISCES (Costs associated with additional licences and equipment upgrades) New Bids C&LL - Vulnerable Children's Centres 1,291 1 (Transfer to children to smaller homes enabling more tailored care. Will generate capital receipts from sale of 3 childrens homes) C&LL - Display Energy Certificates 72 2 (statutory obligation from 6.4.08 to display energy certificates and undertake energy audits) C&LL - Building Schools for the Future 5,000 3 (costs of project team to prepare and submit bid) SC&H - Tamworth One Stop Shop 320 = 4 (Integrated Customer Access for SC&H with Tamworth Borough Council, C&LLL and voluntary sector. Main driver is improvement in customer services) C&LL - Non Schools Maintenance 2,310 = 4 (to mitigate the worst effects of the most urgent items of essential works (Priority D1 jobs) Corporate - Audio Equipment in County Buildings 100 6 (to update audio equipment in Council Chamber and oak Room - including webcasting) C&LL - Corporate Property Database 145 7 (To purchase new database software to combine all property information in a single corporate "state of the art" system) Total New Bids 9,238 Total Bids Requiring Funding 10,988

Invest to save projects have been received totalling £1.175m which if approved will be funded from savings:

Invest to Save Projects £000 DSD - Cannock Chase Visitor Centre 110 (Installation of a district heating scheme for the Cannock Chase Visitor Centre complex, utilising heather and/or wood harvested from the Cannock Chase Heathlands) DSD - Bollards Illumination 735 (Replacement of illuminated bollards with non- illuminated bollards in accordance with Dft prescribed criteria) C&LL - Building Management Systems 330 (Bid for "invest to save" funding in order to install modern Building Management Systems (BMS)) Total Invest to Save bids (to be funded from efficiency savings) 1,175

Documents

Item 4 Medium Terms Financial Strategy (MTFS) Report ...moderngov.staffordshire.gov.uk/Data/Cabinet...The Report attached from Andy Burns, our Director of Finance, looks at the Council’s