District Executive – 9th January 2009

8.Medium Term Financial Plan

Executive Portfolio Holder: / Councillor Robin Munday, Finance and Support Services
Service Head: / Donna Parham – Head of Finance
Lead Officer: / Jayne Beevor – Principal Accountant – Revenues
Contact Details: / (01935 462225)

Purpose of Report

1.To advise members of the Medium Term Financial Strategy and the current position on the MTFP (Revenue Budgets for 2009/10 to 2013/14).

Recommendation

2.That the District Executive:

a)note the current position;

Background

3.A report was made in October 2008 to the Executive on the progress on budget setting for 2009/10 and planning for the following four years. This report updates members of the current position.

Local Government Financial Settlement

4.We are now in the second year of the three-year CSR (Comprehensive Spending Review). The CSR allocated the financial settlement for 2008/09 and a provisional settlement for the following two years. An announcement was made on the 26th November 2008 of the final settlement for 2009/10. For SSDC the amount is £10,984,188. This is £133,193 increase on 2008/09 or 1.23%.

Council Tax

5.I have currently added a 2% Council Tax inflationary increase. Although inflation has been high it is expected over the next few months that inflation will decrease to a much lower level. In addition in accordance with the approved Capital Strategy 2% has been added to finance the capital programme. Therefore the overall increase is currently set at 4%.

MTFP – Budget Position

6.The table below shows the estimated additional expenditure required in future years, offset by increased income and savings identified;

2009/10
£’000 / 2010/11
£’000 / 2011/12
£’000 / 2012/13
£’000 / 2013/14
£’000
Base Budget / 19,734.9 / 19,848.0 / 20,295.2 / 20,838.6 / 21,397.5
Price Inflation @ 2% income inflation @ 4% / 53.1 / 57.9 / 59.4 / 60.8 / 62.4
Pay Inflation (including pensions and increments) / 645.4 / 662.6 / 823.0 / 677.0 / 681.0
Inescapable bids / 1,845.8 / 838.2 / 910.6 / 788.7 / 730.7
Risks currently included within balances / 0.0 / 400.0 / 400.0 / 400.0 / 400.0
Revenue Implications of Capital / (73.5) / 63.9 / 64.3 / 65.0 / 30.0
Corporate Plan growth/adjustments / (20.0) / 45.0 / 30.0 / 70.0 / 30.0
Releasing £3m capital p.a. / 150.0 / 150.0 / 150.0 / 150.0 / 150.0
Efficiency Savings / (1,370.9) / (15.0) / 0.0 / 0.0 / 0.0
Increased Income / (324.3) / 0.0 / 0.0 / 0.0 / 0.0
Other Savings / (255.3) / (60.0) / 0.0 / 0.0 / 0.0
Once-off Expenditure / (394.0) / (6.5) / 0.0 / 0.0 / 0.0
Total Budget Requirement / 19,991.2 / 21,984.1 / 22,732.5 / 23,050.1 / 23,481.6
The resources available to fund these proposals are as follows:
2009/10
£’000 / 2010/11
£’000 / 2011/12
£’000 / 2012/13
£’000 / 2013/14
£’000
Formula Grant / 10,984.2 / 11,127.8 / 11,350.3 / 11,577.3 / 11,808.9
Council Tax / 8,812.8 / 9,122.9 / 9,443.8 / 9,775.7 / 10,118.9
Use of balances / 6.5 / 0.0 / 0.0 / 0.0 / 0.0
Second Homes Income to LSP / 44.5 / 44.5 / 44.5 / 44.5 / 44.5
Total Income Available / 19,848.0 / 20,295.2 / 20,838.6 / 21,397.5 / 21,972.3
Net savings required / (143.2) / (1,688.9) / (1,893.9) / (1,652.6) / (1,509.3)

Savings Plans

  1. Directors were given targets within their themes to put forward savings ideas using the following criteria:
  • Increase income
  • Efficiency
  • Transfer of work to the voluntary sector

Of the total savings target of £563.3k a total of £635k has been found to date. A final report will be made to February District Executive outlining further savings.

Efficiency Agenda

  1. SSDC must produce 3% savings in efficiency plus ½% from working in partnership with our Somerset neighbours. All efficiency savings are used to balance the overall Medium Term Financial Plan. The table below details the Government & Somerset Partnership targets & estimated efficiencies for each year:

Financial Year / Target
£’000 / SSDC Estimate
£’000
2008/9 / 1,056 / 1,103
2009/10 / 1,087 / 1,371
2010/11 / 1,116 / 15

The current list of efficiency savings is detailed in Appendix A. Additional income and other savings are listed in Appendices B & C.

Inescapable Bids

  1. The current list of inescapable bids is outlined in Appendix D. A final update of inescapable commitments will be made in February 2009.
Corporate Plan Bids

10. A scoring matrix will be been used for 2009/10 to assist in the prioritisation of Corporate Plan Bids however the bids have not been included here as savings are still required to balance the overall budget.

Scrutiny Committee
  1. The Scrutiny Committee will consider this Medium Term Financial Report in January 2009. In addition to this a Scrutiny Commission has reviewed the current inescapable bids submitted. Their Comments are attached at Appendix E.
Redundancy Costs
  1. A fund of £500,000 was set up for voluntary redundancies and to date just over £500,000 per year has been saved in salary costs from the fund but the fund is now depleted. In the current financial climate it is unlikely that a further top up of this fund can be made. I have therefore applied to central government to capitalise some of the redundancies made this year to enable SSDC to continue to have a fund into 2009/10.

Next Steps

  1. A final report will be made to the Executive in February 2009 when the budget has been completed. This will include the results of the following work that is currently being carried out:
  • Further reviews of any vacant posts;
  • The results of the budget consultation exercise and the scoring of Corporate Plan Bids;
  • Further work on efficiency savings;
  • An update of requests for voluntary redundancies;
  • Further work on non-priority areas.