Report of the City Mayor

2013/14 Revenue budget and capital programmeExecutive summary

REPORT OF THE CITY MAYOR

TO THE CITY COUNCIL ON WEDNESDAY, 27FEBRUARY 2013

Subject: 2013/14 REVENUE BUDGET AND CAPITAL PROGRAMME

Recommendations:

Members are requested to:

1. Note and support the risk assessment of reserves and assumptionsmade in preparing the revenue budget for 2013/14, and accordingly approve a revenue budget of £233.664m;

1. Agree to accept the government’s offer of a council tax freeze special grant for 2013/14;

1. Approve in accordance with the formal resolution set out in Appendix 6:

a)a council tax requirement in accordance with section 31A of the Local Government Finance Act 1992 (LGFA 1992)

b)a basic amount of council tax and an amount for each valuation band in accordance with section 31B and 36 of the LGFA 1992

c)an amount of council tax for each valuation band in accordance with section 30 of the LGFA 1992

1. Approve the HRA budget for 2013/14 as set out in Part 2 ;

1. Request that each Assistant Mayor and Strategic Director monitor rigorously the implementation of the accepted savings and expenditure against budget on a regular basis, to identify and report to Finance and Budget Scrutiny Select Committee any alternative savings which may be necessary to compensate for any savings not achievable in full and to ensure that overall net expenditure is contained within budget, and for the Assistant Mayor and Chief Financial Officerto report monthly to Finance and Budget Scrutiny Select Committee on progress with the budget on a corporate basis;

1. Approve a capital programme of £118.792mfor 2013/14and the proposed sources of funding as set out in Part 3 and detailed in Appendix 9, and require all capital proposals to be referred to the Assistant Mayor for Finance and Support Services for approval to the detailed funding arrangementsprior to contractual commitments being made.

1. Approve the treasury management prudential indicators for 2013/14 to 2015/16 as set out in Part 4.

EXECUTIVE SUMMARY:

Economic Context

The economic recession of the last few years has seen a widely-acknowledged requirement for public sector expenditure to be reduced to offset the effects of the increase in borrowing that has been necessary to deal with the recession. Whichever party had taken office after the general election in May 2010 was mandated to reduce public sector expenditure, but the coalition government’s policy has been to reduce debt by a greater reduction in expenditure, as opposed to raising taxes. Accordingly, all government departments have experienced cutbacks following the Comprehensive Spending Review (CSR) in 2010. Local governmenthas suffered more than most other areas of the public sector.

The CSR announced plans to reduce local government expenditure by 28% over the four years 2011 to 2015. This would be front-loaded in the first two years with a near 10% reduction in formula grant in 2012/13 and a further reduction of almost 8% in 2013/14.

As a result, local government has seen the biggest reduction in government funding in living memory.

For Salford this has meant that savings of £40m were required in 2012/13, over three times the level of savings achieved by efficiencies in any recent year and equivalent to the cumulative savings achieved over the previous four years, and further savings of almost £24m in 2013/14. Forward projections show that potentially a further £40m will be required over the following two years.

While seeking to identify and continue to deliver further efficiencies wherever possible, the scale of the challenge has been such that it has been inevitable for cuts in services to be made to achieve a balanced budget.

Protecting the Council’spriorities - development of the budget 2013/14

Since June 2012 there has been concerted dialogue with members, strategic directors, staff, trades unions and key partners in developing the 2013/14 budget. Throughout these discussions, there has been careful examination of the full impacts of all proposals so that, in drawing up a balanced budget, members have been made aware of the consequences of their decisions upon residents, services and jobs. In such a challenging financial context, members have been clear that at the heart of these proposals, the council would seek to protect the most vulnerable wholive in the city and every effort has been taken to preserve or indeed invest incritical services.

Salford has always been at the forefront of the public sector reform agenda and it is clear that we will need to build upon our platform of efficiencies, neighbourhood reform and collaborative working with partners in the public, private and voluntary sector in responding to these challenges. In drawing up this budget, members have positively encouraged innovative solutions which have been service-led rather than jobs led, solutions where the council only delivers services where it is the right path to take for the customer not the council itself.

Impacts

When dealing with budget reductions on such a scale, there will still inevitably be large scale impacts upon the communities we serve. At Appendix 4 there is a detailed, line by line explanation of all new savings proposals to be delivered within the 2013/14 budget.

Service group proposals

Some of the significant implications from the savings programme will be:

(a)Customer and Support Services Service group/Office of the Chief Executive

The Customer and Support Services service group will reduce expenditure by a further £1.9m in 2013/14 which equates to a total reduction of £12m since 2011/12.

The 2013/14 programme for the Customer and Support Services service group will continue to build upon the solid foundations of the previous Think Efficiency programme which had created new centralised back office delivery models in areas such as administration, ICT, HR, customer services and finance. Average costs reductions (40%) across all back office services have now significantly surpassed the target levels set previously under the Think Efficiency model which had compared to private and public sector benchmarks. These reductions clearly present significant challenges for the organisation in ensuring there remains sufficient capacity for future development in key areas such as technology and organisational development, with significantly less resources the services have less flexibility to deal with peaks in workloads which is typical in this environment.Previous service reductionsin critical support areas such as customer services in previous years starkly demonstrated how such budget reductions could lead to a significant immediate deterioration in performance. Increased delays in the processing of housing and council tax benefit claims and a marked increase in call handling response times, have been the most notable impacts upon critical front line services and it has only been in recent months that this position has stabilised. With the impact of major changes in welfare benefits including the reductions in awards through the new council tax reduction scheme, no further budget reductions are proposed in 2013/14 in these service areas

New areas of development within these savings proposals include:

A review of all asset management resources across the council following the decision to centralise all property related resources from across the council into this service group

Restructure of regeneration and economic development resources again following the integration of these teams within the Chief Executive's portfolio

Additional challenging income targets in the area of insurance claims handling team building on the huge successes the council has achieved in this area since bringing back the service to 'in-house' delivery through the council.

The Service Group will again deliver significant reductions in areas such as property rationalisation and procurement and 2013/14 will again bring positive developments in these areas including;

Significant collaboration with local and national partners such as Salford Royal Hospital Trust, City West Housing Trust and Department and Work and Pensions in sharing some of the council's core administrative sites such as the former Crompton House site, Turnpike House and the Opportunities Centre in Pendleton. It is envisaged that such collaborative activity will not only bring significant financial benefits to the Council and it's partners but as importantly will lead to improved joined up customer services for the benefit of Salford residents as the council has already demonstrated through its nationally acclaimed Gateways Centre model.

It is clear from the wider budget savings programme of the council that this service group will also continue to support the delivery of an extensive procurement programme where, through effective contract management arrangements and the maximisation of collaborative opportunities to jointly procure with others, the council will continue to deliver large budget efficiencies in this area. It is currently estimated that this work will produce savings of approximately £1.7m.

Creating capacity through workforce reform

As a consequence of the savings proposals there will be around 150jobs lost in 2013/14, and the aim still remains to lose these posts by voluntary means and avoid the need for compulsory redundancies. Members have again made a clear commitment during this process to maximise the opportunities for people leaving the organisation where the post will provide redeployment opportunities for displaced members of staff and whilst there is still considerable work needed to achieve this, the council is confident it can build upon its successful track record in this area despite the huge challenges presented by the budget process. Positive negotiations have continued with trade unions in developing this approach and the council has committed to support all employees through training and career pathways to support movement of staff within the council. It is again anticipated that within 2013/14 savings will continue to be made through the reductions in costs in areas such as overtime and the use of agency staff, with the further roll-out of the internal staffing bank to assist drive down costs in these areas.

(b) Children’s service group

The Children’s service group will reduce net expenditure by £6.004m (9.5%) in 2013-14

This comprises £1.158m step up savings and £4.846m of new proposals.

Specialist Services

A reorganisation of the Early Intervention & Prevention service will be achieved through a proposed combination of efficiencies, including service reductions in speech and language support, parenting programmes, reducing commissioned programmes and changes to three satellite children’s centres. Two satellite centres are identified to be closed and one relocated. Services will be relocated to other major centres where they will be closer and more accessible to the local communities.

Targeting of specific government grants has enabled the funding of existing external contracts to continue in support of Family Support outcomes whilst releasing significant revenue savings in the process for the next two years.

Due to improvements made, over the past two years, in the quality of Safeguarding services and the reduction in Looked After Children numbers, levels of quality assurance required is under review.

Targeted Services

We are currently implementing the final year of a three year reorganisation of the Integrated Youth Support Service (IYSS).

Bringing together an integrated service using hubs for young people in the four localities will reduce the need for managing buildings. Universal youth provision delivered by the local authority will reduce in neighbourhoods and negotiations have begun with stakeholders to deliver a partnership youth offer with the voluntary sector that will become more targeted on neighbourhoods with most need.

Overall, the cuts will impact adversely on the ability for IYSS to deliver on the outcomes around health improvements for young people, early intervention in schools and capacity to respond to issues around anti-social behaviour as the service becomes smaller. The role of the local authority youth provision will become a much more co-ordinating role, ensuring standards and quality working to support the voluntary sector infrastructure.

A review of the SEN Transport Service has resulted in a reduction in the cost of SEN transport due to more effective route planning and improved contractual arrangements. This will be achieved by minor changes to routes which may lead to longer travel times in some cases.

A joint Educational Psychology service with Wigan and Bury has been implemented and has increased income earning potential. A Partial Traded Services Model is on target to generate the income specified for 2013/14 and also provides for increased opportunities for those who live in Salford and/or work on behalf of the families of Salford to access psychological support and training

Universal Services

As a result of the success of the School Provider Arm the implementation of setting to setting support is being rolled out to the Starting Life Well service. This may initially lead to some reduction in support for vulnerable children aged 0 – 5.

Commencing from September 2012 an alternative delivery model for the Music and Performing Arts Service has been commissioned through Salford Community Leisure and using self employed independent tutors. The outcome is intended to maintain the offer of additional music support to schools and children whilst having a different structure to deliver it.

Transformation

Improvements in the commissioning of services have resulted in more effective contractual arrangements with providers with no detrimental impact on the quality of provision. This, along with the reduction in the overall number of Looked After Children has resulted in significant efficiencies being achieved in this service area.

Further savings have been achieved from the recent integration of the Children’s and Skills & Work commissioning teams.

The Joint Outcomes Fund has been significantly reduced and will impact upon a number of voluntary sector providers that currently contribute to supporting the delivery of the Family Poverty Strategy. These providers will experience a loss in income; however, we are not aware that any particular provider relies solely on this funding. At this point it is difficult to determine where else they may experience funding reductions.

(c) Community, Health & Social Careservice group

The Community, Health & Social Care service group will reduce net expenditure by £7.8m, comprising £3.4m additional savings from previous decisions and £4.4m new savings.

It is difficult to make direct comparisons between the previous budgets and these proposals as the functions the service group is responsible for changed over the year. Community Services and Culture & Leisure moved out and Supporting People and Housing Services to Support Independence moved in. In 2013, Public Health moves to the council within this service group.

The service group continues to work to a strong set of political priorities in relation to increasing personalisation, improving health and wellbeing, building on the capacity of communities with a focus on prevention and early intervention. Work continues to get as much value for money by reviewing all service areas, redesigning and reshaping to protect direct service user delivery within the funding available. The budget proposals recognise that virtually all of our services are now commissioned and the new pathways of support for vulnerable adults are more geared to supplying information and advice building on local assets and networks of support, encouraging reablement, whilst protecting the most vulnerable.

Through the Joint Strategic Needs Assessment we identify and understand the needs of the population and through the commissioning strategies and plans we then work out the services that need to be available to those residents with the greatest need. With increasing demand for older people’s services 2010-2015 predicted at 4% per annum and 6% for people with learning disabilities and with less money, the approach has been to consider alternative ways of providing support, less reliant on buildings, having more locally available services, reducing unit costs and offering services in a different way for shorter but more intensive periods. This has meant increasingly that people are being asked to consider different types of provision such as technology rather than people, with some concern and anxiety about this approach.

Stronger, more resilient communities who are engaged and co-producing their own solutions are part of our changing approach, with staff engaged in establishing community groups which can continue under their own power. This has been challenging at a time of significant reductions in support staff in order to protect front line services.

Continued partnership work such as with NHS Salford, Salford Royal Foundation Trust, Greater Manchester West Mental Health Trust and AGMA is essential. Providing essential prevention and early interventions for whole communities and reducing inequalities through Health Improvement is critical. Changes in the NHS and new partnerships with GP commissioners to support vulnerable people and improve health and wellbeing are beginning and we are piloting much more integrated care for older people in Swinton and Eccles. In 2013 the Council becomes responsible for Public Health and, during 2013/14 the transition of these functions becomes reality. Most services in the Community, Health & Social Care service group are commissioned from independent, voluntary or key public sector partners.