Issue - items at meetings - Budget Update and Budget Strategies 2011-2012

Report of the Strategic Director Resources (to follow)

60.1 The Director of Finance introduced the report which had previously been presented to 14 December OSC, prior to the Local Government Finance Settlement announcement. A budget gap of approximately £30million was now identified and work is in hand to address this.

60.2 The 17 February 2011 Cabinet report is being prepared and it is recognised that the timing would affect the scope for scrutiny of the proposals. Feedback from Members on this report would be welcomed.

60.3 Budget setting was particularly complex this year and arrangements for certain specific grants were still awaited. Some would be rolled into the general formula grant, or moved to the dedicated schools grant, while others would remain separate funding streams or be discontinued. Budget-setting was anticipated to be less complex for 2012/13 and 2013/14

60.4 Asked about decisions on the Council’s reserves, the Director outlined the principles concerning the use of reserves. For example reserves could not be used as a ‘one-off’ measure without clear plans for future savings.  The Council had a responsibility to meet legal requirements and to set a balanced budget.  The table report paragraph 3.14 showed the reserves that were completely unallocated and the detailed position would be set out line by line in the final proposals.

60.5 Members expressed considerable disappointment that the Cabinet Member for Finance was not present to answer questions, in particular about the use of reserves (report paragraph 3.17); also that this report gave little opportunity for meaningful scrutiny.

60.6. Other local authorities had produced their budget books. Notwithstanding late information on grant funding streams, it was preferable for Members to work together as far as possible and delaying scrutiny was not helpful.

60.7 The meeting noted that, for the first time, more satisfactory budget scrutiny had been possible of the current year’s budget proposals. The settlement for 2010/2011 had been known earlier and more details were present to scrutiny in December 2009. The timescales for 2011/12 budget were tighter.

60.8. It was agreed to reconvene OSC at a suitable time.

60.9 Answering a question on the extent of budget changes that could be made following the local election, the Director said that with the exception of Council Tax, changes could be made by the appropriate decision-making body.  A new Cabinet would be able to make changes within the Council’s Budget and Policy Framework. More significant changes could be made with the approval of full council.

60.10 The Director of Finance answered questions on the flexibilities and legal requirements concerning the use of Council reserves, giving examples of the approach to decision-making within different scenarios.

60.11 Asked if the high-level screening of Equalities impacts (EIAs) of the proposals could be provided, including cross-cutting impacts of reductions in different service areas, the Director told that meeting that clarification of the process and summary information was planned to be published alongside the budget report.

60.12 Members asked questions about individual specific grants such as the aids support grant and short breaks for children with disabilities.

60.13 Chris Todd, Community and Voluntary Sector Forum co-optee welcomed the commitment to sharing the EIAs. However equalities implications needed thorough consideration. Those that were available were of little help in guiding decision-making he said. In the case of personalisation, the EIA did not consider the impact on individual service users, but rather on the Council’s budget. 

60.14 As regards front-loading of the budget reductions to 2011/2012, the Director of Finance replied that a more even spread over the 4-year period of the Comprehensive Spending Review had been expected. The Local Government Association had made representations about the challenge to local authorities in implementing the changes within the timescale. Nationally the overall reductions amounted to approximately 25% in all departments, with the exception of Health and Department for International Development.

60.15 Councillor Warren Morgan, Chairman of ECSOSC referred to the draft minutes at Appendix C and pointed out the concern at the low level of scrutiny that was possible on this year’s proposals, expressed by the Committee (minute 37.7). The £2.27 million Environment savings required was not an up-to-date figure.

60.16 ECSOSC was concerned that there should not be a reduction in the number of parking enforcement officers and had asked for more information on the funding of council-owned car parks. Car Club parking bay charges had been discussed in the context of increasing the take-up of sustainable transport. ECSOSC had asked that Car Clubs be added to the work plan.

60.17 The Commissioner Community Safety had outlined the savings in this report and the prioritisation of early intervention however there were unanswered questions on the further savings that would be needed.

60.18 Councillor Tony Janio Deputy Chair ECSOSC had congratulated officers in identifying savings thus far and giving reassurances as far as possible about the protection of frontline services. He told OSC that as a substitute member on budget CYPOSC he had called for an officer report on closer working with the third sector on services for children and young people.

60.19 Councillor Amy Kennedy, Chair of CTEOSC said the main budget impacts within the remit of the Committee appeared at this stage to relate only to Renaissance funding which had been prepared for, and supported employment. The Committee had asked for more detail of the future of supported employment services used by some 200 people, and the best use of the Castleham building, which was owned by the Council.

60.20 Chris Todd referred to Appendix F and said that CVSF was pleased to be co-opted to the Committee for discussions on the budget as it gave the Council an opportunity to hear from key stakeholders about some potential impacts of budget reductions. He said it would be helpful to know the scale of the impact of the additional savings which will be requiredand asked to what extent these were already known.

60.21 He stressed the importance of avoiding cuts to preventive services which would be a false economy in the longer term; and looked forward to closer working on decision-making, stating that discussions with CVSF had become ‘quieter’ around budget-setting time, when they should be getting ‘louder.’ Co-production should be right at the heart of the process, he said.

60.22 Contractual roll-overs carried significant risks in the view of CVSF, putting re-commissioning or de-commissioning in a difficult position later on.

60.23 CVSF welcomed avoiding cuts to the voluntary sector.  Contracting to the voluntary sector produced opportunities not always immediately apparent such as achieving better value for money by drawing in additional funding and contracts from various trusts and other bodies. These would otherwise would be lost to the City.

60.24 Chris Todd commented that it would be helpful to receive an update on the Prevention and Wellbeing Strategy referred to at ASCHOSC (appendix B minute 47.20).

60.25 The Director of Finance replied to queries on the proportion of savings proposed in the areas of Equalities and Communities which appeared to be relatively high compared with Human Resources (Appendix F 3a Environment and Community Safety.) 

60.26 Equalities and Communities had been reliant on short-term grant funding, assuming £450,000 of which was being lost.  The proposals showed £250,000 being replaced from core funding which would represent a net gain in resources from the Council’s budget (though not total resources) for Equalities and Communities.

60.27 Savings being generated under proposals for Human Resources took into account the prudential borrowing arrangements for implementing the new HR and Payroll system.

60.28 Clarification on issues raised about investment in car parks would be circulated to Members.

60.29 The Head of Scrutiny clarified that the CVSF report, Appendix F, was published here for the first time.

60.30 RESOLVED: That the Commission

(i) notes the draft minutes from the Overview and Scrutiny Committee Meetings and agrees to send these to Cabinet

(ii) Notes the CVSF response and agrees to forward it to Cabinet

(iii) Agrees on specific issues it wishes to raise with Cabinet based on O&S Committee minutes and the CVSF response, as minuted above.

(iv) Instructs officers to review the budget setting process for 2012/2013 with a view to improving the scrutiny process.

50.1    Councillor Mitchell the Commission Chairman said she had written to the Chief Executive asking for timely information on the whole budget proposals. She invited Cabinet Member for Finance Councillor Jan Young to introduce the Budget Update and Budget Strategies 2011/2012 and reminded the meeting that Strategy and Governance and Finance were the main areas for OSC to scrutinise.

50.2    Councillor Young said the report was taken to 9 December Cabinet and this was and opportunity for OSC to scrutinise the work to date. Views from Scrutiny would be taken into account in preparing the 2011/2012 budget proposals for consideration by full Council on 3 March 2011.

50.3    This would be the first time there had been no increase in Council Tax and a £3million Council Tax freeze grant had been confirmed. Officers were analysing details of the final Local Government Settlement announced yesterday. Reductions in the formula grant for 2011/2012 were broadly as expected post- comprehensive spending review, and detailed planning for the third phase of the successful Value for Money programme was in hand.

50.4    Proposals were being developed for further  savings of £10 - £20 million, for example by reviewing all contracts; bringing together services in the new Delivery Units and working closely with others to share costs, and protect staff whilst reducing expenditure.

50.5         Members asked questions and heard replies including from the Director of FInance:

a)  What are the Council’s total reserves?

Officers can send Members a link to the latest position for the end of March 2010. The current reserves are now being reviewed.

b) How does Systems thinking fit into budget-setting?

Systems thinking asks– is the Council’s interaction with members of the public adding the right value and can this be done more efficiently? Systems thinking  is not designed primarily to achieve savings but greater engagement  with staff and service users should be able to improve efficiency for instance in housing benefit and potentially in other service areas.

c) How would Communities and Equalities work be affected by these proposals as there appear to be cuts in funding for Community Development workers?

This work has relied on short-term grant funding especially LPSA Reward Grant which has now ended.  At present the assumption is that £250,000 of this funding would be replaced from core council budgets. A key budget principle is to protect as far as possible the contribution made by the community and voluntary sector. The effects of loss of short-term grant funding is an important area and is being analysed.

d) What discussions are happening with trades unions and what information is there on  ‘at-risk ‘staff ?

Discussions are continuing with Trades Union representatives in all departments and corporately.

e) Which grants are still ring fenced – for example will £800million announced nationally for short breaks for disabled children be used for this?

As regards specific grants the government is now generally removing ring fencing and very few grants will be left ring fenced. A new early intervention grant (which replaces previous funding streams) will not be ring-fenced. Officers are analysing the whole budget including formula grant, council tax and the few remaining ring-fenced grants to help advise Members in making choices on priorities. The Supporting People grant has been transferred to formula grant and at present it is expected to be protected. There are almost infinite combinations of options on which areas to protect, make savings or where to spend more.

f) Regarding a possible move to generally increase the length of contracts to 5 years – what is average length of contract now, and how many contracts have renewal clauses?

The Director set out the benefits and disadvantages of long term contracts and how contract are evaluated for renewal. She said contracts will be longer, where capital investment is sought such as private finance initiatives, and much shorter where flexibility is important.

g) Regarding Parking Services (agenda page 74) this report indicates savings of £90,000 from contract efficiencies, reduction in staffing levels and improved enforcement. How does this link with the approach to enforcement in the TBM report, item 49 (agenda page 25) which appears to cost over £500,000?

There is increased efficiency in enforcement but local authorities generally expected a reduction in penalty charge notices income as the schemes become established. Departmental officers would be asked for further information on approach to enforcement and ECSOSC may wish to have the matter referred to them.

h)         How is the reimbursement for concessionary bus fares calculated (see agenda page 52) ?

The budget assumes 5% additional spend in 2011/12. The reimbursement methodology had changed; the local bus companies had provided more data and some issues had now been raised with the Department of Transport.

i) Why are leaseholder service charges income budget set at a greater level than the actual charges? (agenda page 92)?

There are recent changes on how charges to leaseholders are calculated. Technical officers would be asked for a detailed reply and ASCHOC may wish to add this to their agenda.

k) Would it not make unnecessary work to track back the changes to the previous funding sources? Also as specific grants are not finalised yet, uninformed speculation is unhelpful.

Replying, the Cabinet Member said that the former specific grants were already known, but speculation was unhelpful until the full funding streams were clear.

l) What is the effect of the Council being on the grant floor when the specific grants are rolled into the formula grant?

The Head of Finance and Procurement said the formula grant is reducing by 13.3% so all grants rolled in are also reduced by that level unless specifically protected.

m)        Why has there been a rise in the valuation of the pension find compared with last year? 

The investments have been performing better and there has been a move from a link from Retail Price Index to Consumer Price Index. It is hoped that the percentage valuation will continue to rise. The fund is performing around average in comparison with other local authorities and more information is readily available.

n) What evidence is there of the sustainability issues taken into account in developing budget proposals? Would like to see more evidence of the Equalities Impact Assessments of the budget proposals and consideration of impact on communities such as ethnic minority groups or the disabled and people affected by mental health issues who would also be affected by changes to the PCT.

Many of the proposals are covered by existing EIAs or being considered as part of a service redesign. Further work is in progress to combine the information as the proposals develop. High-level equalities screening and existing EIAs can made available and these and sustainability issues can be drawn out in more detail at the O&S Committee meetings.

50.6    It was felt that using the Special Educational Needs DSG funding (agenda page 71) was a useful way to cover the statutory SEN assessment staffing cost savings.

50.7    The Chairman reminded the meeting that significant further savings would be needed and asked about the status of this report compared with the work still to be done. Councillor Mitchell asked how information could be tracked and presented to show how the budget was spent formerly and how it would be spent differently.

50.7    The Director said the report formed the first part of more work. It would be difficult to see what had happened to each individual grant to compare like with like.  However the approach would be to show for each service area how the budget would change irrespective of the previous source(s) of the funding; what was formerly spent and what spending was now planned.

50.8    Chris Todd said community and voluntary sector (CVS) was pleased to have the opportunity to be at the Commission meeting and hold open discussions on the budget proposals. The CVS fully supported efficiency savings and value for money principles as set out in the report and protection of the CVS was also welcome.

50.9    He said the Equalities and Communities Team seemed to be required to make a much higher proportion of efficiency savings compared with other services (agenda page 85). Communities were especially important to protect. Cuts as proposed would be a false economy.

50.10 In his view the CVS delivered considerable value for money both in financial terms and in social capital. The CVS delivered services, especially preventative services that the Council or other bodies would otherwise have to pay more for.

50.11 The CVS could help deliver services differently and had a very important role to play working with the council and other public bodies especially in the current economic climate.

50.12  New contracts with service providers needed to be brought forward in conjunction with the service provider, such as being co-designed, co-produced to see what more could be provided for less money, and not based on cost savings alone he said.

50.13  Chris Todd stressed that Equalities impacts Assessments were important particularly for those in most need who had to access to a number of different services and so may well be disproportionately affected by reductions in a number of areas. He asked what was the role of communities in carrying out these assessments?

50.14 There was a potential role for asset transfer of various types depending on the circumstances, to the community and voluntary sector. He gave an example such as Castleham Industries supported employment services.

50.15  The Cabinet Member said the CVS was highly valued and championed especially by Councillor Dee Simson, Deputy Leader of the Council and Cabinet Member for Community Affairs, Inclusion and Internal Relations. She said close working with the voluntary sector was important for delivering services more efficiently. Asset transfers could be considered together with the voluntary sector.

50.16 The Chairman was pleased that equalities impact assessments, one of the main recommendations from scrutiny of the 2009-2010 budget proposals was being acted on and looked forward to receiving more information on the EIAs.

50.17  The Strategic Director, Resources said Resources had a dual role in making savings in their own areas and supporting other areas making their changes for example Human Resources and IT. It is therefore very important that any savings in Resource Teams are timed so as not to rush implementing changes across the Council.  Consolidation, such as communications spend, would help drive out some costs through economies of scale. There was also a need to work more effectively and efficiently with partners across the city.

50.18 The Chairman thanked Councillor Young and the officer for speaking to the Commission.

50.19 RESOLVED 1) that the report be noted

2) That further information be requested as minuted above at 50.5(a), (g), (j) and (n)

3) That 1 February OSC receive comments from the O&S Committees to be incorporated into a single scrutiny response to the budget proposals.