budget report 2017/18 - rochdale.gov.uk · the revenue budget 2017/18 -2019/20 capital programme...

Rochdale BC

Budget Report 2017/18

Including : Provisional Revenue Budget 2017/18 – 2019/20 Provisional Capital Programme 2017/18 -2019/20 Council Tax 2017/18 Pay Policy Treasury Management Strategy Medium Term Financial Strategy

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Contents

1 Introduction 1

2 Part 1 : What we need to spend and how this will be funded

General Fund Revenue Account 1 Local Government Finance Settlement 2 Locally Generated Sources of Income 4 Central Government General Grants and Regional and Local 7

Pressures Budget Gap 10 Education Services Grant and Schools Funding 2018/19 – 2019/20 Provisional Estimates Medium Term financial Strategy Capital Programme

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3. Part 2 : Council tax, business rates and the accounting arrangements for this contained in the Collection Fund

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Collection Fund 2017/18 17 Recommended Council Tax 18 Business Rates 19

Appendices Appendix 1 : General Fund Summary Estimates 2017/18 – 2019/20

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Appendix 2 : Budget Assumptions 2017/18 – 2019/20 23

Appendix 3 : Savings Proposals summary 24

Appendix 4 : Capital Programme 2017/18 – 2019/20 26

Appendix 5 : Statement of Directorate Revenue Requirements 31

Appendix 6 : Pay Policy Statement 38

Appendix 7 : Treasury Management Strategy 43

Appendix 8 : Medium Term Financial Strategy 68

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1. Introduction

1.1 This report contains : the revenue budget 2017/18 - 2019/20 capital programme 2017/8 – 2019/20 Pay Policy Treasury Management Strategy Medium Term Financial Strategy 2017/18 – 2021/22

which are being recommended to Budget Council for approval by Cabinet.

1.2. This report is presented in two parts, as there is a requirement for all billing authorities to keep a separate Collection Fund Account to the main General Fund Budget. Part 1 deals with the budget requirements of Rochdale BC whilst Part 2 concentrates on Collection Fund issues.

2. What we need to spend and how this will be funded

2.1 Part 1 – District Requirements - The General Fund Revenue Account

2.1.1 The proposed budgets for 2017/18 to 2019/20 are set out at summary level at Appendix 1. The net funding requirement for 2017/18 is £196.031m, as set out in table 1 below:

Table 1: Net Funding Requirement

2017/18

£'000

Council Tax 76,840

Business Rates Retained 52,200

Revenue Support Grant 0

Business Rates Top-up Grant 49,401

General Grants 12,556

Collection Fund Surplus 4,359

Collection Fund Adjustment 675

Net Funding Requirement 196,031

2.1.2 The assumptions on which Directorate budgets are based are set out in Appendix 2 (the outcome of consultation on these with Corporate Overview and Scrutiny, Townships and the JCC is that the assumptions were considered).

2.1.3 The budget considers the latest projected outturn for 2016/17, which is currently forecasting an overall in year saving of £1.138m (£1.343m subject to approval of Budget Pressure Funding). The Council’s general

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balances will be £12m at 31st March 2017 and will support the risks within the proposed budget. Any final in year saving at the end of 2016/17 will be allocated to the Equalisation Reserve which has been established to fund the implementation of complex savings proposals and to smooth the impact of the funding gap.

2.1.4 Further information on budget risks is provided in a separate report to Budget Council. Members should consider the views of the Chief Finance Officer set out within the report with regard to the robustness of the budget and the adequacy of balances and reserves when determining the budget requirement.

2.1.5 The calculation of Council Tax (for District purposes) for Band D properties based on the expenditure level at provisional settlement was £178.857m as shown in Table 2.

Table 2: Proposed Budget and Council Tax for District Purposes as at Provisional Local Government Settlement

2016/17 2017/18

BudgetProposed

Budget

£'000 £'000 £'000 %

1 BUDGET REQUIREMENT 180,157 178,857 -1,300 -0.72%

2 Revenue Support Grant 39,273 29,812 -9,461 -24.09%

3 Business Rates Top-up Grant 25,803 30,135 4,332 16.79%

4 General Grants 9,312 9,363 51 0.55%

5 Business Rates Retained 30,918 27,673 -3,245 -10.50%

7 Net Requirements 74,851 81,874 7,023 9.38%

8 Adjustment re balance on Collection Fund as at

31st March

-2,921 -4,359

9 Collection Fund adjustment - -675

10 Amount to be precepted on the Collection Fund 71,930 76,840 4,910 6.83%

£ £

11 Council Tax for District Purposes 1,380.25 1,449.12 68.87 4.99%

12 Tax Base 2017/18 - 53,025

Tax Base 2016/17 - 52,144

Variation

2.2 Local Government Finance Settlement

2.2.1 The Provisional Local Government Finance Settlement for 2017/18 was announced in Parliament 15th December 2016. The provisional settlement confirmed the funding and spending power for Local Authorities. The Final Local Government Finance Settlement for 2017/18

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22ndwas announced on the February 2017. There have been no changes to the overall resources from that provided at Provisional Finance Settlement.

2.2.2 The proposals set out in the Provisional Settlement result in a net increase in resources of £1.731m available to the Council in 2017/18 compared to the budget assumptions at that time. The majority of the additional resources relate to a one off grant of £1.1m for Adult Social Care. Table 3 summarises the impact of the provisional and final settlement.

2.2.3 The Provisional Settlement set out the regional authorities who from 2017/18, would become the pilot regions responsible for 100% of business rates retention. This included a pilot for Greater Manchester. The figures contained in this report have been updated to reflect the pilot. There has been no impact on the financial position as the Government has made a “no detriment” commitment to those included in the pilots. However the resources indicate a change of £18.905m from the assumed budget to final settlement as illustrated at Table 3 and 3a. The main change relates to the removal of the public health grant from services budget which is now replaced with the additional business rates retained as part of the pilot.

Table 3: Impact of Provisional and Final Settlement 2017/18

Current

Assumed

Budget

2017/18

Provisional

Settlement

2017/18

Final

Settlement

2017/18

Difference

between

Assumed

Budget and

Final

Settlement

Reasons

for

Difference

£m £m £m £m See

Locally Generated Funding

Business Rates 31.489 27.673 52.200 20.711 2.3.1

Council Tax 76.108 76.840 76.840 0.732 2.3.2

107.597 104.513 129.04 21.443

Government Grants

Revenue Support Grant 29.812 29.812 0.000 -29.812 2.4.1

Business Rates Top-up Grant 26.319 30.135 49.401 23.082 2.3.1

New Homes Bonus 3.524 3.710 3.710 0.186 2.4.2

Adult Social Care Support Grant 0.000 1.113 1.113 1.113 2.4.3

Improved Better Care Fund 0.969 0.969 0.969 0.000

Section 31 Grants 2.353 2.353 5.546 3.193 2.3.1

Education Services Grant 1.518 1.218 1.218 -0.300 2.6

64.495 69.310 61.957 -2.538

Total 172.092 173.823 190.997 18.905

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Table 3a Difference between Current Budget Assumptions and Final Settlement 2017/18

Difference

£m

Public Health Grant funded from Business Rates Retained 17.174

New Homes Bonus - net impact of revised formula 0.186

Adult Social Care Support Grant 1.113

Council Tax increase 0.732

Education Services Grant reduction -0.300

18.905

Table 3b: Proposed Budget and Council Tax for District Purposes following Final Settlement announcement

2016/17 2017/18

BudgetProposed

Budget

£'000 £'000 £'000 %

1 BUDGET REQUIREMENT 180,157 196,031 15,874 8.81%

2 Revenue Support Grant 39,273 0 -39,273 -100.00%

3 Business Rates Top-up Grant 25,803 49,401 23,598 91.45%

4 General Grants 9,312 12,556 3,244 34.84%

5 Business Rates Retained 30,918 52,200 21,282 68.83%

7 Net Requirements 74,851 81,874 7,023 9.38%

8 Adjustment re balance on Collection Fund as at

31st March

-2,921 -4,359

9 Collection Fund Adjustment -675

10 Amount to be precepted on the Collection Fund 71,930 76,840 4,910 6.83%

£ £

11 Council Tax for District Purposes 1,380.25 1,449.12 68.87 4.99%

12 Tax Base 2017/18 - 53,025

Tax Base 2016/17 - 52,144

Variation

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2.3 Locally Generated Sources of Income

2.3.1 Business Rates and Top-up Grant

Business Rates

The Council in 2016/17 retained 49% of the business rates income collected from local businesses, with 50% being paid to Central Government and 1% to GM Fire & Rescue Authority.

Our Business Rates tax base is projected to be £53.256m for 2017/18, representing the value of Business Rates income we estimate will be collected from businesses. Each business rate tax payer account has a rateable valuation provided by the Valuation Office which is multiplied by a business rates multiplier, this increases each year and is currently set by the Government in the Autumn Statement.

The Council’s share of Business Rates income, equates to £52.200m in 2017/18 after applying business rates discounts such as charitable relief, empty property relief and small business rates relief.

Revaluation 2017

The revaluation of business rates will take affect from 1 April 2017. The revaluation is a revenue neutral exercise, therefore the total business rates bill will stay the same at a National level, after allowing for appeals. At the local authority level, overall bills will increase or fall depending upon revised rateable values. The overall rateable value for Rochdale Council is expected to reduce by 1.4% from the current RV list.

100% Business Rates Retention Pilot 2017/18

The Local Government Finance Settlement 2017/18 included the introduction of the 100% retention of Business Rates for identified regional pilot authorities, including Greater Manchester. The pilot authorities will each retain 100% of locally-raised business rates. In return Greater Manchester Authorities will forgo Revenue Support Grant (RSG) and the Public Health Grant. Authorities’ tariffs and top-ups will be adjusted to ensure these changes are cost neutral. The pilots will also test a number of potential elements of the 100% business rates retention scheme, including revised safety net arrangements.

The pilots will be without detriment to the resources that would have been available to individual authorities under the current local government finance regime (with any “detriment” payments funded from outside the Settlement).

The figures contained in this report at this stage reflect the move to 100% business rates following confirmation of the pilot for 2017/18 in the Final Local Government Finance Settlement. In order to account for the Council retaining 99% of the business rates it collects the following assumptions will be required: RSG and Public Health Grant will be removed as sources of funding

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Any business rates losses resulting from the reduction in rateable value will be offset by increased business rates top up grant

All other business rate relief grants will remain

The underlying assumption of the move to 100% business rates is that it will be fiscally neutral.

The impact of these changes in terms of loss of grants compared to retaining all business rates is illustrated at Table 3c;

Table 3c: Change in resources as part of the 100% Business Rates retention pilot from 2017/18

2017/18

Funding

Based on 2013

System

2017/18

Funding Based

on the New

System

£m £m

Revenue Support Grant 29.812 0

Public Health Grant 17.174 0

Business Rates Income 27.673 52.200

Business Rates Top-up 30.135 49.401

Section 31 Grants 2.280 5.473

Total 107.074 107.074

Business Rates Top Up Grant

Some local authorities collect and retain a lot more business rates than others, so the business rates retention scheme includes a system of top-ups and tariffs. Whether a local authority is a tariff or a top-up authority is determined by comparing the amount of funding required by an authority via the business rates retention system (its baseline funding level) and the amount it can raise in business rates locally (its business rate baseline).

If an authority’s business rates baseline is less than its baseline funding level, it receives a top-up grant from the government. If an authority’s business rates baseline is greater than its baseline funding level it pays a tariff to the government.

The tariff and top-up amounts were set in 2013/14 and in previous years have been increased in line with the business rates multiplier. However, in 2017/18 the tariff and top-up amounts have been adjusted to take account of the business rates revaluation 2017. For those authorities in the 100% Retention Pilot these have been adjusted further.

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The revised system for top ups will be fixed in autumn 2017 once the revaluation has had an opportunity to bed in. However, there is a risk for local authorities that the top up will not adequately compensate for appeals after this date, nor will it reimburse local authorities where large increases in rateable values are offset by reliefs such as in the case of Academy schools.

2.3.2 Council Tax

A Council Tax referendum limit of below 2.0% will be maintained for lower tier councils (those which do not provide Children’s & Adult Care Services). As in 2016/17 councils with responsibility for Adult Social Care will have the flexibility to charge a precept on their Council Tax to fund Adult Social Care Services.

The increase in the Council Tax base has generated £1.257m of additional income and was adjusted in the budget assumptions before notification of the provisional settlement.

The increase in Council Tax base has arisen from a review for 2017/18, the assumed level taking into account:

Increase in the property numbers;

Changes to take-up of the Local Council Tax support scheme and other discounts.

Adult Social Care Precept

The settlement offers the flexibility to charge an Adult Social Care Precept of up to an additional 3% on council tax for the next 2 years however no charge can be made in 2019/20, to maintain the 6% precept across the 3 years. The current budget assumes a 3% increase in the first two years and no further increase in 2019/20. The 3% Adult Social Care Precept in 2017/18 and 2018/19 will generate additional resources of £0.732m in 2017/18 and a further £1.506m in 2018/19.

The Local Government Finance Report and council tax referendum principles for 2017-18 will require Chief Finance Officers to provide information demonstrating that an amount equivalent to the additional council tax has been allocated to adult social care. This must be done within 7 days of their authority setting its budget and council tax for 2017-18. In subsequent years Chief Finance Officers will be required to confirm that this additional council tax continues to be allocated to adult social care.

The adult social care precept will be utilised to support Adult Care costs and forms part of the requirement to support social care to deliver at the current level of activity in a climate of rising costs. There is a commitment that this funding will be used to facilitate the GM priorities for Health and Social Care through the Locality Plan.

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2.4 Central Government General Grants and Regional and Local Pressures

In 2017/18 the Council is estimated to receive £1.299m more in government funding following the Final Settlement than currently assumed in the budget the majority relates to £1.113m from the Adult Social Care Support grant.

2.4.1 Revenue Support Grant (RSG)

The final settlement confirmed the RSG amounts announced in the 2016/17 Final Settlement under the Government’s multi-year funding offer. The figures were already assumed in the budget, but represent a continued significant reduction in RSG funding for the Council. Table 4 shows the RSG for 2017/18 to 2019/20.

Table 4: Revenue Support Grant

RSG

£m £m %

2016/17 39.273

2017/18 29.812 -9.461 -24.1%

2018/19 23.410 -6.402 -21.5%

2019/20 16.947 -6.463 -27.6%

Decrease

By 2019/20 the multi-year settlement indicates that RSG will reduce by £22.326m, a 56.85% overall reduction from the level of grant received in 2016/17.

Rochdale Council is part of the pilot to retain 100% of business rates from 2017/18. Although the Council is eligible for RSG, a grant allocation will not be payable in lieu of the retention of the additional business rates retained. This budget report assumes that this will continue until 2020/21 when all Councils are expected to move to 100% business rates retention.

2.4.2 New Homes Bonus (NHB)

The Government consulted on the New Homes Bonus scheme in September 2016 and the outcome of this consultation was announced in the Provisional Settlement. The overall impact of the changes to the NHB scheme is a reduction in the 2017/18 grant of £1.041m and a £1.526m in 2018/19.

The number of years that the NHB is being paid for will be reduced from the current 6 years to 5 years in 2017/18 and to 4 years from 2018/19. In addition the NHB calculation of the 2017/18 NHB has been amended to introduce a baseline for housing growth, set for 2017/18 as 0.4% of the previous year’s dwelling stock (total stock less long-term empty properties). Housing growth below this level in each authority will not receive NHB allocations.

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The Government also outlined the possibility of not paying NHB where authorities have granted planning permission on appeal. The details of this measure will be consulted on during 2017/18.

Savings from the NHB at a national level will be used to fund the new Adult Social Care Support Grant in 2017/18 only.

2.4.3 Adult Social Care Support Grant

The Adult Social Care Support Grant is a new funding stream which provides £241m nationally in 2017/18 as one off funding, and is being funded from changes to the New Homes Bonus and does not represent additional funding to local authorities.

There will be gainers and losers at an individual local authority level. Rochdale gains £63k in 2017/18, as shown in Table 5. However as the new grant is for one year only the local authority will have a real reduction in funding of £1.220m in 2018/19 from the continued loss of NHB grant. However, this loss of grant will in part fund the Improved Better Care Fund (see paragraph 2.4.4).

Table 5: Adult Social Care Grant compared to reduction in New Homes Bonus

£m

Adult Social Care Grant 1.113

Reduction in NHB Scheme -1.050

Net increase in funding 0.063

This new grant is to be allocated to Local Authorities based on the social care relative needs formula, so that all authorities with responsibility for social care receive a share of this funding. Rochdale’s allocation for 2017/18 is £1.113m and this allocation does not take into account the flexibility around precept increases – i.e. in relation to those who can raise more through the precept at 2% or 3%.

2.4.4 Improved Better Care Fund

The allocations announced earlier this year have been confirmed. Rochdale’s allocation is £0.969m in 2017/18, £5.361m in 2018/19 and £9.240m in 2019/20.

The allocation methodology uses the 2013/14 social care relative needs formula and allocates funding by taking into consideration the amount that can be raised by a local authority from the social care precept. The calculation of the Improved Better Care Fund assumes that councils will increase council tax for the 2% social care precept.

Note that Better Care Funding provided by the Government is not increased if an authority does not choose to increase its Council Tax by the adult social care precept.

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2.4.5 Multi-year Settlements

This is the second year of the four year funding settlement offered by Central Government. Central Government made a commitment to provide central funding allocations for each year of the Spending Review period, should councils choose to accept the offer and if they have published an efficiency plan. The Council accepted the Four-Year Settlement and the indicative figures provided in the 2016/17 settlement have been confirmed in the 2017/18 final settlement.

373 out of 383 authorities accepted the four- year offer. For those authorities who have not accepted the offer Central Government has only confirmed funding allocations for 2017-18. The funding allocations for these authorities in 2018-19 and 2019-20 will be revisited in due course as part of the annual settlement process covering these years and Central Government cannot guarantee that funding allocations for these authorities in these years will not be reduced or distributed on a different basis.

2.4.6 GM Waste Disposal and Passenger Transport levies

GM Waste Disposal Levy The waste disposal levy is calculated by a formula across Greater Manchester which takes account of recycling levels. If Rochdale Borough did not increase recycling at the same level as other GM Authorities there would be an impact on the waste disposal levy charged to our Council thus leading to an increased cost to our Council’s budget.

The Waste Disposal Levy assumed for in the MTFS is based on the latest projections provided by GM Waste Disposal Authority (GMWDA).

GM Passenger Transport Levy The Passenger Transport Levy (PTL) was subject to consideration/agreement as a consequence of the Passenger Transport Authority’s budget setting process in 2017/18 and subsequent years.

Further Considerations The GM Waste Disposal Authority (GMWDA) is seeking to mitigate the impact of a forecast large levy increase in 2017/18 by bring forward a savings programme which will see costs of disposing of the waste we generate reduced. Detailed plans are in an advanced stage, but to ensure that savings for future years are maximised an initial upfront investment of upto £77.7m may be needed in day to day (revenue) spend, as well as some longer term (capital) investment. The impact of the extra revenue spending requirement means that a headline average increase of 5.3% is being increased to an average 53.5%.

The original intention was to eliminate that increase at district level by switching resources within the GM Combined Authority, as the intention was to incorporate the GMWDA into GMCA from April 2017. That has now been delayed by 12 months. Working closely with GMCA it is however proposed to reduce the GMCA Transport levy by an equal cash amount for each district, thus delivering on the no local impact plan. Unfortunately that means that the 53.5% waste levy increase is shown alongside a 46.8% reduction in the Transport Levy. Those

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resources will then be switched back from GMWDA savings to GMCA Transport levy from 2018/19 to 2020/21.

2.4.7 Superannuation Rates The Pension Fund Contribution Rates payable to the Greater Manchester Pension Fund (GMPF) had been assumed in the budget for budget planning purposes to increase by 0.4% over the three years 2017/18 to 2019/20 i.e. 20.1%, 20.5% and 20.9% respectively. Further information provided by the GMPF has revised these rates to 20.9% over the three years. Detailed work has been undertaken with GMPF and the proposal is to amend the contribution rates to 20.5% over the three years 2017/18 to 2019/20 and to reduce the level of the pension provision for early retirement and redundancy by the GMPF to reflect our current forecast level of non-ill health early retirement and redundancy costs. There will be no net impact of these actions on the revenue budget in these years.

2.5 Budget Gap

2.5.1 A number of the assumptions contained in this budget have been reviewed, the provisional settlement has been announced and the council tax and business rates tax bases have been approved by the Planning & Licensing Committee. All these changes have impacted on the budget gap estimated for Rochdale Council as shown in Table 6.

2.5.2 The Savings Programme 2017/18 and 2018/19 identified group 1 and group 2 savings proposals which have been consulted upon from 15th September to 31st October 2016 and 24th November 2016 to 9th January 2017. Updated budget assumptions, changes from the provisional local government finance settlement and the Savings Programme have enabled a balanced budget to be proposed for 2017/18, £6.763m of which are of a one off nature which will need to be addressed in 2018/19. A full schedule of the savings proposals submitted for approval as part of the Revenue Budget 2017/18 is provided at Appendix 3.

Table 6 outlines the budget gap and how this has been projected to be met in 2017/18 from the savings programme and changes to assumptions following the final settlement and other information received.

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Table 6: Revenue Budget Gap

Ongoing One off Ongoing One off Ongoing One off

£m £m £m £m £m £m

Budget Gap as at Cabinet 12th September 30.417 - 8.416 - 38.833 -

Budget Assumptions

GMWDA - reduction in pressure for levy 1.128- - 1.176- - 2.304- - Demographic Growth 0.590 - 0.090 - 0.680 - Transport Levy increase assumption reduced from 1% to 0% 0.147- - - - 0.147- - Reduction in Budget Pressure fund 2.000- - 2.000- - 4.000- - Review of Corporate Budgets 2.500- - - - 2.500- - Other Budget assumptions 0.627- - 0.240- - 0.867- -

5.812- - 3.326- - 9.138- - Final Local Government Finance settlement

Adult Social Care Support grant - 1.113- - - - 1.113- Adult Social Care precept to 3% 0.732- - 0.797- - 1.529- - Changes to Education Services Grant/Funding Formula 0.300 - 0.250- - 0.050 - NHB - changes to scheme - updated for Settlement 0.186- - 1.065 - 0.879 -

0.618- 1.113- 0.018 - 0.600- 1.113-

Council Tax Baseline changes from original assumptions -2.025 - -0.186 - 2.211- -

Updated Budget Gap 21.962 -1.113 4.922 0.000 26.884 -1.113

Saving Proposals not requiring service consultation 11.440- 0.303- 1.438- 0.750- 12.878- 1.053-

- -

Saving proposals requiring service consultation - Group 1 3.313- - 0.374- - 3.687- -

- -

Saving proposals requiring service consultation - Group 2 0.446- - 0.023- - 0.469- -

- -

Total of Savings Proposals 15.199- 0.303- 1.835- 0.750- 17.034- 1.053-

Reserves movements - 5.347- - 0.350 - 4.997-

Revised Budget Gap at January 2017 6.763 6.763- 3.087 0.400- 9.850 7.163-

Recurrent Budget Gap 2017/18 -

Recurrent Budget Gap 2018/19 9.850

2017/18 2018/19 Total

2.5.3 Appendix 1 provides the current budget position for 2017/18 and provisional forecasts for 2018/19 and 2019/20. The current service budget requirement for 2017/18 is £196.031m met from resources totalling £196.031m giving a balanced budget position for 2017/18.

2.6 Education Services Grant and Schools Funding

2.6.1 Government has confirmed the £600m cut to the Education Services Grant (ESG), however the Education for All Bill, which would have removed councils' school improvement duties, is not progressing. The budget assumptions assume a reduction of £1.4m for ESG in 2017/18.

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This assumes transitional ESG funding for the period April to August (£0.850m).

The ESG Retained Duties Grant remains at similar levels to 2016/17 (£0.530m). This has been transferred to the DSG with Schools Forum agreeing for it be centrally retained by the LA to allow provision of the related services.

2.6.2 The Dedicated Schools Grant (DSG) is a separate ring-fenced grant which funds schools and education related issues. In 2017/18 this will be received in four blocks which are:

Early Years – funds provision of the early years free entitlement through a local formula together with support to providers.

Schools – funds primary and secondary schools through a local formula, for pupils aged 4-16. In addition some former Education Services Grant (ESG) funding has been transferred into this Block for 2017/18; this funds support to schools provided by the Local Authority (LA).

High Needs – funds both pre and post 16 pupils with special educational needs from a range of providers.

Central Schools – funds growth in pupil numbers in schools

2.6.3 Earlier in the year the Department for Education (DfE) agreed revised baselines for the split between the Blocks based on current spend. On 20th December 2016 the government announced the School Funding Settlement. A summary of the main issues is outlined below:

Schools Block Dedicated Schools Grant (DSG) –per pupil amount is to remain at the agreed 2016/17 levels – for Rochdale this is £4,815.35 per pupil

Early Years Block DSG includes funding for both 2 year olds and 3-4 year olds. The rates have increased for 2017/18; £4.42 per hour for 3-4 year olds (was £4.28) and £4.30 per hour for 2 year olds. There is also additional funding for the increase in hours offered to eligible working parents effective from September 2017.

High Needs Block – an additional £130m nationally has been added to this for an increase in child population 2-18 – for Rochdale this has given an additional £440k.

Protection for schools – The Minimum Funding Guarantee (MFG) is to remain at -1.5% meaning no school will lose more than 1.5% per pupil in funding.

Pupil premium rates and Universal Infant Free schools meals funding to remain at 2016/17 levels. Year 7 Catch Up and Primary PE and Sports Premium to remain.

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Table 7a: Dedicated Schools Grant (DSG) Funding for 2017/18

Total £m

Schools Block (final) 155.260 Early Years Block (indicative) 14.820 High Needs Block (indicative) 19.950 Schools Central Block ** 0.950

Total DSG 2017/18 190.980

** includes £0.530m funding from former ESG

2.6.4 The DSG funding includes around £27.6m of funding for academies which will be recouped by the Department for Education (DfE) and distributed to them directly.

2.6.5 Although the DSG is provided in f our blocks, LA’s in consultation with Schools Forum can agree switches between blocks based on local priorities and needs. After making adjustments agreed by Forum the following split between blocks is recommended for 2017/18.

Table 7b: Dedicated Schools Grant – Blocks Split 2017/18

Schools

£m

High Needs £m

Early Years £m

Central Schools £m

LA Retained £m

Total

£m DSG Settlement 155.260 19.950 14.820 0.950 190.980 Transfer Central Schools to Schools 0.950 -0.950 Centrally Retained – agreed by Schools Forum

-2.213 2.213

Early Years Centrally Retained – agreed by Schools Forum -0.725 0.725 Transfer to fund High Needs budget pressure -0.353 0.353

Total 153.644 20.303 14.095 - 2.938 190.980

2.6.6 The Government’s intention is to achieve maximum delegation of funding to schools, meaning that only in exceptional circumstances should funding be held centrally by the LA for the provision of central education services. It is however recognised that some funding has to be held centrally and the DfE have set out which services this relates to and the approval required for this. Schools Forum has agreed that £2.213m of funding be retained centrally by the LA for 2017/18. This includes a Growth Fund for increases in pupil numbers at both primary and secondary schools due to demographic pressures (£0.950m); a policy has been agreed for the allocation of this funding. In addition schools have agreed a transfer of funding to the High Needs Block in 2017/18 to fund budget pressures relating to an increase in the number of children with special educational needs.

2.6.7 Maintained schools continue to be able to agree funding to be de-delegated. Forum members from the primary and secondary sector agreed that £2.634m of items be de- delegated for 2017/18.

2.6.8 The Schools block provides funding to primary and secondary schools under a locally agreed formula. There are no national changes required

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to local formulae but the LA has again worked with schools to review the formula and ensure it is fit for purpose. It was agreed no changes were required for 2017/18. As in previous years any turbulence for individual schools will be smoothed by the nationally prescribed Minimum Funding Guarantee (MFG) calculation whereby no school will lose more than 1.5% per pupil combined with a locally determined cap where no school will gain more than 3% in their Individual Schools Budget.

2.6.9 The High Needs Block continues to provide funding for the LA to make additional provision for those children and young people with the greatest needs (often known as high need, low incidence special educational needs [SEN]). The High Needs Block funds provision in both mainstream, special schools and alternative provision (PRU) and the education of learners with learning difficulties/disabilities post 16 up to the age of 25.

2.6.10 The high needs block funding is based the revised baseline agreed with the DfE together with a share of the additional £130m provided nationally for an increase in the numbers of children 2-18 (£0.440m). With increasing numbers of pupils presenting themselves with special educational needs there are ant ic ipated budgetary pressures for the high needs block and schools have agreed a transfer of funding to support this area (£0.353m).

2.6.11 Funding for the 15 hours free entitlement for 3-4 year olds is given to providers based on a local formula which calculates an individual provider hourly rate. From September 2017 there is an increase in hours offered to eligible working parents. Funding for disadvantaged 2 year olds at a rate of £5.30 per hour is also included.

2.6.12 The Funding Settlement included an announcement that the government intends to introduce a national funding formula for schools from 2019/20. Further consultation on this commenced in December 2016 and will end in March 2017. Arrangements for changes to Early Years funding have been confirmed. Funding to providers will remain on a local formula but with more prescription from central government. Required changes to the local formula will be agreed under delegated powers.

2.7 2018/19 – 2019/20 Provisional Estimates 2.7.1 The provisional estimates for 2018/19 to 2019/20 set out the resources

the Council will receive in funding based on the best available information. In the provisional settlement announced on the 15th December 2016 the Government provided indicative Settlement figures for 2018/19 and 2019/20. The Local Government Act Report identifies that the estimates for 2017/18, 2018/19 and 2019/20 have a high degree of risk due to uncertainties regarding the collection of income from both Council Tax and Business Rates and due to further reductions in Public Sector Spending announced in the Chancellor’s Autumn Statement.

2.7.2 The provisional estimates for 2018/19 and 2019/20 are based on the indicative figures provided in the 2017/18 Final Local Government Settlement. On this basis and assuming we increase Council Tax by 4.99% in 2017/18 and 2018/19 and 1.99% 2019/20, we will have budgeted resources of £196.031m in 2017/18, £190.505m in 2018/19 and £190.138m 2019/20.

15

Table 8: Provisional Estimate and Council Tax 2018/19

Detail

2017/18

Proposed

Budget

2018/19

Provisional

Estimate

£'000 £'000 £'000 %

1 Budget Requirement 196,031 190,505 -5,526 -2.82%

Funded By:

2 Revenue Support Grant 0 0 0 0.00%

3 Top-up Grant 49,401 42,648 -6,753 -13.67%

4 General Grants 12,556 14,019 1,463 11.65%

5 Business Rates Retained 52,200 53,164 964 1.85%

6 Net Requirements 81,874 80,674 -1,200 1.47%

7 Less: Collection Fund Surplus 4,359 0

8 Less: Collection Fund Adjustment 675 0

9 Precept on Collection Fund 76,840 80,674 3,834 4.99%

10 Council Tax (District Purposes) £1,449.12 £1,521.43 £72.31 4.99%

Variation

2.7.3 Our estimates of the resources available to the Council in 2018/19 result in a short fall in funding compared to our estimates of the resources we need to deliver services. The ongoing deficit in 2018/19 is £9.850m. In 2019/20 the ongoing deficit increases to £15.381m, detailed in Appendix 1. This is an increase of £5.531m.

2.7.4 The 2018/19 and 2019/20 final level of savings will depend on the outcome of subsequent Finance Settlements.

2.8 Medium Term Financial Strategy

The Council’s Medium Term Financial Strategy (MTFS) is provided at Appendix 8. The MTFS will be reviewed and updated during the year to reflect the latest position in regard to the Council’s financial position, priorities and future plans.

2.9 Capital Programme

2.9.1 The Capital Programme for 2017/18 to 2019/20 takes into consideration the priorities of the Council and the resources available to the Council. The approach for setting the 2017/18 capital budget has followed the steps below:

Initial budget as provisionally approved at Budget Fixing Council (BFC) 24th February 2016.

Review of 2016/17 and 2017/18 schemes taking into account spend to date and previous re-phasing on these schemes.

Consideration of new schemes.

16

2.9.2 When a scheme is approved and the proposed spend is profiled across financial years, the scheme funding will be approved across these financial years and will therefore be considered as a priority in future years. Any reduction in the funding of these schemes will only be considered where contracts have not been entered into.

2.9.3 The Capital budget has been created in line with the Council’s priorities:

Place Plan – aligning capital investment to support the borough’s economic growth potential and continue to regenerate our town centres.

Corporate Plan – ensuring the borough maintains its high standard of quality building and public space.

Asset Strategy – aiming to hold fewer but more efficient assets, realising maximum value from the estate whilst safeguarding its staff, customer and other building users.

2.9.4 The Capital budget is funded from a number of sources; borrowing, capital receipts, and external funding & contributions. Borrowing has an implication for the Council’s Revenue budget as the Council has to make provision to repay the cost of borrowing. The Capital Programme for 2017/18 £46.519m and the provisional 2018/19 £43.258m and 2019/20 £22.174m, programmes are fully funded within the current budget assumptions. Appendix 4 provides details of each scheme. The funding available to the Council for Capital Schemes is detailed in table 9.

Table 9: Capital Programme 2017/18 to 2019/20 - Summary

Services 2017/18 £'000

2018/19 £'000

2019/20 £'000

Adult Services 2,047 2,047 2,047 Children's Services 14,282 7,664 5,256 Economy 17,100 25,020 7,204 Neighbourhoods 13,090 8,167 7,667 Public Health - 360 -

Total requirement 46,519 43,258 22,174 Funding Borrowing 11,100 8,920 11,104 External Grants & Contributions 18,681 11,678 9,270

Invest to Save 13,763 20,860 -

Capital Receipts 2,975 1,800 1,800 Total funding 46,519 43,258 22,174

2.9.5 The Capital schemes in Appendix 4 can be categorised as follows:

Annual Allocation - These schemes receive annual allocations either as a result of external funding, or because the Capital investment is essential for the Council to maintain current Service delivery or to meet statutory responsibilities.

17

Scheme started in previous years - These schemes are multi-year schemes that commenced during or before 2016/17.

New Scheme - These are new schemes or schemes requiring additional funding for the 2017/18 capital programme.

2.9.6 The Council is able to borrow resources for capital schemes. The revenue implications of this option are that for every £1m of capital expenditure there is approximately £61k per annum of revenue cost to repay borrowing, over a 40 year period. If borrowing is required over a shorter period, the annual cost is greater but the overall cost is less.

2.9.7 Borrowing of £11.1m is required to fund expenditure relating to specific schemes in 2017/18. The revenue cost of this is approximately £0.9m per annum.

2.9.8 The current forecast uncommitted Capital Receipts balance at the end of 2016/17 is approximately £6m, and further income is forecast to be received from 2017/18 onwards relating to the sale of surplus Council properties. The Capital Programme as shown in Appendix 4 confirms those capital schemes that are proposed to be funded from unallocated Capital Receipts.

3. Part 2 – Collection Fund and Calculation of Council Tax and Business Rates

3.1 Collection Fund 2017/18

3.1.1 As a “billing” authority the Council is required to maintain a separate Collection Fund. The only transactions dealt with through the Collection Fund relate to the collection of council tax income, national non-domestic rates and the payment of precepts.

3.1.2 The amounts of Council Tax are expressed per Band D property and are shown separately for each precepting authority – the Council, Police and Fire authorities.

3.1.3 Under Current Regulations billing authorities must estimate the annual surplus or deficit on the Collection Fund. They must then notify the relevant precepting authorities of the amount calculated as their share. The position in January and notified to the Police and Fire Authorities estimated that the Collection Fund will be in a surplus position of £5.017m as at the 31st March 2017. The Council’s share of this forecast Collection Fund surplus as at 31st March 2017 is £4.359m. This will impact on the Council’s General Fund budget for 2017/18.

3.1.4 Table 10 shows the calculation of the Council Tax for district purposes and the amount to be precepted on the Collection Fund by the Police and Fire Authorities. A comparison with 2016/17 is provided.

18

Table 10: Calculation of the Council Tax

2016/17 2017/18

£ £ £ %

1 District Requirements 1,380.25 1,449.12 68.87 4.99%

Precepts

2 - Police 157.30 162.30 5.00 3.18%

3 - Fire and Rescue 58.78 59.95 1.17 1.99%

4 Total 1,596.33 1,671.37 75.04 4.70%

PreceptCouncil Tax (Band D)

Increase

3.1.5 The Council Tax Base takes into account a bad debt provision and new and decreased assessments. The overall estimated collection rate assumed in the calculation has been increased to 97.0% (95.8% in 2016/17) to reflect current collection performance.

3.1.6 The increase in the Police and Crime Commissioner precept for 2017/18 was approved as £5 for a Band D property, in line with the flexibility granted by the Government in the Referendums relating to Council Tax Increases Report 2017/18.

3.1.7 The Greater Manchester Fire and Rescue Authority has approved a 1.99% increase in its precept for 2017/18.

3.2 Recommended Council Tax 3.2.1 The Council Tax recommended for 2017/18, including the Police and Fire

precepts, is £1,671.37 for Band D properties. The tax for individual bands is shown in Table 11, below:

Table 11: Recommended Council Tax per Band

Band 2016/17 2017/18

£ £ £ %

Band A 1,064.22 1,114.24 50.02 4.70%

Band B 1,241.58 1,299.95 58.37 4.70%

Band C 1,418.95 1,485.66 66.71 4.70%

Band D 1,596.33 1,671.37 75.04 4.70%

Band E 1,951.07 2,042.79 91.72 4.70%

Band F 2,305.81 2,414.20 108.39 4.70%

Band G 2,660.55 2,785.62 125.07 4.70%

Band H 3,192.66 3,342.74 150.08 4.70%

Increase

Council Tax Levels

19

3.3 Collection of Business Rates

3.3.1 The amount the Council is required to collect in business rates in 2017/18 is £53.256m. The Council is required to pay 1% of business rate income to the Fire and Rescue Authority of the amount of Business Rates that the Council collects from local businesses.

Table 12: Distribution of Business Rates

£m %

Central Government 0.000 0%

GM Fire and Rescue Authority 0.560 1%

RBC Business Rates Retained 52.200 99%

RBC Business Rates Renewable Energy 0.496

RBC Total Business Rates 52.696

Total Collection 53.256

2017/18

3.3.2 Any growth or loss in Business Rates is managed through the Collection Fund with any surplus or deficit on the Collection Fund being distributed to in the following financial year.

3.3.3 The Department of Communities and Local Government (DCLG) has been notified of the intention to continue the Business Rates Pool for Greater Manchester plus Cheshire East and Cheshire West and Chester in 2017/18, and the Pool has been confirmed in the Final Settlement. The purpose of pooling business rates across the individual Authorities is not intended to alter individual Authorities income levels but to retain any levy that might be payable by certain of the Authorities to Central Government. Any sum gained, after applying the agreed allocation to the levy authorities, would be retained by the pool for investment within Greater Manchester (GM) and other non-Greater Manchester Authorities involved in the pool.

3.3.4 The Local Government Settlement 2017/18 included the introduction of the 100% retention of Business Rates for identified regional pilot authorities, including Greater Manchester. The pilot authorities will each retain 100% of locally-raised business rates. In return Greater Manchester will forgo Revenue Support Grant (RSG) and the Public Health Grant. Authorities’ tariffs and top-ups will be adjusted to ensure these changes are cost neutral.

The detail of the changes to tariff and top-ups have been finalised with the pilot areas confirmed in the final settlement. The Government will also make changes to secondary legislation to confirm the new shares of business rates income and safety net thresholds.

20

APPENDIX 1GENERAL FUND SUMMARY ESTIMATES 2017/18 - 2019/20

SERVICE 2017/18 2018/19 2019/20

£'000 £'000 £'000

1 Adult Care 55,786 57,558 59,703

2 Childrens Services 60,885 60,315 59,197

3 Economy 11,154 16,753 16,898

4 Neighbourhoods 55,068 46,617 46,969

5 Resources 4,363 4,544 4,607

6 Public Health and Wellbeing 21,898 21,776 21,764

7 TOTAL 209,154 207,563 209,138

8 Finance Control (Note 1)-857 -3,496 -348

9 Contingency (Note 2) -830 1,559 1,573

10 SERVICES SUB TOTAL 207,467 205,626 210,363

11 Budget Pressures Fund 0 0 0

12 Saving Proposals -4,646 -5,594 -4,844

13 TOTAL REQUIREMENTS 202,821 200,032 205,519

14 Contribution To/(From) Reserves/Balances -6,790 -77 0

15 NET EXPENDITURE REQUIREMENTS 196,031 199,955 205,519

16 BUDGET REQUIREMENT 196,031 199,955 205,519

RESOURCESLocally Generated Funding

17 Council Tax -76,840 -80,674 -82,279

18 Business Rates Retained -52,200 -53,164 -54,148

19 Collection Fund Surplus -4,359 0 0

20 Collection Fund adjustment -675 0 0

21 TOTAL LOCALLY GENERATED FUNDING -134,074 -133,838 -136,427

Government Grants22 Revenue Support Grant 0 0 023 General Grants -12,556 -14,019 -17,858 24 Business Rates Top-Up Grant -49,401 -42,648 -35,853 25 TOTAL GOVERNMENT GRANTS -61,957 -56,667 -53,711

26 TOTAL RESOURCES -196,031 -190,505 -190,138

27 BUDGET REQUIREMENTS 0 9,450 15,38128 One year only savings 40029 UNFUNDED REQUIREMENT 0 9,850 15,381

22

Appendix 2

Budget Assumptions

Area of Budget 2017/18 Assumption

2018/19 Assumption

2019/20 Assumption

Council TaxGeneral Increase (For Planning Purposes2018/19 and 2019/20)

1.99% Increase

1.99% Increase

1.99% Increase

Adult Care Precept 3% Increase 3% Increase 0% Increase

Total Council Tax 4.99% Increase

4.99% Increase

1.99% Increase

Revenue Support Grant* 24.1% Decrease

21.5% Decrease

27.6 % Decrease

Business Rates (NNDR)* 10.5% Decrease 3.2% Increase 3.6% Increase

Top Up Grant* 16.8% Increase 3.2% Increase 3.6% Increase

General Grants 0.2% Increase 14.6% Increase

34.7% Increase

Settlement Funding Overall Impact

7.9% Overall Decrease



Pay 1% Increase 1% Increase 1% Increase

20.5% 20.5% 20.5%

(0.8% Increase)

(0.0% Increase)

(0.0% Increase)

Prices** 0% 0% 0%Discretionary Fees & Charges 5% Increase 5% Increase 5% Increase

Underlying Waste Disposal Levy 4.6% Increase 0.5% Increase 1.6%

IncreaseUnderlying PTA Levy 0% Increase 0% Increase 0% Increase

* Pre 100% Retenetion** Prices – Contractual arrangements and other significant inflation issueswill be considered on a case by case basis.

Superannuation Contribution Rate

23

Appendix 3a

Saving proposals requiring service consultation - Group 1

Recurrent One off Recurrent One off

£m £m £m £m

AC-2017-013 STARS Increased Productivity 0.225

AC-2017-302 Changes to Adult Care charging policy 0.270 0.045

AC-2017-314 Review of staffing structure in Adult Care Commissioning Team 0.031

AC-2017-315 Review Mental Health staffing arrangements 0.153

Total Adult Care 0.679 0.000 0.045 0.000

CS-2017-004 Reduction in Assistant Director support budget 0.061

CS-2017-015 Reduction in Emergency Duty Team budget 0.040

CS-2017-016 Rationalisation of the Adoption and Fostering Service 0.114

CS-2017-017 Reduction in Business support 0.160

CS-2017-018 Reduction in Edge of Care Budget provision 0.050

CS-2017-021 Review of Fostering and Adoption Service 0.040

CS-2017-022 Safeguarding Unit reduction in staffing 0.024

CS-2017-055 workforce development staffing changes 0.015

CS-2017-303 Remodelling of the Education Welfare Service 0.060

CS-2017-304 Proposed cessation of Mobile Play Team 0.044

CS-2017-305 Rationalisation of the additional funding for Child & Adolescent Mental Health Service 0.350

CS-2017-306 Reshape of Children's Social Care delivery 0.200 0.150

CS-2017-307 Restructure of Youth Offending Service 0.080

CS-2017-308 Remodel and Review the Contact Service 0.070

CS-2017-309 Review of funding for Play Schemes 0.024 0.016

CS-2017-316 Proposal to rationalise the Play and Childcare Development Team 0.000 0.050

CS-2017-317 Remodel of the Common Assessment Framework (CAF) Team 0.046

CS-2017-318 Rationalise the staffing establishment of the Commissioning/Placement Team 0.022 0.000

CS-2017-319

Rationalisation of support to the Rochdale Borough Safeguarding Children Board (RBSCB)

aligned to changes in legislation 0.030

Total Children's Services 1.430 0.000 0.216 0.000

EC-2017-103 Reductions in staffing across Planning and Building Control 0.062

Total Economy 0.062 0.000 0.000 0.000

NH-2017-027 Street Lighting Team Restructure (Inc. Oldham) 0.029

NH-2017-032 Communications Team Restructure 0.027

NH-2017-310 Proposal to review the Legal Advice: Welfare, Debt and Housing Support 0.085

NH-2017-311 Review of Community Centre grant funding 0.060

NH-2017-321 Restructure of Strategic Housing Service 0.083

NH-2017-322 Facilities Management Restructure 0.015

NH-2017-323 Restructure of Environmental Management Service 0.105

NH-2017-324 Rationalisation of Enforcement activity across the Council 0.050

NH-2017-325 Neighbourhoods Business Support Team resturcture and rationalisation 0.086

NH-2017-326 Management Information Systems Team restructure 0.128 0.013

NH-2017-327 Restructure - Corporate Policy, Performance and Improvement Team 0.047NH-2017-328 Rationalisation of Township staffing structure 0.049NH-2017-329 Almagamate and restructure Projects and Highways Teams 0.075

NH-2017-330 Restructure of the ICT Systems Team 0.041 0.100

Total Neighbourhoods 0.880 0.000 0.113 0.000

PH-2017-313 Removal of Buy with Confidence Scheme 0.035

N/A Public protection post 0.015

Total Public Health and Wellbeing 0.050 0.000 0.000 0.000

RS-2017-331 Proposal to reconfigure the Revenues & Benefits Services 0.080

RS-2017-332 Proposal to reconfigure Finance Services 0.030

RS-2017-333 Workforce and Organisation Development Restructure 0.102

Total Resources 0.212 0.000 0.000 0.000

Overall Total 3.313 0.000 0.374 0.000

Economy

Neighbourhoods

Public Health and Wellbeing

Resources

Saving Proposal Ref Area of Budget: 2017/18 2018/19

Adult Care

Children's Services

24

Appendix 3b

Saving proposals requiring service consultation - Group 2

Recurrent One off Recurrent One off

£m £m £m £m

AC-2017-340 Re-design of Prevention Services 0.077 0.023

Total Adult Care 0.077 0.000 0.023 0.000

CS-2017-018 Reduction in Edge of Care Budget provision 0.039

CS-2017-346 Review of Practice Improvement 0.020

CS-2017-347 Restructure of Children's and Adult's Occupational Therapy Services 0.022

Total Children's Services 0.081 0.000 0.000 0.000

NH-2017-032 Communications Team staffing reduction 0.027

NH-2017-343 Community Group subsidies 0.028

NH-2017-345 Review of Library Services 0.058

NH-2017-348 Review of mangement arrangements in the Library Service 0.069

Total Neighbourhoods 0.182 0.000 0.000 0.000

RS-2017-349 Review the Finance Services Structure (Finance Services) 0.035

RS-2017-350 Review the Finance Services Structure (Revenues and Benefits Services) 0.071

Total Resources 0.106 0.000 0.000 0.000

Overall Total 0.446 0.000 0.023 0.000

Neighbourhoods

Resources

Saving Proposal Ref Area of Budget: 2017/18 2018/19

Adult Care

Children's Services

25

Appendix 4

STATEMENT OF SERVICE CAPITAL PROGRAMME REQUIREMENTS

SERVICE 2017/18 Estimate £000

2018/19 Estimate

£000

2019/20 Estimate

£000

1

2

3

4

5

Adult Care

Children's Services

Economy

Neighbourhoods

Public Health and Wellbeing

2,047

14,282

17,100

13,090

-

2,047

7,664

25,020

8,167

360

2,047

5,256

7,204

7,667

-

6 TOTAL 46,519 43,258 22,174

26

Appendix 4 Provisional Capital Programme 2017/18 to 2019/20

CAPITAL PROGRAMME 2017/18 TO 2019/20Directorate Scheme Name Category 2017/18 2018/19 2019/20 2017/18 2018/19 2019/20 2017/18 2018/19 2019/20 2017/18 2018/19 2019/20 2017/18 2018/19 2019/20Adult Services Disabled Facilities Grant Annual Allocation 2,047 2,047 2,047 - - - - - - 2,047 2,047 2,047 - - -

Children's Services Devolved Formula Capital Annual Allocation 498 498 498 - - - - - - 498 498 498 - - -

Children's Services New Place Planning Annual Allocation 11,818 5,200 2,792 - - - - - - 11,818 5,200 2,792 - - -

Children's Services Schools Capital Condition Programme Annual Allocation 1,966 1,966 1,966 - - - - - - 1,966 1,966 1,966 - - -

Economy Heywood South/Junction19 New Scheme - - - - - - - - - - - - - - -

Economy Asset Development Fund New Scheme 1,000 1,000 1,000 - - - 1,000 1,000 1,000 - - - - - -

Economy Town Hall Square/River Reopen Phase II New Scheme 890 1,530 1,580 890 1,530 1,580 - - - - - - - - -

Economy Rochdale Town Hall Restoration New Scheme - - 3,024 - - 3,024 - - - - - - - - -

Economy Drake Street - Phase II New Scheme 110 890 - 110 890 - - - - - - - - - -

Economy East Lancashire Railway New Scheme 600 - - 600 - - - - - - - - - - -

Economy Commercial Investment Fund New Scheme 10,000 20,000 - - - - - - - - - - 10,000 20,000 -

Economy Rochdale & Littleborough Flood Relief Scheme New Scheme 1,600 1,600 1,600 1,600 1,600 1,600 - - - - - - - - -

Economy Town Centre East Whole Life Costs New Scheme - - - - - - - - - - - - - - -

Economy Rochdale Market Scheme started in previous years 2,250 - 2,250 - - - - - - - - - - -

Economy Rochdale Town Hall & Town Hall Square Scheme started in previous years 500 - - 500 - - - - - - - - - - -

Economy Town Centre East Scheme started in previous years 150 - - 150 - - - - - - - - - - -

Neighbourhoods Coroners' Service accommodation New Scheme 100 - - 100 - - - - - - - - - - -

Neighbourhoods Burglary Reduction Scheme Annual Allocation 100 100 100 100 100 100 - - - - - - - - -

Neighbourhoods ICT Infrastructure Refresh Programme Annual Allocation 250 250 250 250 250 250 - - - - - - - - -

Neighbourhoods ICT Programmes (Staff) Annual Allocation 500 500 500 500 500 500 - - - - - - - - -

Neighbourhoods Townships Capital Programme Annual Allocation 400 400 400 400 400 400 - - - - - - - - -

Neighbourhoods Highways - Potholes initiative New Scheme 978 - - - - - 800 - - 178 - - - - -

Neighbourhoods Highways Flooding Infrastructure New Scheme 900 800 800 - - - 900 800 800 - - - - - -

Neighbourhoods Gateway Schemes New Scheme 75 - - - - - 75 - - - - - - - -

Neighbourhoods Gully Replacements New Scheme 125 - - - - - 125 - - - - - - - -

Neighbourhoods Housing Standards Fund Annual Allocation 800 800 800 800 800 800 - - - - - - - - -

Neighbourhoods Replacement Parks/Street Machinery Annual Allocation 120 120 120 120 120 120 - - - - - - - - -

Neighbourhoods Rights Of Way Annual Allocation 80 80 80 80 80 80 - - - - - - - - -

Neighbourhoods Upgrade Play Equipment Annual Allocation 75 75 75 75 75 75 - - - - - - - - -

Neighbourhoods Vehicle Replacement Programme Annual Allocation 700 700 700 700 700 700 - - - - - - - - -

Neighbourhoods

Vehicle Replacement Programme - Refuse Collection

Vehicles New Scheme - every 6 years 1,630 - - - - - - - - - - - 1,630 - -

Neighbourhoods Number 1 Riverside Energy Efficiency New scheme 90 - - - - - - - - - - - 90 - -

Neighbourhoods Waste Bin Replacement Programme Annual Allocation 125 125 125 125 125 125 - - - - - - - - -

Neighbourhoods Asset Management Group Annual Allocation 1,750 1,750 1,750 1,750 1,750 1,750 - - - - - - - - -

Neighbourhoods Local Transport Plan Annual Allocation 2,249 1,967 1,967 - - - 75 - - 2,174 1,967 1,967 - - -

Neighbourhoods Clearance & Empty Properties New Scheme 500 500 - - - - - - - - - - 500 500 -

Neighbourhoods Kirkholt Investment Scheme started in previous years 1,543 - - - - - - - - - - - 1,543 - -

Public Health Link4Life equipment Scheme started in previous years - 360 - - - - - - - - - - - 360 -

TOTAL 46,519 43,258 22,174 11,100 8,920 11,104 2,975 1,800 1,800 18,681 11,678 9,270 13,763 20,860 -

Capital Programme Requirement

£000Prudential Borrowing

£000Capital Receipts

£000

Government Grants and External Contributions

£000Invest to Save

£000

27

Appendix 4

Adult Care Capital Programme 2017/18 to 2019/20

No SCHEME NAME SUMMARY AND KEY OBJECTIVESBudget2017/18£'000

Budget2018/19£'000

Budget 2019/20£'000

1 Disabled Facilities Grants (DFGs)

The legislative framework governing DFGs is provided by the 'Housing Grants, Construction and Regeneration Act 1996'. Since 1990, local authorities have been under a statutory duty to provide grant aid to disabled people for a range of adaptations in their homes.

2,047 2,047 2,047

Total 2,047 2,047 2,047

Children’s Services Capital Programme 2017/18 to 2019/20

No SCHEME NAME SUMMARY AND KEY OBJECTIVESBudget2017/18£'000

Budget2018/19£'000

Budget 2019/20£'000

1 Devolved Formula CapitalSchools will develop and commission individual schemes to improve condition and suitability within their buildings with guidance and approval from the Council. 498 498 498

2 New Place PlanningProvision of additional school places to meet statutory duty through a programme of works combining internal remodelling, new build or demountable classroom units. 11,818 5,200 2,792

3 Schools Capital Condition ProgrammeDevelopment of a programme of works to resolve major condition and improvement issues in school buildings in line with the Council's Asset Management Strategy and Local Policy Statement.

1,966 1,966 1,966

Total 14,282 7,664 5,256

28

Appendix 4

Economy Directorate Capital Programme 2017/18 to 2019/20 No SCHEME NAME SUMMARY AND KEY OBJECTIVES

Budget2017/18£'000

Budget2018/19£'000

Budget 2019/20£'000

1 Heywood South/Junction19

South Heywood Area Wide Improvement Programme proposals for a new link road and network improvement from the M62 junction 19 through Heywood to Pilsworth, which will create the opportunity for delivering investment in housing and employment growth.

- - -

2 Asset Development FundTo create jobs and build the local economy by buying properties/developing properties. £1m was also allocated in 2016/17. 1,000 1,000 1,000

3 Town Hall Square/River Reopen Phase IIThe completion of the high quality public realm around the Town Hall to enhance the setting with a possible focus on Rochdale's cooperative heritage. 890 1,530 1,580

4 Rochdale Town Hall RestorationCreating a successful, well-loved public realm, befitting of the Town Hall and wider conservation area, helping to attract a greater number of visitors and residents to the town centre.

- - 3,024

5 Drake Street - Phase IIThe scheme aims to work with businesses and property owners to restructure the mix of uses, improve infrastructure and connectivity, increase footfall and promote independent retail and increased town centre living in the area.

110 890 -

6 East Lancashire Railway (ELR)

The scheme is to support ELR extension into Castleton to connect direct rail access to mainline giving accessibility to visitors from across northern England together with investment at Heywood station. The ELR mainline project will be a landmark heritage attraction for the Borough with significant physical and economic benefits for regeneration of Castleton District centre.

600 - -

7 Commercial Investment Fund

To implement the objective contained within the Council's Asset Strategy by enabling the Council to invest in property to secure a financial return by way of revenue income. "To manage the income-generating assets to improve yields and financial return, to secure the assets’ value as an investment, making a defined contribution to the Council’s financial strategies. The Council will aim to improve the overall financial yield of the portfolio by reducing its management costs and improving its investment profile".

10,000 20,000 -

8 Rochdale & Littleborough Flood Relief Scheme

The River Roch catchment is the main river network in Rochdale Borough and is vulnerable to extensive flood risks affecting communities, businesses, town centres and infrastructure including power, rail and roads. The Environment Agency has identified the River Roch catchment as one of their regional priorities for their capital investment programme and propose a series of flood storage areas and improved defences to reduce the risk of serious flooding for over 1000 homes and businesses. The Council will part fund the improvement.

1,600 1,600 1,600

9 Town Centre East Whole Life Costs Construction of the Rochdale Riverside scheme is due to start in 2017 and be complete in 2019.

- - -

10 Rochdale Market To provide a permanent outdoor market and indoor market in Rochdale town centre. 2,250 -

11 Rochdale Town Hall & Town Hall Square Improvements to the Town Hall and surrounding public space to support the use of the building as a visitor attraction and heritage asset. 500 - -

12 Town Centre EastFunding for various projects in Town Centre East to deliver the Town Centre East (Genr8) scheme. 150 - -

Total 17,100 25,020 7,204

29

Appendix 4Neighbourhoods Directorate Capital Programme 2017/18 to 2019/20

No SCHEME NAME SUMMARY AND KEY OBJECTIVESBudget2017/18

£'000

Budget2018/19

£'000

Budget 2019/20

£'000

1 Coroner's Service accommodation To make alterations and improvements to the accommodation of the Coroner's Service. 100 - -

2 Burglary Reduction SchemeImplement alleygating schemes and gating orders on alleys to reduce the number of burglaries and improve neighbourhood safety. 100 100 100

3 ICT Infrastructure Refresh Programme

To refresh, on a rolling programme the ICT estate. To remove the need for individual services & directorates to hold funds related to ICT equipment. Preventing purchasing of non-strategic & inappropriate ICT. To control and make the spend on ICT equipment the most efficient and cost effective by maintaining a relatively small annual amount as opposed to a very large investments every 7/8 years.

250 250 250

4 ICT Programmes (Staff)To deliver the Council's ICT projects utilising existing ICT staff, to reduce the Capital required each year. The programmes deliver a variety of objectives for each business area and are assessed against business cases to check that they are in line with corporate objectives.

500 500 500

5 Townships Capital ProgrammeAn annual allocation of Capital Funds allocated on a pro rata basis and agreed by each of the 4 Township Committees. 400 400 400

6 Highways - Potholes initiative Additional funding for permanent repairs to potholes across the borough. 978 - -

7 Highways Flooding InfrastructureReplacement of 185 gullies per year at various high risk locations within the Borough; infrastructure works to deal with flooding on carriageways (10 sites); infrastructure works to deal with areas at high risk of flooding.

900 800 800

8 Gateway Schemes To fund signage/ banners and enhanced Environmental Management schemes for gateways and principle corridors .

75 - -

9 Gully Replacements Replacement of gullies at various locations in the borough. 125 - -

10 Housing Standards Fund

Scheme proposes to improve private sector dwellings and environments. Interventions include:-emergency repairs to owner-occupied properties-works in default to private rented properties-corrective works to houses in multiple occupation-tenancy/rent bonds for residents desperate to access decent accommodation unable to access social housing.

800 800 800

11 Replacement Parks/Street MachineryThe programme is a rolling replacement scheme for replacement of the Council's 550 plus pieces of machinery. The programme aims to replace assets when they have exceeded the most cost-effective period of operation.

120 120 120

12 Rights Of Way The programme is a rolling scheme for carrying out the statutory function of maintaining the Council's Rights of Way network.

80 80 80

13 Upgrade Play EquipmentTo maintain, within legislative requirements and guidelines, the current level of Fixed Play provision across the borough. 75 75 75

14 Vehicle Replacement Programme

The programme is a rolling replacement scheme for the Council's 200 plus vehicles. The programme aims to replace assets when they have exceeded the most cost-effective period of operation, ensuring the authority is compliant with legislation covering safety and exhaust emission standards. It also ensures Value for Money in relation to future maintenance requirements.

700 700 700

15 Vehicle Replacement Programme - Refuse Collection Vehicles

An Invest to Save scheme to purchase 10 refuse collection vehicles rather than continue to hire the vehicles. The hire contract expires during 2017/18.

1,630 - -

16 Number 1 Riverside Energy Efficiency Invest to Save scheme to utilise equipment at Number 1 Riverside to reduce electricity costs. 90 - -

17 Waste Bin Replacement Programme

Scheme is to replace wheelie bins which are no longer fit for purpose, and deal with increased demand for new bins as they were first introduced in 1991 and have an estimated life of 10 years. The scheme may also increase recycling rates which in turn would reduces the cost of waste disposal.

125 125 125

18 Asset Management Group To adequately maintain the property portfolio and ensure that the Council comply to any statutory regulations. The scheme also aims to reduce the maintenance backlog and improve the reduced property holding to accommodation standards.

1,750 1,750 1,750

19 Local Transport Plan

To continue the aspirations of the Rochdale Highways Capital Programme and be more effective in identifying and responding to the Local Transport Plan shared priorities of Safety, Air Quality, Congestion and Accessibility. Includes £75k in 2017/18 for road maintenance and signage improvements.

2,249 1,967 1,967

20 Clearance & Empty Properties

Invest to save proposal to bring empty private sector properties back into use. Investing capital funding in staffing to work with and enforce against private sector owners, offering incentives, undertaking works in default and acquiring rundown properties to be leased to and refurbished by housing associations.

500 500 -

21 Kirkholt InvestmentThis scheme aims to deliver dramatic improvements in Kirkholt, the largest estate in the borough. 1,543 - -

Total 13,090 8,167 7,667

Public Health & Wellbeing Capital Programme 2017/18 to 2019/20

No SCHEME NAME SUMMARY AND KEY OBJECTIVESBudget2017/18

£'000

Budget2018/19

£'000

Budget 2019/20

£'000

1 Link4Life EquipmentOn-going update and replacement of leisure centre equipment across the borough. Funding to cover the prudential borrowing is paid from Link4Life to the Council via the contract fee. This saving is built into contract/ efficiencies with Link4Life.

- 360 -

Total - 360 -

30

Appendix 5

STATEMENT OF SERVICE REVENUE REQUIREMENTS

SERVICE 2017/18 Estimate £000

2018/19 Estimate £000

2019/20 Estimate £000

1 Adult Care 55,786 57,558 59,703

2 Children's Services 60,885 60,315 59,197

3 Economy 11,154 16,753 16,898

4 Neighbourhoods 55,068 46,617 46,969

5 Resources 4,363 4,544 4,607

6 Public Health and Wellbeing 21,898 21,776 21,764

7 TOTAL 209,154 207,563 209,138

31

Appendix 5a

32

Revenue Budgets for 2017 / 18 • 2019/20

AREA OF SERVICE: CHILDRENS SERVICE

Controllable Budget Uncontrollable Budget Total Service Budget Less 2017/18 saving proposals subject to approval Total Service Budget

I Controllable by Service

Budget 1 2 3=1+2

Gross Controllable Expenditure Less Expenditure linked to Gra nt Income Net Controllable Expenditure

What does the Gross Expenditure budget fund? Staffing Indirect Staffing Costs Pre mises costs Transpo rt Supplies a nd Services Third Pa rty Payme nts Tra nsfer Payme nts Reserves Capital Fina ncing Inte rnally Commissio ned

4 Total

Earned Income from Fees & Charges

5 I Fees a nd Cha rges/Ea rned Income Total

6=3+5 I Net Controllable Budget

I Uncontrollable by Service

1 I Gross Uncontrollable Expenditure

What areas of expenditure does this cover Staffing Indirect Staffing Costs Pre mises costs Transpo rt Supplies a nd Services Third Pa rty Payme nts Tra nsfer Payme nts Inte rnal Cha rges (net) Depreciatio n Reserves Capital Fina ncing Inte rnally Commissio ned Total Gross Uncontrollable Expenditure

Uncontrollable Income 2 ~IG_r_o-ss_U_n_c_o_n-tr_o_lla_b_le~ln-co-m~e-(T-r-ad-i-ng~ln_c_om~e-) ~~~~~~~~~

3 I Net Uncontrollable Budget

2017/ 18 £'000 39,579 21,306 60,885 · 1,785 59,100

2018/19 £'000 40,064 20,251 60,315 . 2,263 58,052

2019/20 £'000 40,585 18,612 59,197 . 2,001 57,196

2017 /18 2018/19 2019/20 242,984 243,674 244,273

. 195,101 - 195,158 . 195,214 47,883 48,516 49,059

27,263 27,675 28,084 1,863 1,869 1,874 2,160 2,178 2,193 2,240 2,252 2,263

196,690 196,968 197,120 11,075 11,084 11,093

4,428 4,428 4,428 · 1,662 · 1,707 · 1,709

. . .

· 1,073 · 1,073 · 1,073 242,984 243,674 244,273

-8,304 . 8,452 . 8,474 -8,304 • 8,452 • 8,474

39,579 1 40,064 1 40,585 1

21,306 I 20,251 I 18,612 I

. . .

1,634 1,634 1,663 8 7 7

477 440 439 . . .

. . .

. . .

8,622 8,212 7,992 10,565 9,958 8,511

. . .

. . .

. . .

21,306 20,251 18,612

21,306 I 20,251 I 18,612 I

Appendix 5b

33

Revenue Budgets for 2017 /18 • 2019/20

Cont rollable Budget

Uncont rollable Budget

Total Service Budget

Less 2017 /18 saving proposals subject to approval

Total Service Budget


Budget

1 2 3=1+2

Gross Cont rollable Expenditure

Less Expenditure linked to Grant Income

Net Controllable Expenditure

What does the Gross Expenditure budget fund?

Staffing Indirect Staffing Costs

Premises costs Transport

Supplies and Services Third Party Payments Transfer Payments

Reserves Capital Financing Internally Commissioned

4 Total


5 I Fees and Charges/ Earned Income

Total




What areas of expenditure does this cover

Staffing

Indirect Staffing Costs

Premises costs

Transport

Supplies and Services Third Party Payments

Transfer Payments

Internal Charges (net)

Depreciat ion

Reserves

Capital Financing

Internally Commissioned

Total Gross Uncontrollable Expenditure

Uncontrollable Income 2 rlG_r_o-ss~U-n-co_n_t-ro_ll_a_b-le-1-nc_o_m_e~(T-ra_d_i-ng~ln_co_m~e-) ~~~~~~~~~~


2017 /18 2018/19 2019/20 £'000 £'000 £'000

10,345 16,006 16,177 809 747 721

11,154 16,753 16,898 - 99 · 114 - 99

11,055 16,639 16,799

2017 /18 2018/19 2019/20 15,198 21,367 21,599

. 253 . 253 - 253 14,945 21,114 21,346

3,612 3,677 3,741 18 18 18

1,259 1,226 1,244 36 36 36

1,828 1,127 1,135 8,542 15,380 15,522

. . .

. . .

. . .

- 97 - 97 - 97 15,198 21,367 21,599

- 4,600 - 5,108 . 5,169 - 4,600 - 5,108 • 5,169

10,345 I 16,006 1 16,111 I

809 1 747 1 121 I

. . .

. . .

94 91 90 . . .

. . .

. . .

. . .

596 539 514 119 117 117 . . .

. . .

. . .

809 747 721

Appendix 5c

34


NEIGHBO URHOODS

Contro llable Budget Uncontrollable Budget Total Service Budget Less 2017/18 saving proposals subject to approval Total Service Budget


Budget 1 2 3=1+2

Gross Controllable Expenditure Less Expenditure linked to Grant Income Net Controllable Expenditure

What does the Gross Expenditure budget fund? Staffing Indirect Staffing Costs Premises costs Transpo rt Supplies and Serv ices Third Pa rty Paym ents Transfer Payments Reserves Capita l Financing Inte rnally Commissioned

4 Total


5 I Fees and Charges/ Ea rned Income Total



1 I Gross Uncontrollable Expend iture

What areas of expenditure does this cover Staffing Indirect Staffing Costs Premises costs Transpo rt Supplies and Serv ices Third Pa rty Paym ents Transfer Payments Inte rnal Charges (net) Depreciation Reserves Capita l Financing Inte rnally Commissioned Total Gross Uncontrollable Expenditure

Uncontrollable Income 2 rlG_r_o-ss_U_n_c_o_n-tr-o-lla_b_l_e _ln-c-om~e-(T_r_a-di_n_g_ln_c_o_m_e_)~~~~~~~~~


2017/18 2018/19 2019/20 £'000 £'000 £'000 54,678 46,751 47,573

390 - 134 . 604 55,068 46,617 46,969 · 1,272 · 1,576 · 1,385 53,796 45,041 45,584

2017/18 2018/19 2019/20 82,054 74,414 75,516 . 2,922 . 2,922 . 2 ,922 79,132 71,492 72,594

28,652 27,909 28,403 345 346 348

6,099 6,248 6 ,397 3,389 3,320 3 ,371

16,225 16,129 16 ,086 28,932 22,050 22,499

. . .

. . .

7 7 7 · 1,595 · 1,595 · 1,595 82,054 74,414 75,516

. 24,454 . 24,741 . 25,021 • 24,454 • 24,741 • 25,021

54,678 1 46,751 I 47,573 1

2,444 1 1,873 1 1,322 I

. . .

. . .

102 100 99 1,346 1,340 1,265

. . .

. . .

. . .

. 9,199 . 8,591 - 8 ,177 10,195 9,024 8 ,135

. . .

. . .

. . .

2,444 1,873 1,322

- 2,054 I -2,007 I -1,926 I

390 I - 134 1 • 604 1

Appendix 5d

35


AREA OF SERVICE:

Controllable Budget Uncontrollable Budget Total Service Budget Less 2017/18 saving proposals subject to approval Total Service Budget


Budget 1 2 3=1+2


What does the Gross Expenditure budget fund? Staffing Indirect Staffing Costs Premises costs Transpo rt Supplies and Services Third Pa rty Payments Transfer Payments Reserves Capital Financing Inte rnally Commissioned

4 Total


5 I Fees and Charges/Earned Income Total




What areas of expenditure does this cover Staffing Indirect Staffing Costs Premises costs Transpo rt Supplies and Services Third Pa rty Payments Transfer Payments Inte rnal Charges (net) Depreciation Reserves Capital Financing Inte rnally Commissioned Total Gross Uncontrollable Expenditure

Uncontrollable Income

RESO URCES

2 ~IG_r_o-ss_U_n_c_o_n-tr_o_lla_b_le~ln-co-m~e-(T-r-ad-i-ng~ln_c_om~e-) ~~~~~~~~~


2017/18 £'000

9,623 - 5,260

4,363 - 404 3,959

2018/19 £'000

9,822 . 5,278

4,544 - 513 4,031

2019/20 £'000

9,956 - 5,349

4,607 - 404 4,203

2017 /18 2018/19 2019/20 96,157 96,559 96,706

. 84,045 . 84,045 . 84,045 12,112 12,514 12,661

11,253 11,331 11,478 863 863 864

65 65 66 41 41 41

2,651 2,975 2,973 360 360 360

80,915 80,915 80,915 . . .

132 132 132 · 123 · 123 · 123

96,157 96,559 96,706

· 2,489 . 2,692 · 2,705 • 2,489 • 2,692 • 2,705

9,623 1 9,822 I 9,956 1

- 5,260 I . 5,278 1 - 5,349 1

. . .

. . .

3 3 3 1 1 1

. . .

. . .

. . .

- 5,355 - 5,290 . 5,361 91 8 8

. . .

. . .

. . .

- 5,260 • 5,278 • 5,349

• 5,260 I • 5,278 I • 5,349 I

Appendix 5e

36


PUB LIC HEALTH & WELLBEING

Contro llable Budget Uncontrollable Budget Total Service Budget Less 2017/18 saving proposals subject to approval Total Service Budget


Budget 1 2 3=1+2


What does the Gross Expenditure budget fund ? Staffing Indirect Staffing Costs Premises costs Transpo rt Supplies and Services Third Pa rty Paym ents Transfer Payments Reserves Capita l Financing Inte rnally Commissioned

4 Total


5 I Fees and Charges/Earned Income Total




What areas of expenditure does this cover Staffing Indirect Staffing Costs Premises costs Transpo rt Supplies and Services Third Pa rty Paym ents Transfer Payments Inte rnal Charges (net) Depreciation Reserves Capita l Financing Inte rnally Commissioned Total Gross Uncontrollable Expenditure

Uncontrollable Income 2 rlG_r_o-ss_U_n_c_o_n-tr-o-lla_b_l_e _ln-c-om~e-(T_r_a-di_n_g_ln_c_o_m_e_)~~~~~~~~~

3 I Net Uncontrollab le Budget

2017/18 2018/19 2019/20 £'000 £'000 £'000 19,764 19,663 19,704

2,134 2,113 2,060 21,898 21,776 21,764

. 70 - 102 . 70 21,828 21,674 21,694

2017/18 2018/19 2019/20 22,861 22,774 22,830

. . .

22,861 22,774 22,830

2,511 2,489 2,505 39 39 39

202 203 204 22 22 23

3,183 3,135 3,136 13,854 13,836 13,873

. . .

. . .

. . .

3,050 3,050 3,050 22,861 22,774 22,830

- 3,097 . 3,111 . 3,126 -3,097 -3,111 -3,126

19,764 1 19,663 1 19,704 1

2,134 1 2,113 1 2,060 I

. . .

. . .

. . .

15 14 13 . . .

. . .

. . .

924 904 895 1,195 1,195 1,152

. . .

. . .

. . .

2,134 2,113 2,060

2,134 1 2,113 1 2,060 I

Appendix 5f

37

Appendix 6

PAY POLICY STATEMENT

1. PAY POLICY

1.1 The Council’s Pay Policy outlines the principles, which define the aims of the organisation in terms of rewarding its employees properly for their contribution and as a driver for organisation/service improvements. The policy describes what the organisation values and how it will ensure a consistent and equitable approach.

1.2 The principles as set out below were approved by Members in October 2005 and ratified by Council in March 2012:- To enable the Council to recruit and retain the right calibre of staff to achieve the

organisations strategic aims and operational objectives.

To underpin the Council’s desire to achieve equity and added value whilst recognising the financial constraints which exist.

To appropriately recognise responsibility, to empower employees and enhance job satisfaction.

To recognise employee contribution and performance, including the acquisition of competencies and behaviours which are essential to service delivery.

To provide a pay structure which is both transparent and fair, ensuring compliance with relevant legislation.

2. PROPOSED PAY POLICY STATEMENT 2017/18

2.1 The Localism Act 2011 refers to “Pay Accountability” and sets out the requirements for local authorities to approve and publish an annual pay policy statement. The Pay Policy Statement reflects the anticipated position as at 1st April 2017.

2.2 The purpose of the Pay Policy Statement is to provide transparency in terms of the Council’s approach to setting the pay of its employees (excluding teachers and support staff in schools which are the responsibility of the School Governing Body).

2.3 The Pay Policy Statement (attached as Appendix 6a of the report) sets out the policies relating to: The method by which salaries and severance payment are determined. The remuneration of the Council’s most senior managers i.e. posts of Chief

Executive, Directors and Assistant Directors, in accordance with the requirements of the Localism Act 2011.

The committees responsible for ensuring that the Pay Policy Statement is applied consistently, include the Employment and Equalities and Appointment Committees which have delegated powers in relation to Director employment.

The detail and level of remuneration for the lowest level of post/employee. The ratio of pay of the top earner and that of the median earner

2.3 The Code of Practice on Data Transparency advises on the publication of certain information which is currently contained in the Pay Policy Statement.

38

Appendix 6a

ROCHDALE BOROUGH COUNCIL PAY POLICY STATEMENT 2017/18

1. Purpose

The purpose of the Pay Policy Statement is to ensure transparency and accountability with regard to the Council’s approach to setting pay. The Pay Policy Statement has been approved by Council and is publicised on the Council’s website in accordance with the requirements of the Localism Act 2011.

The Pay Policy Statement identifies: The method by which salaries and severance payments are determined.

The remuneration of the Council’s most senior managers i.e. posts of Chief Executive, Directors and Assistant Directors, in accordance with the requirements of the Localism Act 2011.

The committees responsible for ensuring that the Pay Policy Statement is applied consistently, including the Employment & Equalities and Appointment Committees which have delegated powers in relation to senior manager employment;

The detail and level of remuneration for the lowest level of post/employee.

The ratio of pay of the top earner and that of the median earner

It should be noted that the Pay Policy Statement does not include information relating to the pay of Teachers or Support Staff in schools who are outside the scope of the Localism Act. It should also be noted that staff transferred to the Council under TUPE retain their previous terms, conditions and policies.

2. Method by which payments are determined

The Council uses the National Joint Council (NJC) pay spinal column points (scp 6-scp 49) for grading and basic salary level determination for the majority of staff. This is supplemented by the Nationally agreed Soulbury and Youth & Community grading and salary levels. The Council applies the provision of the Joint Negotiating Council (JNC) Chief Executives and the JNC Chief Officers to posts within the scope of the provisions of the Localism Act. All other paid allowances are also subject to negotiation/consultation with either National or Local trade union/representative bodies or are provided for in the Council`s Scheme of Delegation.

In determining grades and remuneration for senior management posts which fall outside of the scope of the National Pay Bargaining Machinery i.e. on locally agreed grades i.e. above scp 49 and below Chief Officers the Council through powers provided for under the Scheme of Delegation takes into account the need to ensure value for money and competitiveness. The Council is currently in the process of implementing the outcome of a pay and grading review of posts at this level in the structure, which is reflected in the Council`s Pay Policy Statement.

New appointments will normally be made at the minimum point of the relevant grade, although appointment panels have discretion to vary where necessary to secure the best

39

candidate. All promotion, re-grading, transfers and secondments are in accordance with Council policy.

The Council has a Market Supplements Policy which covers all posts, and where evidence exists of recruitment and retention issues, allows the Council to make any additional payments to reflect the market rate. This is reviewed regularly to ensure compliance with relevant legislation.

Members of Cabinet and Employment and Equalities Committee on 8 and 14th March 2016 (respectively) approved a revision to the local living wage of £8.25 per hour with effect of 1st April 2016 for all employees and this rate is subject to annual review. The rate for the local Living Wage for 2017/18 will be considered by Cabinet, Employment and Equalities Committee and the Corporate Overview and Scrutiny Committee on 1st, 3rd and 7th March 2017 respectively

All temporary appointments, acting up arrangements, secondments and honorarium payments are approved in accordance with the Council’s Scheme of Delegation.

Incremental progression is currently suspended and the Council is in the process of taking a decision to pay incremental progression on a bi-annual basis with effect of 1st April 2017 as part of the budget savings programme for 2017/18, this decision will be considered by Full

1stCouncil on March 2017. In addition to the above and by exception incremental progression is not applied in instances where formal conduct/capability procedures are applied.

The Council is also in the process of taking a decision on applying graduated unpaid leave on a permanent basis with the implementation of changes to conditions of service effective from 1st April 2017 as follows;

To be taken either on a fixed (between Christmas & New Year) basis or flexible basis dependent on operational requirements. The amount of unpaid leave is dependent on grade or equivalent salary as follows:

Grade or equivalent salary Number of Days Unpaid Leave

Grade 1 / 2 2 days

Grade 3 - 6 3 days

Grade 7 - 9 4 days

Grade 10 and above 5 days

Again the final decision will be taken at Budget Council on 1st March 2017.

Pensions and Voluntary Early Retirement and Redundancy

Pension contributions for all employees who have exercised their statutory right to become members of the Local Government Pension Scheme are applied in accordance with the Local Government Pension Scheme Regulations. Certain employees have access to other pension schemes, for example the Teachers’ pension scheme and the NHS pension scheme.

The policy of the Council is to provide a consistent approach to all of its employees who leave the Council’s employment under the terms of its applicable schemes. The Council is

40

able to consider early retirement in the interests of efficiency or redundancy and the Council`s Special Scheme for Early Retirement/Voluntary Redundancy provides for access to accrued pension benefits for members aged 55 years and over and a redundancy payment, but does not provide any enhancements to pension (or other additional payments) on the basis of seniority.

The policy of the Council regarding the calculation of redundancy payments for all of its employees is to use the statutory redundancy calculator based on completed years of service (up to a maximum of 20 years) and to apply the current contractual weekly pay of the employee in order to calculate the payment to which he/she is entitled.

The Council will review the proposed changes to legislation regarding pensions and public sector exit payments once the proposed regulations have received royal assent.

3. Senior Management Pay

The Localism Act refers to posts of Chief Executive, Chief Officer and Deputy Chief Officer (i.e. those which report to a “Chief Officer”). Whilst the Council does not employ any post within the designation of Chief Officer or Deputy Chief Officer it is considered for the purpose of this legislation that the definition relates to posts of Chief Executive, Directors and Assistant Directors. The structure and the annual salary levels for the above mentioned posts along with a description of the roles and responsibilities; is detailed on the Council`s website.

Designation Grade/Salary Number of Posts

Chief Executive (see note below) £127,512 to £132,613 1

Note:

The Chief Executive is appointed as the Electoral Registration Officer and Returning Officer and the appropriate payments are made. The Chief Executive receives fee payments pursuant to his/her appointment as Returning Officer at elections. The fees paid in respect of elections vary according to the size of the electorate and number of postal voters and are calculated in accordance with the allowance set by the Authority. Fee payments for National and European elections are set by Central Government and are, in effect, not paid by the Authority, as the fees are reclaimed.

Directors (five positions) Point 1 £ 95,169Point 2 £101,121Point 3 £104,965Point 4 £110,801Point 5 £116,628Point 6 £122,464

Progression through the above points is to be determined on the basis of annual performance assessments, however it should be noted that Members considered that progression should be frozen pending consideration of such assessment at a future meeting of the Council. The current suspension of annual increments applies to these positions and the proposed changes to conditions in relation to bi-annual incremental progression will also apply to these posts.

The current position regarding Assistant Directors substantive pay grade is as follows:

41

Assistant Director Level 2 £78,195 to £88,434 2

Assistant Director Level 1 £64,028 to £74,267 9

Consultant in Public Health £65,922 to £81,618 1

Note:

In addition, the Director of Public Health is also part of the Greater Manchester Director of Public Health on call rota arrangements for which the payment is 2% of salary.

The Council applies Market Supplements to Senior Management Posts, in accordance with the Policy, where evidence exists of recruitment and retention issues; this is reviewed regularly to ensure compliance with relevant legislation.

Under delegated authority (approved by the Employment and Equalities Committee meeting of 18th August 2015) the Chief Executive, in consultation with the Chair of Employment and Equalities Committee, agrees the arrangements for the payment of Responsibility Allowances for officers undertaking specific Statutory Officer duties.

The pay scales, detailed above, for Directors and Assistant Directors include the Nationally agreed pay award applied from 1st April 2016 to all for posts and will be adjusted for any pay awards agreed for 2017/18.

4. Responsibility for the application of employment procedures for Senior Management posts

Responsibility for governance in relation to these issues lies with the Employment & Equalities and Appointment Committees which are non-executive committees of the Council. The Council is acting in accordance with Guidance issued by the Secretary of State in relation to employment decisions for Senior Management posts with salaries in excess of £100,000 per annum.

5. Pay Ratio

The following information is provided to assist with understanding the ratio calculation;

The Chief Executive Salary level used for comparative purposes is £132,613 i.e. the maximum of the grade

The lowest paid Council job i.e. Cleaner has a maximum salary level of £15,915

The Mean (average) pay is £25,123

The Mode (most frequently occurring) level of salary is £17,547

The Median (middle) of the salary range is £22,434

The ratio of pay of the top earner i.e. Chief Executive and that of the median earner is 1 to 5.91 and is within the 1:20 ratio recommended by the Hutton Review. In other words for every £1 earned by the median earner the Chief Executive earns £5.91. The calculation indicates that the Authority’s median level of earnings as a proportion of the Chief Executive earnings is 16.92% just higher than a sixth.

42

TREASURY MANAGEMENT STRATEGY Appendix 7

1. Treasury Management Strategy Statement

1.1 The main objectives of the Treasury Management Strategy are:

To effectively manage and control the risks associated with treasury management activities giving regard to the Code, and all relevant legislation, criteria and limits set within this report.

To ensure that sufficient cash is available to enable the Council to discharge its financial obligations when they become due.

To undertake all borrowing at or below budgeted rates on the basis of best value, and also seek opportunities to reduce the cost of servicing existing debt.

To minimise the cost of any temporary borrowing (which is required for day to day cash flow reasons).

To invest prudently having regard to the security and liquidity of Investments and the predictability of returns.

To aim to achieve the optimum return on investments commensurate with proper levels of security and liquidity.

2. The Borrowing Strategy

2.1 The Council’s capital expenditure plans are a key driver of treasury management activity. Cabinet Members will consider future capital expenditure forecasts elswhere on this agenda. Capital expenditure can be funded by external grants and contributions, capital receipts and reserves and by revenue contributions. The gap between planned capital spend and existing resources results in a funding requirement which will need to be met by borrowing. A summary of the estimated potential long term borrowing requirements to fund new capital expenditure included in future budgets is shown below.

Table 1 : Borrowing Requirement 2016/17 2017/18 2018/19 2019/20£000 £000 £000 £000

Current Approved Capital Programme 7,150 11,100 8,920 11,104Invest to Save Schemes 4,106 13,763 20,860 - Potential New Borrowing - Previous Years 117,365 - - -

128,621 24,863 29,780 11,104

The 2016/17 requirement includes £8.7m rephasing from previous years’ mainstream programmes. An additional £108.7m is capital expenditure incurred in previous years which, at present, we have not borrowed externally for. The Council has used its balance sheet strength to internally fund this expenditure from its accumulated reserves and balances.

As these reserves and balances are utilised for the purpose for which they were originally intended , the Council will need to borrow from external sources . Invest to Save Schemes have been included, as they will increase the Council’s overall

43

borrowing requirement. However, as the schemes are self funded via income streams or future reductions in revenue expenditure, our overall (net) borrowing costs will not increase.

2.2 The Council’s Capital Financing Requirement (CFR) is the historic outstanding capital expenditure which has not yet been paid for from either revenue or capital resources. It is essentially a measure of the Council’s underlying borrowing need.

Any capital expenditure which has not immediately been paid for will increase the CFR. The Council also charges its revenue account with a prudent amount each year to adequately cover its debt repayment obligations and charge capital expenditure through to its revenue account over the useful life of the assets purchased. This is known as Minimum Revenue Provision (MRP) – see Appendix iv for further details. The projected movement in the CFR (which can be viewed as the Council’s underlying borrowing need) is shown below.

Table 2 : Capital Financing Requirement Current Estimate Estimate Estimate2016/17 2017/18 2018/19 2019/20

£000 £000 £000 £000Opening CFRGeneral Fund 374,152 383,217 395,114 411,231

Capital Spend - Borrowing (Int & Ext) 21,353 25,298 29,780 11,104

PFI Additions / Capital Receipts 114 - - -

MRP (Including Current PFI) (11,546) (12,502) (12,717) (13,676)

GM Debt Repayment (856) (899) (946) (994)

Closing CFRGeneral Fund 383,217 395,114 411,231 407,665

PFI Finance LeasesOpening 107,847 105,555 102,486 99,184Additions 554 - - - Repayments (2,846) (3,069) (3,302) (3,371)Closing 105,555 102,486 99,184 95,813

Underlying Borrowing Requirement 277,662 292,628 312,047 311,852

2.3 The CFR includes the Council’s Private Finance Initiative (PFI) long term liabilities. Such schemes include a borrowing facility which is the responsibility of the contractor. The Council is not required to borrow separately to finance these schemes. Therefore PFI schemes are deducted from the overall CFR to produce the Council’s own underlying borrowing requirement.

2.4 The Council’s borrowing position and CFR are shown after the application of any capital receipts to fund shorter term borrowing.

3. Current Portfolio Position

3.1 The Council’s estimated treasury portfolio position at 31st March 2017 with forward projections is summarised in table 3. The Council has continued to fund its capital programmes without the need for new long term external borrowing in 2016/17.

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Table 3 : Debt Portfolio New GeneralBalance Borrowing Repayments Balance Balance Balance Balance

Debt Type at 1/4/16 to 31/3/17 to 31/3/17 at 31/3/17 at 31/3/18 at 31/3/19 at 31/3/20£000 £000 £000 £000 £000 £000 £000

Fixed Rate Debt

PWLB 11,342 11,256 (674) 21,924 46,092 75,560 86,664

Short Term / Salix 222 - (65) 157 98 - -

Market - Fixed Rate 86,000 - - 86,000 81,000 56,000 96,000

Total Fixed Rate Debt 97,564 11,256 (739) 108,081 127,190 131,560 182,664

Variable Rate Debt

PWLB - Variable Rate - - - - - - - Market - Variable Rate 44,000 - - 44,000 49,000 74,000 34,000Total Variable Rate Debt 44,000 44,000 49,000 74,000 34,000

TOTAL RMBC DEBT 141,564 11,256 (739) 152,081 176,190 205,615 216,686

3.2 Historically, most of the Council’s previous borrowing was sourced via the Public Works Loan Board (PWLB). As part of the Council’s Housing Stock Transfer in March 2012, most of this debt was repaid by DCLG as part of the overall settlement. This significantly altered the balance of our portfolio. The majority of our opening debt (1/4/16) is now with commercial banks in the form of long term (40 years plus) LOBO market loans (£130m) with £11.3m PWLB debt.

3.3 The Council also has obligations to repay its share of debt inherited after the dissolution of the Greater Manchester Council.

3. 4 Table 4 shows our total gross debt and net debt after deducting our estimated level of short term investments.

Table 4 : Net Borrowing Requirement Current Estimate Estimate Estimate 2016/17 £000

2017/18 £000

2018/19 £000

2019/20 £000

Borrowing Requirement BR = CFR less PFI

Total RBC Debt

Balance on GM Debt

277,662

152,081

4,983

292,628

176,190

4,083

312,047

205,615

3,137

311,852

216,686

2,143

Total Gross Debt

Gross Under/(Over) borrowing (BR less Gross Debt)

Less Short Term Investments

157,064

120,598

(45,000)

180,273

112,355

(45,000)

208,752

103,295

(45,000)

218,829

93,023

(45,000)

Net Borrowing Requirement NBR (Debt - Inv)

Net Underborrowing (BR less NBR)

112,064

165,598

135,273

157,355

163,752

148,295

173,829

138,023

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3. 5 The Prudential Code states that authorities should ensure that, over the medium-term, net borrowing should only be for a capital purpose. This means that net external borrowing should not, except in the short-term, exceed the capital financing requirement for the previous year plus the additional CFR for the current and next two years. This allows some flexibility for limited early borrowing for future years, but ensures that borrowing is not undertaken for revenue purposes.

3. 6 Table 4 shows that the Council does not envisage any problem in meeting this prudential indicator during the period covered by this report. An overall under borrowed position will be maintained. This position will be monitored with reference to our balance sheet review and expected movements in interest rates.

4. Treasury Indicators – Limits to Borrowing Activity

4.1 The Operational Boundary represents a maximum limit on the anticipated level of external borrowing. Its value is calculated with reference to: Current outstanding debt (including internal borrowing). Estimates of the authority’s capital investment plans. The potential requirement to refinance and/or restructure loans. Possible third party loans. An allowance for temporary borrowing arising from normal day to day cashflow

fluctuations.

4.2 Estimates for 2016/17 to 2019/19 are shown in table 5.

Table 5 : OPERATIONAL BOUNDARY Current 2016/17

£000

Estimate 2017/18

£000

Estimate 2018/19

£000

Estimate 2019/20

£000 Opening Debt - RBC

New Borrowing Net of Repayments

141,564

127,882

269,446

24,109

293,555

29,425

322,980

11,071

Closing Debt - RBC

Third Party Loans & Investments Temporary Cash Flow Fluctuations

269,446

4,819 13,472

293,555

4,642 14,678

322,980

3,456 16,149

334,051

3,263 16,703

Total - Excluding Other Long Term Liabilities

Other Long Term Liabilities Greater Manchester Council Debt Existing PFI Schemes

287,737

5,838 105,555

312,875

4,982 102,486

342,585

4,083 99,184

354,017

3,136 95,813

111,393 107,468 103,267 98,949

Total Including Long Term Liabilities 399,130 420,343 445,852 452,966

4.3 The Code states that occasional and temporary breaches of the Operational Boundary, whilst not ideal, are acceptable if it is prudent to do so. It is recommended that delegated authority be given to the Chief Finance Officer to approve a breach where it would be advantageous to the Council. This would be reported to Cabinet at its next meeting following the event.

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4.4 The Authorised Limit for external borrowing represents a control on our maximum level of borrowing. This represents a legislative limit beyond which external borrowing is prohibited.

4.5 The Operational Boundary is the start point for the calculation of the Authorised Limit to which is added sufficient headroom to accommodate such issues as unusual cash movements , borrowing in advance of need and the early maturity of commercial debt with repayment options (LOBOs). Levels for 2016/17 to 2019/20 are shown in table 6.

Table 6 : AUTHORISED LIMIT Current 2016/17 £000

Estimate 2017/18 £000

Estimate 2018/19 £000

Estimate 2019/20 £000

Operational Boundary Borrow in Advance of Need (next year's cap prog) LOBO Refinancing Additional Headroom - Unusual Cash Movements

399,130

24,863 44,000

19,957

420,343

29,780 49,000

21,017

445,852

11,104 74,000

22,293

452,966

11,104 34,000

22,648

Total 487,950 520,140 553,249 520,718

5. Prospects for Interest Rates

5.1 The Council has appointed Capita Asset Services (CAS) as its Treasury Advisor. Part of that service is to assist the Council to formulate a view on interest rates. Table 7 summarises CAS’s view on future interest rates:

Table 7 : Interest Rates Now Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Mar-19 Mar-20% % % % % % % %

Bank of England Base Rate 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.75

5 Year PWLB Rate 1.46 1.60 1.60 1.60 1.60 1.70 1.80 2.00 10 Year PWLB Rate 2.20 2.30 2.30 2.30 2.30 2.30 2.50 2.70 25 Year PWLB Rate 2.84 2.90 2.90 2.90 3.00 3.00 3.20 3.40 50 Year PWLB Rate 2.62 2.70 2.70 2.70 2.80 2.80 3.00 3.20

The PWLB rates quoted above are net of HM Treasury’s Certainty Rate which was introduced on 1st November 2012. The authority benefits from a 0.2% reduction to the standard rate in return for providing information about its future borrowing plans.

5.2 The price of the borrowing undertaken by the Council is influenced by the prices of sovereign debt, or gilts, traded on the gilt market. Movements in the prices of gilts are influenced by a combination of UK and global inflation expectations, interest rate forecasts and the effects of supply and demand which is dependent upon economic factors and market sentiment. The effects of the world banking crisis, economic and geo-political uncertainties have followed through to 2016/17 and will continue to influence the world’s economies for the foreseeable future. Uncertainties around Brexit, the falling pound, growing UK inflation, the US election result (and future results in European elections), the resurgence of the Eurozone sovereign debt crisis and slowdowns in the growth of the Chinese and other emerging economies all make for increased volatility generally and in regard of future interest rates. Rates are currently relatively low though they are expected to rise. This position is expected to materialise in the short / medium term.

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5.3 The Council’s borrowing strategy will give consideration to borrowing in the following forms:

5.4 The cheapest borrowing will generally be internal borrowing by running down cash balances (from reserves and balance sheet strength) and foregoing interest earned from investments at historically low rates in a relatively high risk environment. The Council will continue to pursue this policy in 2017/18. However, in view of the overall forecast for long term borrowing rates to increase over the next few years, consideration will also be given to weighing the short term advantages of internal borrowing against potential increased long term costs. This decision will be influenced by the ‘cost of carry’ (the difference between current borrowing and investment rates) which will be considered against the backdrop of uncertainty and affordability constraints, taking into account the Council’s overall financial position.

5.5 The Council would expect to carry out most of its permanent borrowing from the PWLB, as the interest rates are generally the cheapest available and can be fixed for the term of the loan to provide greater certainty. The option of temporary borrowing from other public authorities will continue in 2017/18 to match cashflow requirements during the year. Longer term rates will be monitored in consultation with our advisors and longer term rates locked in to if a sustained upward movement in rates is expected.

5.6 Given the overall size of past capital programmes, the relatively long maturity profile of existing debt and the current ratio of MRP compared to actual loan repayments, it is envisaged that relatively short / medium term annuity or equal instalment repayment loans (in which part of the loan principal is paid off each year as well as interest) will be taken for future borrowing.

5.7 Commercial loans (including those with variable rates and options) will be considered on a comparative basis with equivalent PWLB debt and may be selected if they are thought to offer best value and conform to the Council’s borrowing strategy. The market for these loans has been relatively stagnant in the last twelve months with few options available.

5.8 Further considerations to achieve the objectives are as follows:

Give due consideration to the impact of new borrowing or debt restructuring on the Council’s debt maturity profile and the associated implications for interest rate risk and the Authority’s balance sheet.

Continue to seek out new products that may become available in the debt market that are suitable for Local Authority purposes. One option to be explored is the use of bond placements to raise funding possibly working alongside other local authorities or the Municipal Bond Agency to share costs and attract investors.

Consider and mitigate the effects of developments in Accounting Standards on the Council’s income and expenditure account which may be created by borrowing decisions.

Increase the use of direct dealing with counterparties in relation to debt where this approach reduces brokerage costs and/or secures lower interest charges.

5.9 In normal circumstances the main sensitivities of the forecast are likely to be the two scenarios noted below. Council officers, in conjunction with the treasury advisors, will

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continually monitor both the prevailing interest rates and the market forecast, adopting the following responses to a change of sentiment:

If it were felt that there would be a significant sharp FALL in long and short term rates, e.g. due to a marked increase of risks around relapse into recession or of risks of deflation, then long term borrowings will be postponed, and potential rescheduling from fixed rate funding into short term borrowing will be considered.

If it were felt that there would be a significant sharp RISE in long and short term rates than those currently forecast, perhaps arising from a greater than expected increase in world economic activity or a sudden increase in inflation risks, then the portfolio position will be re-appraised with the likely action that fixed rate funding will be drawn whilst interest rates were still relatively low.

6. Policy on Borrowing in Advance of Need

6.1 The Council will not borrow more than or in advance of its needs, purely in order to profit from the investment of the extra sums borrowed. Any decision to borrow in advance will be within approved Capital Financing Requirement estimates, and will be considered carefully to ensure that value for money can be demonstrated and that the Council can ensure the security of such funds.

7. Debt Rescheduling

7.1 As short term borrowing rates will be considerably cheaper than longer term fixed interest rates, there may be potential opportunities to generate savings by switching from long term debt to short term debt. However, these savings will need to be considered in the light of the current treasury position and the size of the cost of debt repayment (premiums incurred).

7.2 The reasons for any rescheduling to take place will include: the generation of cash savings and / or discounted cash flow savings; helping to fulfil the treasury strategy; enhance the balance of the portfolio (amend the maturity profile and/or the balance

of volatility).

7.3 Consideration will also be given to identify if there is any residual potential for making savings by running down investment balances to repay debt prematurely as short term rates on investments are likely to be lower than rates paid on current debt.

7.4 The current PWLB spread between the rates applied to new borrowing and repayment of debt, has meant that PWLB to PWLB debt restructuring is now much less attractive than prior to 2007. In particular, consideration would have to be given to the large premiums which would be incurred by prematurely repaying existing PWLB loans and it is very unlikely that these could be justified on value for money grounds if using replacement PWLB refinancing.

7.5 Most of our current debt portfolio is in LOBO loans. The premia associated with early repayment (to compensate the lender for future interest and embedded options) make it unlikely that rescheduling will be a cost effective option.

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8. Debt Related Budgets

8.1 Table 8 summarises external interest charges for the treasury function on our managed debt portfolio.

Table 8 Interest Budget Estimate Estimate Estimate Estimate2016/17 2017/18 2018/19 2019/20

£000 £000 £000 £000

Total Loan Interest Budget 10,443 11,150 12,101 12,903Less Invest to Save Schemes (131) (370) (962) (1,420)Net Interest Budget 10,312 10,780 11,139 11,483

9. Investment Strategy

9.1 The Council’s investment priorities will be security of capital first, liquidity second, then return.

9.2 The day to day cash requirements needed to fund general revenue and capital expenditure will continue to be managed on a proactive basis by the treasury function. Cashflow forecasting produced by the Council will be used to ensure that investments are placed for the most relevant period. This is to ensure sufficient liquid resources are availaible to meet its financial obligations, whilst achieving the optimum return on investments commensurate with proper and emphasised levels of security and liquidity. The risk appetite of the Council is low in order to give priority to the security of its investments.

10. Creditworthiness Policy

10.1 The global banking crisis , the current economic climate and the financial difficulties faced by UK and international banks have placed security of investments at the forefront of Treasury Management Investment Policy.

10.2 The Council will continue to ensure that: It maintains a policy covering the categories of investments it will invest in, criteria

for choosing investment counterparties with adequate security and monitoring their security.

It has sufficient liquidity in its investments. For this purpose it will set out procedures for determining the maximum periods for which funds may prudently be committed. These procedures also apply to the Council’s prudential indicators covering the maximum principal sums invested.

10.3 The Chief Finance Officer will maintain a counterparty list in compliance with specified criteria and will revise the criteria and submit them to Council for approval as part of the strategy.

10.4 Table 9 shows the minimum long and short term ratings that the Council will adhere to in making its investments.

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Table 9 : Credit Ratings

LongTerm

Short Term

LongTerm

Short Term

Nationalised (Semi) UK Banks A- and F1 Baa2 and P2

All Other UK Banks and Building Socities A and F1 A3 and P1

Other International Banks AA- and F1 Aa3 and P1

Debt Management Agency Deposit Facility N/A N/A N/A N/A

Other Local , Police & Fire Authorities N/A N/A N/A N/A

LOWER OFInstitution Type Fitch Rating OR Moody’s Rating

(Minimum) (Minimum)

10.5 The ratings are provided by two of the leading credit agencies – Fitch and Moody’s. They provide independent objective assessments of the credit worthiness of institutions and countries, which help investors decide how risky it may be to invest money in a certain financial institution. The prime credit worthiness rating is Fitch’s long term rating which is between AAA for the prime institutions down to D for those in default. There is a range of 21 ratings. The minimum limits set out allow only investments with higher rated institutions as detailed above. The short term ratings of both agencies, F1 (Fitch) and P1/P2 (Moody’s), indicate that the institution is regarded as of Prime quality having a superior or strong ability to meet its financial commitments.

10.6 The Council also uses the creditworthiness service provided by CAS. This service has been progressively enhanced over recent years and now uses a sophisticated modelling approach with credit ratings from all three rating agencies – Fitch, Moody’s and Standard & Poors - forming the core element. However, it does not rely solely on the current credit ratings of counterparties but also uses the following as overlays: Credit watches and credit outlooks from credit rating agencies Credit Default Swap (CDS) spreads to give early warning of likely changes in

credit ratings Sovereign ratings to select counterparties from only the most creditworthy

countries

10.7 This modelling approach combines all of this information via a weighted scoring system which is then combined with an overlay of CDS spreads. The end product of this process is a series of colour coded bands which indicate the relative creditworthiness of each counterparty and the possible length of any Council investment: Yellow – 5 years – applies to UK Government Gilts , deposits with the UK Debt

Management Office , other local authorities / public bodies (note this includes Greater Manchester authorities such as GMCA, GMWDA, TFGM etc) and Multilateral Development Banks

Purple – 2 years Blue - 1 year (only applies to nationalised or semi nationalised UK Banks) Orange - 1 year (other banks) Red - 6 months Green – 100 days (formerly 3 months) No colour – generally not to be used

10.8 All credit ratings will be monitored weekly. The Council is alerted to changes to ratings of all three agencies through its use of the CAS creditworthiness service. We

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are also told which counterparties have moved to negative/positive watch and which may be closest to a possible downgrade.

10.9 If a downgrade results in the counterparty / investment scheme no longer meeting the Council’s minimum criteria, current investments will be recovered at the earliest opportunity and its further use will be withdrawn.

10.10 In practice, the Council will use a combination of it’s own creditworthiness ratings and Capita’s scoring system / advice to establish an on-going counterparty list. On occasion, fine tuning by an individual credit rating agency can lead to a counterparty temporarily being reduced below the Council’s Credit Criteria (on one factor) yet maintaing a high overall score using Sector’s system (or vice versa) . In this instance an overall view will be taken on the merit of the counterparty and its continued use . Such rare instances will be reported as part of the next possible Financial Update Report.

10.11 Several global industry wide changes will continue to impact on credit ratings and financial markets during 2017/18 . These include: Bank Stress Testing Regulatory oversight and ratio requirements European Union directives on Bank Recovery and Deposit Guarantee Schemes Bail-In legislation which ensures that large investors, including local authorities,

will need to rescue failing banks instead of taxpayers in future The continuiung removal by Ratings Agencies of their factors in relation to

perceived systemic support (the propensity of a sovereign state to bail out a financial institution)

All of the above may lead to increased volatility in ratings . However , the timing and full extent of these changes is not yet clear. If the changes have significant impacts, requiring a re-assessment of the ratings listed in table 9, it is recommended that delegated approval be given to the Chief Finance Officer to temporarily suspend the Council’s own creditworthiness criteria in favour of a revised the modelling approach agreed with our financial advisors.

11. Money Market Funds

11.1 Money Market Funds (MMF) and UK Gilt Funds with high credit ratings will continue to be used for short-term cash investments where they provide an opportunity of reasonable returns combined with exceptional liquidity . MMFs invest in a portfolio of short term, high quality debt instruments, helping the Council to spread its risk exposure. MMFs are managed and rated by the credit agencies within very specific guidelines.

11.2 For the purposes of investing in MMFs and UK Gilt Funds, the definition of ‘high credit rating’ will cover those funds that are rated as triple-A (AAA) by the main credit rating agencies which can be established from information supplied by CAS and SunGard (a specialist investment used to place funds).

11.3 The introduction of EU directives and changes to regulations relating to Net Stable Funding and Liquidity Coverage Ratios mean that the overall attractiveness of short-dated MMF investments may be significantly reduced in 2017/18. The Council will therefore monitor its use of such investments and be mindful of alternatives. This will include enhanced funds which offer a higher return but require a period of notice for return of funds.

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12. UK Building Societies

12.1 Many UK Building Societies continue to be without credit ratings altogether or have poor ratings and consequently most have been removed from our counterparty list. As an additional safeguard investments will only be made with any building society which has assets in excess of £1,000m.

13. Investment Limits

13.1 The monetary limits for institutions on the Council’s counterparty lists are shown in table 10. In certain special circumstances, authority is delegated to the Chief Finance Officer to exceed our normal day to day limits. This might include the risk of the removal or capping of our borrowing powers by Central Government or the threat of imminent significant increases to PWLB interest rates.

This would ensure that the Council can still place money with the relatively few counterparties of highest creditworthiness in case of the requirement to borrow in advance of absolute need to achieve value for money for the Council. Any instance of the Special Circumstances Limits being actioned will be reported retrospectively to Cabinet.

Table 10 : Investment Limits Fitch Rating Moody's

Institution (Long Term) (Long Term)

UK Nationalised / Part Nationalised Banks A- Baa2 £10,000,000 £15,000,000

Banks and Building Societies AA- and above Aa3 and above £10,000,000 £15,000,000

Banks and Building Societies A and A+ A3 to A1 £5,000,000 £8,000,000

Council's Banker - Barclays n/a n/a £10,000,000 £15,000,000

Bank Group Overall Limit £15,000,000 £25,000,000

Money Market Fund AAA AAA £10,000,000 £15,000,000

Treasury Bills n/a n/a £30,000,000 £50,000,000

Debt Management Office n/a n/a £50,000,000 £70,000,000

Fire/Local (inc GM bodies)/Police Authority n/a n/a £10,000,000 £15,000,000

OR Normal Investment Limit

Special Circumstances

Limit

13.2 The Council currently has its day to day banking operations with Barclays. As part of our banking package it is possible to place money in a linked interest bearing instant access account automatically via electronic transfer. In view of the reasonable interest rate offered on this account (compared to other on call options), Barclays relatively strong rating and ease of administration it is proposed to increase the limit on this account to £10 million (providing the bank continues to meet the minimum level required).

13.3 As part of the Local Authority Mortgage Scheme (LAMS) approved by Cabinet on 4th July 2012, the Council is currently participating in a cash backed mortgage scheme which requires the placing of a five year deposit with the mortgage provider (Lloyds Bank) to indemnify loans made. This is an integral part of the policy initiative and is considered to be outside of the criteria above.

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14. Certificates of Deposit, Covered Bonds / Repos and Treasury Bills

14.1 In December 2013, the Council opened a custodial account with Kings & Shaxson (a firm of London brokers). This gives us access to a range of high quality institutions (which normally do not deal directly with local authorities) via Certificates of Deposit (short-dated marketable securities). This will enable us to expand our counterparty list whilst ensuring capital is secure. The Council will continue to apply the same credit rating criteria and limits to these investments as laid out in tables 9 and 10.

14.2 Covered bonds are financial instruments secured by assets such as mortgage loans. All issuers are required to hold sufficient assets to cover the claims of all covered bondholders (and carry a preferential claim).The Council will only deal with bonds that are issued by banks / financial institutions that meet our credit criteria or AAA rated institutions.

14.3 A repurchase agreement (Repo) involves the sale and repurchase of securities (usually government bonds) traded simultaneously. The securities will be repurchased by the seller at an agreed date from the buyer / lender for an agreed higher price which represents interest to the lender. The seller is using their securities as collateral to borrow cash at a specified rate over time.

14.4 Treasury Bills are short-dated marketable securities issued by the UK Government – as such their counterparty risk is low.

15. Use of Financial Derivatives

15.1 The Council will only use standalone financial derivatives (such as swaps, forwards, futures and options) where it is confident it has the powers to enter into such transactions. They will only be used for the prudent management of its financial affairs and never for speculative purposes. Additional risks presented, such as credit exposure to derivative counterparties, will be taken into account when determining the level of risk involved. Embedded derivatives will not be subject to this policy, although the risks they present will be managed in line with the overall treasury risk management strategy.

16. Investment Budgets and Targets

16.1 Table 11 summarises the investment income budget for the treasury function:

Table 11 : Investment Income 2016/17 2017/18 2018/19 2019/20£000 £000 £000 £000

Investment Income 400 400 400 400

16.2 With interest rates on investments at historic lows, a reducing level of internal balances, an increased emphasis on security of capital rather than return and potentially lower returns on short-dated maturities this target will be challenging to achieve.

16.3 The treasury function will continue to benchmark its investment performance for the year against the seven day LIBID (London Interbank Bid) plus two basis points – i.e. to outperform seven day cash rates. This is the most commonly used performance indicator by local authorities for the measurement of investment returns.

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17. Additional Prudential Treasury Indicators

17.1 The Prudential Code contains several indicators that have not been separately identified in the main body of this report. These are summarised in Appendix iii.

18. Policy on the Use of External Service Providers

18.1 The Council uses CAS as its external treasury management advisors.

18.2 The Council recognises that responsibility for treasury management decisions remains with the Council at all times and will ensure that undue reliance is not placed upon our external service providers.

18.3 However , there is recognition that there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure that the terms of their appointment and the methods by which their value will be assessed are properly agreed and documented, and subjected to regular review.

19. Scheme of Delegation and the Role of the Chief Finance Officer

19.1 Please see Appendix ii for the responsibilities of member groups and officers in relation to treasury management.

20. Minimum Revenue Provision (MRP) Strategy

20.1 Please see Appendix iv for the Council’s policy for paying off an element of accumulated capital expenditure through a charge to its revenue budget each year – the Minimum Revenue Provision (MRP).

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APPENDIX i

CIPFA Treasury Management Code of Practice

CIPFA recommends that all public service organisations adopt, as part of their standing orders, financial regulations, or other formal policy documents appropriate to their circumstances, the following four clauses.

1. The Council will create and maintain, as the cornerstones for effective treasury management: a treasury management policy statement, stating the policies, objectives and approach to

risk management of its treasury management activities suitable treasury management practices (TMPs), setting out the manner in which the

Council will seek to achieve those policies and objectives, and prescribing how it will manage and control those activities.

The content of the policy statement and TMPs will follow the recommendations contained in Sections 6 and 7 of the Code, subject only to amendment where necessary to reflect the particular circumstances of this organisation. Such amendments will not result in the organisation materially deviating from the Code’s key principles.

2. The Council will receive reports on its treasury management policies, practices and activities, including, as a minimum, an annual strategy and plan in advance of the year, a mid-year review and an annual report after its close.

3. The Council delegates responsibility for the implementation and regular monitoring of its treasury management policies and practices to Cabinet and for the execution and administration of treasury management decisions to the section 151 Officer who will act in accordance with the Council’s policy statement and TMPs and, if he/she is a CCAB member, CIPFA’s Standard of Professional Practice on Treasury Management.

4. The Council nominates the Corporate Overview and Scrutiny Committee to be responsible for ensuring effective scrutiny of the treasury management strategy and policies.

The Treasury Management Policy Statement (TMPs)

This organisation defines its treasury management activities as:

1. The management of the organisation’s investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.

2. This organisation regards the successful identification, monitoring and control of risk to be the prime criteria by which the effectiveness of its treasury management activities will be measured. Accordingly, the analysis and reporting of treasury management activities will focus on their risk implications for the organisation, and any financial instruments entered into to manage these risks.

3. This organisation acknowledges that effective treasury management will provide support towards the achievement of its business and service objectives. It is therefore committed to the principles of achieving value for money in treasury management, and to employing suitable comprehensive performance measurement techniques, within the context of effective risk management.

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APPENDIX ii

Treasury Management Scheme of Delegation

(i) Full Council receiving and reviewing reports on treasury management policies, practices and activities approval of annual strategy. approval of/amendments to the organisation’s adopted clauses, treasury management

policy statement and treasury management practices budget consideration and approval approval of the division of responsibilities

(ii) Cabinet receiving and reviewing regular monitoring reports and acting on recommendations approving the selection of external service providers and agreeing terms of appointment.

(iii) Corporate Overview & Scrutiny Committee reviewing the treasury management policy and procedures and making

recommendations to the Cabinet.

The Treasury Management Role of the Chief Finance Officer

The Director of Chief Finance Officer

recommending clauses, treasury management policy/practices for approval, reviewing the same regularly, and monitoring compliance

submitting regular treasury management policy reports submitting budgets and budget variations receiving and reviewing management information reports reviewing the performance of the treasury management function ensuring the adequacy of treasury management resources and skills, and the effective division

of responsibilities within the treasury management function ensuring the adequacy of internal audit, and liaising with external audit recommending the appointment of external service providers.

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APPENDIX iii

Other Prudential Indicators

1.1 The Code contains prudential indicators which assess the overall affordability of our capital expenditure plans , providing an indication of their impact on the Council’s overall finances (see table 12).

1.2 The ratio of financing costs to revenue streams identifies the cost of borrowing (net of investment income) as a percentage of the net revenue streams of the Council.

1.3 The incremental impact of capital investment decisions on band D council tax identifies the additional revenue costs of the Council’s proposed capital programme.

1.4 Both indicators are based on the current budget, but will invariably include some estimates, such as the level of government support, which are not published over a three year period.

Table 12 : Affordability Indicators 2016/17 2017/18 2018/19 2019/20

Financing Costs / Revenue Streams 9.97% 10.21% 10.94% 11.32%

Incremental Impact - Band D Council Tax £5.78 £7.42 £6.81 £8.24

2.1 The Code requires local authorities to set upper limits on the percentage of outstanding principal amounts that are fixed rate and variable rate loans at any point during the forthcoming year and the following two financial years. The variable figure is calculated net of investments therefore, for example, should the value of investments in one year exceed the level of variable debt over the equivalent period then this will have the effect of creating a negative percentage figure for variable rate debt and a figure greater than 100% for fixed rate debt.

2.2 Following discussion with CAS, it is recommended that the limits set out in Table 13 be applied for the period 2017/18 to 2019/20 .The repayment of a large part of our fixed rate PWLB debt as part of Stock Transfer has increased the amount of variable debt (usually LOBOs which were excluded from the repayment exercise).

Table 13 : Fixed / Variable Debt Limits Upper Limit % Lower Limit % Fixed Variable

125 55

40 (25)

3.1 It is important that local authorities manage the risks associated with having too large a proportion of their debt maturing and requiring refinancing at a time of unfavourable interest rates. The Code, therefore, requires authorities to set upper and lower limits on the amount of principal amounts outstanding which will mature in different time periods as a percentage of total projected borrowing. Following discussion with CAS, the limits set out in Table 14 are recommended for approval for the years 2017/18 to 2019/20.

Table 14 Maturity Limits Upper Limit % Lower Limit %Under 12 months 60 012 months to 2 years 60 02 years to 5 years 60 05 years to 10 years 70 010 years and over 100 25

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APPENDIX iv

Minimum Revenue Provision (MRP)

1. Explanation of MRP and Background

1.1 The DCLG’s Local Authorities (Capital Finance and Accounting) Regulations of 2008 require local authorities to make a Minimum Revenue Provision (MRP) - the amount the Council must provide in the Revenue budget for prudent repayment of debt on capital loans. Charges for depreciation of assets, though appearing as a cost of services, are removed from the charge to revenue and replaced with MRP when calculating the Net General Fund Balance.

The policy for 2017/18 remains largely unchanged and is summarised below.

2. MRP Policies for 2017/18

2.1 For Capital expenditure incurred prior to 1st April 2008 the Council, commencing, will set aside 2% of its outstanding CFR on a straight line method – no amendments will be made for Adjustment A. This enables that balance to be written out in equal instalments over the next 50 years.

In previous years the Council has made provision for additional voluntary amounts to be set aside for schemes funded by borrowing. Voluntary provision may continue on expenditure prior to 1 April 2008 (and other schemes), though given current financial constraints this is unlikely to be actioned.

2.2 Prudential Borrowing – Short and Long Life Assets

It is proposed to continue to use the Asset Life Method for the following reasons: The proposed method represents a continuation of the existing policy with

regards to the calculation of MRP It is prudent – matching charge to the period that assets offer benefit The method will have no financial impact on existing Council Budgets. The method also includes the ability to take advantage of the MRP holiday (see

paragraph 2.8) which may be financially beneficial to the Council.

2.3 Example Asset Lives5 Years – ICT Resources7 Years – Vehicles10 Years – Other Equipment –such as wheelie bins40 Years – Buildings and Highways work

2.4 Annuity & Equal Instalments For specific projects (generally those with a commercial or Invest to Save element), MRP will be separately considered on a case by case basis. This review will take account of cash flows relating to the scheme and the finance taken to fund it. An annuity basis works in the same way as a mortgage with the MRP (equivalent to principal) increasing over the length of the project (at the same time interest payments will reduce to provide an equal repayment over the project’s life).

2.5 For expenditure in relation to capital expenditure funded by borrowing in relation to expenditure which is capital by virtue of a Ministerial Direction or which is capital

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expenditure which does not create a council asset, MRP will generally be provided over a 20 year period starting in the year after which the expenditure was incurred.

2.6 In accordance with CIPFA’s Code of Practice, repayments of PFI finance leases will be recorded as MRP.

2.7 The MRP charge will usually commence in the year following the occurrence of the capital expenditure. The exception to this is an asset that takes more than one year to become operational – see below.

2.8 Deferral of MRP (MRP Holiday) The Council will continue the policy that delegates authority to the Chief Finance Officer and the Cabinet Member for Finance to defer the charging of MRP in accordance with the Prudential Code and current accounting regulations in the following circumstances:

• There is a separately identifiable project with quantified borrowing costs.

• The period from the projects inception to it becoming operational is significantly in excess of 12 months.

• A business case has been produced incorporating the deferred MRP and capitalised interest which demonstrates that the project is prudent and affordable over its whole life.

• The borrowing and MRP amounts are material, in excess of £250,000 annually.

• The deferred MRP and accumulated interest will be charged to the appropriate revenue account on a prudent basis, once the project is operational.

2.9 Local Authority Mortgage Scheme As part of the scheme approved by Cabinet on 4th July 2012 the Council made a deposit with Lloyds Bank which provides an integral part of the mortgage lending, thereby qualifying as capital expenditure and inclusion in the CFR. Once the deposit matures, funds are returned in full to the Council and classed as a capital receipt, reducing CFR accordingly. Therefore there is no need to make a separate MRP.

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APPENDIX v

GLOSSARY OF TERMS

Authorised Limit This Prudential Indicator represents the limit beyond which borrowing is prohibited, and needs to be set and revised by Members. It reflects the level of borrowing which, while not desired, could be afforded in the short term, but is not sustainable. It is the expected maximum borrowing need, with some headroom for unexpected movements.

Bail In A bail-in is rescuing a financial institution on the brink of failure by making its (uninsured) creditors and depositors take a loss on their holdings.

Bank Rate The rate at which the Bank of England offers loans to the wholesale banks, thereby controlling general interest rates in the economy.

Certificates of Deposit

A negotiable form of fixed deposit with a secondary market (i.e. it can be sold before maturity) – if held to maturity the interest received will be that fixed initially.

Counterparty One of the opposing parties involved in a borrowing or investment transaction.

Credit Default A financial instrument for swapping the risk of debt default used when Swaps issuing bonds and securities – effectively it provides insurance against

default. The CDS spread is the difference between the price at which providers are willing to sell the swap and the price at which buyers are willing to buy. A high (or increasing) spread may suggest that the loan is more likely to default.

Credit Rating A qualified assessment and formal evaluation of an institution’s (bank or building society) credit history and capability of repaying obligations. It measures the probability of the borrower defaulting on its financial obligations, and its ability to repay these fully and on time.

Discount Where the prevailing interest rate is higher than the fixed rate of a long-term loan, which is being repaid early, the lender can refund the borrower a discount, the calculation being based on the difference between the two interest rates over the remaining years of the loan, discounted back to present value. The lender is able to offer the discount, as their investment will now earn more than when the original loan was taken out.

Fixed Rate A fixed rate of interest throughout the time of the loan. The rate is fixed at Funding the start of the loan and therefore does not affect the volatility of the

portfolio, until the debt matures and requires replacing at the interest rates relevant at that time.

Gilts The loan instruments by which the Government borrows. Interest rates will reflect the level of demand shown by investors when the Government auctions Gilts.

High/Low Coupon High/Low interest rate.

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Liquidity The ability of an asset to be converted into cash quickly and without any price discount. The more liquid a business is, the better able it is to meet short-term financial obligations.

LOBO Lender Option Borrower Option. A loan facility from a commercial institution in which the interest rate is usually fixed at the start of the term but the lender has the option to vary the rate at pre-defined time intervals. The borrower then has an option to accept the variation or repay the loan.

Market Private sector institutions - Banks, Building Societies etc.

Maturity Profile/ Structure

An illustration of when debts are due to mature, and either have to be renewed or money found to pay off the debt. A high concentration in one year will make the Council vulnerable to current interest rates in that year.

Monetary Policy Committee (MPC)

The independent body that determines Bank Rate.

Operational Boundary

This Prudential Indicator is based on the probable external debt during the course of the year. It is not a limit and actual borrowing could vary around this boundary for short times during the year. It should act as an indicator to ensure the Authorised Limit is not breached.

Premium Where the prevailing current interest rate is lower than the fixed rate of a long-term loan, which is being repaid early, the lender can charge the borrower a premium, the calculation being based on the difference between the two interest rates over the remaining years of the loan, discounted back to present value. The lender may charge the premium, as their investment will now earn less than when the original loan was taken out.

Prudential Code The Local Government Act 2003 requires the Council to ‘have regard to‘the Prudential Code and to set Prudential Indicators for the next three years to ensure that the Council’s capital investment plans are affordable, prudent and sustainable.

PWLB Public Works Loan Board. Part of the Government’s Debt Management Office, which provides loans to public bodies at rates reflecting those at which the Government is able to sell Gilts.

Specified Investments

Sterling investments of not more than one-year maturity. These are considered low risk assets, where the possibility of loss of principal or investment income is very low.

Non-specified investments

Investments not in the above, specified category, e.g., foreign currency, exceeding one year or outside our minimum credit rating criteria.

Variable Rate Funding

The rate of interest either continually moves reflecting interest rates of the day, or can be tied to specific dates during the loan period. Rates may be updated on a monthly, quarterly or annual basis.

Volatility The degree to which the debt portfolio is affected by current interest rate movements. The more debt maturing within the coming year and needing replacement, and the more debt subject to variable interest rates, the greater the volatility.

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Yield Curve A graph of the relationship of interest rates to the length of the loan. A normal yield curve will show interest rates relatively low for short-term loans compared to long-term loans. An inverted Yield Curve is the opposite of this.

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