www.hertsdirect.org local government finance settlement and integrated planning process mike parsons...
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Local Government Finance Settlement and Integrated Planning Process
Mike Parsons
Overview & Scrutiny Committee
3 February 2012
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Finance Settlement 2012/13 - Headlines
• 2nd year of 2 year settlement – figures unchanged from previous announcement
• No change to formula methodology from 2011/12
• Further council tax freeze grant for 2012/13 (but unlike the 2011/12 grant, this is one-off)
• New distributional system planned from 2013/14 (Bill published just before Christmas)
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Baseline Adjustments
- Academy & Free School adjustment for local authority central services
- No change to previously announced adjustments for 2011/12 or 2012/13
- Entirely new methodology proposed from 2013/14
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Hertfordshire’s Figures 2012/13- Formula Grant2011/12 Actual Formula Grant £200.7m- Baseline adjustments £ 2.4m= 2011/12 Baseline £198.3m
2012/13 Raw Formula Grant £162.0m + Damping £ 15.7m= Comparative Formula Grant £177.7m (-10.4%) + Freeze Grant 2011/12 £ 12.6m= 2012/13 Formula Grant £190.3m
• comprising £3.6m RSG + £186.7m NNDR
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Hertfordshire’s Figures 2012/13- Other significant grants• Council Tax Freeze Grant 12/13 £12.6m [one-off]
• Early Intervention Grant £37.0m
– additional £1.4m for targeted 2 year olds
• Learning Disability Grant £38.4m
• NHS Social Care Funding £10.6m
• New Homes Bonus £2.0m
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Revenue Spending Power
• Calculated by Government as
– Council tax requirement (2011/12)
– Formula grant (adjusted)
– Specific grants (where available)
– NHS funding for Social Care
• 2011/12 Adjusted estimate £791.5m
• 2012/13 Estimate £773.4m
• Change -£18.1m or -2.3%
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Conclusions• Formula grant as expected; other grants little changed
from 2011/12
• Great uncertainty from 2013/14 onwards, with anticipated new grant methodology (business rates, council tax benefit, school central services) and transfer of functions (public health)
• IPP needs to reflect reduced grant funding and pressures
– Inflation, inc. energy– Demography, numbers and complexity– Legislation, e.g. landfill tax, carbon commitment– Other, e.g. capital financing
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Revenue Pressures 2012/13
• Inflation: £ 3.9m
– Pay 0%; electricity 10%-26%; gas 17.7%-17.8% business rates 5.6% …
• Demography: £9.3m– Learning Disability £5.3m;– Older People £2.9m; – Physical Disability £0.6m; – Mental Health £0.4m
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Revenue Pressures 2012/13
• Legislation: £ 2.6m– e.g. Landfill Tax £2.2m
• Capital Financing & Contingency: -£17.7m– reduction mainly due to reduced borrowing
• Previous Policy Decisions:-£1.5m
• Other: £ 1.1m
NB only major items shown; totals include some negative items
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Revenue Savings 2012/13
Previously delivered 2011/12 £88.5m
Further savings identified* 2012/13 £38.2m
= Total savings£126.7m
*still to be delivered …
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Revenue Savings 2012/13
• Significant areas already subject to member process, including:
– Home to school Transport - £2.9M
– Street Lighting - £0.7M
– Libraries Hours - £1.5M
– SMS - £1.4M
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Other Revenue Savings 2012/13
• LEAN reviews in HCS
• Transfers to Serco
• Standards & School Effectiveness
• CLA strategy
• Careers – shift to schools
• Enablement
• MH services review
• Preventative and voluntary services review
• Highways, property & HR resourcing procurements
• Delayering and structural changes – inc SMB
• Terms & Conditions
• Day Crewing (F&R)
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Looking ahead …
2013/14 2014/15 £m £m
Identified 146 151Gap - 33Total 146 184
• Figures for 2013/14 and 2014/15 will depend on changes to grant distribution system
• Assumes Council Tax freeze in all years – assumption only: decision will be required when setting budget in future
years
Transformation Savings by Work StreamWork Stream
14/15£m
WS 1: Simplifying the Customer Journey 3.9
WS 2: Children's Services Transformation 32.3
WS 3: Promoting independence, personalisation and early intervention
27.8
WS 4: Localism & Engagement 0.4
WS 5: Enhanced commissioning and procurement 33.5
WS 6: Best Use of Assets 11.2
WS 7: Organisational Design & Delivery 11.9
WS 8: Working for HCC
Sub-total Efficiency Savings
8.7
129.7 [85%]
WS 9: Right level of publicly financed services 21.4
Total identified savings 151.1
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Value for Money / Benchmarking
• Detailed work undertaken – starting to see impact of transformation in some areas
• Analysis will inform search for the further £33m savings required for 2014/15
• Next slide is 2009/10 CIPFA VFM analysis … the following slide is provisional and unverified 2010/11 version [note some data is clearly incorrect – e.g. Fire, Early Years]
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Value for Money
Early Years
BS, Welfare and Inclusion
School Improvement
Highway Maintenance
Adults<65 with LD
Public Transport
Planning and admissionsSpecial Educational Needs
Children's Social Care
Road SafetyOld People's Social CareWaste Disposal
Libraries
Fire Service
Adults<65 with MHN
High
Cost Percentile
Pe
rfo
rman
ce P
erc
enti
le
Provisional and unverified VFM 2010/11
Adults<65 with LD
Adults<65 with PD
Early Years
Fire
Libraries
School Improvement
School Planning & Admissions
Special Educational Needs
Street Lighting
Adult Education
Public Transport
BS, Welfare & Inclusion
Children's Social Care
Road Safety
Waste Disposal
Adults<65 with MHNs
Highways Maintenance
Older Peoples Social Care
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50 60 70 80 90 100Relative Cost (%)
Rela
tive P
erf
orm
an
ce (
%)
Source: Cipfa VFM Toolkit 2010/11. Significant changes from 2009/10 content and methodology noted. Further work being undertaken to analyse and verify the information, particularly for Fire and Early Years areas.
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Capital Programme 2012/13 - 2015/16
• Proposed programme based on following principles– Major schemes in existing programme preserved
• but Stevenage Fire Station now refurbishment, rather than new build
• Croxley Rail updated for latest figures; and• Vehicle replacement programme reviewed
– Continuation of current levels of funding for highways maintenance
– New schemes only where funded principally from grant or s106
• e.g. Broadband, Fire Station improvements
– Where possible grant used to substitute for prudential borrowing, and so reduce debt
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Prudential borrowing & debt
• One-off investment of £37.5m revenue funding (including the 2012/13 council tax freeze grant) to support 2012/13 capital programme
• Significantly reducing need for prudential borrowing (which would otherwise have been required to fund the programme) and so reduces cost of debt in future years
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Schools Budget
• Funding per pupil (including mainstreamed grants) frozen at 2011/12 cash level
• Minimum Funding Guarantee (MFG) for schools - set at -1.5% of their 2011/12 per pupil funding, before pupil premium
• Pupil premium grant - additional to DSG and increased for 2012/13 to £600 per pupil entitled to free school meals* and Children Looked After (£250 for Service Children)
*now includes those who have been in receipt at any time in previous 6 years
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Reserves
• Contingency 2012/13 £3.1m
• General Fund balance – recommended increase in minimum prudent level to 3% (from 2.5%) of net revenue budget (=£24m)
• plus Specific Reserves for particular purposes (the largest individual reserve being accumulated school balances)
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Outstanding information
• Final government formula grant settlement (though no changes expected)
• Some further minor grant announcements from government departments
• Lee Valley Park and Environment Agency levies
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Timetable
• Service Cabinet Panels 31 January – 7 February
• Overview & Scrutiny 3 and 8 February
• P&R Cabinet Panel 10 February
• Cabinet 20 February [final]
• Council 21 February
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Questions