The Director of Strategic Resources presented a report on the proposed Revenue Budget for 2014/2015.
Details were provided of the overall consultation process regarding the budget intentions following which 76 responses had been received and 2 petitions and subsequent withdrawal of three proposals in respect of Trade Union Facility time (£43,500), Community Councils (£12,500), Staff Terms and Conditions (£412,000) a total of approximately £468,000. In addition the Mayor had announced additional funding of £250 for each Community Council in 2014/2015.
The report gave an indication of the impact of the Local Government Finance Report for 2014/2015 and 2015/2016 which had resulted in a minor change of increased resources of approximately £9,000 from the provisional settlement provided in December 2013.
The impact of the Government's statement was outlined which included a reduction of £8.6 million in Government grant support applied to Middlesbrough which equated to 5.3% reduction or approximately £62 per head of population. On average local authorities had received a 2.9% reduction which if applied to Middlesbrough a further £3.91 million would have been available. Members requested further information regarding the current level of support per head of population and appropriate comparative information in this regard.
It was also pointed out that as part of the settlement there was a proposal to cease the Social Fund grant. Middlesbrough had received £954,000 per annum which had provided assistance in approximately 4,000 cases in 2013/2014. Members expressed deep concern at the potential impact on the most vulnerable at the withdrawal of such funding and acknowledged the ongoing discussions regarding important policy decisions to be made in terms of welfare reform.
The Board was advised that the position for 2014/2015 was broadly in line with the current Medium Term Financial Plan projections.
Taking into account the level of government support proposed over the next two years together with the adjusted allocation for 2013/2014 it was estimated that further budget reductions would need to be made as £25 million 2015/2016, £20 million 2016/2017, £14 million 2017/2018, £13 million 2018/2019 and £13 million 2019/2020.
Confirmation was given that in preparing the medium term financial plan, the principles consistent with previous year's budget strategies and the agreed structure, process and governance arrangements in respect of the Change Programme had been adopted.
The revenue budget assumptions applied for 2014/2015 included:-
(a) A 1% provision for pay awards.
(b) An additional inflationary provision for the assessed impact of increased prices for energy and fuel of £0.2 million, together with specific contract inflation income from fees and charges had been assumed to increase on average by 1.5%.
(c) Identified potential pressures relating to safeguarding vulnerable children which included a specific additional provision of £400,000 and £175,000 had been provided to address social worker caseload in 2014/2015 and 2015/2016 respectively.
(d) Within Adult Social Care, an annual provision of £2.4 million had been made to deal with estimated ongoing demand led spending pressures.
(e) Provision for a continuation of reduced car parking charges for Zetland Car Park at an increased cost of £300,000 per annum.
(f) An allowance of £650,000 had been made for the potential impact on the demand for services at Middlesbrough's Crematorium in view of the construction of a crematorium in Redcar and Cleveland.
(g) Provision had been made in relation to the structural budget deficit in respect of income from commercial rents and charges of £215,000.
(h) Provision had been made for the impact of grant changes including additional New Homes Bonus £416,000 and a reduction in Council Tax benefit grant £100,000.
(i) Additional annual provision of £400,000 had been made in respect of the Council's agreed capital programme.
In presenting the budget reductions there had been a number of mitigation measures put in place of approximately £7 million which included Efficiency and Procurement savings £1.9 million), Children and Families demand pressures £1 million, Adult Social Care £0.8 million, maximisation of external funding £2.5 million, and reduction in pension contributions £0.8 million.
The recommended budget reductions for 2014/2105 were shown in Appendix A of the report submitted summarised as Neighbourhood and Communities £4.355 million, Wellbeing Care and Learning £1.937 million, and Corporate and Central Services £8.555 million. The Board was advised that it had been estimated that the full year impact of the 2014/205 savings outlined in Appendix A would provide additional savings of £7 million in 2015/2016 and further savings of £2 million in 2016/2017.
Members were keen to seek assurances that the proposed reduction of £7,600,000 (ref. 29 of Appendix A submitted) regarding proposals to modernise the way in which back office services were delivered by automating processes, making greater use of IT and merge similar functions was achievable mindful of the necessary changing cultures and potential time factors in order for this to be attained. An indication was given of a number of proposals which were dependant on the success of the Middlesbrough Manager model and confirmation given that a further breakdown would be provided to Members in this regard.
In terms of financial reserves the Director of Strategic Resources had advised that it was considered appropriate to maintain a minimum of between £4.0 million and £4.5 million over the medium term. Following a review in December 2013 the projected position for General Fund Reserves at 1 April 2014 was estimated at £5.299 million.
As required by the prevailing regulations the report included a statement from the Director of Strategic Resources confirming that in his opinion the budget calculations for 2014/2015 were robust as set out in the report submitted.
In accordance with prevailing legislation It was confirmed as required that an equality impact assessment had been undertaken and full copies of each individual assessment together with a summary and an overall impact assessment of the budget process had been circulated with the report submitted.
The Board was advised that the budget provided an extra £7 million gross investment in key services (before any budget reductions) including £3.400 million for care for children and young people, £2.400 million for care for older people and vulnerable adults and £1.165 for income shortfalls. It was stated that the 2014/2015 draft budget minimised impact on front line services but it was pointed out that efficiency savings alone could not meet the projected gap over the medium term and there will be a requirement to reduce front line services.
An indication was given of the factors that had been considered in respect of the level of Council Tax increase including the current level of Council Tax, current levels of inflation, pressures from caring for vulnerable people, level of budget reductions required and the medium to long term implications of the Government's Autumn Statement and the Local Government Finance Settlement 2014/15 - 2015/16.
It was also confirmed that the impact of the Government's proposed freeze grant had also been considered. Following an assessment of the current criteria it was indicated that should the Council decide to accept the freeze grant reference was made to an additional requirement for further budget reduction of approximately £400,000 in 2014/2015 and an overall additional gap shortfall of £17 million over the next 10 years.
ORDERED as follows:-
1. That the information provided be noted.
2. That further information be provided to Members on the areas outlined.