ENVIRONMENT POLICY DEVELOPMENT COMMITTEE
7 AUGUST 2006
MEDIUM TERM BUDGET STRATEGY,
AND 2007/08 BUDGET
SPECIFIC WARDS AFFECTED
All
EXEMPT/CONFIDENTIAL ITEM
No
1 PURPOSE OF THE REPORT
To request the views of the Environment Policy Development Committee on the
Medium Term Budget Strategy for 2007/08.
Members are invited to give their views regarding service priorities for 2007/08 and
therefore where expenditure should focused. Members are also requested to
indicate those areas, which are not priorities, and to make suggestions to address
the 2007/08 budget deficit.
2 BACKGROUND
2.1 The Cabinet report dated 2 August 2006 outlines the Medium Term Budget Strategy
for 2007/08 – 2009/10 for the General Fund Revenue Budget. For the 2007/08
financial year, the report makes the following assumptions:
External support increase (RSG and NNDR Pool) of 2.7%
Council Tax increase of 3.7%
No use of balances / Collection Fund Surplus
Planning Delivery Grant of £200,000
No areas for growth and savings have been identified to balance the budget at this
stage, and the ‘stand still’ position reveals a budget deficit of £604,000.
2.2 The Cabinet report assumes a 3.7% increase in Council Tax for all financial years.
This is in line with the increase for 2006/07. At this stage it is considered that the
Council Tax increase for 2007/08 will be no higher than 3.7% and, depending on
budget pressures, will be set lower if possible. It is expected that the capping level
will be 5% for 2007/08, in line with the level reported for 2006/07.
2.3 The following assumptions for increased expenditure have been made in the budget
strategy:
Pay awards – 3%
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Pay Increments – Actual
Superannuation Increase – 1.6%
Housing Benefits Increase – 3%
General Inflation – 2.5%;
2.4 The following assumptions have been made in respect of the income items included
in the budget: -
Investment Income
Total investment income of £1,400,000, based on an average investment level of
£25m for general cash flows, £6m for the LSVT capital receipt and an average
interest rate of 4.5%. The Council’s investment income will now be reviewed further
in light of the LSVT agreement and the resulting cash flow implications.
Government Support
The Government has introduced a three-year finance settlement process in part to
assist local authorities with their medium term financial planning and to give greater
stability to Council Tax levels. The new settlement process was introduced 1 year
into the current financial cycle and Central Government have provided a two year
settlement for the 2006/07 and 2007/08 financial years. The first full three year
finance settlement will be for 2008/09 to 2010/11.
The 2006/07 settlement resulted in an increase of 3% and the 2007/08 settlement
will be a 2.7% increase. On this basis the 2008/09 and 2009/10 increases have
been projected at 2.5%.
Fees & Charges
An inflationary increase of 2.5% on all fees and charges has been incorporated at
this stage.
The fees and charges will be reviewed as part of the budget setting process for
2007/08. The scope for expanding services and introducing new charges will be
reviewed and incorporated in the strategy during the process
2.5 The budget setting process commences with the base budget. The budget for
2006/07 is used as the base budget and will be built upon in terms of inflationary
pressures, service demands and saving/efficiency requirements. The 2006/07
budget must also be re-examined in light of the Large Scale Voluntary Transfer
(LSVT) agreement. The assumptions made during the 2006/07 budget setting
process need to be compared with the actual agreement made, to update the
projection of residual costs.
3 Three Year Projection
3.1 If no action was taken and expenditure was to continue at the current levels of
activity, expenditure and income would be as follows with a council tax increase of
3.7%. One percent Council Tax generates revenue of approximately £100,000:
2
2006/07 2007/08 2008/09 2009/10
£ £ £ £
Employee Costs 16,882,870 17,703,856 18,240,172 18,712,277
Premises Costs 4,302,390 4,409,950 4,520,199 4,633,204
Transport 3,213,565 3,293,904 3,376,252 3,460,658
Supplies and Services 5,170,750 5,300,019 5,432,519 5,568,332
Third Party Payments 5,613,535 5,753,873 5,897,720 6,045,163
Transfer Payments 25,817,175 26,693,121 27,468,263 28,266,660
Capital Financing Costs 4,773,085 4,773,085 4,773,085 4,773,085
Reversal of Capital Charges -4,758,325 -4,758,325 -4,758,325 -4,758,325
Total Expenditure 61,015,045 63,169,483 64,949,885 66,701,054
Government Grants 25,274,575 26,032,812 26,813,796 27,618,210
Other Grants and Contributions 1,689,175 1,739,850 1,792,046 1,845,807
Sales 1,381,810 1,416,355 1,451,764 1,488,058
Fees & Charges - Activities 7,828,530 8,024,243 8,224,849 8,430,470
Rent - other 1,109,460 1,137,197 1,165,627 1,194,768
Interest 1,315,700 1,400,000 1,400,000 1,400,000
Other Net Recharges 4,463,925 4,311,503 4,440,848 4,574,073
Total Income 43,063,175 44,061,960 45,288,930 46,551,386
Net Expenditure 17,951,870 19,107,523 19,660,955 20,149,668
Add/(Deduct)
Balances/Reserves
Planning Delivery Grant 200,000 200,000 200,000 200,000
Net Requirement 17,751,870 18,907,523 19,460,955 19,949,668
Financed by:
Council Tax 10,083,854 10,456,957 10,843,864 11,245,087
NDR Pool 6,427,315 6,577,331 6,741,764 6,910,308
Revenue Support Grant 1,240,701 1,269,659 1,301,400 1,333,935
0 0 0 0
Total Financing 17,751,870 18,303,947 18,887,028 19,489,330
Deficit / (Surplus) 0 603,576 573,927 460,338
3.2 A breakdown of 2006-07 service budgets relating to this Committee is included in
Appendix A. Please note that the budget book was prepared before the changes to
the portfolios in May 2006.
4 The Gershon Efficiency Agenda
There should be a clear link between the strategic budget review and the Gershon
Annual Efficiency Statement, which was approved by Cabinet on 15 March 2006.
The Gershon efficiency agenda requires efficiency gains of 2.5% per year up to
2007/08, across a range of services. The following areas relating to the
Environment Directorate have been identified for review in the Annual Efficiency
Statement:
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E-recruitment and e-auction for agency staff
Corporate Printing, including reduced paper usage
Joint procurement work with Congleton
Joint Building Control with Congleton and Crewe and Nantwich
E-billing
Review of Markets
Staff transfer from back office to front office
5 Capital Programme
The three year Capital Programme is updated annually in line with the Council’s
Capital Strategy. Development in updating the Capital Programme will commence
in September 2006, with a full review of available capital resources. An update will
be provided in the December report.
6 Way forward
The Corporate Plan was formally adopted by the Council in 2004, covering the
Council’s priorities for the next five years. The plan forms the basis for individual
service delivery plans for 2007/08. The priorities identified in the Corporate Plan,
Service Delivery Plans and new corporate tasks for 2007/08 will be the drivers for
the Medium Term Financial Strategy and will inform the budget proposals that will
be reported to Cabinet in October. A further report covering details of the proposed
2007/08 budget within the remit of this Committee will be presented to members
during December 2006.
The timetable for the financial strategy review and budget setting process for
2007/08 is proposed as follows: -
Date Meeting Action
Financial Strategy
2 August 2006 Cabinet Assessing current position
Financial Strategy
3 August 2006 Scrutiny Committee Scrutiny of budget setting process
Budget Development Process
7 – 29 August 2006 Policy Development Checking budget process aligns
Committees with priorities
Financial Strategy
11 October 2006 Scrutiny Committee Scrutiny of budget setting process
Financial Strategy
25 October 2006 Cabinet Setting the broad budget plan,
taking account of feedback from
Policy Development Committees
Financial Strategy
22 November 2006 Cabinet Service Budgets 2007/08
Financial Strategy
9 – 24 December Policy Development Service Budgets 2007/08
2006 Committees
4
Budget Update
24 January 2007 Cabinet Feedback from Policy
Development process
Update of progress and any
emerging issues
Final Budget Setting
14 February 2007 Cabinet Recommendation of detailed
budget to Council
Final Budget Approval
22 February 2007 Council Including council tax setting
7 OTHER IMPLICATIONS
Financial - As covered in the report
Staffing - None
Legal - None
Assets - None
Policy - None
Equality - None
Crime & Disorder - None
Other - None
8 APPENDICES
Appendix A – Extract from Budget Book 2006-07
Cabinet Portfolio Holder Cllr F Keegan Tel Ext No: 4178
Director Emma Alexander Tel Ext No: 4800
Corporate Manager Lisa Quinn Tel Ext No: 4801
The Contact Officer for this report is Lisa Quinn ext no 4801.
TRACKING/PROCESS:
Consultation Ward Members Partners
N/A N/A N/A
Panel Overview & Scrutiny Cabinet Council
N/A Scrutiny Committee 2 August 2006 February 2007
3 August 2006
Policy Development
Committees 7 – 29
August 2006
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BACKGROUND PAPERS
The following list of documents were used to complete this report and are available
for public inspection for four years from the date of the meeting from the Contact
Officer named above
Budget Book 2006/07
Cabinet report – 2 August 2006
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Appendix A
Summary
2005/2006 2006/2007
Page Net Expenditure Under Main Headings Original Original
(1) (2) (4)
£ £
Strategic Planning and Development Portfolio
30 Technical - General 215,245 165,640
31 Engineers and Architects 266,975 268,605
32 Fleet Management 0 0
33 Town Centre Services 46,370 52,890
34 Markets 44,975 33,940
35 Public Conveniences 357,335 415,090
36 Car Parking -702,880 -929,190
37 Planning 1,899,450 1,950,925
Total Net Requirements 2,127,470 1,957,900
Public Health Portfolio
£ £
39 Management and Administration 0 0
40 Waste Management 0 0
41 Refuse Collection and Recycling 3,396,530 4,053,005
42 Street Cleansing 1,251,360 1,416,570
43 Public Health 186,605 172,670
44 Food Safety 255,600 246,940
45 Health and Safety 127,970 131,065
46 Pollution Control/Contaminated Land 288,265 363,340
47 Pest Control 94,260 100,715
48 Dog Warden 74,850 82,635
Total Net Requirements 5,675,440 6,566,940
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