NNDR Consultation – Financial Strategy and Budget 2010/11
1.1 This report gives details on the Financial Strategy and Budget Report 2010/11. This
will allow businesses to review the changes in the budget for 2010/11 and give them
an opportunity to make any comments which will form part of a verbal response by
the Executive Director of Resources and Customer Services at the Cabinet meeting
to be held on 22nd February 2010.
2. EXECUTIVE SUMMARY
2.1 This report sets out the 2010/11 budget for the residents of the borough of Croydon
in the context of the Council’s medium term Financial Strategy, the final year of the
strategy period 2007/11. The budget for 2010/11 is balanced and prudent. It
continues to build upon the principles of sound financial management and for the
longer term strategic financial planning of the Council which was first outlined in the
Financial Strategy 2007/11. The budget is the second budget to be set in the
context of the recession which has impacted on the Council’s financial position and
the measures necessary to ensure a prudent budget for the period ahead. Details by
Council Priority of the capital programme (Appendix 1) and the overall Investments
(Appendix 2), Efficiencies (Appendix 3) and Cuts (Appendix 4) are attached.
2.2 These are turbulent times for the public sector and in particular for local government
as funding priorities are likely to remain for Health and Education. The need to
reduce public spend in order to enable a reduction in the overall debt in the economy
is self evident. Local Government is therefore facing significant reductions in future
funding whilst the recession impacts on both income and service expenditure. In
these circumstances the combined reduction impact could be as much as 30%. On
this basis the revised Financial Strategy has been developed to assist the Council in
navigating through these rough waters.
2.3 Despite these challenges the Council has continued to make progress in the
achievement of its strategic financial objectives as set out in the financial strategy.
This has been recognised again in the Use of Resources score which achieved level
3 in the harder test of the new organisational assessment. This provides nationally
recognised evidence that Croydon is managing all of its resources to the highest
standards and that the Financial Strategy, which provides the framework for the
Council’s budget setting and local taxation policy, is based upon robust financial
principles and processes.
2.4.1 Continuous developments have been made across the Council over the last financial
year to improve the budget setting process; key changes have included a further
strengthening of the already robust budget challenge sessions, which are now called
the ‘Challenge’ sessions as it aligns further with the strategic service planning and
financial process, and further work in order to identify efficiencies and improvement
The outcome of the Council’s efficiency, targeting £15.947m (6.04% of the 2010/11
budget), reducing the council tax band D bill by £126.03. The local taxation
increases required to support the 2010/11 budget and associated strategic priorities,
objectives and strategies are set out in Table 1 below.
Table 1 – Local Taxation & GLA Taxation increase ( Band D comparison)
Local Taxation 2010/11 Increase Annual Weekly
% Increase Increase
£ £ £
Croydon 1150.11 1.07% 12.22 0.24
GLA 309.82 0.00% 0.00 0.00
Overall Council Tax 1459.93 0.8% 12.22 0.24
2.5 This is the last budget which will be set under the 2007/11 Financial Strategy. This
report highlights the success of the financial strategy in ensuring the improvement in
the Council’s financial position. A new Financial Strategy has been prepared for the
period 2010/14 which supports the recommendations contained in this report and
sets the strategic financial direction for the Council over the coming period.
3.0 FINANCIAL STRATEGY OBJECTIVES REVIEW
3.1 The Financial Strategy approved by the Cabinet on the 12 th February 2007
established the overriding financial objectives of the Council for the medium term.
These core objectives ensure alignment of the Council’s overall strategic priorities
and resources. They clearly communicate to our residents the priorities to which the
local revenue raised will be directed ensuring greater alignment between resource
allocation and residents priorities.
3.2 The objectives of the strategy are set out in Table 2 below.
Table 2 – Financial Strategy Objectives
Financial Strategy Objectives Outcomes
1 To maintain an affordable Council Tax
2 To ensure the Council systematically challenges and secures Value
3 To ensure that the Council’s resources are expended on meeting the
Council’s Vision for Croydon and achieving the priorities for our
community Investing in our
4 To ensure that the Council’s infrastructure is fit for purpose and that Communities Priorities
new capital needs are identified and met
5 To ensure that the Council’s core ongoing financial position remains
stable and continues to support the Council’s key objectives. Our Financial Foundation
3.3 Graph 1 below visually demonstrates the key elements of the overall financial
strategy, the balance and stability achieved in ensuring our budget expenditure
increases are supported by our revenue resources in turn underpinned by the
foundation of the Council’s reserves and balances. The outcome of the financial
strategy clearly demonstrates sound financial management over this period.
Graph 1 – High Level Financial Sustainability Analysis
Council Tax Increase Net Budget Increase Increase in Grant (Use of)/ Contribution to Balances & Earmarked Reserves
3.4 The progress made against the Council’s medium term financial strategy is
demonstrated below against each of the strategy objectives. Over the period of the
current financial strategy the Council has rebuilt the foundation of financial standing
and strengthened its ability to cope with the financial risk which local government is
daily and readily exposed to. Balances and Reserves have been restored to a
position where they can resource our future strategies and in-year financial
management has successfully ensured a balanced budget delivery each and every
year over the period of the strategy.
3.5 The strength in financial standing will ensure the Council can now take a longer term
and more strategic regard to the future needs of the borough, the aspirations of our
residents and in managing the financial challenges ahead.
Objective 1 – An affordable Council Tax
Graph 2 – Croydon Council Tax
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Croydon 26.84% 7.20% 4.99% 4.44% 3.99% 3.99% 3.84% 1.07%
27.3% 7.3% 5.1% 6.3% 4.3% 3.5% 3.0% 0.8%
3.6 The local taxation policy is based on the Croydon element of council tax increasing
by less than 4% each year over the term of the financial strategy. This is embedded
as an objective within the Council’s financial strategy and this has been maintained
over the period of the financial strategy. The 2010/11 overall increase represents the
lowest Council Tax increase in Croydon since the introduction of the council tax
source of local funding.
3.7 The level of council tax paid by our residents is the 7th lowest for the outer London
authorities (based on 2009/10 data) whose central government funding is on the
grant floor (the lowest amount payable by central government).
3.8 Whilst the Council is under considerable financial pressure to fund services and
limited by the minimal increases in central government funding, the strategy for
council tax will remain focussed on minimising the level of increase giving certainty
to the residents of our borough. Our requirement to ensure the delivery of the
efficiency and transformation agenda is therefore critical in moving forward. In light
of the likely outcome of the forthcoming Comprehensive Spending Review this will
be particularly challenging and demanding. As a consequence of this the Council
has developed the “Step Change Croydon” programme to enable it to balance the
budget over the next financial strategy period.
Objective 2 - Delivering Efficiencies and Securing Value for Money
3.9 Graph 4 highlights the continued improvement in efficiency achievement over the
period of the current and previous financial strategy achieving £70.3m of efficiencies.
The Council continued to embed the value for money challenge to all services
delivered by the organisation through its RELEASE & DELIVER programme. This
platform enables the Council to draw together all the extensive work it is already
doing in relation to making services more efficient: smarter procurement; service
transformation; better use of assets; working with others and looking to others for
guidance to ensure that the Council’s financial challenges can be met along with
delivering improved services. For 2010/11 a 4% target was given to all departments.
This target has been exceeded through the identification of 6.04% of efficiencies,
£15.947m (6.04%) of efficiencies and £1.587m of cuts for the period 2010/11 to
ensure a balanced budget is achieved for the 2010/11 year.
3.10 For the period of the next financial strategy the Council will focus on the delivery of
an organisation-wide ‘One Council’ transformation programme ‘Step Change
Croydon’ to deliver the efficiencies and improvements required to balance the
budgetary gap over this coming period.
3.11 Over the period of the current financial strategy the Council has identified £52.654m
of efficiencies or 25.85%, this represents an increase of £34.926m compared to the
previous financial strategy period (2002/06).
3.12 Graph 5 below gives details of the Council’s achievements in this financial strategy
period (2007/11) compared with the previous financial strategy period (2002/06).
3.13 Table 3 below shows identified efficiencies by department. To date the Council is
proposing to generate efficiencies of £25.122m over the next four years, which
includes £15.947m identified in 2010/11. This represents 6.04% per cent of the
Council’s budget which far exceeds the central government expectations and targets
but is absolutely necessary to avoid substantive cuts in services.
Table 3: Efficiency Programme for the period 2010 to 2014
2010/11 2011/12 2012/13 2013/14 Total
DEPARTMENT £m £m £m £m £m
Adult Services & Housing (5.150) (4.086) (1.066) 0.000 (10.302)
Children Young People & Learners (3.527) (1.206) (0.544) (0.158) (5.435)
Community Services (2.931) (0.561) (1.255) (0.355) (5.102)
Planning, Regeneration & Conservation (0.277) 0.000 0.000 0.000 (0.277)
Central Departments (4.062) (0.100) 0.000 0.000 (4.162)
TOTAL (15.947) (5.953) (2.865) (0.513) (25.278)
3.14 The Council continues to improve its performance and delivery of value for money.
In 2007/08, for the Council overall, 71 (out of 129) indicators met their targets, with a
further 24 showing improvement (73.6% in total). This success rate is 3.6% higher
than that achieved last year, where 70% of indicators met target or improved.
Comparing this performance information along with other benchmarked measures
shows that Croydon is the 7th highest performer in London for delivering value for
money performance to its residents.
3.15 Croydon has continued to achieve exemplary efficiencies since 2004/05, delivering
consistently above the 75 percentile of London boroughs for NI 179. In 2008/09
60% of our performance targets were either met or improved and the Council has
shown significant improvement in areas of key concern to our local communities.
For example we are out performing our target for the number of 17 year olds staying
in education achieving 91% ahead of the target (target was 90% by 2015).
Attainment of 5 A*-C GCSE levels has increased by 18% since 06/07. The Council
provided 1,455 new homes in 08/09 with only one other London borough providing
more new homes, and Croydon is now the leading London borough for improved
street & environmental cleanliness.
3.16 To build on the success of the Release & Deliver programme, the Council has
established the ‘Step Change Croydon’ programme. The programme has been
established to support the delivery of a minimum 5% efficiency per year but
fundamentally will target large scale transformation change across the entire
organisation, our partners, our public sector relationships and our enabling and
service delivery services. The overall programme will be delivered through three
programme boards, Markets and Partners, Business Transformation and Workforce
with each chaired by an Executive Director and the overall programme chaired by
the Chief Executive.
Objective 3 - Achieving the priorities for the Borough
3.17 In establishing the recommendations and priorities for investment full consideration
of the priorities from our community are taken into account in shaping those
choices as part of our Customer Strategy challenged through the customer element
of our “Challenge” process identified in Diagram 1 below.
3.18 Diagram 1 below sets out, from a recent survey carried out with residents, priorities
for improvement in our services compared with those areas of our business which
are important in making the borough ‘a good place to live’. This informs the
Council in making decisions for investment (growth) at the same time as guiding
the difficult choices that are required in the current economic climate.
3.19 Examples of investments where residents views and priorities have been shaping
the choices made include:
Parks to be Proud of. This is a major project aimed at improving the quality
of Croydon's local parks. It is the chance to vote on which of Croydon's 127
parks should get a share of £1.5million and will allow people to have a say in
what the money gets spent on. This money is new investment over and above
the ongoing programme of general parks maintenance
Community Improvement Fund - £1m to deliver a range of projects in
response to the wishes of the local community including traffic schemes, park
improvements, playground refurbishments and community facilities.
Diagram 1 – Key priorities identified by our community
3.20 Through the use of customer insight, customer feedback loops and customer
satisfaction information the services above have now been targeted for intensive
support around their improvement activities. The launch of the customer service
excellence standard means that service areas can assess themselves and identify
where they need to focus their improvement efforts. Examples of the areas
covered in the excellence standard include information and access to service,
timeliness, quality and delivery of service and people and culture. More recently
the Place Survey (2008) has now shown that satisfaction has improved from an
overall level of 42% in 2006 to 45% in 2008, one of only five authorities in London
to show improvement despite the overall declining levels of satisfaction in London
and the country as a whole.
3.21 It has also been a clear policy over the period of the financial strategy that additional
income raised from local taxation is used to invest in the agreed priorities. The
Council had continued to invest in key areas to ensure that it delivers the services to
meet the community priorities and needs of the residents in the borough. Illustrated
below are examples of some of the investment put in over the current period of the
financial strategy and the outcomes that this has achieved.
improving perceptions in relation to anti-social behaviour within the borough;
improved satisfaction with street scene services
improvements in the performance of children’s services
Achievement of 5 or more A*-C grades at GCSE or equivalent including English
and Maths 52.1% matched national average-The rate of improvement in Croydon
schools over the last 3 years has been 17.34% against 8.8% nationally and
represents very good progress.
Reduction in secondary school persistent absence rate to 6.8%
Narrowing the gap between the lowest achieving 20% in the Early Years
Foundation Stage Profile and the rest met 34.6 % LAA target.
Improving NEETS position in a time of economic recession (see economic
recession case-studies re Croydon the Place approach)
3.22 During 2010/11 further investment has been made in the following areas:
Table 4 – Investments in 2010/11
Provision of a well resourced social work service – ‘Refocus and Reform’ 1.996
Transforming Croydon Schools – Our Investment in our Schools 1.907
Waste and recycling 1.537
Investment to support issues in relation to mental health and learning disabilities 1.700
Investment in additional provision in the Youth Offending team. 0.175
Investment in the integrated children’s system 0.159
Total 2010/11 7.474
Objective 4 - Investing in our Infrastructure for the future
3.23 The Council has ensured that it has remained within the prudential borrowing
parameters which are set as part of the budget and will continue to ensure that this is
the case. Over recent years new key capital schemes have been progressing such as
the refurbishment of Thornton Heath Library and the Early Years Children’s Centres.
Other sources of funding have enabled the Council to deliver its strategic priorities
including Homes for the future and our plans for borough-wide street lighting
improvements and waste management.
3.24 In 2010/11 further work will be carried out and new schemes are planned which include
Waddon Waylands Regeneration Scheme and the Primary Schools and Primary Capital
Programme. More details are shown in Table 6. A strategic decision has been taken to
increase the size of the capital programme from additional borrowing to fund a long
term infrastructure investment through a new Capital Strategy to be presented to the
Cabinet in the Summer. There are still significant infrastructure requirements in the
Borough and the programme for 2010/11 is designed to tackle these.
3.25 Graph 7 below shows the historic nature of the Council’s spend on the infrastructure
compared to other London boroughs with Croydon being the 5 th lowest this recognises
the opportunity for the Council’s new Capital Strategy and a prudent level of capital
gearing for the Council.
Graph 7 – Local Authority Spend per head on Infrastructure
£ per head
Kensington & Chelsea
Barking & Dagenham
Hammersmith & Fulham
LB Croydon Inner London Boroughs Outter London Boroughs
Table 5 – Capital Investment 2010/11
Priority Description £m
Improving Waddon Regeneration Scheme – including a leisure centre, Children’s £11.000m
health and Centre and housing . This is the first scheme to be delivered by
well being CCURV and will result in the development of four sites on the Purley
and Way in Waddon.
Achieving a Primary Capital Programme and Primary Schools Programme – the £26.442m
better creation of a new primary school and additional classrooms within
outcome for existing schools to accommodate the growing demand for places.
children and Childrens Hub – Creation of a single centre where all Childrens care
young people services are located. Resulting in improvements and a transformation £5.580m
of service delivery in this critical area of our service provision.
Improving the Waste and Recycling Services – Purchase of wheeled bins to enable £0.650m
environment waste to be collected and recycled, and kitchen waste collection
service to be implemented in the borough.
Promoting Acquisition of strategic assets – purchase of assets and sites within £2.000m
Economic the borough to act as a catalyst for regenerative development in the
Growth and borough.
Delivering Highways – Streetscene, Highways maintenance, footway and signs £7.000m
High Quality and lines programme. Works to repair and improve the Streetscene
Public including roads, footways and signage.
Value for Housing Investment Programme – Investment in existing housing
Money stock and creation of new housing within the Borough. £27.840m
Objective 5 – Financial Stability
Graph 8 – Reserves, Balances and Provisions
Reserves,Balances and Provisions
As at As at As at As at Estimated
31/03/06 31/03/07 31/03/08 31/03/09 31/03/10
GF Balances Other minor reserves LMS Balances Provisions
3.26 The Council has achieved its target of General Fund balances of 3% of net
operating expenditure over the medium term providing a stable financial position
from which the other key objectives of the Financial Strategy have been achieved.
3.27 In addition the Council has rebuilt the level of provisions and reserves in order for it
to meet future liabilities and more importantly in order to enable the delivery of its
future strategic ambitions and priorities.
4. LOCAL TAXATION INCREASE FOR 2010/11
4.1 The council tax increase for 2010/11 is recommended to be 1.07% in accordance
with Appendix G of the report.
4.2 The effect of this increase on all council tax bands is contained in Appendix H with
the Band D effect shown in Table 6 below.
Table 6 – Local Taxation increase for 2010/11
Band D per year 1150.11 12.22
Band D per week 0.24
5. GREATER LONDON AUTHORITY PRECEPT 2010/11
5.1 The consultation paper on the Mayor’s budget for 2010/11 was issued on 10
December 2009. This set out proposals for a nil increase in the precept. The
Executive Director for Resources and Customer Services responded to the
consultation on behalf of the Council. The Mayor will present his draft budget to the
London Assembly on 27th January 2010 and his final budget on 10 th February 2010.
5.2 This overall resultant council tax increase is set out in Tables 7 and 8 below.
Table 7 – Local Taxation increase and the GLA Tax increase
2007/08 2008/09 2009/10 2010/11
Band D % % % %
3.99 3.99 3.84 1.07
Greater London Authority 5.29 0.00
Total % Taxation increase 4.28 3.53 2.99 0.8
Table 8 – Local Taxation increase and the GLA Tax increase
Band D 2010/11 Increase per week
£ £ £
Croydon 1150.11 12.22 0.24
Greater London Authority 309.82 0.00 0.00
Total Council Tax increase 1,459.93 12.22 0.24
5.3 The Croydon element increase of 1.07% and the GLA precept increase of nil results
in an overall council tax increase of 0.8% for the residents of Croydon.
6. CONSULTATION WITH NATIONAL NON-DOMESTIC RATEPAYERS (NNDR)
6.1 The Executive Director of Resources & Customer Services has agreed that the
annual consultation will be facilitated through a link to Croydon’s web site, allowing
businesses to review the changes in the budget for 2010/11 and make comments to
6.2 The Settlement for 2009/10 shows Croydon receiving £94.915m from the national
NNDR pool. For 2009/10 Croydon’s latest estimate of payments into the pool totals
£110.8m, a net contribution of just over £16m.
6.3 For 2010/11 Croydon will receive £103.505m from the pool. However the net
position is less clear as a result of the revaluation of non-domestic properties. At a
national level the yield from business rates is only increased by the rate of inflation.
The national increase in rateable values is offset by a decrease in the multiplier (the
rate in the pound charged). Croydon saw an average increase in rateable values of
10.7% with a decrease of the national multiplier of 14.6%. However the position is
complicated by transitional arrangements and these have yet to be fully worked
through. Nevertheless it is anticipated that Croydon will remain a net contributor to
(Note: Although the increase in receipts from the pool is in excess of that in the
Council’s formula grant this is balanced by a reduction in RSG to bring the increase
back to 1.5%. This is because the distributable amount from the national pool has
increased from £19.5bn to £21.5bn. This is mainly due to a change in the estimated
balance position of the pool from an estimated opening deficit for 2009/10 to an
opening surplus for 2010/11. In accordance with normal practice the government
varies the RSG amount to compensate).
7.1 Consultation on the Financial Strategy and Budget has begun and if you have any
comments then please send them in writing to by Friday 19th February.
Executive Director of Resources and Customer Services
London Borough of Croydon
The outcomes of this consultation will be made in a verbal report to the Council Tax