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BUDGET & FINANCIAL STRATEGY 1 Executive has authority to


BUDGET & FINANCIAL STRATEGY 1 Executive has authority to

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									                         REPORT OF:                HEAD OF FINANCE & PROCUREMENT
                         AUTHOR:                   GRAHAM FRIDAY
                         TELEPHONE:                01737 276556
                         TO:                       EXECUTIVE
                         DATE:                     8TH SEPTEMBER 2005
                         EXECUTIVE MEMBER:         COUNCILLOR M.H.C. BUTTERY

AGENDA ITEM NO:                      6                KEY DECISION REQUIRED:       YES

SUBJECT:                           BUDGET & FINANCIAL STRATEGY
PURPOSE OF THE REPORT:             Seek endorsement of the revised Financial Strategy that
                                   will form the starting point for the determination of the
                                   2006/07 budget and Council Tax.

1.   To endorse the draft Financial Strategy, including changed budget assumptions, as the
     starting point for the determination of the 2006/07 budget.

2.   That the draft Financial Strategy be opened to formal consultation, in accordance with the
     Council's Policy Framework.
3.   A provisional target of increasing the Band D Council Tax by 5% be established. This will
     equate to a required savings target of £1.55 million.

Executive has authority to determine the above recommendations.

1.   The purpose of this report is to seek approval of key budget assumptions,
     revising the Council’s Financial Strategy, and to identify the major pressures
     that will impact upon the final determination of next year’s Council Tax level.

2.   Under the terms of the Policy Framework and Budget Procedure Rules in the
     Council’s Constitution, the Executive should make and consult on any plan,
     strategy or budget proposal that forms part of the policy framework and
     budget. A key part of this process is the annual approval of the Financial
3.   The draft Financial Strategy is required for approval at this time, as it
     represents the starting point from which the detailed compilation of the budget
     requirement will take place over the next couple of months, leading up to the
     Executive’s consideration of a formal Provisional budget proposal at its
     meeting on the 18th November 2005.
4.    The proposed Financial Strategy is attached at Appendix 1 and incorporates
      the guiding financial principles adopted by the Executive in July in respect of
      the 2006/09 Corporate Plan.

5.    The Financial Strategy should in its presentation clearly show how resources
      are going to be allocated to support the deliverability of the Council’s
      Corporate Plan. This year is the transitional year between the old and the new
      Corporate Plans, therefore the Financial Strategy cannot at this time fully
      reflect the objectives of the new Plan until they have been formally approved,
      but it does provide the overall financial environment within which the financing
      of the new Corporate Plan can be considered.

Resource Implications

6.    The attached Financial Strategy contains a significant amount of detail.
      Potential Council Tax increases are set out on page xxx based on current
      service levels.

7.    Work is still underway on the impact of the 2006/09 Corporate Plan. A report
      on costs of the proposed governance arrangements will be brought forward to
      the next Executive, as will a report on a revised capital programme. For the
      purpose of this report it is assumed that a 1% "floor" approach is employed by
      the Government, ensuring a cash increase on the previous years grant.

8.    The Financial Strategy projections must be treated as very provisional, it
      should be noted that based upon current information, savings of some £1.55
      million will be required to ensure a Council Tax increase of 5%. This is before
      any additional resource requirement being needed to fund the 2006/09
      Corporate Plan as an exercise is currently under way to identify any extra
      costs linked to the successful implementation of the plan.

9.    It is therefore recommended that a savings target be established at this early
      stage of the 2006/07 budget construction process, with proposals being
      presented to the Executive in November.

10.   During the budget process Officers will closely scrutinise the following areas
      of the Council’s overall budget:

      •   Cost of providing the current level of services.

      •   Potential for generating more Capital receipts from asset sales.

      •   Review of the need for provision within the current Capital spend

      •   Potential for alternative ways of providing current services.

      •   Options for potential discontinuation of existing functions.

11.   A timetable of the key stages within the 2006/07 budget process is set out at
      Appendix 2.
Policy Framework
12.   The Council’s budget is, in effect, a financial representation of its policies and
      priorities as determined by the Corporate Plan. The Financial Strategy is an
      integral part of the process.

13.   Under the Council’s current Policy Framework the Financial Strategy is
      currently a Level 2 document which requires the Executive to formally consult
      on it with the Overview & Scrutiny Committee.

14.   The Financial Strategy is an important element of the Council's decision-
      making framework. Assumptions contained within it have a significant
      influence on a number of important areas, including Council Tax levels.

15.   This report sets out a draft Financial Strategy for Executive consideration.
      The Strategy will be refined as a result of developments such as the outcome
      of the “Balance of Funding Review”, the Local Government Finance
      Settlement and updated information on, amongst others, prices and new
      legislative requirements.

16.   It is proposed, in November, to bring forward a 2006/07 budget report that will
      reflect both the Corporate Plan 2006/09, the outcome of the officer budget
      review process and the views of the Overview & Scrutiny Committee.

Background Papers:
                                                                          APPENDIX 1


                       2006/07 to 2008/09

1.     Introduction

       The purpose of the strategy is to set out in financial terms how much the
       Council might wish to spend over the next three financial years on the
       provision of its services and how this level of spend could be funded.

       The strategy is therefore a financial representation of the Council’s objectives.

2.     Section One: National, Regional Context

       This part of the strategy identifies key external issues that will have some
       impact upon the Council’s budget. All issues are of an on-going nature and
       their impacts are quantified to the best of current knowledge and
       understanding for inclusion within the annual provisional budget report.

2.1.   New Legislation/Transfer of Functions

       The following legislative and regulatory changes or transfer of functions will
       impact on the Council’s finances over the duration of the strategy:-
       •   Full implementation of the Licensing Act 2003
       •   Private Sector Housing Act 2004
       •   Air Quality
       •   Anti-Social Behaviour
       •   Contaminated Land
       •   Concessionary Fares
       •   Benefits Payments
       •   Waste Management and Landfill

2.2.   Amendment to Central Government Grant Mechanism

       The Government is currently undertaking a review of the way Local
       Government is funded. The outcome of that review should be known within
       the next year and any subsequent changes will therefore have an impact on
       the Council in years 2 & 3 of this strategy.
2.3.   Government Grant

       On 19th July the Government published a document on changes to the
       formulae used to distribute grant to English authorities. It presents 39
       questions and 49 options for changes to grant formulae, not all of which
       impact directly upon District Councils. Key aspects of the consultation for
       District Councils include:-

       •   Possible move away from notional measures of spend.
       •   Introduction of two-year settlement announcement for 2006/07 and
           2007/08, with three-year settlements thereafter.
       •   Specific revenue grants to be allocated on a three-year forward basis.
       •   £350 million added to control totals to reflect the need to spend additional
           money for free concessionary fares for people over 60 and disabled
           people, as announced in the Chancellor's 2005 Budget.
       •   Increase in fixed cost element from £300,000 to £325,000.
       •   Options around funding the grant "floor".

2.4.   Capping

       For 2005/06 eight authorities were capped, against the following criteria:-

       •   An increase of more than 6% over their 2004/05 budget; and
       •   An increase in Council Tax of more than 5.5%.

       The Minister for Local Government announced on 7 July 2005 that ‘we will not
       hesitate to use our capping powers in future years to deal with excessive
       increases if this proves necessary’.

2.5.   Council Tax and Business Rate Revaluation

       Council Tax revaluation will be implemented from 2007/08, according to
       current government plans. It is too soon to quantify the impact on the
       Council's financial position. For example it is not yet clear whether there will
       be a change in the number of Council Tax Bands.

       The experience in Wales - where no new bands were introduced - was of
       significant changes between bands.

       It is anticipated that there will be a significant volume of appeals against the
       new valuations, which will have to be handled by the Council, at a cost. Both
       the revaluation itself – which is carried out by the District Valuer, not by the
       Council - and any appeal process may impact on the collection of the Council
       Tax, with an adverse effect on the Council’s cashflow and interest earnings.
       There will probably be some form of transitional arrangements to mitigate any
       significant effects but these will only be known closer to the time.
2.6    Depreciation

       The Government has begun a consultation process on the introduction of full
       depreciation accounting for Local Government assets. This will bring Local
       Government accounting in line with standard commercial practice. No
       deadline for introducing this has been yet identified, but the likelihood is that it
       might impact on the final year of this strategy.

       The change might have a direct impact on council tax requirement, as assets
       might have to be funded directly from revenue as opposed to being funded
       from capital receipts.

       The other change proposed in the consultation is that Councils should ensure
       that the impact of depreciation is properly taken account of when evaluating
       options on service delivery or asset acquisition.

3.     Section Two: Local Context

3.1.   Economic Factors

       National interest rates are now anticipated to be at the top of the economic
       cycle, and the band within which interest rates will fluctuate over the course of
       the 10 years or so has narrowed significantly. This will have a significant
       impact upon the Council’s income streams.
       All income streams will be critically assessed during the detailed budget
       process to evaluate their robustness against economic activity data.

3.2.   Returns on Investment

       Until now the Council has benefited from higher investment returns gained
       from the prudent investment of money three years ago. These investments
       are starting to reach their maturity dates. With interest rates having recently
       eased, the potential yields that the Council can generate from its investments
       will reduce. This will cause upward pressure on the Council's budget.

       The other major impact on returns from investment is the Council's capital
       spending plans. Spending on capital is financed from the money that is
       currently invested. For every £100,000 spent on capital items the Council Tax
       account will loss between £4,500 to £5,000 in investment income.

       The Council also benefits from earning interest on the developer
       contributions, known as Planning Gains (under Section 106 agreements),
       which have been received but not yet spent. The Council has currently
       accumulated a sum of over £4.3 million in cash contributions. The Council is
       now starting to approve spending programmes for that money, which will also
       over the course of time further reduce the investment income earned.
       The current policy on interest earned on a Section 106 agreement is to take
       the interest to benefit the Council Tax, unless there is a specific requirement
       within the Section 106 agreement to apply interest to maintain the purchasing
       power over the time it takes to spend it. Current plans indicate that from
       2007/08 onwards the Council will start to see a net outflow of cash as the
       current pool of contributions starts to be spent. This will create further long-
       term pressures on Council tax increases.

       It is therefore proposed to change the approach to accounting for interest on
       all new Section 106 contributions received after the 1st April 2005. From that
       date all interest earned on new contributions will be placed in a specific
       reserve until those contributions have been spent, at that time it will be
       classified as surplus to requirement and will then be available for use to either
       off set Council Tax increases or fund one-off initiatives.
       Work will continue to optimise returns on the money markets. At the same
       time the Council will continue to rigorously review its property assets for
       disposal. Consideration will also be given to developing a policy on property

3.3.   Pension Fund – Deficit

       The slow recovery of the stock market and the increase in life expectancy will
       maintain the pressure on the Surrey Pension Fund and, therefore, on the
       Council’s contributions. The 2004 statutory review has identified the need for
       the Council to increase its contributions over the next three years, by over
       £807,000. The Council currently uses a Pension Equalisation Reserve to
       smooth out the impacts of the reviews. At current contribution levels this
       reserve will be eliminated by 2007/08.

3.4.   Insurance Fund

       Over the last two years the Council has deferred the impact of increased
       insurance costs on the Council Tax by funding a significant proportion from
       the Insurance Reserve. This means that the premiums currently outstrip the
       amount borne by revenue budgets by £310,000 per annum. The value of the
       reserve at the 31st March 2005 was £502,000. The minimum level of balance
       recommended from the Council’s Insurance brokers to cover any unforeseen
       events is between £500,000 and £750,000. The fund is able to provide the
       support for 2005/06 but from then onwards there will be a risk to the Council
       should it continue to do so and a significant adverse event happen. To
       mitigate this risk this strategy assumes that the support to revenue from the
       reserve will be phased out during 2006/07 and 2007/08.

3.5.   VAT Partial Exemption Limit.

       Under current VAT regulations, the Council is able to recover the VAT on
       expenditure that relate to activities/services (such as Parks, Markets, and
       Council Properties for which we generate commercial income) which
       themselves then are ‘Exempt’ from the Council having to charge VAT to the
       customer. The amount of VAT that is recoverable on these activities should
       not exceed 5% of the total VAT that the Council pays in any year.
       The total VAT paid in 2004/05 was £2.350 million, creating a 5% partial
       exemption limit of just under £118,000. The actual percentage for 2004/05
       was 3.50%. The position is being constantly monitored and adjustments being
       made to ensure that the Council does not exceed the 5% limit.

3.6.   Prudential Code

       The Council has now implemented the new Prudential Code, with the relevant
       new performance indicators now being included within this strategy. The
       purpose of the new Code is to provide Local Authorities with more freedom to
       make their own decisions on how to use the money market to help finance
       their capital expenditure.

       To ensure that Local Authorities use their new power in a sensible way the
       Code requires a Local Authority to ensure that they can afford the additional
       costs of borrowing within their Council Tax levels.

       To ensure that this affordability test is open and transparent, the Code
       established the need for a Local Authority to provide estimates of the impact
       on the Council Tax over a three year period and to estimate and monitor
       specific performance indicators.

       At present it is more cost effective for the Council to consume its own
       reserves to finance capital investment, than to use borrowing as an alternative
       means of finance. In other words – due to our financial resources - we can
       avoid paying the premiums associated with borrowing on the money markets.

       The Council might wish to consider using borrowing, where it can be assured
       that the additional ‘cost of borrowing’ is being paid for from resources which
       are additional to the Council Tax, i.e. Lottery Funding, Government Grants
       etc; or from efficiency savings or additional income streams that will be
       generated from making the capital investment.

       This strategy and the Treasury Management Strategy assume that the
       Council wishes to maintain its ‘Debt Free’ status and that the new borrowing
       powers are limited to major income generating schemes that come from the
       2006/09 Corporate Plan.       This reflects the guiding financial principles for
       2006/09 Corporate Plan adopted by the Executive on 14th July 2005.

4.     Section Four: Priorities

4.1.   The Financial Strategy - Aims

       To optimise the monetary resources available:-

          In order to provide the money to meet policy objectives;

          Whilst providing prudent financial management to manage the level of
          Council Tax at an affordable level; and

          Whilst underpinning future service delivery.
4.2.   The Financial Strategy - Purpose

       The purpose of the Financial Strategy is to:-

            Help elected Members determine the affordability of initiatives to which the
            Council is committed.

            Help determine the timing of priorities.

            Provide realistic forecasts of long-term expenditure commitments and
            funding requirements.

            Show the likely implications of changes in legislation on spending

            Forecast the financial impact of changes in demand for services.

            Match demand with likely resources.

            Provide a framework for programming activities by individual services.

       The main components of Reigate & Banstead Borough Council’s Financial
       Strategy are set out in Annex A.

       The Financial Strategy is a Level 2 strategy, which supports the Council’s
       Corporate Plan (Level 1), and is itself supported by two other Level 3
       strategies, which should be read in conjunction with this strategy.

       •    Capital Investment Strategy
       •    Treasury Management Strategy

       In order to convert the above aims into financial projections the strategy has
       to make assumptions on some key financial data streams. These
       assumptions are set out on Annex B.

5.     Section Five: Annexes

           Annex A                    Medium Term Financial Strategy – Main

           Annex B                    Medium Term Financial Strategy – Key

           Annex C                    Preliminary Medium Term Financial
                                                                                           ANNEX A


No                                                            Detail

1.   Policy Focused         The Financial Strategy will work on the key principle of maintaining the
                            level of Council Tax at affordable level for the residents.

                            Corporate priorities are translated into growth and savings plans in a
                            transparent way.

                            Within service areas growth and savings proposals reflect service

                            Growth items linked to corporate priorities are monitored discretely to
                            ensure outcomes are delivered.

2.   Planned Medium to      Revenue is planned on a 3 year rolling programme, by function.
     Long Term
                            Capital is planned on a 5 year rolling programme, by corporate theme
     (Timescale that will   areas.
     allow services to be
     rationalised/re-       Projections are based on assumptions that are regularly revisited.
     engineered and
     improved)              Interest earned from capital receipts is a discrete element.

                            Income and charges are a discrete element.
     A Continuous
3.                          The Council will maintain a continuous approach to identifying and
     Process (not one-off
                            delivering improvements in cost efficiency across all of its functions.
                            The impact of decisions made in one area on other areas is reflected i.e.
                            how all services including support and overheads will be impacted.

                            Growth & Savings must describe how the BVPIs and other performance
                            measures will be impacted.

                            Targets linking spend and performance are identified for functional
                            planning and monitoring purposes.

4.   Ensures Value For      Services whether purchased externally or provided internally should offer
     Money                  value for money/best value; i.e. the required quality at an affordable cost.

                            All risks are identified and assessed in making value for money decisions.

                            Investment of capital resource will be based on full option appraisals and
                            whole life costings. Options will be evaluated using a ‘Net Present Value’
                            approach. The target will be for all investments to return a ‘Zero’ NPV
                            within five years.

5.   Releases Resources     The Council will set itself an annual efficiency target of around 2.5%. This
     or Achieves Savings    will accord with the requirements of the ‘Gershon’ initiative.

                            Resources released through savings will be redirected to either fund new
                            initiatives or to maintain the affordability of the level of the Council Tax.

                            Specific operational reserves, entitled the Organisational Development
                            Fund and the Front Line Initiative Fund will be used to finance ‘time limited’
No                                                       Detail
                         items of expenditure.

                         The Council will continue to specifically reserve the capital receipt
                         generated from the LSVT, any use of this investment will have to generate
                         a Net Present Value of “zero” from the options appraisal.

                         The investment in the Council change programme will demonstrate a
                         “zero” Net Present Value by 2012.

                         Minimum balances of 15% of net budget or £2.5 Million (whichever is the
                         lower) will be maintained to cover emergencies.

6.   Levers Additional   The Council will maximise resources, whether capital or revenue, by
     Resources           bidding for any available grants or resources, including partnership monies.
                         Bidding to be priority based within context of the Corporate Plan.

                         The Council will operate a strategic approach to its property, meaning that
                         it might

                         •   Invest in property/land in order to meet its medium-long term

                         •   Dispose of assets where it makes sense financially and operationally

                         •   Share facilities where it makes financial and operational sense to do

                         All Fees and Charges will be reviewed annually and all discretionary
                         charges optimised in line with an agreed policy.
                                                                                             ANNEX B


      These assumptions support the Council's annual budget and medium-term Financial Strategy,
      and underpin the objectives set out in the Community and Corporate Plans

                  Policy Objectives Supported by the Medium-Term Financial Forecast

1.    To set Council Tax annually, having regard to inflation, the additional costs incurred in meeting
      new Government requirements and levels of Government grant support.

2.    To preserve the cash receipt from LSVT, to provide the Council with a source of ongoing
      investment income, and as a source of finance for "invest to save" initiatives.

3.    To maintain the Council's unallocated reserve (shown on the balance sheet as the General Fund
      Reserve) at 15% of the net revenue budget or £2.5 million, whichever is the lower. This balance
      is to be reported to Members and remedial action will be agreed whenever the forecast balance
      varies by more than +/- 10% of the target amount.

4.    To optimise the potential benefits that come from the efficient operation of the Council’s overall
      capital financing and treasury management activities, in accordance with the Prudential Code and
      the Code of Practice for Treasury Management in the Public Services.

5.    To maintain the Council’s Debt Free status whilst keeping the position under review.

6.    To optimise income from discretionary fees and charges, the working assumption is that
      discretionary fees and charges should normally be increased by at least inflation, and as a
      minimum recover all costs associated with providing that service or function.

7.    To achieve corporate efficiency savings of, on average, 2.5% per annum over a three-year period
      (defined as 2.5% of the direct expenditure budget after inflation, excluding windfall savings).
      These savings will be redirected into a corporate pot for decision by Members (e.g. redistribution
      towards a combination of key services and keeping Council Tax at an acceptable level).

8.    To ensure that the pension fund is fully funded as soon as practicable.

9.    To consider the disposal of property assets where the return on the investment may not be
      greater than from an equivalent Money Market investment.

10.   To consider the acquisition of ‘investment’ properties where the investment return would be
      greater than from an equivalent Money Market investment; reflecting strategic objectives.

11.   Adequate provision is made to ensure that the Council maintains its property assets in a condition
      for make them fit for purpose and compliant with all necessary governing regulations (e.g. Health
      & Safety).
              Technical Cost Assumptions Built Into the Medium-Term Financial Forecast

12.   Inflation will be determined annually as part of the budget setting round, based upon the best
      available information. For the purposes of financial forecasting the rates of inflation will be
      assumed to be:-

                                                          2006/07           2007/08       2008/09

      Cost of Living (RPI(X))                             2.5%              2.5%          2.6%
      General Inflation (CPI)                             1.9%              2.0%          2.1%

      Source: HM Treasury – Forecasts for the UK Economy, A Comparison of Independent Forecasts

13.   The level of discretionary income will be increased, as a minimum, by RPI(X), and set to recover
      all associated costs.

14.   The Government will continue to operate a "floor damping" approach to Revenue Support Grant
      (RSG) and Reigate & Banstead will be at the floor.

15.   The Council will remain within its partial exemption limit from VAT.

16.   The Collection Fund is assumed to be in balance.

17.   The revenue implications of the approved capital programme are built into the financial forecast.

18.   All expenditure will be treated as being revenue expenditure. Capitalisation of costs will be part of
      the financing of the capital expenditure, to accord with Section 2 of the Local Government Act

                                              Prudential Indicators

19.   The annual budget and medium-term forecast for the return on the Council's investments is set by
      the Council following receipt of advice from the Council's fund managers.

20.   Capital Financing Requirement will be:-

      Zero for all years within the Financial Strategy, because the Council currently aims to retain its
      ‘Debt Free’ status.

21.   The limits of external debt for the following three years will be:-

                                2006/07          2007/08          2008/09
      Authorised                £ 40m            £ 30m            £ 20m
      Operational               £ 35m            £ 25m            £ 15m

22.   Ratio of Financing Costs to Net Revenue Stream will be:-

      Zero for all years within the Financial Strategy, because the Council is maintaining its ‘Debt Free’

24.   The projected earning rate from the Council’s net investments will be as follows

                                2006/07          2007/08          2008/09
                                  4.50%           4.25%             4.25%

      This assessment is based on information received from the Council’s external Treasury
      Management Advisor.
                                                                                                               ANNEX C


                                                                                        2006/07         2007/08    2008/09
                                                                                          £000            £000       £000

     Employees1                                                                          18,220           18,812    19,441
     Other Costs                                                                         33,288           34,739    36,769
     Income                                                                             -36,659          -36,630   -37,393

     Base Budget                                                                         14,850          16,921     18,817

     Loss of interest:
                    Investment Income                                                        735            200        20
                    Capital Programme (general)2                                             100            260       155
                    Warwick Quadrant3                                                        130              -         -
                    Highways                                                                  50              -         -
                    Redevelopment Schemes                                                    105              -         -
     Incremental salary growth                                                               165            136       140
     Pensions: increased payments                                                            294            297       300
     Pensions Provision shortfall                                                            196            713         -
     Insurance                                                                               160            165         -
     Other commitments                                                                       136            125         -

     Revised Base Budget4                                                                16,921          18,817     19,432

     Less: Government Funding5                                                            -5,961          -6,021    -6,081

     Council Tax Requirement                                                             10,960          12,796     13,351

     Average Band D Council Tax6                                                            £199           £233      £243

     Percentage Increase                                                                  22.3%           16.8%      5.6%

     Savings Required to Reduce Council Tax
     Increase to 5%7                                                               £1,550,000         £1,370,000   £60,000

1.       Assumes inflation-only salary increases.
2.       Excludes Corporate Plan, HMP and specific schemes listed.
3.       Income from the Warwick Quadrant purchase is included in the Income line above.
4.       Does not include any growth for Concessionary Fares and assumes no other growth pressures.
5.       Assumes 1% growth, no impact from Revaluation and no impact from the Lyons Review.
6.       Current average Band D charge is £163.
7.       Assumed Capping limit.
                                                                                                                                                                    APPENDIX 2

                               CORPORATE PLANNING TIMETABLE (July 2005 – March 2006)

              Budget Peer Challenge             Service Planning Process             Executive / Council             Overview & Scrutiny             Corporate Plan Process
                     2006/07                             2006/07                        Involvement                     Involvement                         2006/09

                                                                                                                                                 Executive approve draft Plan for
                                                                                                                                                 consultation (14.7.05)
                                            Service Planning & Budget
                                                                                                                                                 Formal Consultation period –
18.07.05                                    Preparation guidance issued to
                                                                                                                                                 start (18.7.05)
                                            Heads of Service (18.7.05)
                                                                                                                                                 ‘State of The Borough’ debate
25.07.05                                                                                                                                         incl. consideration of draft Plan
                                            Revised Budget guidance and
08.08.05                                    working papers issued to Heads of
                                            Service (w/c 8.8.05)
29.08.05                                                                                                         O&S Committee Budget &
                                                                                                                 Service Planning Review Panel
           Departmental Management                                              Updated Financial Strategy       examine Financial Strategy      Formal Consultation period – end
05.09.05   Team validate Efficiency Plans                                       considered and approved by the
           and Growth Bid and prepare                                           Executive (7.9.05)
              Budget Peer Challenge             Service Planning Process                Executive / Council                Overview & Scrutiny               Corporate Plan Process
                     2006/07                             2006/07                           Involvement                        Involvement                           2006/09

           submission to the Peer Review
           Panel meetings (6.9.05 -         Heads of Service to have compiled
           20.9.05)                         the following bundle of integrated
                                            documents (16.9.05):-
                                            •    Draft function plans, including
                                               draft 2006/07 budget
                                                                                                                      CMT review documentation
                                               requirements, costed Efficiency
                                                                                                                      from the Service Units that are
                                               Plan and documented Growth
                                                                                                                      to be subject of review by the
12.09.05                                       Bid requests
                                                                                                                      O&S Committee Budget &
                                            •    Service Plan updated to cover
                                                                                                                      Service Planning Review Panel
                                               "Core Function" requirements for
                                               the period 2006/07 to 2008/09
                                            •    Updated Human Resource
                                            •    Updated Operational Risk

           Peer Review Panel consider
           submission from the DMT's                                                                                                                     Following formal consultation,
26.09.05   and prepare recommendations                                                                                O&S Committee undertake            Executive recommend adoption
           on Growth & efficiency savings                                                                             review of documentation from       of draft Plan to Council (29.9.05)
           (21.9.05 - 7.10.05)                                                                                        nominated Service Units
           CMT consider                                                                                               O&S Ctte consider
                                                                                                                                                         Adoption of Corporate Plan by
10.10.05   recommendations from Peer                                                                                  recommendations to Executive
                                                                                                                                                         Council (13.10.05)
           Review Panel (11.10.05)                                                                                    on Financial Strategy (12.10.05)

                                            CMT/Leader consider Provisional        Executive receive O&S
24.10.05                                    Budget report (17.10.05 - 4.11.05)     comments on Financial Strategy
                                                                                                                      Report on Budget process
07.11.05                                                                                                              considered by O&S Committee
                                                                                   Provisional Budget approved for    Period of time for the O&S
14.11.05                                                                           formal consultation by Executive   Committee to scrutinise
                                                                                   (17.11.05)                         Provisional Budget report
21.11.05                                                                                                              (18.11.05 - 2.1.06)

                                                                                   Budget update report to
                                                                                   Executive (if needed)
                   Budget Peer Challenge             Service Planning Process               Executive / Council              Overview & Scrutiny              Corporate Plan Process
                          2006/07                             2006/07                          Involvement                      Involvement                          2006/09

                                                 Presentation of all (draft) Service                                    O&S Committee consider
  09.01.06                                       Plans to Council Members (Meeting                                      recommendation on provisional
                                                 date to be determined)                                                 budget (11.1.06)
                                                                                       Executive receive comments
                                                                                       from O&S Committee on
                                                                                       Provisional Base Budget
                                                                                       Budget, Service, HR Plans
                                                                                       approved by the Executive,
  23.01.06                                                                             taking on-board the
                                                                                       recommendations from the O&S
                                                                                       Committee (26.1.06)



                                                 Draft Budget Book incorporating
                                                 Service Plans amended in light of
                                                                                       Budget approved by Council
  13.02.06                                       the approved 2006/09 Corporate
                                                 Plan and amendments to Budget,
                                                 published (14.2.06)



                                                 Combined Council Tax/
                                                 Performance Plan leaflet issued
                                                 with Council Tax demand (1st week
                                                 in March)

Note:   Formation of four Policy Development Groups (based on four Corporate Plan themes) and the PDG’s development of four corresponding Strategic Action Plans for recommendation to
        Executive, to be plotted in the final column on the above timetable once dates are provisionally agree and diarised. This will be subject of separate guidance with work commencing in
        September 2005.

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