1 / 24

Budget 2012/13 and Medium Term Financial Plan 2012-16

Budget 2012/13 and Medium Term Financial Plan 2012-16. Councillor Muhammed Butt Deputy Leader of the Council. Budget & Finance Overview & Scrutiny 8 th February 2012. On target to achieve budget for 2011/12 Challenging year with considerable service and financial risks

magnar
Download Presentation

Budget 2012/13 and Medium Term Financial Plan 2012-16

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Budget 2012/13and Medium Term Financial Plan 2012-16 Councillor Muhammed Butt Deputy Leader of the Council Budget & Finance Overview & Scrutiny 8th February 2012

  2. On target to achieve budget for 2011/12 Challenging year with considerable service and financial risks 97.5% of planned £41.7m of savings ‘One Council’ savings achieved Strong financial disciplines applied rigorously throughout the year Reserves not usedto achieve target – end year reserves £10.080m 2011-12 – Forecast outturn

  3. 2011/12 Forecast Outturn (Based on December 2011 figures)

  4. Financial Pressures 2011/12 (1) • Children & Families - Social Care placements (£318k), Legal Costs (£131k net) and delay in closing Crawford Avenue (£190k) • Adult Social Care – Placement costs (£800k), Transitions (£280k net), frontline agency staff (£600k) and Brent Transport (£400k) offset by operational savings • Environment & Neighbourhoods - Delay in achieving Library savings (£250k) and metered parking offset other transport savings

  5. Financial Pressures 2011/12 (2) • Regeneration & Major Repairs – Temporary accommodation (minus £250k net) • Corporate Services – Schools payroll losses (£250k), Procurement and Design Services • Central costs – Debt servicing costs (minus £384k) from lower interest rates and slower drawdown on Civic Centre

  6. Europe expected to be in full recession; UK ‘on the edge’ with risk of double dip - Strong risk of Euro break-up Government borrowing up now over £1,000,000,000,000 OBR downgrade of growth forecasts for 2012/13 and 2013/14 – impact on public finances? Public sector pay restraint/pensions overhaul Rising unemployment for another 18 months Inflation peaked at 5.2% now 4.2% and falling Interest rates remain at 0.5% until end of 2014 or beyond House prices falling/flat in most of UK Economic situation

  7. Settlement for Brent for 2012/13 • Further 7.4% reduction in grant - cumulative 19.3% cut over 2011/12 and 2012/13 • Business rates collected in England in 2012/13 (£23.1bn) exceed Formula Grant payable (£22.9bn) for the first time – excess used to fund Council Tax freeze grant

  8. Real terms Formula Grant Loss - 2011/12 to 2016/17 (Effective grant – Business Rate retention in force from April 2013) Post CSR

  9. Council Tax • Localism Act 2011 allows the government to determine levels of council tax increase above which local authorities are required to seek approval via a local referendum • For 2012/13 this has been set at 3.5% for London authorities • 2012/13 Council Tax Freeze grant equal to 2.5% increase in funding. • Brent - £2.575m receivable in 2012/13 only– propose acceptance • This funding is in addition to 4 year grant in 2011/12 – 2014/15 • This is NOT an excessive rise as defined in the Localism Act and thus is not subject to a referendum

  10. Real terms Council Tax Loss - 2011/12 to 2015/16 (Assumes a static Council Tax base)

  11. Brent Council Tax 2012/13 • 3rd year of Council Tax freeze • GLA Requirement to be added on – expect £306.72 not £309.82 – Decision on 9th February

  12. Budget process • Proposals developed by the Executive, taking account of the advice of officers. • The key processes for doing this are as follows: • Borough Plan and updated medium term financial outlook considered by the Executive in July 2011; • Away-days involving both Executive and Corporate Management Team members considered key service and budget issues likely to affect the council in future years; • Development by officers, in consultation with relevant Lead Members, of budget proposals for individual service areas; • A process of external consultation with residents and businesses; • Consideration of matters raised by Overview & Scrutiny • Approval to the detailed budget proposals in the report and publication

  13. The basis of our budget • Sustainable medium term plan which allow Council objectives and priorities to be met – not just a 1 year issues • Realistic spending totals year-on-year (no use of reserves) • Reserves maintained at agreed level • Maintain real value of Council Tax where possible • Investing for transformation • Commitment to efficiency • Control debt interest costs through judicious use of prudential borrowing

  14. Budget Requirement 2012/13

  15. Service Area Budgets 2012/13

  16. Impact of the One Council Programme

  17. Risk Assessed reserves = £12m 4½% of net budget requirement

  18. Schools • Schools budget overspent by £5.7m at the end of 2010/11 and forecast £7.2m by end of 2011/12 • Principle issue is SEN/Statemented spending – Schools Forum have approved a plan to recover deficit by 2014/15 but relies on no further overspending in-between • School balances are £12m – 6th highest in London based on last CIPFA statistics • Flat-cash settlement for 2012/13 with £6,236 per pupil (compared with England average of £5,082) • Pupil premium up from £488 to £600 per disadvantaged pupil • Forum have asked for 15% reduction in centrally funded items – we do not propose to agree this.

  19. HRA • From April 2012, new HRA self financing system is being implemented, under which HRA Subsidy will be abolished in return for a one-off redistribution of debt. The HRA budget for 2012/13 has therefore been compiled on the basis of this new framework • No cross subsidy permitted with General Fund • Average 7.14% Rent increase (RPI + ½% + ¼ of the way to target rent) • 2011/12 – overspend of £0.4m but HRA still £0.7m surplus balances ; Rent collection 99.6% • Optimised ALMO – new management agreement needed from September 2012 – focus on collaborative savings • 30 Year Business Plan being prepared for member approval in Spring.

  20. Capital Programme

  21. Capital Programme • Capital is not free money – it has long term consequences, particularly when budgets are falling

  22. Medium Term outlook • Continued (increased?) pressure on public sector budgets – local government likely to bear the biggest strain • Indications of grant equivalent cuts of 5-8% in 2015/16 and a further 7-9% in 2016/17 • April 2013 – large number of changes implemented • Abolition of Formula Grant – introduction of Business Rate retention • Localisation of Council Tax Benefits with only 90% of current funding • Housing Benefit reforms bite / HB fraud transfers to DWP • Community Infrastructure Levy • Audit Commission replacement • Recruitment/Retention issues – 4 year pay freeze, increased pension costs, undervaluing of public sector workers, chaotic change

  23. Medium Term Financial position • Savings based on Council Tax increases of 3.5%; 2.5%; 2,5% respectively – significantly higher if lower or nil rises • Allowance for pay inflation of 1% in 2013/14 and 2014/15 and 2% in 2015/16; No general allowance for non-pay inflation • Levies:Forecast to grow from £2.579m in 2012/13 to £2.803m in 2013/14, £3.043m in 2014/15 and £3.293m in 2015/16 • Freedom Pass/concessionary fares: £14.771m in 2012/13. Additional £1.360m (2013/14), £887k (2014/15) and £936k (2015/16) in forecast. • New Homes Bonus – growth of £1.4m per annum

  24. Savings target over the spending review period (2011/12 to 2015/16) remains around £100m £41.7m savings largely on target for 2011/12 Considerable risks – cost pressures could be higher and savings make take longer to achieve than we think 2013 onwards – many changes in the funding regime, many as yet unspecified Savings on this scale are painful and energy & morale sapping Civic Centre and regeneration remain the key focal points Preserving our reserves is critical in a time of heightened risk Summary

More Related