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Budget Scrutiny Committee Wednesday, 4 th November, 2009

Budget Scrutiny Committee Wednesday, 4 th November, 2009. Topical Issues. Content. Housing subsidy reform Supplementary business rate LABGI BSF PFI Total Place. 1. Housing subsidy reform. CLG Consultation paper July – response 27/10 Key points

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Budget Scrutiny Committee Wednesday, 4 th November, 2009

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  1. Budget Scrutiny CommitteeWednesday, 4th November, 2009 Topical Issues

  2. Content • Housing subsidy reform • Supplementary business rate • LABGI • BSF • PFI • Total Place

  3. 1. Housing subsidy reform • CLG Consultation paper July – response 27/10 • Key points - abolish subsidy and replace with redistribution of debt - abolish pooling of capital receipts - keep HRA but free it of some liabilities - 30 year HRA business plan • Issues - debt treatment – how equalise/premia - General Fund vs HRA – debt/landlord costs

  4. 2. Supplementary business rate • Legislation passed Sept 09 • LAs can raise up to a 2p in rate supplementary rate • Only use for promoting economic development • Must demonstrate additionality • Requires consultation and ballot • Exemptions for RVs below £50k • May include or be additional to BIDs • Value to Salford of 2p rate = £2.5m • Academic ?

  5. 3. Local Authority Business Growth Incentive Scheme (LABGI) • Relaunched 2009/10 - £50m nationally, £100m 2010/11 • Previous scheme 2005/06 – 2007/08 - rates revenue on new development retained locally - much controversy/dissatisfaction – calculation/interpre-tation errors – legal challenge - £1bn over 3 years – Salford share £3.7m • New scheme 2009/10 - ? - rates revenue on new development identified by regional clusters (AGMA) and shared by population - Salford £262k 2009/10, £500k ? 2010/11

  6. 4. Building Schools for the Future (BSF) 1. KEY FEATURES • FBC approved Cabinet 27/10 • Financial close – Ph 1 due Nov 09, Ph 2 due June 10 • Establish a Local Education Partnership (LEP) • New build for secondary schools + ICT for all secondaries • Ph 1 – Walkden, Irlam/Cadishead, ICT • Ph 2 – Moorside/Swinton (+ Moorside PS), Oasis Academy, Ambrose Barlow/St Georges, St Patrick’s, All Hallows, Wentworth, • Ph 1 ready Sept 11, Ph 2 ready Sept 12 • ICT operative Sept 10

  7. CAPITAL FUNDING Construction costs £182.4m ICT £ 16.9m Investment in LEP £ 1.7m £201.0m funded by :- LEP borrowing/equity £141.0m Capital grant £ 14.9m Supported borrowing £ 3.5m Unsupp. Borrowing £ 3.5m Capital receipts £ 38.1m £201.0m REVENUE FUNDING Per annum Unitary charge £23.8m funded by :- Government grant (for PFI credits) £16.8m School contributions £ 3.2m Council contribution £ 3.8m £23.8m Council also funds USB financing costs of £ 0.2m 4. Building Schools for the Future (BSF)2. FINANCIAL IMPLICATIONS

  8. 4. Building Schools for the Future (BSF) 3. Risks • Interest swap rates • Disruption • Timing • Capital receipts • Pupil demand

  9. 5. Private Finance Initiative (PFI) FEATURES • Provider – Designs, Builds, Finances, Operates (DBFO) - bears long-term risk (typically 25 years) - undertakes and finances construction - usually owns/maintains assets for life of contract • Council – uses and occupies assets - pays annual unitary charge for use/occupation - receives annual Gov grant for PFI credits - meets any affordability gap - monitors service compliance - becomes owner of assets at end of contract

  10. 6. Total Place • Purpose – to identify collective spend by public agencies by region and scope for efficiency • Cumbria pilot • AGMA + Warrington – spend analysis completed • Results - total spend £22bn – LAs £8bn, DWP £6bn, PCT £5bn, Univs £0.8bn, Police £0.7bn - by type – Benefits £7.2bn, Health £4.8bn, Education £4bn, Care £1.5bn, Planning /Housing £1.2bn, Safety £1.2bn - spend per head – highest – Mcr/Salford £8,100 - lowest – Stockport £5,700 • Next Steps - “deep dive analysis” – Under 5s provision

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