Agenda item

Annex 1

 

Adjustment to the 2018/19 Budget Proposal

 

The Cabinet's budget recommendation to Full Council included the most up to date information at the time of writing, and as part of this included funding projections based on the  provisional financial settlement that was announced on 19^th December 2017. 

 

1. The Final Settlement 2018/19

 

The Final Settlement was announced on 6^th February 2018.  The Settlement included an additional non-recurrent national Adult Social Care Support Grant of £150m, of which £3.449m is allocated to Lancashire County Council, in addition to some small adjustments to the business rates calculations.

 

2. Business Rates

 

Information has now been received from the City and Borough Councils, with the business rates forecast for 2018/19 showing an improved position. 

 

The impact of the most up to date information is as follows and has been reflected in the revised Medium Term Financial Strategy (MTFS) in Section 5:

 

Table 1

	2018/19 £m	2019/20 £m	2020/21 £m	2021/22 £m
Cabinet Recommendation	188.972	194.421	198.989	204.431
Full Council Adjustment	190.736	194.882	198.989	204.431
Increase	1.764	0.461	0.000	0.000

 

3. Collection Fund Position

 

The final collection fund positions for Council Tax and Business Rates have been received from the City and Borough Councils:

 

Table 2

 

	£m
Council Tax Collection Fund	6.893
Business Rates Collection Fund	0.926
Total Surplus/(Deficit) Position	7.819

 

Table 2 shows a surplus position has been reported, with this being one off additional funding that is recommended to be transferred to the transitional reserve.

 

A revised reserves position is shown below showing the impact of the additional one-off income:

 

Table 3

Reserve Name	Approved at Full Council Feb 2017	2017/18 Forecast Spend	2017-18 transfers to / from other reserves	2017/18 Forecast Closing Balance	2018-19 Forecast Spend	2019-20 Forecast Spend	Total as at 31 March 2020
	£m	£m	£m	£m	£m	£m	£m
County Fund	-36.000	2.373	10.000	-23.627	0.000	0.000	-23.627
SUB TOTAL - COUNTY FUND	-36.000	2.373	10.000	-23.627	0.000	0.000	-23.627
Strategic Investment Reserve	-4.446	1.283	0.037	-3.126	1.240	0.410	-1.476
Downsizing Reserve	-18.913	2.653	1.431	-14.829	3.762	0.000	-11.067
Risk Management Reserve	-10.439	3.768	3.001	-3.670	3.670	0.000	0.000
Treasury Management Reserve	0.000	0.000	-10.000	-10.000	0.000	0.000	-10.000
Transitional Reserve	-159.014	39.695	-9.920	-129.239	-1.959	0.578	-130.620
To facilitate the transition of services	-3.000	0.000	3.000	0.000	0.000	0.000	0.000
Service Reserves	-13.038	2.604	2.441	-7.993	3.571	0.501	-3.921
SUB TOTAL - LCC RESERVES	-208.850	50.002	-10.010	-168.858	10.284	1.489	-157.085
Schools/Non-LCC Service Reserves (3.5)	-18.989	1.263	0.010	-17.716	1.011	-0.687	-17.392
SUB TOTAL SCHOOLS/NON LCC RESERVES	-18.989	1.263	0.010	-17.716	1.011	-0.687	-17.392
GRAND TOTAL	-263.839	53.638	0.000	-210.201	11.295	0.802	-198.104

 

The revised table above presents an increased amount available within the transitional reserve to support the revenue budget financial gap.

 

Table 4 demonstrates the funds that are forecast to be available to support the budget gap in 2018/19 and 2019/20. However, in order to set a legal budget further savings will need to be made.

 

Table 4

	2018-19 £m	2019-20	2020-21 £m
MTFS Funding Gap	42.045	68.410	118.138
Available reserves to support financial gap	42.045	68.410	20.165	130.620

 

4. Council Tax

 

The Council Tax Base has now been confirmed by the 12 Borough and City Councils. This has resulted in a slight increase in the figures published in the Full Council papers.

 

	Band D equivalent	£m
Provisional Tax Base	361,544.11	468.171
Final Tax Base	361,822.64	468.531
Increase	278.53	0.360

 

The share for each District Council of the total raised from the Council Tax of £468,531,375:

District	£
Burnley	29,935,961
Chorley	47,412,434
Fylde	38,525,165
Hyndburn	26,553,630
Lancaster	53,350,704
Pendle	30,639,750
Preston	48,173,614
Ribble Valley	29,656,258
Rossendale	26,194,937
South Ribble	46,022,493
West Lancashire	45,099,305
Wyre	46,967,124
Total Raised from Council Tax	468,531,375

 

This gives an overall position of:

 

5. Funding Gap

 

	2018/19	2019/20	2020/21	2021/22	Total
	£m	£m	£m	£m	£m
Spending Gap as per Full Council papers	47.619	21.633	49.280	25.960	144.492
Funding	-5.574	4.732	0.448	-0.014	-0.408
Revised Funding Gap	42.045	26.365	49.728	25.946	144.084

 

 

 

 

 

 

 

 

 

 

 

6. Revenue Budget

 

 

 

 

County Councillor Geoff Driver CBE,

Leader of the County Council,

8 February 2018

 

 

 

 

 

 

 

 

Annex 2

 

BUDGET COUNCIL: 8^TH FEBRUARY 2018

 

AMENDMENT PROPOSED BY THE LABOUR GROUP TO THE 2018/19 BUDGET

 

 

(1)  Proposed additions to the revenue budget

£m

 

Reverse the saving relating to Terms and Conditions   3.750

(CORP003)

 

Reinstate Carnforth Bus/Rail Interchange  0.012

 

Reverse the proposal to cut Community Transport (CMTY024)  0.254

 

Reverse the proposal to cease funding for Police Community   0.220

Support Officers (PH012)

 

Invest to saving in securing franchised public transport schemes  1.000

 

Additional borrowing costs  0.070

 

 

Total cost of proposed amendments:  5.306

 

 

 

 

(2)  Financing the proposed additions to the revenue budget

 

£m

 

Reduce agency staff expenditure   -1.000

 

Funding from the transitional reserve  -4.306

 

Total Funding  -5.306

 

 

 

 

 

 

 

 

 

 

 

 

(3)  Proposed additions to the capital programme

  £m

 

Additional funding for permanent pothole repairs  1.000 

 

Total Additions to Capital Programme:  1.000

 

 

(4)  Proposed amendments to the funding of the Capital Programme

 

£m

 

Additional borrowing for permanent pothole repairs  -1.000

 

 

Total amendments to the funding of the Capital

Programme:  -1.000

 

 

Note:

 

From within the proposed 2018/19 capital programme for Highways, Labour would ring-fence £4m for pothole repairs and £1m for an in increase in the gulley cleaning fleet. 

 

 

 

View of the Interim Chief Executive and Director of Resources (S151)

 

The proposals have been validated as being deliverable financially in 2018/19. It must be stressed that the proposals will lead to a widening resource gap in 2018/19 and future years, including an additional call in 2018/19 on the transitional reserve of £4.306m, unless addressed though additional savings being identified via reductions in expenditure or income generation.

 

Noting the above, overall the proposed amendments do not materially impact my comments on the robustness of the estimates or adequacy of reserves for the 2018/19 budget. However I must reiterate my comments from within the main report, as amended for the updated information circulated today. "….the position for 2019/20 is critical to addressing the issue of financial sustainability as there remains a funding gap of £68.410m. Urgent work is required to identify proposals for additional savings early in 2018/19 that can be delivered in 2019/20 and for the remaining MTFS position." 

 

These proposals will increase the level of risk already inherent in the medium term financial strategy increasing the underlying financial pressure to £72.716m in 2019/20 and £148.390m by 2021/22.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annex 3

 

BUDGET COUNCIL: 8^TH FEBRUARY 2018

 

AMENDMENT PROPOSED BY THE LIBERAL DEMOCRAT GROUP TO THE 2018/19 BUDGET

 

 

(5)  Proposed Additions to the Revenue Budget

£m

 

Reinstate funding for highway safety signing and lining:  0.500

(CMTY011)

 

Reinstate funding for PCSOs (PH012):  0.220

 

Reinstate funding for Information Centres (Preston, Nelson,

Clitheroe & Carnforth; and Morecambe Visitor Centre

(CMTY027):    0.099

 

Reinstate Bus Stop Information & publicity material

(CMTY030):  0.015

 

Provide funding for street light energy costs to allow a more

flexible policy on times of dimming in locations where there

are community safety concerns:  0.500

 

Fund additional reactive maintenance to highway drainage,

with delegation to districts where there is local capacity to   0.318

carry out work (including drainage schemes in capital

programme): 

 

Fund set up costs of a Local Lancashire Lottery with the aim

to generate funds to replace the funding lost to charitable  0.007

and other organisations being cut through axing of LCC

funding streams: 

 

Fund six person team (part year) to market county council

facilities and services to generate income (see savings):  0.200

 

Additional highway winter maintenance funding to provide

extra grit bins and filling:  0.500

 

Reinstate Highways Asset Management reduction (COM002b)  0.315

 

Reinstate cut in Youth Offending Team budget  (CYP015)  0.336

 

Total Cost of Proposed Amendments:  3.010

 

 

 

 

 

(6)  Financing the Proposed Additions to the Revenue Budget

£m

 

Reduction in costs of agency staff:  1.000

 

Target additional net income from maximising use of county council’s

physical assets (e.g. weddings at Wycoller) and traded services:  1.000

 

Increase staff vacancy factor by a further ½%  1.595

 

Cease provision of Member Champion grants  0.050

 

Reduce Special Responsibility Allowance of Leader of County

Council (with pro-rata adjustments to SRAs geared to that level)

by 10% and cease SRAs for Member Champions:  0.056 

Total Revenue Savings:  3.701

 

Net position is a reduction in the funding gap and required

contribution from the Transitional Reserve   0.691

 

 

 

(7)  Proposed Additions to the Capital Programme

£m

 

Additional funding to carry out road and pavement repairs:  15.000

 

Increase drainage maintenance budget:  1.282

 

Additional road repair funding in Pendle:  1.700

(See deletion below)

 

Total Additions to Capital Programme:  17.982

 

 

(8)  Proposed Amendments to the Capital Programme

 

£m

 

Delete M65 Junction 13 Eastern roundabout signalisation  1.700

 

(Funded from 2017/18 NPIF)

 

Total Reductions from Capital Programme:  1.700

 

 

 

 

View of the Interim Chief Executive and Director of Resources (S151)

 

The proposals have been validated as being deliverable financially in 2018/19. However it must be stressed that whilst additional revenue savings have been proposed, to fund the additions to the revenue budget, £1m of these covers the targeting of additional income and necessarily has not been subject to as rigorous a validation process as the income generating proposals contained within the budget report. 

 

In addition, reducing agency staff costs and increasing the vacancy factor would need to be very closely monitored to determine the impact on services with the risk that, in some areas, there could be a negative impact on service delivery. 

 

There is also a significant increase in the proposed size of the Capital Programme of £16.282m which would need to be funded form additional prudential borrowing. While the borrowing costs would not impact until 2019/20 onwards, this does create an ongoing additional annual revenue cost of £1.1m and further increase the funding gap in future years.

 

Overall the proposed amendments do not materially impact my comments on the robustness of the estimates or adequacy of reserves for the 2018/19 budget. However I must reiterate my comments from within the main report, as amended for the updated information circulated today. "….the position for 2019/20 is critical to addressing the issue of financial sustainability as there remains a funding gap of £68.410m. Urgent work is required to identify proposals for additional savings early in 2018/19 that can be delivered in 2019/20 and for the remaining MTFS position." 

 

These proposals will increase the level of risk already inherent in the medium term financial strategy and the underlying financial pressure to £68.819m in 2019/20 and £144.493m by 2021/22.