COUNTY COUNCIL – 11th FEBRUARY 2016moderngov.staffordshire.gov.uk/documents/s78395/MTFS...2016/21...

COUNTY COUNCIL – 11th FEBRUARY 2016

Medium Term Financial Strategy 2016/21 and 2016/17 Budget and Council Tax

Recommendations of the Leader of the Council and the Deputy Leader and Cabinet Member for Strategy, Finance and Corporate Issues

(a) We recommend that:

(b) The County Council approve the following:

i) a net revenue budget of £470.406m for 2016/17 as set out in Appendix 9;

ii) planning forecasts for 2017/18 to 2020/21 as set out in Appendix 9;

iii) a contingency provision of £2m for 2016/17;

iv) a net contribution from general reserves of £4.571m for 2016/17;

v) a budget requirement of £465.835m for 2016/17;

vi) a council tax requirement of £293.874m for 2016/17;

vii) a council tax at Band D of £1,088.65 for 2016/17 which is an increase of

3.95% when compared with 2015/16. This results in council tax for each category of dwelling as set out in the table below:

viii) that the Director of Finance and Resources be authorised to sign precept

notices on the billing authorities respectively liable for the total precept payable and that each notice state the total precept payable and the council tax in relation to each category of dwelling as calculated in accordance with statutory requirements;

ix) the Capital Programme set out in Appendix 12;

Category of dwelling

Council Tax rate £

Band A 725.77 Band B 846.73 Band C 967.69 Band D 1,088.65 Band E 1,330.57 Band F 1,572.49 Band G 1,814.42 Band H 2,177.30

x) the Prudential Indicators set out in Appendix 14;

xi) the Authorised Limit for external debt determined for 2015/16 as detailed

in Appendix 14 referred to above will be the statutory limit determined under Section 3(1) of the Local Government Act 2003;

xii) the Financial Health Indicators set out in Appendix 15;

xiii) that we continue to develop the Strategic Plan and the Medium Term

Financial Strategy on the basis of a 3.95% increase in council tax in 2017/18 and future years and that services continue to develop their medium term plans on the basis of the planning forecasts set out in Appendix 9 of the attached report.

(c) The Director of Finance and Resources’ comments in respect of the adequacy

of reserves and the robustness of the budget set out in the attached report be noted and the County Council be asked to take note of these comments when considering the budget and council tax recommendations.

(d) That the Director of Finance and Resources be authorised to adjust the

contingency provision to reflect any grant changes announced in the final 2016/17 Local Government Finance Settlement.

(e) That the Director of Finance and Resources be authorised to adjust the

business rates income to reflect any changes as a result of the risk surrounding appeals by NHS Trusts.

COUNTY COUNCIL – 11th FEBRUARY 2016

Report of the Director of Finance and Resources

Medium Term Financial Strategy 2016/21 and

2016/17 Budget and Council Tax

Introduction 1. I am pleased to be able to introduce the Medium Term Financial Strategy (MTFS)

2016/21 and the detailed 2016/17 budget and council tax proposals. The MTFS has been prepared in conjunction with the Strategic Plan and sets out the framework for the preparation of detailed revenue and capital budgets, decisions on council tax and savings and investment plans.

2. The council has reaffirmed its priorities to reflect both county-wide and national

issues. The three priority outcomes, which are clearly connected to ensure that the people of Staffordshire will:

• Be able to access more good jobs and feel the benefits of economic growth;

• Be healthier and more independent;

• Feel safer, happier and more supported in and by their community.

3. In addition to the above, the County Council is committed to ensuring that as a well

run council, management and support services are provided in the most effective and efficient manner.

4. The Strategic Plan requires an appropriate financial plan to make sure funding is available to deliver priority outcomes. For the council the financial plan is the MTFS. The aim of the financial planning framework is to identify opportunities to drive out savings whilst protecting vital services and securing priority outcomes as identified in the Strategic Plan.

5. Effective consultation is a key principle of a good and balanced budget. The needs

of the people of Staffordshire are at the heart of what the council aims to achieve and good consultation is an integral part of “stress testing” the assumptions included in the MTFS. For many years the council has undertaken a range of consultation and engagement activities locally, such as focus groups, resident and citizens’ panel surveys and other specific events. The feedback from our communities continues to shape the development of the Strategic Plan and MTFS.

MTFS Underlying Principles 6. Underpinning the planning framework is the council’s aim of setting a good and

balanced budget:

A good budget means that: • It has a medium term focus, supporting the Leading for a Connected

Staffordshire Business Plan; • Resources are focused on the Vision for a Connected Staffordshire and

priority outcomes; • It is not driven by short term fixes; • It demonstrates how the County Council has listened to consultation with local

people, staff and our partners; • It is transparent and well scrutinised; • It is integrated with the capital programme; and • It maintains financial stability.

A balanced budget means that:

• Income equals expenditure; • Savings targets and investment proposals are credible and achievable; • Key assumptions are “stress tested”.

7. The MTFS has been informed by rigorous feedback from the Corporate Review

Committee. Their comments together with Cabinet’s response are set out in Appendix 2.

8. The proposed budget would result in achieving a balanced budget for 2016/17 in

difficult financial circumstances. The future years are not balanced, even with an additional Adult Social Care precept assumed in all years and there is still work to do in order to balance the draft budget in 2017/18.

9. There are still large budget gaps in the future years of the MTFS and these will

need to be addressed. Accordingly, in March, the MTFS process for 2017/18 will begin and will start to work on savings options and proposals for further reductions in spending.

Summary

10. The MTFS and budget are simply the Strategic Plan and the Leading for a

Connected Staffordshire Business Plan of the council expressed in financial terms. The MTFS provides the financial framework within which the Strategic and Business Plans have been developed and refined over the past six months.

11. The headline figures are:

• a net revenue budget of £470.406m;

• the budget includes a contingency provision of £2m;

• the 2016/17 budget is supported by a net contribution of £4.571m from reserves;

• a 2016/17 budget requirement of £465.835m;

• a council tax requirement of £293.874m;

• the County Council’s Settlement Funding Assessment 2016/17 is £156.9m, a

reduction of £24.7m (15.7%) compared to the equivalent figure for 2015/16;

• a proposed 2016/17 council tax at Band D of £1,088.65, which is an increase of 3.95% when compared with 2015/16;

• the council tax base has increased by 1.4% to 269,944 equivalent Band D

properties;

• the County Council’s share of the estimated overall net surplus on the District/Borough Councils’ collection funds is £3.358m;

• the government’s capital allocations for 2016/17 total £43.7m, which

compares to the allocation in 2015/16 of £47.0m;

• after taking account of other resources available to support capital spending, the capital budget for 2016/17 is £128.2m including delegated budgets for schools. The five year capital programme involves £350m of investment;

• the Strategic Plan and the MTFS will continue to be developed on the basis of

an annual 3.95% increase in council tax.

12. Section 25 of the Local Government Act 2003 places a requirement on the Chief Finance Officer to report to the Council on the adequacy of reserves and robustness of the budget. The Council must have regard to this report when making its budget decisions. I have set out my comments in paragraphs 86 to 91 of this report. Given the degree of review and scrutiny of the budget that has taken place, the level of the contingency provision and the risk-based assessment of the level of general balances, this does, in my opinion, provide the reassurance required under Section 25 of the Local Government Act 2003.

13. I would like to thank Cabinet, Select Committee Members, the Senior and Wider

Leadership Teams and colleagues throughout the council for their help and support in developing the MTFS and 2016/17 budget.

Current Economic Climate 14. The Government’s Office for Budget Responsibility (OBR) has direct control over

the forecasts and judgements required to make an independent assessment of the public finances and the economy. The Bank of England continues to exercise control over interest rates and the supply of money.

15. The OBR produces forecasts for the economy and public finances. There are a

number of briefings which are produced throughout the year, setting out best estimates of inflation and other economic measures such as Gross Domestic Product (GDP) over the medium term. Whilst these measures do not necessarily have a direct bearing on council activity, it is important that plans are set with regard to these measures as they are the best estimate of the state of the economy and the impact they may have on council services and funding.

16. The OBR was predicting growth of 3% at the beginning of 2015 but there was a

weaker start to the year which meant that in July the OBR forecast 2.4% growth throughout 2015. The latest outlook is for weaker growth during 2016 which will then pick up during 2017. The Bank is likely to maintain its low interest rate for some time to come with latest predictions suggesting that the rate will not start to rise until late 2016 or early 2017.

17. During 2015 the Consumer Price Index has been around zero but is forecast to

increase during 2016. The latest CPI data published for December 2015 reported that CPI was 0.2% compared to 0.5% in the previous December. The current assumption in the MTFS is that 0% inflation has been allocated to services, with the exception of any contractual commitments.

18. The MTFS currently assumes 0% inflation in 2016/17, rising to 2% thereafter for

non-pay inflation excluding energy and utility costs which are funded in line with existing contractual commitments. This appears to still be reasonable in the light of the recent fall in inflation. A list of the major assumptions used in preparing the MTFS is attached as Appendix 3.

Business Rate System Changes 19. At the Conservative Party Conference in October the Chancellor announced his

intention to allow local authorities to retain 100% of the business rates in their areas, rather than paying over 50% to central government as they do currently. The details around this plan have yet to be produced and it will involve a large amount of work to devise a suitable scheme that provides the required incentives for all tiers of local government.

20. With the retention of all business rates will come new responsibilities and this is a

completely unknown area. It is not certain what responsibilities will transfer to local government or what the costs of this service provision are likely to be.

21. The timescales for the implementation of this new business rates scheme are not set

out currently but as a change of legislation is required, the new scheme could not be implemented any earlier than 2019/20 and may well be 2020/21.

22. The Chancellor also announced that with the retention of all business rates, the

Revenue Support Grant will disappear completely and will no longer be a funding stream for local government. The County Council was already planning for this eventuality and the announcement confirmed the accuracy of the current planning

assumption. It is likely that other specific grants will also be reduced or phased out with the introduction of this new business rates system.

Spending Review 2015 23. The Chancellor announced his Spending Review and Autumn Statement on 25th

November. He stated that the economy is growing in a stable and sustainable manner and that the budget deficit will be repaid by 2019/20. He outlined four priorities for the Spending Review: developing an integrated health and social care system; investment in infrastructure and a devolution revolution; tackling big social failures and reinforcing national security.

24. The previous announcement on retaining 100% of business rates was confirmed and consultation will be held in 2016 on how this new system should work. The consultation will also seek views on the additional responsibilities that will be transferred to local authorities. There are various options for this, including the transfer of the administration of Housing Benefit for pensioners, Transport for London capital projects and the funding of Public Health.

25. The New Homes Bonus funding stream will be reformed and there will be

consultation on the proposed changes in 2016. Savings made from this will be re-directed to fund social care. The Education Services Grant will be reduced nationally but the timing of this reduction is not clear.

26. An additional council tax rise of up to 2% will be permitted providing the income

generated is ringfenced for adult social care. Also the Better Care Fund will be increased by a further £1.5bn nationally by 2019/20. The methodology for distributing the Better Care Fund has been amended to include reliance on ability to raise council tax. The aim is to achieve a fully integrated health and social care system by 2020.

27. The government has announced that it has reduced the specific grant provided for

Public Health by £2.4m (6.2%) in 2015/16. In the Spending Review it was announced that this saving will be ongoing and, indeed, there will be further savings of 9.6% made in future years. The allocation of these savings for Staffordshire has not yet been announced.

28. Funding levels per pupil are protected and both the Pupil Premium grant and the

Universal Infant Free School Meals grant will remain and will be funded at the same rates. There will be consultation on a new, national funding formula for schools, early years and high needs during 2016, with the aim of implementing the new formula in 2017/18. The government’s aim is for all schools to become academies by the end of this parliament.

29. In terms of capital investment, it was announced that there will be another Local

Growth Fund pot available for bids and that indicative allocations from the last round are now confirmed. It was also confirmed that a new Enterprise Zone has been created in the Stoke / Staffordshire Ceramics Valley which will provide additional funding for the LEP.

Provisional Local Government Finance Settlement 30. The Provisional Local Government Finance Settlement was announced on 17th

December 2015. The announcement included provisional allocations for 2016/17 plus indicative allocations for years 2017/18, 2018/19 and 2019/20.

31. The settlement used a different distribution formula which has meant that authorities have been allocated amounts which vary from their forecasts considerably. The Revenue Support Grant (RSG) allocation also includes funding for the Care Act which was funded from a specific grant in 2015/16.

32. The amount included for the Care Act is £4.7m for 2016/17 and commitments

against that are forecast to be £2.0m. However, there is an underspend on the 2015/16 allocation of funding which will be used to fund the 2016/17 spend. In future years it is assumed that the commitment remains at £2.0m.

33. The indicative allocations for future years show that the reductions in RSG are front-

loaded and therefore more severe in the earlier years of the period. It is confirmed that RSG will be zero by 2020/21.

34. The settlement confirmed the option to increase the council tax by a further 2% in

order to fund the costs of adult social care. This option would generate £5.7 million for the County Council in 2016/17.

Shaping the MTFS

35. The period for the MTFS is five years, which provides a framework that promotes

longer term planning. Due to the general election which took place in May 2015, the Local Government Finance Settlement for 2015/16 included funding amounts for that one year. Therefore there was a great deal of uncertainty about the funding available for 2016/17 and the planning assumption was that Revenue Support Grant would reduce by £22.3m in 2016/17. However the actual reduction is £29.4m, considerably worse than the planning assumption. The planning assumption was that RSG would be zero by 2019/20 and after this time, the County Council would be self-financing, relying totally on income from business rates, council tax and fees and charges to fund services.

36. Identifying efficiency through innovation and new ways of working has featured heavily in previous years’ MTFS and, in the light of the current economic climate will continue to be a fundamental part of the council’s plans going forward. The council has a proven track record of delivering savings with £123 million being identified and delivered in the past four years (up to and including 2014/15). The forecast for the current year is to achieve a further £33.1m of savings making a total of £156 million over five years. The council still has a number of challenges ahead and the way residents’ needs are met and services are provided will need to continue to evolve. The delivery of challenging savings targets and the management of current and future pressures is crucial to the delivery of the MTFS and Strategic Plan.

Projected pressures and savings options 37. When the 2015/16 MTFS was agreed in February, the position was a balanced one

over the five year period, with headroom in years two and three and a budget gap in years four and five.

38. This position assumed that recurring savings of £52.6m would be achieved across

the five year period. Another major assumption included in the position at February was a council tax increase each year of 1.95%.

39. Since then services have identified various projected pressures and savings, which

have all been subject to a challenge process with senior officers and Cabinet members. The main area of demand for council services remains social care, for both adults and children but there are also pressures emerging in other services such as waste management and highways.

40. The pressures on social care mainly relate to the All Age Disability service which is

overspending in the current year and has a financial recovery plan in place to mitigate this. There are also some small pressures which relate to Deprivation of Liberty Safeguarding and the impact of previous years’ decisions around the domiciliary care framework.

41. In the Economy, Infrastructure and Skills portfolio, the pressures are in the waste

management service, relating to green waste recycling credits and Waste Electrical and Electronic Equipment (WEEE) regulations. The Stafford Western Access Road project will have some borrowing costs associated with it, these will be substantial, rising to £0.5m p.a. by the end of the MTFS period. A number of other small pressures and two reductions of existing pressures make up the total for this portfolio.

42. Taking all the projected pressures into account, this makes a total of £8.5m of new

issues which are funded in 2016/17. The funded pressures are shown in detail, by service, in Appendices 4a to 4e.

43. Despite the small amount of headroom in 2016/17 when the MTFS was agreed in

February, these pressures, plus the loss of Revenue Support Grant, means that further savings are required. Services have focused on the business plan and the delivery of the relevant outcomes in order to generate savings options whilst still ensuring that outcomes are delivered.

44. The People portfolio of services has put forward savings relating to the new

children’s ICT system, the Families First service, Learning and Skills and Special Educational Needs and Disabilities (SEND).

45. The Economy, Infrastructure and Skills portfolio has put forward numerous savings

options, some of which have an increasing impact towards the end of the MTFS period. However, the largest savings for 2016/17 include a reduction in the member division highways programme, reduced environmental highways maintenance and a

review of lower category or duplicate resource (e.g. where a Pelican crossing is also in place) school crossing patrols only.

46. Public Health have reviewed the contracts in place currently and can make savings

in the areas of drug and alcohol support, the locality prevention programme, sexual health and wellbeing and NHS health checks.

47. The corporate services have offered a variety of savings plus an authority-wide

review of non-contractual salary spend and a saving resulting from a review of the timing of insurance contributions to reserves.

48. There are new savings options which total £13.0m and the details can be seen, by

service, in Appendices 4a to 4e.

49. These new pressures and savings, plus those already approved in previous years, are shown in Appendix 5. A summary is shown in the table below. A budget gap of around £20 million exists in each year from 2017/18 onwards and further savings will be required to close this gap. This is discussed later in the report.

2016/17

£m 2017/18

£m 2018/19

£m 2019/20

£m 2020/21

£m Pressures 12.593 15.619 24.394 26.744 26.944 Inflation 7.121 18.960 31.001 40.763 50.740 Savings (29.216) (37.285) (49.710) (56.947) (62.130) Net movement

(9.502) (2.706) 5.685 10.560 15.554

Risks

50. There are a range of risks which need to be carefully monitored and managed. In

some cases the risks may not materialise or may be managed in order to mitigate their impact on the budget.

51. The 2015/16 MTFS assumed the County Council would receive an additional £15m, above the £16.2m already received, from the Better Care Fund (BCF), with the risk highlighted that not all this funding may be received as schemes may not start to deliver benefits immediately. That risk has materialised in 2015/16 and there is now a three year plan to deliver the BCF with savings increasing as schemes come online. As 2016/17 is the second year of the BCF there remains a risk that schemes do not deliver their benefits during that financial year. However all partners have recognised the lessons to be learnt from 2015/16 and are committed to ensuring that a plan is produced in line with the detailed guidance which will be published. The table below illustrates the three year plan.

Better Care Fund Agreement 2015/16 2016/17 2017/18 Previous funding transfers from NHS (S256)

£16.2m £16.2m £16.2m

Care Act implementation £1.9m £1.9m £1.9m Cash contribution from CCGs £5m £5m £5m Savings from health economy £6m £10m £14m Bridging finance £4m - (£4m) Total in current MTFS £33.1m £33.1m £33.1m 52. In July, the Chancellor announced that a National Living Wage would come into

effect from April 2016 and the costs associated with this will be borne largely by the County Council’s providers. The Chancellor also said that these providers should also see measures that reduce liabilities, for example decreases in their corporation tax liabilities which will be expected to go some way towards offsetting the additional cost and may therefore minimise this risk. The County Council is currently assuming no increase in unit prices for the living wage and any other inflationary or statutory obligations impacting on providers. Any price increases will need to be funded by productivity and efficiency improvements by providers.

53. The contract with the Staffordshire and Stoke-on-Trent Partnership Trust was re-negotiated earlier in 2015. The risk share arrangement in place could also give rise to additional costs.

54. The capital programme for additional school places could have revenue implications

from the repayment of borrowing. This is assumed to be a risk presently as it is anticipated that costs would not arise within the period of this particular MTFS.

55. The Chancellor’s announcement regarding the retention of 100% of business rates

included the fact that other specific grants will be reduced or phased out as a result of this additional income from business rates. The details of this are unknown as yet and will be subject to consultation as described in paragraph 24 above.

56. There is an emerging national issue about NHS Trusts being able to claim

mandatory relief on their business rates. If this were to be the case, the impact will be huge nationally with costs of between £1bn and £1.5bn for local government. This could have a severe impact on the business rates received in 2017/18, and on the Stoke on Trent and Staffordshire Business Rates Pool. Discussions are taking place at a national level, involving the Local Government Association, DCLG, HM Treasury and the Department of Health in order to identify a suitable way forward on this issue. The MTFS is based on provisional forecasts of business rates income which do not include the impact of NHS Trusts appeals. The Director of Finance and Resources requests the authority to amend the budget for business rates income in the light of any further information regarding this issue.

Council Tax Base and Collection Fund 57. The District and Borough Councils have provided their tax bases to allow the council

tax to be calculated. The council tax for the County Council is calculated by dividing the council tax requirement by the notified council tax base. The council tax base is the number of households in the county area expressed as a Band D equivalent.

58. An increase in the tax base of 0.8% had been assumed, in accordance with the 2015/16 MTFS. However, the notifications show an increase for 2016/17 of 1.38%. Details of the council tax base by District and Borough council are attached as Appendix 6a. Following discussions with District and Borough Councils, the MTFS assumes an average increase of around 1% in the tax base for the remaining years of the period. This assumption includes data on house building where available.

59. District and Borough councils are required to declare the surplus or deficit on their

council tax collection funds each year. The surplus or deficit is then reflected in the council tax bills for the following year. The estimated position set out in Appendix 6a shows a surplus for the council of £3.358m. The final figures are subject to audit and any adjustments required are made in the following year.

60. The surplus on the collection fund shows that collection rates in some District and

Borough Councils have been higher than anticipated. However, despite the surplus declared this year, it is prudent to continue to assume that the collection fund will be in balance for the remaining four years of the MTFS.

Council Tax 61. The County Council has consistently maintained one of the lowest council tax rates

of any English county council. For four years the council tax was either kept the same or reduced. However, the current demands for our services meant that in 2015/16 we had to increase council tax by 1.95%. The planning assumption for 2016/17 was also an increase by 1.95% and this is assumed in the current plan.

62. The Chancellor announced that local authorities would have the option to increase council tax by an additional 2% in order to fund the costs of adult social care. We are pleased that the Government has acknowledged this growing national funding gap and after exploring all other options, the additional precept is proposed. The income raised from this will be used directly to fund adult social care, therefore it will be used to care for Staffordshire people and Staffordshire families.

63. The council must notify District and Borough Councils of its council tax rate for each property band before 1st March each year. The council’s proposed council tax at Band D is £1,088.65 which is an increase of around 10 pence per day for the average taxpayer. As there are no special expenses for the council, the same rate applies across all District and Borough Councils. The table below sets out the council tax proposals for each category of dwelling. The Band D rate produces a Council Tax Requirement of £293.874m for 2016/17.

Business Rates 64. Income from business rates was assumed to increase slightly in 2016/17, following

discussions with the districts. The latest forecast was in December and these provisional amounts are included in the MTFS. Districts have to provide a formal forecast to DCLG and at the time of writing further clarification is required on these formal forecasts, particularly in relation to the risk mentioned above around mandatory relief for NHS Trusts. It is therefore requested that the Director of Finance and Resources be granted authorisation to amend the MTFS for these formal forecasts once they are confirmed. Further detail on the business rates forecasts for each district is shown in Appendix 6b.

Review of Reserves and Balances 65. Section 25 of the Local Government Act 2003 requires the Chief Finance Officer to

report to the Council on the adequacy of proposed reserves and the robustness of the budget.

66. We have reviewed the earmarked reserves and provisions we hold to make sure

they are still required and that they are adequate. The details of this review are attached in Appendix 7.

67. At the end of 2015/16, general balances are forecast to be in the region of £20m. We

have carried out a risk assessment of the level of general balances the council needs to hold. In doing this we have taken into account the uncertain future economic outlook and the risks surrounding the MTFS which are set out later in this report. This assessment attached as Appendix 8 has concluded that £21.5m is required to reflect the financial risks the council is facing. Balances plus the contingency provision of £2m is considered sufficient to cover the risk. However if all the risks outlined above materialise, then balances would be fully utilised and this would necessitate a financial recovery plan to identify and plan to repay the amounts used from balances.

Category of dwelling

Council Tax rate £

Band A 725.77 Band B 846.73 Band C 967.69 Band D 1,088.65 Band E 1,330.57 Band F 1,572.49 Band G 1,814.42 Band H 2,177.30

Summary of MTFS Position 68. The MTFS as set out in this report results in a budget requirement after approved

use of reserves for 2016/17 of £465.835m. The proposed 2016/17 detailed net budgets across services together with planning forecasts for future years of the MTFS are included in Appendix 9. An analysis of the year on year changes to the budget is summarised in Appendix 10, while Appendices 11a–11e provide details of the budget allocations within each portfolio.

69. Although the budget for 2016/17 is a balanced one, there is a gap of around £20m a

year in future years as shown in the graph below. Action to close the gap for 2017/18 will commence in March 2016.

Capital Strategy 70. The capital programme for 2015/16 totalled £156.7m and at the Second Quarter

monitoring report, the programme had decreased to £126.3m due to a delay in starting construction on the A50 Project A. Construction has now started the spend will be pushed into 2016/17 and future years.

71. The proposed 2016/17 capital programme stands at £128.2m currently, although announcements regarding allocations from central government have not yet been received for all services. Economic regeneration projects are a priority, as are highways development and school expansions.

72. The capital programme includes funding for the A50 Project A and the Stafford Western Access Route development plus other economic regeneration projects funded by the Local Growth Deal. There are also planned extensions to existing schools and a new primary and a new secondary school being built in East Staffordshire.

73. The draft capital programme is shown in more detail at Appendix 12. The detailed

allocations are shown in Appendix 13. Prudential Indicators

74. The Prudential Code sets out a number of indicators (estimates and limits) which

authorities must consider when reviewing their capital investment plans. The Code requires that the body responsible for approving the budget approves these indicators and capital programme (i.e. the County Council). These indicators for the next five years are attached as Appendix 14.

75. Based on these indicators and overall finances of the County Council the capital investment programme, including unsupported borrowing, is considered affordable, prudent and sustainable.

Financial Health Indicators 76. Members need appropriate information to allow them to assess the ongoing financial

health of the council and to provide reassurance that it is on course to deliver its financial strategy. Appendix 15 sets out targets for a range of Financial Health Indicators. Performance against these indicators will be monitored and reported during the year.

Consultation Summary

Business Ratepayers

77. A meeting was held on 15th December 2015 with members of the Staffordshire Chambers of Commerce. They were asked for their views on the Council’s draft MTFS, including what more could be done to help businesses in Staffordshire.

78. Representatives were provided with the context of the future of local government funding moving to self sufficiency, therefore local government will become financially more dependent on business rates and council tax as central government grant gets phased out entirely. The medium term position shows that Staffordshire County Council will shrink in size as funding is reduced over the medium term, at a time when pressures in relation to an ageing population continue to increase. The importance of helping businesses in Staffordshire was highlighted, which will have mutual benefits for the County Council as well as Staffordshire businesses.

79. The group were keen that the authority is business friendly and flexible to business

demands. Representatives wanted to know the impact of local government retaining

100% of business rates collected. The representatives requested to be included with any central government consultation.

80. The representatives emphasised the importance of understanding Staffordshire’s

vision for the future. The group wanted to understand the impact of devolution for Staffordshire, especially with the West Midlands Combined Authority, the ‘Midlands Engine’ to the south and the ‘Northern Powerhouse’ immediately to the north. The group felt that a well communicated Staffordshire vision would create an identity that will help breed confidence and certainty in Staffordshire businesses. The group were satisfied that Staffordshire aims to benefit from its geographical location between the ‘Northern Powerhouse’ and the ‘Midlands Engine’ in order to benefit from both.

81. The group would like to see investments from the Pension Fund made within Staffordshire businesses. Although investments have been made in Staffordshire, it is not a specific policy due to the size of pension fund investments and the need to spread risk. In addition Pension Funds’ investments may well change through the creation of the six British Wealth Funds nationally. However, the group were happy that such schemes as the small business loan fund helps to invest and encourage growth in Staffordshire.

Trade Union Consultation

82. The Trade Union Consultative Committee met on 8th January 2016 and the meeting

included an update on the MTFS.

83. At the meeting, the Trade Unions raised the following issues: • Concerns about the level of funding for the County Council in 2016/17 and

future years and the impact these reductions would have on services; • Concerns about the impact of Government reduced funding on schools; • Reassurance was given that all savings options will be consulted on, where

appropriate. Corporate Review Committee Comments 84. A good budget is transparent and well scrutinised. As part of the overall budget

setting process the Corporate Review Committee have a remit to scrutinise the MTFS plans and as such it has been scrutinising the MTFS throughout the year. In addition it conducted a series of interviews with portfolio holders and Senior Officers to assess the issues facing services.

85. The Committee have also scrutinised the detailed spending pressures, investment

and savings proposals. The report of the Committee, which concluded that the MTFS and 2016/17 budget met the principles of being a good and balanced budget, was considered by Cabinet at its 3rd February meeting. The Committee’s comments and recommendations along with Cabinet’s response are attached as Appendix 2.

Robustness of Budget and Risk Implications

86. Section 25 of the Local Government Act 2003 places a duty on the Chief Finance Officer to report on the robustness of the budget. This involves an assessment of risk. The proposed budget outlined in this report has been subject to considerable and detailed examination by officers across the organisation as well as relevant finance staff. The MTFS and the implications for services have been considered and refined by the Senior Leadership Team and Cabinet as the Strategic Plan has been refreshed.

87. The MTFS has also been subject to detailed scrutiny by the Corporate Review

Committee. Reassurance is also provided by the confirmation, in paragraph 74 above that the County Council’s borrowings are within the boundaries of prudential guidelines.

88. The robustness of the budget when considered in light of the finite resources

available to the county council and how politically it is allocated across the services is essentially a judgement about the assessment of risk. The main risk faced by the council this year is the uncertainty about how much funding will be received from Government and the NHS. The other key risks identified at this stage that need to be managed effectively are set out below. • The biggest risks are around social care and include the Better Care Fund and

the relationship with Clinical Commissioning Groups and providers including the Staffordshire and Stoke on Trent Partnership Trust;

• The impact of the National Living Wage and the costs for providers of nursing, residential and domiciliary care;

• The reduction in government funding from Revenue Support Grant, Education Services Grant and Public Health Grant;

• The impact on income from Business Rates particularly in relation to the mandatory relief claims from NHS Trusts;

• Spending exceeding budgets and/or income falling short of budgets; • Savings options identified and assumed in the MTFS not being achieved; • Plans not being delivered and outcomes not achieved; • The impact of the current economic climate, including increased inflationary

pressures, interest rate changes, reduced levels of income from fees and charges for council services etc;

• Increased demand for council services above estimates, including the impact of welfare benefit changes;

• Impact of any cost shunting from other agencies to the county council; • Expected income from other agencies not materialising.

89. Failure to deliver the savings identified will jeopardise the council’s MTFS and the

delivery of the Strategic Plan. The processes for commissioners to deliver these savings already includes accountability letters, which will continue to focus on delivery of outcomes and performance as well as financial responsibility. The council has a proven track record of delivering savings and there will be regular monitoring and reporting of them during the year. However the financial situation is becoming

more and more challenging, with this year’s decisions being the most difficult to make for many years.

90. There are still large budget gaps in the future years of the MTFS and these will need

to be addressed. Accordingly, in March, the MTFS process for 2017/18 will begin and will start to work on savings options and proposals for reducing spend.

91. With regard to the risk of overspending against budget, thorough budget preparation

and detailed monitoring during the year coupled with a personal financial accountability framework which minimises this risk. Furthermore Finance Units are able to identify any concerns at an early stage, advise management teams and recommend measures to mitigate the impact. Budget monitoring reports are regularly considered by management teams and by Select Committees, Portfolio Holders, SLT and Cabinet on a quarterly basis.

Conclusions 92. The proposed budget would result in achieving a balanced budget for 2016/17 in

difficult financial circumstances. The future years are not balanced, even with an additional Adult Social Care precept assumed in all years and there is still work to do in order to balance the draft budget in 2017/18.

93. The role of local councils has changed considerably in recent times, not only to make

better use of the public purse, but to encourage greater independence and less dependence on services funded by the taxpayer.

94. In Staffordshire, we have already shaped a very different council to manage demand

on these services, reduced costs by £156m over five years, and introduced creative, more affordable ways of making a positive difference to the lives of Staffordshire people – all with one of the lowest county council taxes in the country.

95. We have a proven track record of working with partners in the county, across the

region and nationally to bring in investment and create the right conditions for Staffordshire’s economy to flourish and create more well-paid jobs for local people. We want to continue to build on this success story, helping make our county a place where children and young people get a good education to set them up for adult life, people can realise their ambitions and more people enjoy healthy, independent lives as they grow older

96. We are continuing to work with residents, voluntary groups, partners or the private

sector to find new ways to improve lives. Our approach is about listening, creating the right conditions for Staffordshire’s people to flourish, and allowing people to get on with creating their own prosperous future. In turn this allows us to focus our efforts and limited resources on those who need us the most.

97. It is essential for us to work closer and smarter with our public sector partners who

together spend over £7billion a year of public money in Staffordshire. We have a duty to make sure this money is spent as wisely and effectively as it can be to reduce

the burden on taxpayers, particularly as we face growing demand for our services especially around care.

98. We will be talking with residents and partners in the months ahead about the role of

the county council and will listen further to their ideas on how we must adapt to changing circumstances and help ensure that everyone in Staffordshire can prosper, be healthy and be happy.

99. I value the help and support I have received from elected members and colleagues

over the last 12 months. I am particularly grateful to colleagues in the finance community for their contribution to the construction of this budget and MTFS, which is a product of a great team effort.

Andrew Burns Director of Finance and Resources

List of Appendices 1. Equalities, legal, resource, risk, climate change implications and health

impact assessment 2. Recommendations of the Corporate Review Committee and Cabinet’s

response

3. Major assumptions used in MTFS 4. Funded Pressures and Proposed Savings

a Health and Care b Families and Communities c Economy, Infrastructure and Skills d Finance and Resources e Strategy, Governance and Change

5. Summary of Pressures, Inflation, Savings and Investments

6. Information from Districts

a Council Tax Base, Collection Fund and Precepts b Business Rates

7. Review of Earmarked Reserves/Provisions 8. Risk Based Review of General Balances

9. Proposed Net Budget 2016/17 and Planning Forecasts 2017/18 to 2020/21

10. Summary of Budget Changes 11. Portfolio Budget Summaries

a Health and Care b Families and Communities c Economy, Infrastructure and Skills d Finance and Resources e Strategy, Governance and Change

12. Capital Programme 2016/17 to 2020/21

13. Capital Allocations 2016/17 to 2020/21 14. Prudential Indicators 15. Financial Health Indicators

Appendix 1 Equalities implications: The overarching equalities implications are at the heart of political deliberations with interconnecting links. This interconnectivity is key to delivering within Staffordshire, the best value for money for all. Specific equalities implications arising from the issues covered by this report will be incorporated into outcome and service plans. Equality Impact Assessments will therefore be undertaken for each specific issue, where appropriate. Legal implications: There are no specific legal implications presented by this report. Resource and Value for money implications: The Resource and Value for money implications are set out in the report. Risk implications: Risk implications are outlined in paragraphs 86 -91 of the report. Climate Change implications: We have considered the impacts on climate change whilst developing the MTFS and have, in line with the council’s key priority concentrated on reducing our carbon footprint in future service delivery plans. As an organisation, over the medium term we are encouraging greater flexible working which aims to reduce emissions even further. Health Impact Assessment The impact on public health has been considered whilst developing the MTFS. Innovation and Efficiency options proposed aim to improve and promote the health of citizens through closer working with the NHS. Further implications will be incorporated in the Outcome Plans for Staffordshire as a place where people live longer, healthier and more fulfilling lives. Report author: Rachel Spain Corporate Finance Manager Tel: (01785) 854455

Appendix 2

Recommendations of the Corporate Review Committee and Cabinet’s response

Comments and Recommendations of the Corporate Review Committee

Cabinet’s Response

We note that the cost of care in Staffordshire has increased and we recommended Cabinet to look at budget provision in significant service areas in other authorities and where they find distinct differences to Staffordshire, these budget areas should be subject to peer review.

The County Council participates in bench marking exercises and has access to statistics that cover all local authorities. This recommendation will feed into the rolling MTFS process for 2017/18.

In terms of contract compliance monitoring within the County Council, we urge the County Council’s commissioners to improve service delivery and recommend that this be closely monitored by the Select Committees.

Cabinet agrees to forward this recommendation on to the appropriate Select Committees.

Cabinet has assured us that they have capacity and capability to deliver the MTFS and we urge them to robustly challenge the two major risk assumptions: SSOTP and BCF and take remedial action, promptly and when necessary. We recommend that we should continue to meet as a working group to focus on the financial aspects of key risk areas.

Risks will be managed carefully and monitored closely throughout the year and any issues will be reported to Cabinet. Cabinet agrees that it would be beneficial for the working group to continue its meetings.

The County Council is seriously exposed to risk around the care budget and must be vigilant in mitigating that risk. We welcome that the Cabinet Member for Health, Care and Wellbeing and the Head of Care are actively working through issues which affect the deliverability of SSOTP and BCF and urge them to take every opportunity to influence ongoing negotiations with partners and that support be provided to the Cabinet Member.

Noted and the working group can be assured that the Cabinet Member and the Director of Health and Care will be negotiating carefully with partners to deliver outcomes.

The Cabinet Member and the Head of

The County Council does recognise the

Appendix 2

Recommendations of the Corporate Review Committee and Cabinet’s response

Comments and Recommendations of the Corporate Review Committee

Cabinet’s Response

Care are agreed on the importance of the BCF and we urge the County Council as Commissioner, to maintain an influencing space in negotiations. The County Council must be absolutely clear about transfer costs, duplication and apportionment.

importance of the Better Care Fund and is committed to ensuring that the BCF functions well in Staffordshire. The BCF plan will be managed carefully and monitored closely to ensure the benefits of this joint working are released to all partners.

We asked the Interim Director for Public Health to demonstrate intervention which has lead to successful outcomes: a return on investment. Evidence of effective and efficient budget allocation will support the Cabinet Member for Health, Care and Wellbeing in his negotiations with the CCGs. We welcome the opportunity for efficiency savings which might be achieved by Public Health and Social Care working more closely together.

Noted and the recent restructure of the Senior Leadership Team will ensure that Public Health is fully integrated with social care.

In terms of impact on MTFS, the County Council holds a 49% stake in Entrust and we recommend the Prosperous Staffordshire Select Committee be vigilant in monitoring whether that investment is delivering.

Noted and this recommendation will be referred on to the Prosperous Staffordshire Select Committee.

Appendix 3

Major Assumptions Used in MTFS Year-on-Year Increases

2016/17 2017/18 2018/19 2019/20 2020/21 Staffing costs Pay 1.0% 2.0% 2.0% 2.0% 2.0% Local Government Pension Scheme increases

1.0%

1.0%

1.0%

1.0%

1.0%

General running costs Prices (including internal recharges from trading services)

0.0%

2.0%

2.0%

2.0%

2.0%

Contractual inflation 0.0% 2.0% 2.0% 2.0% 2.0% Income (standard allocation) 2.0% 2.0% 2.0% 2.0% 2.0% Utility / Running Expenses Electricity 6.0% 10.0% 10.0% 10.0% 10.0% Gas -10.0% 10.0% 10.0% 10.0% 10.0% Business Rates bills 2.0% 2.9% 3.2% 3.2% 3.2% Water1 3.0% 3.0% 3.0% 3.0% 3.0% Petrol 2.0% 2.9% 3.2% 3.2% 3.2% Diesel 2.0% 2.9% 3.2% 3.2% 3.2% In-Year Increases Interest Rates Interest on investments 0.63% 1.13% 1.63% 1.75% 1.75% Interest on debt 4.20% 4.30% 4.40% 4.45% 4.50% General Funding New Homes Bonus £3.5m £2.8m £2.2m £1.9m £0.7m Loss of Revenue Support Grant (£30.4m) (£23.6m) (£15.2m) (£14.8m) (£10.7m) Revenue Support Grant £64.3m £40.7m £25.5m £10.7m - Council Tax 1.95% 1.95% 1.95% 1.95% 1.95% Social Care Precept 2.00% 2.00% 2.00% 2.00% 2.00%

1 Water Bill increases are set by OFWAT. These have been capped for the 5 year period at the previous Novembers RPI inflation rate plus 0.5%

Health and CareFunded Pressures and Proposed Savings

Appendix 4a

Description 2016/17 £m

2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Public Health

Total Service Savings Approved in February 2015 0.311 0.260 0.260 0.260 0.260

New Service SavingsRedesign the Drugs and Alcohol service to offer more effective support for Staffordshire residents. (1.130) (1.130) (1.130) (1.130) (1.130)Delivery against new payments by results contracts for NHS Health Checks. (0.330) (0.330) (0.330) (0.330) (0.330)Review opportunities to modernise support to families with children under five. 0.000 (2.500) (2.500) (2.500) (2.500)Review of the Locality Prevention Programme contract. (0.800) (1.400) (1.400) (1.400) (1.400)Review break clause in current contract for Child Health & Wellbeing. 0.000 0.000 (2.000) (2.000) (2.000)Delivery against payments by results model for Lifestyles Programmes. 0.000 0.000 (1.000) (1.000) (1.000)Retendering of the Sexual Health and Wellbeing contract. (0.190) (0.190) (0.190) (0.190) (0.190)New Service Savings Total (2.450) (5.550) (8.550) (8.550) (8.550)

All Aged Disability

Total Service Spending Pressures Approved in February 2015 (0.008) 0.520 0.520 0.520 0.520

New Service Projected PressuresPrevious years MTFS savings remain unachieved. The existing MTFS savings requires a saving of £3m in 2016/17. A new delivery plan is to be put into place with a specific emphasis on day centres, and the majority of the savings have been re-profiled in a new saving.

3.000 3.000 3.000 3.000 3.000

The current in year overspend of £2.7m (at quarter 2) includes an underlying service pressure of £0.5m. 0.500 0.500 0.500 0.500 0.500

Includes Procurement savings which will be delivered in a different way, and have been reprofiled accordingly, and the ongoing pressure in relation to sustained financial recovery for the service. 1.600 1.600 1.600 1.600 1.600

New Service Projected Pressures Total 5.100 5.100 5.100 5.100 5.100


Appendix 4a


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

New Service Savings Options Improving how we communicate with eligible adult social care users about the amount available within their indicative personal budget. Offering a range of mechanisms for people to exercise their choice and control including increasing the numbers taking direct payment.

0.000 (0.250) (0.750) (1.000) (1.500)

Completing all contract changes by April 1st 2017 and driving improved value for money and negotiation improved rates / efficiencies from existing providers / contracts. Impact on service users will be minimal. Impact on the local social care provider market will be regularly reviewed to ensure that the market is strengthening and where possible provider capacity and reliance is improved.

0.000 (0.125) (0.250) (0.450) (0.700)

The effectiveness of current accommodation contracts will be reviewed in line with the priorities to focus on those people who are eligible for adult social care. This is part of reshaping the Extra Care offer. 0.000 (0.100) (0.200) (0.300) (0.400)

Realignment and re-shaping of the workforce to deliver a more efficient and effective workforce at a reduced cost includes new ways of working, and shared resources with partners. Also includes new models of user led support planning, brokerage and self assessment / skill mixing.

0.000 (0.250) (0.500) (0.500) (0.500)

Enables individuals to have greater access to services and communities through an assets based approach. 0.000 (0.015) (0.030) (0.060) (0.060)

Enable Staffordshire people with a disability who live out of county due to a lack of local provision to live in county at a reduced cost and with better outcomes 0.000 (0.050) (0.100) (0.150) (0.200)

Increased local capacity for people with a learning disability and mental health service users will enable more people to live near their communities and friends and families at a lower cost. Ensuring that the cost of care is based on need and reflects local market variations will support the council in making sure it can support people with the available resources.

0.000 (0.125) (0.500) (0.850) (1.950)

To reshape support plans for children transitioning into adults, and young people within adult social care to focus on enablement, and outcome based care and housing support. (1.250) (1.540) (1.820) (1.820) (1.820)

A new delivery plan for Modernisation has been put in place with a specific emphasis on day centres. (0.300) (0.600) (1.200) (1.800) (3.000)New Service Savings Options Total (1.550) (3.055) (5.350) (6.930) (10.130)

Long Term Conditions

Total Service Spending Pressures Approved in February 2015 1.810 4.010 4.010 3.760 3.760

New Service Projected PressuresPressure related to increased level of Deprivation of Liberties cases. 0.150 0.150 0.150 0.150 0.150Increased costs of re-tendered care contracts. 0.870 0.870 0.870 0.870 0.870Deferred implementation of Care Act (early assessments) 0.000 0.000 0.000 2.500 2.500Bridging Finance for Better Care Fund and SSOTP. 0.000 0.000 4.900 4.900 4.900New Service Projected Pressures Total 1.020 1.020 5.920 8.420 8.420

Total Service Savings Approved in February 2015 (11.000) (11.000) (11.000) (11.000) (11.000)


Appendix 4a


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

New Service Savings Options The effectiveness of current contracts will be reviewed in line with the priorities to focus on those people who are eligible for adult social care. This will release savings and we will look to informal social networks and local communities to support the transition to minimise any negative impact on service users. Also increasing information and advice to self funders. Reshaping Extra Care offer.

0.000 (0.050) (0.100) (0.150) (0.200)

Ensure Staffordshire residents rights to free nursing care are accessed in the community and 24hr nursing care. (0.250) (0.500) (0.750) (1.000) (1.000)

Enables individuals to have greater access to services and communities through an assets based approach. 0.000 (0.035) (0.070) (0.090) (0.090)

Enable Staffordshire people with a disability who live out of county due to a lack of local provision to live in county at a reduced cost and with better outcomes. 0.000 (0.050) (0.065) (0.080) (0.100)

New Service Savings Options Total (0.250) (0.635) (0.985) (1.320) (1.390)

Mental Health



New Service Savings Options Realignment and re-shaping of the workforce to deliver a more efficient and effective workforce at a reduced cost includes new ways of working, and shared resource with partners. Also includes new models of user led support planning, brokerage and self assessment / skill mixing.

(0.130) (0.130) (0.130) (0.130) (0.130)


Governance

Total Service Spending Pressures Approved in February 2015 0.000 (0.050) (0.050) (0.050) (0.050)

Total Health & Care Pressures 8.160 10.988 15.888 18.138 18.138Total Health & Care Savings (15.194) (20.235) (25.880) (27.795) (31.065)Health & Care Grand Total (7.034) (9.247) (9.992) (9.657) (12.927)

Families and CommunitiesFunded Pressures and Proposed Savings

Appendix 4b


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Children's and Education Services


Projected Changes to Original Service Spending PressuresAssuming the rising trend of children who need to be looked after does not re-emerge, part of this pressure can be removed. 0.000 (0.350) (0.700) (1.050) (1.050)

Staying Put Initiative - additional placement costs due to children being able to choose to stay in care until they are 21. However, the numbers in foster care deciding to remain in care is not as high as expected. Assuming this trend remains the same the pressure in future years can be reduced.

(0.200) (0.200) (0.200) (0.200) (0.200)

Total Projected Changes to Service Spending Pressures Approved in February 2015 (0.200) (0.550) (0.900) (1.250) (1.250)

New Service Projected PressuresEntrust Service Delivery Agreement. 0.400 0.400 0.400 0.400 0.400New Service Projected Pressures Total 0.400 0.400 0.400 0.400 0.400


New Service Savings Options

Under current SCC arrangements, when a maintained school converts to Academy status, SCC is required to undertake a range of transfer functions linked with legal, property transfer and HR associated with the change of status. There is a cost to SCC to fulfil these actions. Given that schools' choices are outside of LA control and schools attract a conversion grant to meet the costs associated with delivering the change in status, this proposal is seeking a contribution from those schools converting to academy status under a cost-share arrangement.

(0.100) (0.100) (0.100) (0.100) (0.100)

Savings arising from the previous restructure of the Education team plus a commitment not to recruit to vacant posts within the service. At this stage it is proposed that these vacant posts will be found from within the School Improvement team. This is the first saving from what may arise from a transition towards a Schools led model of School Improvement.

(0.150) (0.150) (0.300) (0.300) (0.300)

SCC contributes to DSG in place of the former Children's Fund Grant that was mainstreamed into DSG in 2010. This top up is earmarked to cease - and proposal is to fully fund commitments from DSG, ending the revenue contribution given that DSG has sufficient reserves.

(0.300) (0.300) (0.300) (0.300) (0.300)

Currently within the service budget £0.1m is given out annually to 3rd parties in the form of revenue grants. These can support activities such as schools sports, foreign exchanges and community sport groups for young people based in schools. Within the service, underspends and grants to support groups where alternative funding can be sourced by the groups, following signposting by SCC, has yielded a reduction in contributions of around 25% on the current budget.

(0.025) (0.025) (0.050) (0.050) (0.050)


Appendix 4b


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Looked After Children numbers have stabilised since the last MTFS, but pressure has emerged since June 2015, including the arrival of 36 unaccompanied asylum seeking children and increased care proceedings. Significant amount of targeted activity has and is being undertaken to reduce dependence on external residential placements, undertake intensive prevention work to prevent entry in to care etc. Savings can be achieved if numbers and placement mix remains stable.

(1.000) (1.000) (1.000) (1.000) (1.000)

Intensive work, which will need some investment, should result in significant long term savings in social worker time, legal costs and placement costs. The proposal developed is a joint initiative with partners and is expected that SCC will be required to invest staff at a cost of £0.150m as part of a dedicated multi agency team.

(0.114) (0.474) (0.596) (0.596) (0.596)

Joint initiative with Public Health in respect of targeted interventions focussed on drug and alcohol abuse which is a causal factor of many children entering the care system. 0.000 (0.156) (0.855) (1.300) (1.300)

Engagement with partners to work differently together to build greater resilience in families and communities across Staffordshire which will both reduce demands coming into the children's social care system (estimated at 5%) and improve outcomes. The aim is that through changing how we commission for families we can address the root causes of difficulties and address the intergenerational cycle of dependency. The programme is estimated to deliver benefits over the longer term with savings rising to £3m by year ten.

(0.094) (0.387) (0.800) (2.030) (2.393)

Following on from last year's change to redundancy cost-share, which contributed £1m towards the 2015/16 MTFS, this includes savings released from removing the budget earmarked in 2015/16 for residual costs relating to 2014/15 that have been paid in April 2015. The policy for 2016/17 will also be strengthened in relation to the following areas - bringing the arrangements around settlement agreements in line with those for general redundancies, and bringing the treatment for teachers added years due to early retirement on the back of redundancy in line with the treatment of non teaching staff - e.g. that the individual school pays.

(1.000) (1.000) (1.000) (1.000) (1.000)

The capital financing costs of Pisces system and capita developments are due to fall out. (0.500) (0.500) (0.500) (0.500) (0.500)Dependent on whether any more redundancies occur, the on-going provision for redundancies and repayment of loans can be reduced. (0.150) (0.150) (0.150) (0.150) (0.150)

Review of support services across the service. Following the implementation of Careworks and new ways of working, together with the impact of other services e.g. Children's Centres, it is anticipated that the level of support costs can be reduced, primarily from the deletion of vacant posts. A review of staffing structure across other areas of the service is being undertaken which may also deliver some savings.

(0.420) (0.420) (0.420) (0.420) (0.420)

Termination of the Evolve Young People contract. 0.000 (0.050) (0.100) (0.100) (0.100)New Service Savings Options Total (3.853) (4.712) (6.171) (7.846) (8.209)

Culture and Physical Activity

New Service Projected PressuresGreen Book Compliance. 0.130 0.130 0.130 0.130 0.130New Service Projected Pressures Total 0.130 0.130 0.130 0.130 0.130


Appendix 4b


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m


Projected Changes to Original Service SavingsFollowing a review during 2015/16 which will realise savings of £0.350m, the Mobile and Travelling Library Service will be delivered via two Mobile Libraries and one Travelling Library from April 2016. This service will be reviewed again during 2018/19.

0.000 0.000 0.000 (0.300) (0.300)

Implementation of Libraries Framework. It is anticipated that the current review will eventually deliver more savings than set out in the current MTFS, in the order of £0.5m by 2018/19. 0.000 0.000 (0.500) (0.500) (0.500)

Implementation of Libraries Framework. There is a need to keep under review the current libraries provisions to assess the effectiveness of community management / delivery. 0.000 0.000 0.000 (0.250) (0.500)

The successful delivery of the Staffordshire History Centre will enable a new staffing model. 0.000 0.000 (0.130) (0.260) (0.260)Total Projected Changes to Service Savings Approved in February 2015 0.000 0.000 (0.630) (1.310) (1.560)

New Service Savings OptionsSurrender of Shugborough lease to National Trust 0.000 (0.331) (0.476) (0.243) (0.243)New Service Savings Options Total 0.000 (0.331) (0.476) (0.243) (0.243)

Rural

New Service Savings OptionsReview of the Countryside estate is anticipated to deliver savings through different operating models. 0.000 (0.050) (0.100) (0.150) (0.250)Rights of Way - integration with Amey through the Infrastructure and strategic partnership. 0.000 (0.100) (0.150) (0.200) (0.250)Review of service provision in close co-operation and co-ordination with other service areas. 0.000 (0.040) (0.040) (0.040) (0.040)Review of service provision with a view to moving towards self-funding. 0.000 0.000 (0.030) (0.060) (0.060)New Service Savings Options Total 0.000 (0.190) (0.320) (0.450) (0.600)

Community Safety

Total Service Spending Pressures Approved in February 2015 (0.050) (0.050) (0.050) (0.050) (0.050)

Projected Changes to Original Service Spending PressuresRealignment of service reflecting the likely outcome of the Business & Community Protection project 0.050 0.050 0.050 0.050 0.050Total Projected Changes to Service Spending Pressures Approved in February 2014 0.050 0.050 0.050 0.050 0.050



Appendix 4b


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Projected Changes to Original Service SavingsBringing forward property savings in relation to Youth Club closure programme. (0.463) (0.232) 0.000 0.000 0.000Total Projected Changes to Service Savings Approved in February 2015 (0.463) (0.232) 0.000 0.000 0.000

New Service Savings OptionsReview of service efficiencies. 0.000 (0.200) (0.400) (0.480) (0.480)New Service Savings Options Total 0.000 (0.200) (0.400) (0.480) (0.480)

Total Families & Communities Pressures 0.830 0.830 0.830 0.480 0.480

Total Families & Communities Savings (8.513) (10.093) (12.657) (15.064) (15.827)Families & Communities Grand Total (7.683) (9.263) (11.827) (14.584) (15.347)

Economy, Infrastructure and SkillsFunded Pressures and Proposed Savings

Appendix 4c


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Economic Development

Total Service Spending Pressures Approved in February 2015 (0.035) (0.075) (0.075) (0.075) (0.075)

Projected Changes to Original Service Spending PressuresCabinet has approved a further additional tranche of resource to support the business loan scheme. This represents the initial pressure being gradually reduced. 0.025 0.025 0.025 0.025 0.025

Total Projected Changes to Service Spending Pressures Approved in February 2015 0.025 0.025 0.025 0.025 0.025

New Service Savings OptionsA strategic review of the County Council's portfolio of Enterprise Centres is being undertaken through the Penda Property Partnership. This is a wide-ranging review looking at all aspects of the portfolio. 0.000 0.000 0.000 (0.075) (0.150)

A review of spend across Tourism. 0.000 0.000 0.000 (0.090) (0.090)It is anticipated that total savings in the order of £0.1m per annum can be delivered against a number of budget headings with limited impact on outcomes. (0.100) (0.100) (0.100) (0.100) (0.100)


Strategic Infrastructure


New Service Projected PressuresThis pressure is the revenue cost of prudential borrowing associated with the County Council contribution to the Stafford Western Access Route project. 0.000 0.000 0.200 0.380 0.520

Detailed review of current service levels focusing on street lights was undertaken. Original savings proposal not being pursued. 0.100 0.200 0.300 0.300 0.300



New Service Savings OptionsThe Members' Divisional Highways Programme (DHP) Initiative currently contains £10,000 for each Member to help facilitate greater local collaboration as well as streamline and capitalise the delivery of low cost improvements. This will be reduced to £7,000 a year, representing a 30% saving.

(0.180) (0.180) (0.180) (0.180) (0.180)


Appendix 4c


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Reduced environmental maintenance / community operations (0.500) (0.500) (0.800) (1.300) (1.300)This saving relates to the removal of lower category or duplicate resource school crossing patrol sites (e.g. where a Pelican crossing is also in place) as part of a wider review of the service. (0.150) (0.150) (0.150) (0.150) (0.150)


Connectivity


Projected Changes to Original Service Spending PressuresChange in costs of home to school transport relating to number of school days in a financial year. (0.190) (0.070) 0.050 0.240 0.170Expected changes in pupil numbers and diversity in destination bases. (0.190) (0.230) (0.330) (0.450) (0.320)Total Projected Changes to Service Spending Pressures Approved in February 2014 (0.380) (0.300) (0.280) (0.210) (0.150)



Removal of contribution to enhance rail services on the Chaseline since DfT have been requested to include services in 18 month direct award to London Midland and intention that this will be secured in the long term by WMR Ltd. (0.040) (0.040) (0.040) (0.040) (0.040)

Working with operators to ensure that Your Staffordshire Card is self funding by 2018/19. 0.000 0.000 (0.280) (0.280) (0.280)

Working with operators to adjust bus network to ensure commercial opportunities are maximised, and anticipated reduction in concessionary fare budget following introduction of new bus network. 0.000 0.000 (2.000) (2.000) (2.000)

Anticipated reduction in budget following introduction of a review of all age disabilities policies and practices and enhanced route planning. 0.000 (0.100) (0.300) (0.600) (1.000)


Sustainability


New Service Projected PressuresThis pressure relates to changes in the Waste Electrical and Electronic Equipment (WEEE) regulations. Under this revision, Producer Compliance Schemes were given targets which have essentially removed the evidence trading element and hence massively reduced the income available for collecting WEEE.

0.200 0.200 0.200 0.200 0.200

Contractual price increase to waste bulking and haulage contract. 0.070 0.070 0.070 0.070 0.070New Service Projected Pressures Total 0.270 0.270 0.270 0.270 0.270


Appendix 4c


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Original Service SavingsSavings reflect the impact of energy income generation at the W2R plant. (0.250) (0.500) (0.750) (1.000) (1.000)

Rationalisation and charging for all disposal at appropriate premises 0.000 0.000 0.000 0.000 0.000

Commence discussion with District Councils with a view to revised service provision. Little progress has been made to date so risk of non-achievement of 2015/16 savings target. (0.500) (1.000) (1.000) (1.000) (1.000)

Rationalisation of household waste site provision. 0.000 0.000 0.000 0.000 0.000

Charges can be made for rubble and builders waste at HWRC since, technically, this is not household waste. Potential income could be in the order of £100k. Consultation would probably reduce benefit to 50% in 2015/16. Wider benefits include simplification of trade/domestic waste and cross-boundary conflict.

(0.050) (0.050) (0.050) (0.050) (0.050)

The W2R facility is now fully operational. Negotiations are ongoing with the operator regarding maximising the capacity of the Plant with additional tonnages. This will require the approval of the Environment Agency and Planning consent. Estimated benefit is in the order of £300k after taking account of Partner share.

0.000 0.000 0.000 0.000 0.000


Projected Changes to Original Service SavingsThe current spend on Recycling credits is around £8.5m. There is already an MTFS proposal around reducing this spend in conjunction with the Districts specifically with regard to the treatment of Green Waste. The difficulty in achieving this Green Waste Recycling Credits proposal has been acknowledged and as such this is updating the MTFS with a £1.5m pressure.

1.000 1.500 1.500 0.000 0.000

Review of household waste site provision. 0.000 0.000 (0.150) (0.150) (0.600)Total Projected Changes to Service Savings Approved in February 2015 1.000 1.500 1.350 (0.150) (0.600)

New Service Savings OptionsAgreement has been reached to terminate the Poplars landfill contract. This will produce ongoing savings from 2017/18 with full year savings achieved from 2018/19 at £0.5m per annum. 0.000 (0.200) (0.500) (0.500) (0.500)

New Service Savings Options Total 0.000 (0.200) (0.500) (0.500) (0.500)

Total Economy, Infrastructure & Skills Pressures 1.990 2.020 5.240 5.690 5.890Total Economy, Infrastructure & Skills Savings (0.970) (1.520) (5.000) (7.715) (8.640)Economy, Infrastructure & Skills Grand Total 1.020 0.500 0.240 (2.025) (2.750)

Finance and ResourcesFunded Pressures and Proposed Savings

Appendix 4d


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Finance

New Service Projected PressuresIncrease of Insurance Premium Tax rate from 6% to 9.5% 0.050 0.050 0.050 0.050 0.050Insurance - economies of scale lost due to academisation. 0.200 0.200 0.200 0.200 0.200SSOTP back office service level agreements - loss of income. 0.135 0.148 0.160 0.160 0.160Adult Financial Services - additional costs incurred as a result of the potential requirements of the Care Act. 0.300 0.300 0.300 0.300 0.300New Service Projected Pressures Total 0.685 0.698 0.710 0.710 0.710


Projected Changes to Original Service SavingsReduction in fees relating to the final accounts audit. (0.050) (0.050) (0.050) (0.050) (0.050)Total Projected Changes to Service Savings Approved in February 2015 (0.050) (0.050) (0.050) (0.050) (0.050)

New Service Savings OptionsDigital payslips - print savings. (0.015) (0.015) (0.015) (0.015) (0.015)Potential to safely reduce the level of reserves held to cover insurance liabilities. (1.000) 0.000 0.000 0.000 0.000Treasury and Pensions - service review savings. (0.015) (0.035) (0.035) (0.035) (0.035)SSOTP back office service level agreements - mitigating cost reduction/removal. (0.092) (0.092) (0.092) (0.092) (0.092)New Service Savings Options Total (1.122) (0.142) (0.142) (0.142) (0.142)

Strategic HR

New Service Savings OptionsService review savings. (0.056) (0.181) (0.206) (0.256) (0.331)Introduction of annual leave purchase scheme. 0.000 (0.180) (0.180) (0.180) (0.180)Review of corporate-wide non-contractual salary spend not covered by national terms and conditions. (0.900) (1.800) (1.800) (1.800) (1.800)New Service Savings Options Total (0.956) (2.161) (2.186) (2.236) (2.311)

Total Invest to Save Approved in February 2015 (0.010) (0.010) (0.010) (0.010) (0.010)


Appendix 4d


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Strategic Property

New Service Savings OptionsOffice accommodation - reduced workstation to people ratios 0.000 0.000 (0.350) (0.350) (0.350)New Service Savings Options Total 0.000 0.000 (0.350) (0.350) (0.350)

Customer Services

New Service Savings OptionsPrice increase on registration - Priority Certificates - based on benchmark with other authorities. (0.015) (0.015) (0.015) (0.015) (0.015)Registrars - staffing restructure. (0.085) (0.085) (0.085) (0.085) (0.085)Customer Services printing and postage - reductions achieved through digitisation. 0.000 (0.010) (0.010) (0.010) (0.010)Reduction in volume of 1st class post. 0.000 (0.030) (0.030) (0.030) (0.030)Staffing reductions achieved through postage volume reductions. 0.000 0.000 (0.024) (0.024) (0.024)Use of the Web Team to deliver Staffordshire Connects projects. (0.010) (0.010) (0.010) (0.010) (0.010)Deliver schools web development project for Entrust. 0.000 (0.015) 0.000 0.000 0.000Customer Services - phased severance costs ceasing. 0.000 (0.083) (0.101) (0.101) (0.101)New Service Savings Options Total (0.110) (0.248) (0.275) (0.275) (0.275)

Information Communications & Technology

New Service Projected PressuresSSOTP back office service level agreements - loss of Income. 0.877 0.970 1.063 1.063 1.063New Service Projected Pressures Total 0.877 0.970 1.063 1.063 1.063


New Service Savings OptionsImplementation of a strict printing strategy (e.g. no printing from Outlook, no colour printing only mono, force double side, etc.). (0.100) (0.100) (0.100) (0.100) (0.100)

Printers - cross cutting saving arising on maintenance, renewal, consumables, etc. (0.117) (0.160) (0.117) (0.117) (0.117)SSOTP back office service level agreements mitigating cost reduction/removal. (0.333) (0.333) (0.333) (0.333) (0.333)New Service Savings Options Total (0.550) (0.593) (0.550) (0.550) (0.550)


Appendix 4d


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Procurement & Contract Management

New Service Projected PressuresSSOTP back office service level agreements - loss of Income. (0.100) (0.100) (0.100) (0.100) (0.100)New Service Projected Pressures Total (0.100) (0.100) (0.100) (0.100) (0.100)

Total Finance & Resources Pressures 1.462 1.568 1.673 1.673 1.673Total Finance & Resources Savings (3.309) (3.974) (4.459) (4.509) (4.584)Finance & Resources Grand Total (1.847) (2.406) (2.786) (2.836) (2.911)

Strategy, Governance and ChangeFunded Pressures and Proposed Savings

Appendix 4e


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Information Governance Unit

New Service Projected PressuresFleet Care - Contract review options. Effects in short to medium term can be mitigated by drawing on balances in the appropriation reserve. 0.000 0.000 0.550 0.550 0.550


New Service Savings OptionsSavings from staffing review. (0.040) (0.090) (0.090) (0.090) (0.090)New Service Savings Options Total (0.040) (0.090) (0.090) (0.090) (0.090)

Transformation Support Unit


Review of Transformation Support Unit to explore need for change, future design, and opportunities from trading. (0.100) (0.150) (0.300) (0.450) (0.600)


Strategic Policy and Partnership

New Service Savings OptionsRemove vacant policy officer post. (0.034) (0.034) (0.034) (0.034) (0.034)General review of expenditure. (0.030) (0.030) (0.030) (0.030) (0.030)New Service Savings Options Total (0.064) (0.064) (0.064) (0.064) (0.064)

Insight, Planning and Performance


New Service Savings OptionsRe-profiling for final year of the contract for Engaging Communities Staffordshire. (0.072) (0.072) (0.072) (0.072) (0.072)Removal of Graduate intern posts. (0.044) (0.044) (0.044) (0.044) (0.044)Reduce equalities budget to reflect new model of engagement and funding. (0.010) (0.010) (0.010) (0.010) (0.010)New Service Savings Options Total (0.126) (0.126) (0.126) (0.126) (0.126)


Appendix 4e


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Communications and Marketing


New Service Savings OptionsReduce number of issues of "MyStaffordshire" residents' magazine before ceasing publication entirely with increased digital communications approach. (0.075) (0.147) (0.147) (0.147) (0.147)

Savings from staffing review. (0.044) (0.106) (0.206) (0.206) (0.206)New Service Savings Options Total (0.119) (0.253) (0.353) (0.353) (0.353)

Legal



New Service Savings OptionsReduced court fees. (0.200) (0.200) (0.200) (0.200) (0.200)Savings from staffing review.Review of provision required in specific service areasSavings from a review of processes and procedures.New Service Savings Options Total (0.303) (0.303) (0.303) (0.303) (0.303)

Democracy

New Service Projected PressuresWebcasting price increase. 0.006 0.006 0.006 0.006 0.006Recover estimated funding deficit on election costs passed on by district councils. 0.040 0.040 0.040 0.040 0.040New Service Projected Pressures Total 0.046 0.046 0.046 0.046 0.046

New Service Savings OptionsReduce Local Community Fund from £10,000 to £7,500 per member. (0.155) (0.155) (0.155) (0.155) (0.155)Member Development - reduce budget to allign with levels of expenditure in recent years. (0.010) (0.010) (0.010) (0.010) (0.010)Member & Democratic Services - savings from staffing review. (0.020) (0.020) (0.020) (0.020) (0.020)Cessation of member allowances and reimbursement for home broadband, telephone rental and computer consumables. (0.012) (0.012) (0.012) (0.012) (0.012)

Members -savings from a review of processes and procedures (0.010) (0.010) (0.010) (0.010) (0.010)

(0.103) (0.103) (0.103) (0.103) (0.103)


Appendix 4e


2017/18 £m

2018/19 £m

2019/20 £m

2020/21 £m

Cessation of Community Partnership Grants. (0.046) (0.046) (0.046) (0.046) (0.046)Community Partnership - general review of expenditure. (0.025) (0.025) (0.025) (0.025) (0.025)

Cessation of commitments related to earlier restructures (0.075) (0.075) (0.075) (0.075) (0.075)


Total Strategy, Governance & Change Pressures 0.151 0.213 0.763 0.763 0.763

Total Strategy, Governance & Change Savings (1.230) (1.464) (1.714) (1.864) (2.014)Strategy, Governance & Change Grand Total (1.079) (1.251) (0.951) (1.101) (1.251)

Appendix 5

All figures presented in each year represent a cumulative change from the current 2015/16 budget.

2016/17 2017/18 2018/19 2019/20 2020/21£m £m £m £m £m

Health and CarePressures 8.160 10.988 15.888 18.138 18.138 Inflation 3.244 9.857 16.557 20.846 25.224 Savings (15.194) (20.235) (25.880) (27.795) (31.065)Health and Care Total (3.790) 0.610 6.565 11.189 12.297

Families and CommunitiesPressures 0.830 0.830 0.830 0.480 0.480 Inflation 1.835 4.876 8.027 11.260 14.574 Savings (8.513) (10.093) (12.657) (15.064) (15.827)Families and Communities Total (5.848) (4.387) (3.800) (3.324) (0.773)

Economy, Infrastructure and Skills Pressures 1.990 2.020 5.240 5.690 5.890 Inflation 0.936 2.345 3.779 5.239 6.723 Savings (0.970) (1.520) (5.000) (7.715) (8.640)Economy, Infrastructure and Skills Total 1.956 2.845 4.019 3.214 3.973

Finance and ResourcesPressures 1.462 1.568 1.673 1.673 1.673 Inflation 0.670 1.067 1.434 1.810 2.200 Savings (3.309) (3.974) (4.459) (4.509) (4.584)Finance and Resources Total (1.177) (1.339) (1.352) (1.026) (0.711)

Strategy, Governance and ChangePressures 0.151 0.213 0.763 0.763 0.763 Inflation 0.436 0.815 1.204 1.608 2.019 Savings (1.230) (1.464) (1.714) (1.864) (2.014)Strategy, Governance and Change Total (0.643) (0.436) 0.253 0.507 0.768

Grand Total (9.502) (2.707) 5.685 10.560 15.554

Summary of Pressures, Inflation, Savings and Investments

Council Taxbase, Collection Funds and PreceptsAppendix 6a

2015/16 2016/17

Cannock Chase 26,902.88 27,149.00 East Staffordshire 34,436.07 35,159.73 Lichfield 36,264.00 36,610.00 Newcastle 35,242.00 36,078.00 South Staffordshire 36,942.09 37,146.90 Stafford 43,792.10 44,438.00 Staffordshire Moorlands 32,060.00 32,458.00 Tamworth 20,628.00 20,904.00 Totals 266,267.14 269,943.63

2015/16 2016/17£ £

Cannock Chase 0 109,000East Staffordshire 869,236 936,634Lichfield 705,832 315,696Newcastle 808,637 690,071South Staffordshire 745,100 0Stafford 0 392,000Staffordshire Moorlands 412,510 373,701Tamworth 539,523 540,783Totals 4,080,838 3,357,885

Key: Surplus / (Deficit)

2015/16 2016/17£ £

Cannock Chase 28,174,939 29,555,745 East Staffordshire 36,064,323 38,276,623 Lichfield 37,978,684 39,855,458 Newcastle 36,908,360 39,276,297 South Staffordshire 38,688,836 40,439,954 Stafford 45,862,738 48,377,407 Staffordshire Moorlands 33,575,905 35,335,386 Tamworth 21,603,361 22,757,129 Totals 278,857,147 293,874,000

Tax Base (Band D equivalents)

Estimated Council Tax Collection Fund Position

Precepts

Business RatesAppendix 6b

2015/16 2016/17£ £

Cannock Chase 3,320,589.60 3,504,510.00 East Staffordshire 4,891,959.47 4,735,620.00 Lichfield 2,975,858.64 2,962,524.06 Newcastle 2,988,851.80 2,887,666.74 South Staffordshire 1,896,441.39 1,916,650.71 Stafford 3,990,178.80 4,420,350.00 Staffordshire Moorlands 1,634,447.34 1,559,730.51 Tamworth 2,957,088.00 2,952,128.61 Totals 24,655,415.04 24,939,180.63

Business Rates

Review of Earmarked Reserves / Provisions Appendix 7

Reserve Name Reason for Reserve Forecast

Balance 31st March 2016

£m

Transfer into

General Balances

£m

Forecast Balance after

Transfer £m

Information Technology

To provide finance to cover advance expenditure for information technology projects this will be repaid over future years. The reserve is currently committed for a range of future IT projects including education projects and the broadband network. The reserve is considered appropriate for its purpose.

4.310 0.000 4.310

PFI Reserves

These reserves are required to ensure sufficient resources are available to meet the county council's obligations over the whole life of PFI contracts and to even out the charge to revenue over the period. The balance on the street lighting PFI contract is reviewed at the end of each financial year and at other strategic points. At this stage in the contract it is considered appropriate to maintain the balance of the reserve at its current level.

3.829 0.000 3.829

Landfill Liabilities To meet any third party pollution claims which may arise at closed landfill sites, operational landfill sites or household recycling centres for the cost of remedial works. The level of the reserve is considered appropriate.

0.000 0.000 0.000

Woodlands To ensure sufficient resources are available to meet expenditure and future expenditure programmes arising from the management of Shugborough Woodlands in accordance with the National Trust Woodland plan.

0.093 0.000 0.093

Archives The reserve forms part of the Joint Archives agreement with Stoke City Council and is used to finance any overspends or emergency work that may arise. The current level of the reserve is considered to be sufficient.

0.117 0.000 0.117

Redundancy

To smooth the impact of redundancies over a five year period. This reserve is self-funding as all interest charged is posted to revenue. It is not possible to forecast demand for contributions from this reserve therefore the current level is sufficient.

(5.499) 0.000 (5.499)




£m

Transfer into

General Balances

£m


Transfer £m

Equal Pay Provision

This provision was created to cover the cost of payments made under the Single Status project. However, the project is now completed and as it stands there are no Equal Pay Claims, therefore the provision is no longer needed.

(0.028) 0.000 (0.028)

Waste Provision Following environmental and regulatory changes, we have set aside money for various waste management contracts. 0.000 0.000 0.000

General Insurance Reserve

To meet any liabilities not covered by external insurance arrangements, including potential liabilities which may arise following the demise of MMI. Any surpluses/deficits arising on the reserve are shared between the county council and Stoke City Council under LGR arrangements. The latest advice suggests that the balance on the reserve will be needed to contribute towards a potential shortfall in the MMI reserve.

1.203 0.000 1.203

Material Damage and Motor Vehicles Reserve and Provision

To ensure that sufficient resources are available to meet outstanding liabilities in respect of the self funding element of material damage claims. An internal review has been undertaken regarding the level of the insurance provision, and has deamed the level of reserves sufficient.

0.669 0.000 0.669

Insurance self-funding Provision (pre LGR)

To ensure that sufficient resources are available to meet outstanding claims not covered by the county council's former insurance arrangements for the period 1st May 1992 to 31st March 1997.

0.870 0.000 0.870

Insurance self-funding Provision (post LGR)

To ensure that sufficient resources are available to meet outstanding claims not covered by the county council's insurance arrangements from 1st April 1997. This is a long term fund and the gap in funding will be dependant on the level of claims.

6.003 0.000 6.003




£m

Transfer into

General Balances

£m


Transfer £m

Insurance Trading Reserve

To ensure that sufficient resources are available to undertake day to day activities associated with supporting the county council's insurance arrangements.

0.072 0.000 0.072

Employers Liability Insurance (Pre 1985 reserve)

To ensure that sufficient resources are available to meet outstanding claims where the policy excess is not covered by the county council's former insurance arrangements. The current balance will be repaid over the period of the MTFS.

0.000 0.000 0.000

Schools' Balance of Risk Provision To ensure sufficient funds are available to meet schools claims. 0.151 0.000 0.151

Schools' Supply Cover Reserves To ensure sufficient funds are available to meet schools claims. 0.570 0.000 0.570

Conservation and Archaeology

To meet the county's obligation towards the Extensive Urban Survey scheme, which is being run in partnership with English Heritage. 0.040 0.000 0.040

Museums

The reserve has been built up from when the Museum sold some firearms. The revenue this sale created can only be used to fund items that can be included within the Museums collection. This funding is therefore not available to support the revenue budget.

0.004 0.000 0.004

Trading Services

The trading services reserves are earmarked sums set aside for trading services activity. The balance mainly represents vehicle replacement programmes managed by County Fleet Care but also includes balances that the trading service will draw down on in years when the service creates a deficit.

3.489 0.000 3.489




£m

Transfer into

General Balances

£m


Transfer £m

Revenue Carry Forward Earmarked Reserves

To hold revenue grants which remain unspent at year end and do not have any conditions attached. As the grants are unconditional (with the exception of the Growing Places fund), these funds could be available to support the MTFS.

21.742 0.000 21.742

Vehicle/Plant Renewals

To ensure sufficient resources are available to purchase replacement vehicles, plant & equipment for specific services. This includes purchasing mowers, trailers and bush cutters. This funds completely different types of vehicles to those funded through the County Fleet Care reserve.

0.151 0.000 0.151

37.786 0.000 37.786Total Earmarked Reserves

Appendix 8

Provision £m

Area of Expenditure Level of Risk

Explanation of risk/justification of balances

1.0 Inflation Medium Services could experience risks in contract prices over and above the general inflation allocation allocated in the MTFS. The mix of price increases could vary across sectors, which could result in a particular strain on resources in some areas.

1.0 Treasury Management Low 1% point increase in interest rate on borrowing against capital programme.

1.0 Investments Low 0.5% point drop in interest on balances will reduce the income by £0.75m.

Estimates of the level and timing of capital receipts0 Capital Receipts High In the event that the estimated level of receipts is not

achieved because of unforeseen circumstances, the impact on the revenue budget should be minimal, as the shortfall would be dealt with by either adjusting the capital programme or by additional short term prudential borrowing, if judged affordable.

The treatment of demand led pressures3.5 Adults Social Care High Increasing demand for services.1.0 Looked after Children High Continual risk that demand pressures from a potential

increase in the number and cost of out of county residential care placements will exceed budget provision.

0.5 Other areas Medium Risks of overspend in other budget areas.1.5 Income

General grant incomeHigh There are risks around collection rates for both Council Tax

and Business Rates, as well as uncertainty around future government grant levels.

1.5 VAT Low Risk of exceeding 5% limit for input tax.The treatment of efficiency savings/productivity gains

10.0 Non achievement of efficiency savings/ ’invest to save’ costs/ redundancy costs

Medium Risk of non-achievement of savings, or delays in delivery or additional unforeseen one off costs to facilitate savings.

Treatment of inflation and interest rates

Risk Based Review of General Balances

CIPFA guidance indicates that a well-managed authority with a prudent approach to budgeting should be able to operate with a relatively low level of general reserves and that Chief Financial Officers should take account of the strategic, operational and financial risks facing the authority.

A risk assessment has been undertaken to identify the key financial risks for next year which can be used as a basis for determining the minimum level of general balances for the county council. Details of this assessment are provided below. Whilst not a complete list of all the financial risks faced by the council, the assessment focuses on those most likely (High and Medium risks) to have a significant impact on the budget.

Financial risks in any significant new funding partnerships, major outsourcing deals or major capital developments4.0 Partnership risks High Financial risks of various potential significant partnership

agreements that the council may enter into over the MTFS period.

The availability of other funds to deal with major contingencies 2015/16

Provision £m

Area of Expenditure Level of Risk

Explanation of risk/justification of balances

1.0 Disaster recovery Low Cost of consequential losses for uninsurable risk incidents such as virus attack on ICT infrastructure.

10.0 Insurance (Difficult to quantify)

Low Risk of: uninsured terrorism, gradual pollution liabilities, gap between Aggregate stop and Provision.

Level of Balances – Summary

High and Medium Risks 21.5£mLevel of Risk

Proposed Net Budget 2016/17 Planning Forecasts 2017/18 to 2020/21Appendix 9

Proposed Net Budget 2016/17

Planning Forecast 2017/18




£m £m £m £m £mHealth and CarePublic Health (1.635) (4.773) (7.759) (7.745) (7.731) All Aged Disability 92.379 94.018 101.206 101.678 100.575 Long Term Conditions 76.562 84.533 85.798 89.436 91.124 Mental Health 11.636 12.023 12.265 12.512 12.763 Governance 6.393 6.584 6.830 7.083 7.341 Sub Total 185.335 192.385 198.340 202.964 204.072 Families and CommunitiesChildren's and Education Services 89.768 92.250 93.153 93.548 95.665 Culture and Physical Activity 7.891 7.754 7.129 6.842 6.833 Rural 2.486 2.361 2.297 2.236 2.156 Community Safety 17.337 17.642 17.940 18.369 18.892 Community Capacity / Localities - - - - - Sub Total 117.482 120.007 120.519 120.995 123.546 Economy, Infrastructure and Skills Economic Development 1.103 1.108 1.154 1.035 1.008 Strategic Planning Policy 0.016 0.032 0.049 0.067 0.085 Strategic Infrastructure 25.997 26.863 27.460 28.143 28.982 Connectivity 29.085 29.309 27.882 27.792 27.793 Skills 7.989 8.010 8.031 8.052 8.074 Sustainability 20.723 21.194 22.695 21.351 21.230 EI&S Business Support 2.508 2.533 2.559 2.585 2.612 Sub Total 87.421 89.049 89.830 89.025 89.784 Finance and ResourcesFinance 4.847 5.458 5.986 6.112 6.243 Strategic HR 0.020 (1.154) (1.148) (1.165) (1.207) Stratgeic Property 0.476 0.482 0.138 0.144 0.151 Customer Services 0.644 0.575 0.620 0.693 0.768 Information Communications & Technology 3.488 3.497 3.613 3.721 3.833 Procurement & Contract Management 1.646 1.715 1.744 1.774 1.806 Sub Total 11.121 10.573 10.953 11.279 11.594 Strategy, Governance and ChangeInformation Governance Unit (0.368) (0.407) 0.155 0.168 0.180 Organisation Development 0.743 0.763 0.784 0.806 0.828 Transformation Support Unit 1.910 1.924 1.840 1.758 1.677 Strategic Policy and Partnership 1.323 1.361 1.399 1.439 1.479 Insight, Planning and Performance 1.232 1.287 1.317 1.348 1.380 Communications and Marketing 1.265 1.165 1.099 1.135 1.172 Legal 1.612 1.712 1.778 1.846 1.916 Executive and Business Support 2.399 2.473 2.549 2.628 2.708 Democracy 3.399 3.444 3.490 3.537 3.586 Sub Total 13.515 13.722 14.411 14.665 14.926

Service Total 414.874 425.736 434.053 438.928 443.922

Capital FinancingCapital Financing 36.490 34.001 33.381 33.381 33.381 Centrally Controlled 17.042 19.168 20.870 22.785 24.901 Contingency 2.000 2.000 2.000 2.000 2.000 Net Revenue Budget 470.406 480.905 490.304 497.094 504.204 Use of Reserves (10.171) (5.885) - - - Use of Capital Reserves (0.400) (0.425) - - - Contribution to General Balances 6.000 - - - - Budget Requirement 465.835 474.595 490.304 497.094 504.204 Revenue Support Grant (64.267) (40.687) (25.515) (10.691) - Retained Business Rates (93.579) (95.538) (98.260) (101.392) (104.611) Settlement Funding Assessment (157.846) (136.225) (123.775) (112.083) (104.611) New Homes Bonus (3.459) (2.815) (2.214) (1.866) (0.745) ESG (7.298) (5.137) (3.405) (2.071) (0.949) Better Care Fund - (1.300) (12.700) (23.200) (23.200) Council Tax Collection Fund Surplus (3.358) - - - - Council Tax (293.874) (307.673) (322.895) (338.814) (355.324) Financing Total (465.835) (453.150) (464.989) (478.034) (484.829) (Headroom) / Shortfall - 21.445 25.315 19.060 19.375

Summary of Budget ChangesAppendix 10

2015/16 Original Budget

Funding Transfers &

Other Adjustments

2015/16 Revised

Base Budget

Inflation Other Service Movements

Total Spending Pressures

Total Pressures

Investments Service Savings

2016/17 Draft Budget

£m £m £m £m £m £m £m £m £m £m

Health and Care 188.927 1.548 190.475 3.244 (1.350) 8.160 10.054 0.000 (15.194) 185.335

Families and Communities 124.671 (0.227) 124.444 1.835 (1.114) 0.830 1.551 0.000 (8.513) 117.482

Economy, Infrastructure and Skills 85.822 1.169 86.991 0.936 (1.526) 1.990 1.400 0.000 (0.970) 87.421

Finance and Resources 10.845 (2.750) 8.095 0.670 4.203 1.462 6.335 (0.010) (3.299) 11.121

Change 13.429 0.729 14.158 0.436 0.000 0.151 0.587 0.000 (1.230) 13.515Service Total 423.694 0.469 424.163 7.121 0.213 12.593 19.927 (0.010) (29.206) 414.874

Centrally Controled Items 18.971 (2.016) 16.955 0.087 0.000 0.000 0.087 0.000 0.000 17.042

Capital Financing 38.842 0.000 38.842 (2.352) 0.000 0.000 -2.352 0.000 0.000 36.490

Contingency 2.000 0.000 2.000 0.000 0.000 0.000 0.000 0.000 0.000 2.000

Net Revenue Budget 483.507 (1.547) 481.960 4.856 0.213 12.593 17.662 (0.010) (29.206) 470.406

Appendix 11a

Health and CareBUDGET SUMMARY

2015/16 2015/16 2016/17Original Revised DraftBudget Budget Budget

£m £m £m

Public Health 0.491 0.494 (1.635)

All Aged Disability 88.571 89.641 92.379

Long Term Conditions 82.071 82.485 76.562

Mental Health 11.650 11.641 11.636

Governance 6.144 6.214 6.393

TOTAL 188.927 190.475 185.335

Centrally Controlled Items 4.305 4.458 4.486

Total Including Centrally Controlled Items 193.232 194.933 189.821

Appendix 11b

Families and CommunitiesBUDGET SUMMARY


£m £m £m

Children's and Education Services 93.345 93.012 89.768

Culture and Physical Activity 8.935 8.927 7.891

Rural 2.485 2.434 2.486

Community Safety 19.906 20.071 17.337

Community Capacity / Localities 0.000 0.000 0.000

TOTAL 124.671 124.444 117.482



Appendix 11c

Economy, Infrastructure and Skills BUDGET SUMMARY


£m £m £m

Economic Development 1.191 1.191 1.103

Strategic Planning Policy 0.000 0.000 0.016

Strategic Infrastructure 26.330 26.763 25.997

Connectivity 27.748 28.099 29.085

Skills 8.060 7.982 7.989

Sustainability 19.990 20.453 20.723

EI&S Business Support 2.503 2.503 2.508

TOTAL 85.822 86.991 87.421



Appendix 11d

Finance and ResourcesBUDGET SUMMARY


£m £m £m

Finance 2.999 1.186 4.847

Strategic HR 0.986 0.916 0.020

Stratgeic Property 0.694 0.445 0.476

Customer Services 0.566 0.623 0.644

Information Communications & Technology 3.861 3.279 3.488

Procurement & Contract Management 1.739 1.646 1.646

TOTAL 10.845 8.095 11.121



Appendix 11e

Strategy, Governance and ChangeBUDGET SUMMARY


£m £m £m

Information Governance Unit (0.462) (0.347) (0.368)

Organisation Development 0.744 0.721 0.743

Transformation Support Unit 1.944 1.944 1.910

Strategic Policy and Partnership 1.296 1.351 1.323

Insight, Planning and Performance 1.351 1.276 1.232

Communications and Marketing 1.534 1.455 1.265

Legal 1.724 1.774 1.612

Executive and Business Support 1.416 2.316 2.399

Democracy 3.882 3.668 3.399

TOTAL 13.429 14.158 13.515



Appendix 12

2016/17 2017/18 2018/19 2019/20 2020/21£m £m £m £m £m

Health & CareAdults Social Care 10.257 0.000 0.000 0.000 0.000Sub Total 10.257 0.000 0.000 0.000 0.000

Families & CommunitiesBasic Need Works 15.060 4.326 3.221 3.221 3.221Special Programmes 7.131 7.577 7.577 7.577 7.577Rural County 0.170 0.150 0.150 0.150 0.150Childrens Projects 0.133 0.133 0.133 0.133 0.133Sub Total 22.494 12.186 11.081 11.081 11.081

Economy, Infrastructure & Skills Economic Development 35.516 16.197 0.601 0.370 0.350Strategic Infrastructure 35.774 44.326 38.735 28.925 25.191Sustainability 1.880 0.281 0.030 0.030 0.015 Sub Total 73.170 60.804 39.366 29.325 25.556

Trading Services - County Fleet Care 1.400 0.600 1.800 0.600 0.600

Property 18.021 1.574 1.325 1.310 1.402

Corporate Leased Equipment 0.500 0.500 0.500 0.500 0.500

Sub Total Capital Programme 125.842 75.664 54.072 42.816 39.139

Schools Devolved Capital 2.343 2.343 2.343 2.343 2.343

Draft Capital Programme 128.185 78.007 56.415 45.159 41.482

Capital Programme 2016/17 to 2020/21

Government Capital AllocationsAppendix 13

2016/17 2017/18 2018/19 2019/20 2020/21£m £m £m £m £m

Schools Basic Need 8.527 4.379 3.241 3.241 3.241

Schools Grant 8.718 7.719 7.719 7.719 7.719

Schools Formula Capital - Grant 2.343 2.343 2.343 2.343 2.343

Social Services - Community Capacity Grant 2.310 - - - -

Transport Maintenance 18.405 17.848 16.154 16.154 16.154

Integrated Transport 3.423 3.423 3.423 3.423 3.423

Grand Total 43.726 35.712 32.880 32.880 32.880

Appendix 14 Prudential Indicators

Indicator Target 2016/17

Target 2017/18

Target 2018/19

Target 2019/20

Target 2020/21

A. Indicators for Affordability, Prudence and Capital Expenditure

1.Ratio of Financing Costs to Net Revenue Stream 8.74% 8.91% 8.41% 7.95% 7.74%

This shows the capital financing costs (interest charges/receipts and repayment of loans) as a proportion of government grant (revenue) and council tax. This allows the authority to track how much of its annual income is needed to pay for its capital investment plans proportionate to its day to day running costs.

2. Estimates of the incremental Impact of Capital investment decisions on the council tax (Band D) £3.03 £13.52 £20.28 £26.25 £27.62

This indicator aims to show the impact of varying capital programmes expressed as a cost to the Band D Council Taxpayer. Specifically it identifies the impact on council tax levels of new capital investment decisions when compared to programmes approved previously and reflects the reduced capital allocations from government. The new indicators also reflect recent significant interest rate changes. The increase demonstrates the continued investment in large capital projects such as ‘Superfast Broadband’, Ryecroft and Shugborough.

3. Estimates of Capital Expenditure £128.185m £78.007m £56.415m £45.159m £41.482m Expressed in absolute terms rather than as a ratio, this shows the overall level of capital investment irrespective of how it is being funded.

4. Capital Financing Requirement £584.252m £586.580m £593.493m £584.129m £570.168m This indicator effectively shows the level of the county council’s underlying need to borrow for capital purposes. The reduction in the Capital Financing Requirement reflects the Treasury Management strategy of using cash instead of borrowing. The indicator is also reducing due to central government supporting capital schemes through grant rather than supported borrowing.



Target 2017/18

Target 2018/19

Target 2019/20

Target 2020/21

5. Net Borrowing and the Capital Financing Requirement

Net borrowing is not expected to exceed the total of the capital financing requirement (except in the short term)

It is a key indicator of prudence that, over the medium term, net borrowing is only for capital purposes.

B. Indicators for Treasury Management

1.Treasury Management Code of Practice The county council has adopted the CIPFA Code of Practice on Treasury Management

This indicator identifies whether an authority has adopted CIPFA’s Code of Practice for Treasury Management in the Public Services. The County Council has adopted this code. 2. External Debt a. Authorised Limit £671.000m £665.000m £661.000m £650.000m £639.000m b. Operational Boundary £556.000m £568.000m £567.000m £548.000m £548.000m c. External Loans £518.000m £513.000m £498.000m £498.000m £498.000m The Authorised Limit is the maximum level of external borrowing which should not be exceeded. It is linked to the estimated level of borrowing assumed in the Capital Programme. The Operational Boundary represents the Director of Finance & Resources estimate of the day to day limit for the Treasury Management activity based on the most likely i.e. prudent but not worst case scenario. External loans represent the borrowings, including other liabilities that the council holds. These will only fall if early repayment is made or when they mature.

3.Interest Rate Exposures a. Upper Limit (Fixed) £596.000m £591.000m £586.000m £575.000m £564.000m Borrowing 100% 100% 100% 100% 100% Investments 0% 0% 0% 0% 0%

a. Upper Limit (Variable) (£180.000m) (£185.000m) (£190.000m) (£195.000m) (£205.000m) Borrowing 20% 20% 20% 20% 20%



Target 2017/18

Target 2018/19

Target 2019/20

Target 2020/21

Investments 100% 100% 100% 100% 100% Upper limits of fixed and variable borrowing and investments are required to be set. This limits the county council’s exposure to both fixed and variable interest rate movements as part of the overall risk management strategy for Treasury Management activities.

4. Maturity Structure of Borrowing Upper Limit Lower Limit

See Attached Graph

This indicator identifies the amount of debt maturing in specified periods. The overarching principle is that steps should be taken from a risk management point of view to limit exposure to significant refinancing risk in any short period of time. The county council currently applies the prudent practice of ensuring that no more than 15% of its total gross fixed rate debt matures in any one financial year. 5. Upper limit for total principal sums invested for over 364 days (per maturity date) £95.000m £95.000m £95.000m £95.000m £95.000m

Any investments made for over 364 days will be in accordance with the county council’s limit on non specified investments.


Maturity Structure of Debt Graph

Appendix 15

Financial Health Indicators

Current Performance

Level of General Reserves (annual indicator) Well managed organisations operate with an adequate level of general reserves taking into account the risks they face. We determine the actual level of reserves we require annually through a risk based approach. However, it is prudent to aim to hold a minimum level of general reserves. General reserves are maintained at a level of at least 2% of the council’s current net revenue budget

Aged Debt (quarterly indicator) Organisations need to ensure that money owed to them is collected in a timely manner. This indicator shows how well we are managing to collect money owed to us. Level of outstanding general debtors more than 6 months old does not exceed £2.25m

Working Capital (annual indicator) It is essential that working capital is well managed. This indicator shows how well our debtors and creditors are being managed. Current debtors divided by current creditors is in the acceptable range of 1 - 3

Payments to suppliers (quarterly indicator) By paying suppliers quickly we are supporting the Staffordshire economy. It also means businesses are more likely to want to do business with us and offer us competitive rates which will improve our financial health in the medium term. At least 90% of invoices have been paid within 10 days of us receiving them during the last quarter

Financial Monitoring (quarterly indicator) Effective financial monitoring is essential in any organisation. Monitoring provides organisations with early information of potential issues enabling them to take corrective action to avoid future financial difficulties. Quarterly financial monitoring reports have been issued to Cabinet during the last 12 months The council’s most recent revenue outturn forecast did not vary by more than +/-2% when compared to the overall revenue budget Monthly monitoring reports of progress against MTFS savings have been produced for the Senior Leadership Team during the last 12 months

Financial Reporting (annual indicator) Preparing timely and accurate accounts is vital to demonstrate to interested parties that we have sound financial controls. They also provide detailed information which shows our overall financial health. The council’s most recent Statement of Accounts were produced on time and were issued with an unqualified opinion by our external auditors

Indicator not met

Indicator not met by small margin

Indicator met

G

G

G

G

G

G

R A G

R

A

COUNTY COUNCIL – 11th FEBRUARY 2016moderngov.staffordshire.gov.uk/documents/s78395/MTFS...2016/21...

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Transcript of COUNTY COUNCIL – 11th FEBRUARY 2016moderngov.staffordshire.gov.uk/documents/s78395/MTFS...2016/21...