Oct 10 Cabinet Report Financial Business Planning 2011 14

8/3/2019 Oct 10 Cabinet Report Financial Business Planning 2011 14

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AGENDA ITEM: 9 Page Nos. 101 124

Meeting Cabinet

Date 20 October 2010

Subject Financial and Business Planning 2011/12 2013/14

Report of Leader of the Council

Cabinet Member for Resources and Performance

Summary This report sets out the impact of recent announcements on the

medium-term financial strategy, sets out high level budget options toenable consultation with the public and stakeholders, and proposes nextsteps in Cabinets consideration of the financial and business planningprocess.

Officer Contributors Andrew Travers, Deputy Chief ExecutiveZina Etheridge, Assistant Chief Executive

Assistant Directors of Finance

Status (public or exempt) Public

Wards affected All

Enclosures Appendix 1 Leaders letter to Secretary of State

Appendix 2 Service budget savings options for consultation

For decision by Cabinet

Function of Executive

Reason forurgency/exemption fromcall-in

N/A


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1. RECOMMENDATIONS

1.1 That the impact of the Emergency Budget, the consultation on formulagrant, and the revised medium-term financial strategy are noted.

1.2 That consultation on the 2011/12 to 2013/14 budget optionscommences on the basis of the proposals set out at Appendix 2.

1.3 That Cabinet consider consultation responses in setting budgetheadlines at a further meeting to be held on 13 December 2010,

following the local government finance settlement.

2 RELEVANT PREVIOUS DECISIONS

2.1 Cabinet on 21 June 2010 considered the strategic outlook and likely severeresource constraint, and agreed a financial and business planning processcovering the period 2011/12 to 2013/14.

3. CORPORATE PRIORITIES AND POLICY CONSIDERATIONS

3.1 The financial and business planning process is designed to enable Membersto set the strategic direction of the Council, and for that direction to bereflected in the Corporate Plan, the budget, and business unit and individualstaff plans. The process is designed to dovetail with the current CorporatePlan, ensuring resources are most effectively focussed on the priorities setout in the plan of Better Services with Less Money, Sharing Opportunities,and Successful London Suburb.

3.2 The severe pressure on resources through the business planning period willrequire targeting on service areas of the greatest need.

4. RISK MANAGEMENT ISSUES

4.1 Severe resource constraint represents the most significant risk to the Council

fulfilling its strategic objectives. The One-Barnet (formerly Future Shape)programme potentially mitigates this risk, but needs to be taken forward in atimely fashion and integrated into the financial and business planningprocess.

4.2 The Council has recently taken steps to improve its risk management


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Association to achieve the best possible outcome. Regular progress reportsare provided to the Cabinet Resources Committee.

4.4 The financial challenges facing the Council and set out this report will requirefundamental change in the way Council services are delivered which in turnwill impact on the human resources of the organisation and related policiesand practices. Managing this process in conjunction with Trade Unions andstaff is a key risk which will be mitigated through the people and cultureworkstream within the One-Barnet programme.

4.5 The delivery of savings of the likely magnitude required will necessitaterobust monitoring and financial control through the performance and riskmanagement processes.

5. EQUALITIES AND DIVERSITY ISSUES

5.1 The projected increase in the boroughs population and changes in thedemographic profile will be key factors that need to be considered when

determining both the corporate strategy and service responses. Both ofthese need to also reflect the aspirations and contributions of currentresidents.

5.2 Consultation following publication of this report is a key part of theconsideration of equalities and diversity issues. All specific proposalsemerging from the financial and business planning process will need to befully considered in terms of equalities and diversity issues as set out in the

current Corporate Plan, including the requirements for specific consultationand equality impact assessments where necessary. The equalitiesassessment of the budgetary implications will be presented to Cabinet forconsideration.

5.3 Similarly, all human resources implications will be managed in accordancewith the Councils Managing Change policy that supports the CouncilsHuman Resources Strategy and meets statutory equalities duties andcurrent employment legislation.

6. USE OF RESOURCES IMPLICATIONS(Finance, Procurement,Performance & Value for Money, Staffing, IT, Property, Sustainability)

6.1 This report is concerned with the Councils medium-term financial strategyand budget process. It anticipates severe resource constraint and proposes


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7. LEGAL ISSUES

7.1 All proposals emerging from the financial and business planning process willneed to be fully considered in terms of legal implications for the Council and,where appropriate, mechanisms put into place to mitigate legal risks.

8. CONSTITUTIONAL POWERS

8.1 Constitution, Part 3, Responsibility for Functions Section 3, Responsibilitiesof the Executive.

9. BACKGROUND INFORMATION

9.1 Strategic approach

9.1.1 The Cabinet on 21 June 2010 considered the strategic policy context for thefinancial and business planning process paying particular attention to:

planned housing development in the Borough

the consequent population increase (making Barnet the most populousLondon Borough)

changing roles and expectations for public services and localgovernment.

9.1.2 Although the Governments emergency budget had not been announced atthat point, very significant reductions in government support to local

authorities were anticipated.9.1.3 Barnets response to the changing strategic agenda is the One-Barnet

transformation programme built around the principles of a new relationshipwith citizens, one public sector in Barnet, and a relentless drive for efficiency.

9.2 Emergency budget

9.2.1 The Governments emergency budget was announced on 22 June. The

headlines were: 25% cuts over four years for non-protected public services, increasing

to 33% if there is protection for schools and defence;

help from government to enable Councils to freeze council tax in2011/12;


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9.2.2 The impact on our budget plans can be summarised as follows:

2011/12m

2012/13m

2013/14m

Total m

Gap Cabinet 21 June 10.0 8.2 5.0 23.2

Revised Gap - Emergency Budget 25%reduction in government support

10.2 8.0 7.3 25.5

Revised Gap - Emergency Budget 33%reduction in government support

13.2 10.7 9.6 33.5

9.2.3 The above figures are based on 2.5% per annum council tax increases. If the

additional financial support indicated by government becomes available, andis provided on an on-going basis, it would be possible to set a zero percentincrease in council tax for 2011/12.

9.3 Spending review and local government finance settlement

9.3.1 The results of the Governments Spending Review will be announced on 20October. Cabinet will be provided with a verbal briefing at this meeting and afull report following publication of the local government finance settlementexpected in late November/early December. However, the Spending Reviewis, in line with the budget, expected to set out very significant reductions inpublic expenditure including for local Government and other services whichimpact directly on Barnets residents (such as policing and health). In linewith this, business planning options will propose significant changes to the

Councils services. Should the Spending Review imply significantly greaterreductions in Government support than currently anticipated, then thetimetable will need to be amended to allow for the identification of furthersavings options.

9.3.2 The Government is consulting on changes to the distribution of formula grant.The Secretary of State has indicated that there will be two two-yearsettlements (for 2011/12-2012/13 and 2013/14-2014/15), with the more

significant change taking place in the second settlement following the reviewof local government finance which is due to report in 2012.

9.3.3 The consultation document sets out a number of potential changes whichcould have a significant distributional impact. Of most concern is the potentialchange to the calculation of the area cost adjustment which would reduce theproportion of labour costs included within the formula This would have an


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the pressure on primary school places has been reported to Cabinet. TheCouncil continues to seek government support for this unavoidable

requirement and a corporate asset disposal programme is beingconsidered to generate capital receipts. In the circumstances, it is,however, prudent to increase capital financing provision by 1m in each of2012/13 and 2013/14;

Transport for London has announced that it is withdrawing from thepreviously agreed five-year deal in respect of the financing of the FreedomPass. The estimated impact on Barnet in 2011/12 is 1m.

9.4.2 The impact on our budget plans of these changes is as follows:

2011/12m

2012/13m

2013/14m

Total m

Gap - Emergency Budget 33% reduction ingovernment support

13.2 10.7 9.6 33.5

One-Barnet saving shortfall 1.6 1.6

Primary places prudential borrowing 1.0 1.0 2.0

Freedom Pass 1.0 1.0

Revised Gap 15.8 11.7 10.6 38.1

9.5 Financial and business planning process

9.5.1 The financial and business planning process has progressed as agreed by theCabinet in June. Services have been asked to generate net savings options of

20% of the 2010/11 base budget over the three-year period. Savings optionsare set out at Appendix 2. In addition to reductions in mainstream budgets,the schedules also reflect the potential impact of reductions in specific grantand other specific funding which would result in equivalent cessation orreduction in the relevant service areas.

9.5.2 Budget options are released for consultation at this stage and work willcontinue to verify detailed proposals and consider further savings

opportunities, including those generated through consultation and staffengagement.

9.5.3 The consultation and engagement programme will be as follows:

a budget ideas website has been available from 22 September www.ideas.barnet.gov.uk to encourage residents to submit ideas of


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non-domestic rate payers will be consulted on the budget headlines (asstatutorily required) from January to February 2011;

staff engagement will continue through budget savings suggestions and arapid improvement project;

engagement with partners will; be progressed through a post-SpendingReview Summit;

there will be consideration of budget options by the Budget andPerformance Overview and Scrutiny Committee.

9.5.4 The human resources implications of the process will be further considered atGeneral Functions Committee on 25 October 2010. Specifically, theCommittee will consider revised severance and management of changepolicies, and the practical steps for the implementation of a redundancyprogramme.

9.5.5 An initial review of the budget options to be released for consultation showsthe following potential post reductions and redundancies in 2011/12 and lateryears:

2011/12 2012/13 2013/14Staff

redundantFTE FTE FTE

Mainstream funded services 160 180 80 120Specific grant/other specific fundedservices at risk

240 250 - -

Total 400 430 80 120

Finalisation of budget proposals in the period to December will enable formalproposals for headcount reductions to be prepared and for the necessaryconsultation to take place.

9.5.6 The financial and business planning process will continue as planned. Thenext steps will be to consider the budget package following the publication on

20 October of the Spending Review and the Local Government FinanceSettlement expected in late November/early December. It is recommendedthat the special meeting of Cabinet provisionally planned for December is nowconfirmed.

10 LIST OF BACKGROUND PAPERS


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CABINET APPENDIX 220th OCTOBER 2010

Summary Sheet 1111 Adult Social Services 1122 Chief Executives Service 113

3 Childrens Services 1144 Commercial 1155 Corporate Governance 1166 Revenues and Benefits 1177 Customer Services, Libraries, Registrars 1188 HR 119

9 IS 12010 Finance 12111 Environment & Operations 12212 SPA 12313 Planning Housing & Regeneration 124


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FINANCIAL AND BUSINESS PLANNING 2011-13 SAVINGS SUMMARY - GROSS

SAVINGS

Service Original Budget

2011-12 Gross

Savings

2012-13 Gross

Savings

2013-14 Gross

Savings All Years

'000 '000 '000 '000 '000

Adult Social Services 96,321 (7,917) (5,957) (4,144) (18,018)

Chief Executive's Service 4,008 (897) (150) (150) (1,197)

Children's Service 49,169 (3,894) (1,194) (4,553) (9,641)

Commercial Services 8,202 (521) (1,063) (732) (2,316)

Corporate Governance 6,010 (604) (205) (216) (1,025)

Corporate Service 0

Benefits & Local Taxation includes Revenues 5,820 (1,390) (256) 0 (1,646)

Customer Service & Libraries, Museum & Local Studies, Registration & Nationality 8,404 (428) (1,364) (355) (2,147)

HR 2,017 (170) (150) (300) (620)

IS 6,609 (357) (1,020) 0 (1,377)

Corporate Service Total 22,850 (2,345) (2,790) (655) (5,790)

Environment & Operations excluding Special Parking Account 28,443 (2,415) (1,010) (1,065) (4,490)

Special Parking Account 5,092 (739) (239) (381) (1,359)

Finance 3,446 (595) (403) 5 (993)

Planning, Housing & Regeneration 1,996 (901) (205) (230) (1,336)

SERVICE TOTAL 225,537 (20,828) (13,215) (12,121) (46,164)

1111


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Savings Options

Service: Chief Executive

Service Area Description 2011/12 2012/13 2013/14

1 Executive Directors Efficiency saving from restructure of Director's Group -596 0 0

2 Mayor's office Reduction in civic events supported by the council -33 0 0

3 Comms Reduction of communications team -62 -1 0

4 Grants End small grants programmes - will lead to specific reductions in service -128 0 0

5 GrantsReduce funding for large grant contracts - may lead to closure of some facilities and will lead

to reductions in service-78 -149 -150

Total -897 -150 -150

Refocusing of the third sector grants programme

000's

Expected Revenue Savings (pa)

Reducing the Cost of Senior Management

Rationalisation of the communications team and Mayor's Office

3113


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Savings Options

Service: Commercial


Strand A One Barnet Service Transformation

1 Commercial Alternative service delivery model: estimate of savings available -101 -147

Strand B Procurement Savings

2 Procurement Savings from renegotiating video contract and post room contract -45

Strand C Estates consolidation & improvement

3 Property Services Reduction in use of external asset management resources -100

4 Property Services Cost of maintaining properties pending sale -120 -120

5 Property Services Removal of essential car allowances -32

6 Property Services Council offices utilisation and efficiency savings -193 -746 -462

7 Property Services Facilities Management saving in relocation of depot -150

Strand D Commercial Rents

8 Property Services Increased commercial rents income -50 -50

Total -521 -1063 -732

000's


5115


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Savings Options

Service: Corporate Governance


Strand A One Barnet

1 Cross directorate E-recruitment -1 -1

Strand B Re-organisation - No Significant Service Reduction

2 CAFT/Electoral registration/Perf & ODRe-organisation of the staffing within these teams as an efficiency resulting in no significant

service reduction-151 -9 -36

3 CG DirectorsReorganisation of staffing arrangements as an efficiency resulting in no significant service

reduction-35

Strand C Re-organisation - Service Reductions

4 Democratic Services / Legal Services/Elections Team Re-organisation of these teams resulting in some service reductions -266 -180 -100

Strand E Members Allowances

5 Democratic Services Revision of Members allowances -100

Strand F Cross Directorate Efficiencies and Reductions in Expenditure

6 Civil protection/Legal Services/ Democratic Services General reductions in expenditure -30 -5 -30

7 Insurance Efficiency saving from reorganisation of service arrangements -11

8 Cross-directorate Expenditure reduction & Rationalisation -10 -10 -50

Total -604 -205 -216

000's


6116


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Savings Options

Service: Revenues and Benefits


Strand A One Barnet1 Revs & Bens Alternative service delivery model: estimate of savings available -256

Strand B Efficiencies within Benefits Service

2 Benefits Efficiencies through new IT system -92

3 Benefits Efficiencies from reduced management costs -70

Strand C Local Tax and Control Service Savings

4 Local Tax & Control Removal of 50% Long Term Empty Discount -1000

5 Local Tax & Control Removal of payment booklets -50

6 Local Tax & Control / Benefits Refunds to be issued via BACS -20

Strand D Student Finance

7 Student finance Transfer of function of student finance to Student Loan Company -158

Total -1390 -256 0


000's

7117


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Savings Options

Service: Customer Services, Libraries and Registrars


Strand A (One Barnet programme)

1 Customer Services Alternative service delivery model: estimate of savings available -300

2 Customer ServicesCustomer Service Organisation Programme - consolidation of telephone contact staff and technology into a single service and

encouraging significant increase in use of the web for customer contact-105 -170

3 Libraries Reduce building maintenance costs and increase revenue streams -10 -60 -30

Strand B (Service review, reorganisation, or reduction)

4 Customer ServicesConsolidation of management roles. End Saturday opening and reduce advertising expenditure at Burnt Oak Customer Service

Centre-68

5 Registrars Relocate registry office to Hendon -50

6 LibrariesStrategic Review of Libraries to provide a modernised service to meet local need, delivering a better service for

less money. Estimate of savings required.-635 -275

7 LibrariesReview operation of mobile library and home library

service to better meet the needs of vulnerable residents; and review of museums-90 -125 -50

Strand C (Reduce spend, reduce service, or increase income)

8 Registrars Further develop income generating services - e.g. nationality and settlement checking -44 -14

9 Libraries Reduction of spending on supplies and services -111 -10

Strand D (Grant reduction)

10 Libraries Pending decision on reduced Bookstart grant. Reduction of all grant would cease service

11 Libraries Pending decision on Children's Centre. Reduction of all grant would cease service

Total -428 -1364 -355

000's


8118


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Savings Options

Service: HR

Service Area Description 2011/12 2012/13 2013/14Strand A - HR One Barnet

1 HR E Recruitment will provide process savings and reduced advertising costs. -81

2 HR Alternative service delivery model: estimate of savings available -150

3 HR HR efficiency, post implementation of One Barnet -300

Strand B - HR Savings

4 HR Workforce saving as part of e recruitment -45

5 HRChanges to Trade Union Facilities Agreement to bring in line with other London

boroughs-44

Total -170 -150 -300


000's

9119


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Savings Options

Service: Information Systems


Strand A - One Barnet

1 IS Alternative service delivery model: estimate of savings available -600

2 IS Consolidation of IS from service areas -96 -224

Strand B - IS service efficiency

3 IS Procurement savings from the supply and delivery of IT related products and services -226 -174

4 IS Consolidation of Libraries IS support staff -35 -22

Total -357 -1020 0


000's

10120


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Savings Options

Service: Finance


Strand A Alternative Service Delivery Model

1 Finance Alternative service delivery model: estimate of savings available -345 -120

2 Internal AuditSavings resulting from alternative service provision of the Internal Audit Service and changes in scope of the audit

coverage-144

Strand B Efficiency Improvements

3 Accounts Payable Procurement / SAP Optimisation savings - In supplies and services e.g. Office Supplies and invoicing -60

4 Strategic Finance Income recovery resulting from successful VAT claims -337 37 300

5 Income Move to new initiatives involving less cash e.g. prepaid cards and cashless working -40 -175

Strand C Staffing Reductions

6 Financial Services Restructure of Finance teams and rationalisation of vacant posts to streamline -54 -55

Total -595 -403 5

000's


11121


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Savings Options

Service: Environment & Operations (Non SPA)


Strand A Revenue Income Optimisation

1 Highways Charging for parking in all borough car parks -125

Strand B One Barnet

2 Environment & Operations Alternative service delivery model: estimate of savings available -138 -13

Strand C Greenspaces efficiencies and service reductions

3 GreenspacesEfficiencies from changed working practices in greensapces and service reductions including changes required as part of the Big

Society agenda-122 -30 -417

4 Greenspaces Leisure contract savings following contract review -133 -70 -62

Strand D Efficiencies and service reductions in Waste and Street Scene Services

5 Refuse & Street Scene Efficiencies and service reductions in refuse fleet and refining service provision -293 -111 -124

6 W aste & Sustainability Efficiencies and service reductions in publicity and rationalisation of corporate functions to reduce duplication. -83 -71

Strand E Efficiencies and service reductions in Highways

7 Highways Efficiencies and service reductions in Highways contracts and changes in highways priorities -737 -430 -200

Strand F Community Protection Group

8 Community Protection Group CCTV mobile unit to be operated and deployed by metropolitan police -67

9 Community Protection Group Efficiencies within Community Safety -57 -37

Strand G Service-wide efficiencies from changed working practices

10 Environment & Operations Change to working practices and move to area based working to make more efficient use of resources -660 -285 -225

Total -2415 -1010 -1065


000's

12122


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Savings Options

Service: Environment & Operations (SPA)


Strand A Revenue Income Optimisation

1 Highways Improving compliance with parking regulations -739

Strand B One Barnet

2 Highways Alternative service delivery model: estimate of savings available -239 -381

Total -739 -239 -381


000's

13123


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Savings Options

Service: PHR


Service & LEAN efficiencies

1 HousingLEAN Review - Phase 2 i.e. next step of Housing restructuring to improve customer service through improving

processes-200

2 PHRSenior management delayering and Business Support staff consolidation. The aim is to have minimal impact on

frontline services.-142

One Barnet

3 PHR LEAN Review and consolidation of Planning & Regulatory services with associated restructure and efficiencies toimprove customer service through improving processes.

-200

4 PHROne Barnet Programme - Alternative Service Delivery Model for Planning & Regulatory Services: estimate of savings

available-104 -205 -230

Income generation

5 Regeneration Private Sector Leasing Properties on regeneration estates - additional income from properties purchased ready forRegeneration.

-200

6 Environ Health /

Hendon Cem/Crem

Improved Business Planning and additional income from competitive charging at Hendon Cemetery and

Crematorium.-55

Total -901 -205 -230

000's


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