Agenda item

2:00pm – 2:30pm

The Chief Executive and the Chief Finance Officer will be present to provide an introduction and general overview of the 2011/12 budget proposals.

The Deputy Chief Executive and the Chief Finance Officer were present to provide an introduction and general overview of the 2011/12 budget proposals.

The Chief Finance Officer explained that following a huge decrease in Government funding, the 2011/12 budget had been the most difficult budget to construct in decades and that significant cuts were unavoidable.  The proposed budget aimed to protect Leicester’s priorities.  It was also pointed out by way of introduction that Council Tax had been frozen for the coming year if the proposals were adopted.

The in-year spending cuts announced on 25 May 2010 resulted in a drop of £9.2m of funding from central government, and the City Council had also been adversely affected by cuts to organisations such as the East Midlands Development Association (EMDA).   Furthermore, the Comprehensive Spending Review saw a 29% real terms reduction in formula grants over four years at national level. In response to a query from Councillor Suleman, it was clarified that grants received by the Council were to reduce by 12.9%, in 2011/12.  The Chief Finance Officer also stated that a number of specific grants had been rolled into formula grant, and that the appropriate sums had been added into the budget. This was not growth, just a change of funding.

The Board were informed that the Council had received a two year settlement from the Government, which would see an overall reduction of £30m in revenue grants and a £20m reduction in capital.  It was also explained that this included a reduction of £9.6m in Children’s Services specific grants for which budget proposals did not exist at the time the draft budget was published.

Further key funding changes included a cessation of the Housing Revenue Account subsidy system in 2012/13, the receipt of additional funding for adult care via the NHS and the transfer of £0.9m as a central provision for academies. 

Members heard that a number of ‘one-off’ monies would be used for severance and for the 2011/12 budget.  Total available monies amounted to £17.5m, The amount of one off monies which the budget proposed to use would exceed this, to cover the additional funding required for Children’s Services.  It was intended to review all budgets significantly in Spring 2012

In respect of the main features of the Budget, the Chief Finance Officer reported that protecting BSF funding was a key component; as was investing £750,000 into Safeguarding Children which reflected the increased number of children entering the care system.  An extra £1m for concessionary bus travel had been provided in light of an average 5% increase in fares and a growing number of elderly citizens using buses. 

In terms of savings, a proposed senior management review and savings within ODI and HR were key features.  Savings within ODI were expected to grow from £5.6m to almost £9m by 2014.  Savings within HR related in part to changes to the terms and conditions of staff which included proposals to reduce working hours to 35 hours. The Chief Finance Officer was expecting the trade unions to comment on these in their formal responses.

In relation to Children’s Services specific grants, it was explained that the Government had announced major complex reductions in overall grant funding, which encapsulated a 22% reduction of Early Intervention Grant, which provided for  schemes including Sure Start.  Schools were reported as also suffering from forthcoming budgetary pressures, as a result of a pay award, and the reduction of several direct grants.  It was also explained that the size of the gap in the overall position of the budget was expected to grow significantly from the draft proposals as a result of the impact of cuts in Children’s Services grants. 

The Chief Finance Officer reported that £4m would be received in each of the next two years via the NHS to deliver Adult Social Care work which directly benefitted health outcomes.  Use of this money had to be agreed with the PCT. It was also noted that clarity from the Government was still awaited in respect of several other grants including youth justice.

The Chief Finance Officer believed the key areas of risk in the budget were the adult social care programme, the changes in staff terms and conditions, and the ODI programme. This was due to the size of the savings and the fact that programmes of activity were required to deliver them.

The Deputy Chief Executive spoke further on areas of interest to Members and explained that the current level of budgetary pressures had led to a greater number of services being brought into review.  He stated that the overall level of risk to the Council was sizeable in light of the reduction of the amount of money made available.  He also made it clear to the Board that any changes to the terms and conditions of staff contracts were subject to full consultation with staff and Trade Unions, and that implementation of such changes would be far easier if Trade union support was provided.  .  Furthermore, the Deputy Chief Executive explained that consultancy spend over the last financial year had fallen from £9.6m to £3.3m and that agency spend had fallen by £2.3 million in the last year, well exceeding it’s target.

Clarity was sought around the level of finance required for pension and severance costs.  The Chief Finance Officer confirmed that £15m would be provided via “quasi borrowing” and by the use of available one-off monies. “Quasi borrowing” would be achieved by using monies set aside for capital (and then borrowing for capital works) or by using facilities within the pension scheme to defer cost.  In response to a further query in relation to the proposal to reduce working hours, the Deputy Chief Executive said that £4m was proposed for this, which equated to 50% of the total possible saving and explained that the proposal could not be extended to all Council staff due to need for full coverage in some service areas.

Concern from members was expressed around the shortage of information around the ODI review budget.  The Deputy Chief Executive confirmed that a significant amount of background detail on this programme was available which could be made available to Members.  In response to further comments around a shortage of information around Adult and Social Care budgetary processes, the Deputy Chief Executive explained that a broader transformation process had shaped this area , which had made it difficult to break down specific figures in the same way as many other divisional budgets. 

The Chair asked whether any particularly radical measures had been employed by the Council to try and address the overall budget situation.  The Deputy Chief Executive confirmed that service transformation processes had commenced within many of the Council’s larger and more expensive services.  Further to this, a variety of other ways of remodelling services which included neighbourhoods, were being considered.  He added that work on the 2012/13 budget would commence in the coming months and as part of this, many other services would be looked at in more of a transformational way.

RESOLVED:

                        (1)       That the general overview of the 2011/12 budget proposals       be noted; and

(2)       That further information on the ODI review budget be       provided to Members