Meeting documents

The Executive
Tuesday, 16th February, 2010

The Executive

(Budget)

Minutes of the meeting held on 16th February, 2010 

 

PRESENT:

 

Councillor C.McGregor (Leader) (Chairperson)

Councillor Bob Parry OBE (Deputy Leader)

 

Councillor E.G. Davies

Councillor R.Ll. Hughes

Councillor T. Jones

Councillor Bryan Owen

Councillor Ieuan Williams

 

 

 

IN ATTENDANCE:

 

Corporate Director (Education and Leisure)

Corporate Director (Finance)

Corporate Director (Environment and Technical services)

Acting Corporate Director (Housing and Social Services)

Press Officer

Committee Services Manager

 

APOLOGY:

 

Councillor G. O. Parry MBE

 

 

 

 

1.   DECLARATIONS OF INTEREST

 

None to declare

 

2.  URGENT MATTERS CERTIFIED BY THE MANAGING DIRECTOR (OR HIS APPOINTED    

     OFFICER)

 

None to declare.

 

3.  MINUTES

 

RESOLVED that the minutes of the meetings of the Executive held on 11th, 12th and 19th January be confirmed as true records.    

 

4.  2009/10 BUDGET - QUARTER 3 - REVENUE.

 

Submitted - The report of the Head of Service (Finance) on the monitoring of the 2009-10 revenue budget for the third quarter of the financial year up to 31 December 2009. The report emphasised the position on corporate accounts and budgets and drew members’ attention to significant items or trends within service budgets.

 

(Appendix A) of the report summarised expenditure against the revenue budget for each Service. This was further broken down in Appendix B. The budget figures incorporated the virements, which were listed at Appendix C, which the Executive was asked to approve.

 

 

 

 

 

 

 

RESOLVED

 

Ÿ

To note the contents of the report.
 

 
 

Ÿ

To approve the virement of £150k income from an easement into the Highways budget.
 

 
 

Ÿ

To approve general virements as detailed in Appendix C of the report.
 

 
 

5.  2009/10 BUDGET - QUARTER 3 - CAPITAL
 

 
 

Submitted - The report of the Head of Service (Finance) on the capital budget monitoring report       for the first nine months of the financial year. The appendix to the report included a summary of       expenditure against the budget up to the end of December 2009.
 

 
 

Reported - That the Highways Service had been successful in obtaining funding for its Environmental schemes. These included flood prevention works in Beaumaris and improvements to Amlwch, Menai Bridge and Llangefni town centres. Most of these were matchfunded from within the service’s own budgets but the Head of Service (Highways) had requested that the Executive give consideration to allocating additional funding for the Beaumaris scheme to enable all the planned works to be carried out. The additional cost was £65k.
 

 
 

The Executive could allocate £65k additional funding from the Regeneration/Match Funding Contingency. As in previous years the timing of these grants had made it difficult for the Service to be proactive but Services had been advised that future matchfunding must be in place before the scheme proceeds.
 

 
 

There was a projected overspend of £15k on the Holyhead Town Centre Regeneration Scheme. The Executive was asked to release £15k from the matchfunding/ regeneration reserve to fund this.
 

 
 

RESOLVED
 

 
 

Ÿ

To note progress of expenditure and receipts against the Capital Budget.
 

 
 

Ÿ

To approve the release of £15k from the matchfunding/regeneration contingency to fund the overspend on the Holyhead Town Centre Regeneration Scheme and £65k towards the Environmental Improvement Scheme in Beaumaris.
 

 
 

6.   2009/10 BUDGET - QUARTER 3 -TREASURY MANAGEMENT
 

 
 

Submitted for information - The report of the Head of Service (Finance) on the 3rd Quarter monitoring report for Treasury Management for 2009/10.
 

 
 

RESOLVED to note the contents of the report.
 

 
 

7.   2009/10 BUDGET - QUARTER 3 - HOUSING REVENUE ACCOUNT
 

 
 

Submitted for information - The report of the Head of Service (Finance) on a review of the Housing Revenue Account budget for 2009/10.
 

 
 

RESOLVED to note the contents of the report.
 

 
 

 
 

 
 

 
 

8.1 BUDGET 2010-2011 - COMPLETING THE REVENUE BUDGET
 

 
 

Submitted - The report of the Corporate Director (Finance)on the medium term revenue budget strategy and final revenue budget proposals for 2010/11.
 

 
 

Reported - That four tasks faced the Executive:-
 

 
 

(i) Take account of consultation responses covering the Strategic Priorities, the Medium Term Financial Strategy and the Budget for 2010-11. These were covered in a separate report.
 

 
 

(ii) Consider whether it wished to propose a Medium Term Strategy covering future years annual budgets to the Council.
 

 
 

(iii) Complete final budget proposals for financial year 2010-11 as required by the Constitution.
 

 
 

(iv) Update the Capital Plan and propose a capital budget for 2010-11 consistent with the capital plan. A separate report dealt with these.
 

 
 

This report dealt with (ii) and (iii) above but they cannot be considered in isolation of (i) and (iv).
 

 
 

MEDIUM TERM FINANCIAL STRATEGY
 

 
 

Ÿ

Terminology 
 

 
 

This report went on to draft a proposed Medium Term Budget Strategy. Reference was made at the end of the draft to how it fitted with other documentation which together comprised the Financial Strategy.
 

 
 

Ÿ

Public Spending Assumptions
 

 
 

At this time of great uncertainty about public spending, it was necessary to explain again the assumptions which underlined the Director’s forecasts of WAG funding, and which had been used for the Budget Strategy. These were detailed at Paragraph 1.2.2 - 1.2.6 of this report.
 

 
 

All that could be concluded was that there was a wide range of outcomes around the 1% cash cut assumption the Director’s had made. There was little doubt that all plausible scenarios led to severe real term cuts in funding, which was justification to plan for the worst. As figures changed these projections would be updated, but it was likely to affect only the pace of necessary spending reductions.
 

 
 

Ÿ

Pay, Pensions and Interest Rate Assumptions
 

 
 

In the light of the local government employers’ proposing there would be no pay award in 2010, the assumptions had been modified to reflect this. It was assumed that the third stage of the teachers pay agreement would be implemented in 2010. After that the projections assumed that the 1% cap on public sector pay announced in the PBR would be achieved.
 

 
 

In his earlier projections the Corporate Director had assumed an increase of 2% of payroll per year from 2011-12. However, the Director had not assumed any increase in teachers’ pension contributions which may be too optimistic. In the absence of firm figures he proposed to leave these assumptions unchanged.
 

 
 

 
 

 
 

 
 

 
 

Ÿ

Comparing Assumptions
 

 
 

The different possible assumptions about the future course of public spending potentially created confusion between differing views. An exercise was underway to compare notes between authorities and establish whether a common approach was possible.
 

 
 

For the sake of simplicity, the Director had not included several different scenarios in the proposed Budget Strategy, but it may become necessary to do so.
 

 
 

Ÿ

A Proposed ‘Medium Term Revenue Budget Strategy’
 

 
 

Appendix 1 of the report was a draft strategy for consideration by the Executive to be forwarded to the Council for approval. This was based on the issues discussed with Executive members in recent weeks,both in formal meetings and informally.
 

 
 

The draft strategy followed very closely the proposals of the ‘Looking to the Future’ consultation paper. In reflection of some comments received, it had been necessary to elaborate on some aspects of it, to help it serve as a formal Council policy.
 

 
 

This consultation paper, including the proposed budget strategy, was considered by the Principal Scrutiny Committee on 4 February. No specific observations on the strategy were resolved on by the Committee.
 

 
 

The Executive were invited to reflect on the comments received in consultation, and determine whether they wished to make changes to this document before forwarding it to the Council for adoption.
 

 
 

REVENUE BUDGET 2010-11
 

 
 

Ÿ

Completing Budget Calculations
 

 
 

One significant external development required a change to budget calculations. The standstill budget adopted by the Executive in January assumed a 0.5% pay award for local government employees in 2010. The national employers had since made clear their stance, that there should be a zero pay award. It was recommended that the provision be removed from the proposed budget saving £0.2m.
 

 
 

The standstill budget adopted in January included a “process contingency” for issues which had been identified but calculations not completed. The represented budget in Table 1 of the report was based on the initial budget proposals, but having adjusted for these. The main items were:-
 

 
 

Ÿ

Interim Managing Director Allowing for an estimated full year cost of current arrangements.
 

Ÿ

Non-domestic rates Further adjustments consequent on the 2010 revaluation.
 

Ÿ

Procurement
 

Ÿ

Legal Service budget Correction of anomalies necessary because of the decisions to claw back service reserves which had previously funded current costs.
 

Ÿ

Safeguarding Children Board Notification of 2010-11 budget.
 

Ÿ

Tywyn Trewan Levy Notification of 2010-11 levy.
 

Ÿ

Finalisation of figures for savings proposals.
 

 
 

These adjustments left the process contingency at £376k. This was a sum which may be allocated by the Executive during the year in response to events not foreseen at the start of the year. A sum in the region of £100k had usually proved appropriate.
 

 
 

The Executive was requested to confirm the adjustments outlined above.
 

 
 

 
 

Ÿ

Issues from Consultation
 

 
 

The Executive would wish to reflect on all issues raised in the consultation process. The Director drew attention to three larger issues:-
 

 
 

Ÿ

The allocation of the £400k set aside for capacity (Paragraph 2.2.2 referred)
 

 
 

     It was recommended that this sum of £400k be not allocated to any particular service, but set               aside as a central contingency, with powers to allocate delegated to the Executive.
 

 
 

Ÿ

The proposed 2% cut to schools quantums (Paragraph 2.2.3 - 2.2.6 referred)
 

 
 

Reducing the cut from 2% to 1.5% would add £164k to the budget total. In view of the financial outlook, it was likely only to amount to a deferral of the cut, making the following year’s position worse. It may not make a great deal of difference to the staffing reductions required.
 

 
 

Ÿ

The proposed 5% increase in Council Tax (Paragraph 2.2.7 referred)
 

 
 

The 5% figure proposed by the Executive would meet with WAG expectations but in the light of what other authorities were reported to be considering, it was possible that a figure of, say, 4.5% would also meet such expectations. As with the schools budget such a decision would, in all probability, only defer the increase, adding to the following year’s figure. Reducing the figure from 5% to 4.5% would add £120k to the budget.
 

 
 

The main flexibility the Executive had in these respects was to reduce the general contingency. There may be scope either to reduce the schools cut or to reduce the Council Tax increase. Doing both would harm the authority’s ability to face the financial storm ahead. Doing neither would leave us more robustly placed.
 

 
 

Ÿ

Use of Reserves for Severance, etc.
 

 
 

In earlier reports, the Corporate Director had identified that up to £1.1m could be available from financial reserves for one-off costs to support the making of future savings with regard to staff severance.
 

 
 

The main issue was likely to be schools. Schools themselves made the “hiring and firing” decision.
 

Where a school needed to reduce staffing to balance its budget and was also holding large reserves, the Director did not consider it appropriate for the authority to fund these costs - the burden should fall on the school reserves. While this was not sustainable indefinitely, the Director expected a school in such a position also to weigh up the possibility of using the reserves instead to continue to employ, deferring severance.
 

 
 

For schools with inadequate reserves but having to sever staff, there may be no alternative but to support these costs from the centre. This had been supported from education service reserves in the past two years but these now were all but exhausted, therefore some support from central reserves may be required.
 

 
 

These issues would need to be considered further and it was too early at this point to estimate how much may need to be set aside to manage the staff reduction, but it seemed inevitable that some of the £1.1m may be set aside, mostly for schools but also for other services. As the situation developed, some flexibility may be required to amend the final budget proposals to include the best estimates of the likely effect.
 

 
 

 
 

 
 

 
 

Ÿ

Robustness of Estimates and Adequacy of Reserves.
 

 
 

The Director was required by the Local Government Act 2003 to report on these matters as the budget was completed.
 

 
 

     There were few major contract awards in 2010-11 in the absence of which the main uncertainty must be about the outlook for inflation, including pay awards, and interest rates. The budget was based on freezing pay and general inflation at 1%. Any significant increase above this level was a risk. There was also a risk that projected savings would not be attainable in practice. The higher the level of saving, the more the risk.
 

 
 

     Given that there was always some risk of unforseen spending or overspending, the authority needed to maintain adequate reserves. The Director’s report to the Executive in December 2009 reviewed the level of financial reserves. The third quarter budget monitoring reports updated the position and projected where reserves would be at the end of the current financial year. The projection, in total, were little changed and did not amend the earlier estimate.
 

 
 

     RESOLVED
 

 
 

     i) To adopt Appendix 1 of the report as a draft Medium Term Revenue Budget Strategy, to be recommended to the Council
 

 
 

     (ii) To adopt as the Executive’s final budget proposals for 2010/11, the initial budget proposals, amended as follows:-
 

 
 

Ÿ

a Band D Council Tax of £825.30, an increase of 4.5%;
 

Ÿ

to remove the provision for a local government pay award in 2010 in view of the national employers’ decision to freeze pay;
 

Ÿ

other adjustments detailed in the report of the Corporate Director (Finance);
 

Ÿ

to set aside £150k from the process contingency with a view to adding this back to secondary schools budgets, reducing by half the amount required to fund integration overspend, but on condition that the secondary schools agree to more delegation of integration spending from now on.
 

 
 

     (iii) To seek to implement further savings from the Affordable Priorities Programme during the 2010/11 financial year, as opportunities arise.
 

 
 

     (iv) Not to use reserves to balance the 2010/11 budget, but to seek access from the Council to up to £0.6m of general balances for initiatives which generate further savings.
 

 
 

     (v)To authorise the Portfolio Holder for Finance and the Corporate Director (Finance) to make such minor changes as may be necessary before submission to the Council.
 

 
 

8.2 CAPITAL BUDGET AND CAPITAL PLAN
 

 
 

     Reported by the Corporate Director (Finance) - That as part of the normal annual budget setting process, the Council’s Medium Term Capital Plan was updated and a capital budget for the forthcoming year was agreed.
 

 
 

     This year, the focus for consultation had been the revised strategic priorities and the affordable priorities. It would be necessary to translate these priorities into a Capital Strategy and a revised Capital Plan. There were however, a number of additional areas of uncertainty including the implementation of the new Asset Management Plan and the 21st Century Schools Funding Programme which needed to be addressed during the forthcoming months.
 

 
 

     In order to ensure that there was authority for capital expenditure during the early part of the forthcoming year, the Corporate Director suggested that the Executive proposed an Interim Capital Plan and Budget to the County Council as part of the annual budget resolution.
 

 
 

     The current three year capital plan was detailed at Appendix A of the report and was built up from a small number of strategically important programmes or budgets together with a block of “annual” budgets supporting the Council’s asset base or providing a direct service. There was also a relatively small amount of match funding and contingency in every year.
 

 
 

     In aiming to roll forward the capital plan in a normal year, there was usually reasonable certainly on the availability of core resources. As previously reported by WLGA and in committee reports and presentations, things had changed. Capital funding was expected to be cut by 50% nationally. It was not yet clear how this would fall on Welsh Local Government but it may hit hypothecated grant first. Although no cuts were made to core capital resources for next year, it was almost certain that cuts would not be avoided in following years. However, the Forward Medium Term Revenue Budget Strategy suggested a revenue funded/ unsupported borrowing programme to help fill the gap on core resources and the rolling forward of the capital plan had been done on the basis that WAG cuts to core resources would be displaced by unsupported borrowing.
 

 
 

     The current Strategic priorities for the capital plan were attached at Appendix B with the main items attracting funding in the current year listed at Paragraph 4.1 of the report.
 

 
 

     There was always some uncertainty at this stage in planning capital budgets, but this year was unprecedented because of the Executive’s review of its strategic priorities and related work streams; changes to WAG funding of schools; uncertainty on future resources; options on leisure centres and residential homes. These were detailed at Paragraph 5.1 of the report.
 

 
 

     The standard policies, practices and definitions relating to the Prudential Code, capital resources the capital plan and capital budget were outlined in the Director’s report to the Executive on 23 February, 2009 and were still relevant. They formed the basis of his review and would be incorporated into the Medium Term Revenue Budget Strategy.
 

 
 

     Detailed at Paragraph 6.1 of the report were those strategic issues that had been reviewed; together with the capital budget for the current year.The current capital plan assumed an over commitment of resources with a total of £1,775k over the period of the plan and was designed as a buffer for slippage with an assumption that resources would remain at broadly similar levels for the foreseeable future.
 

 
 

     The remaining unallocated contingencies were listed at Paragraph 6.2 of the report, the suggested way forward at Paragraph 6.3, suggested interim Capital Plan and Capital Budget and the likely grants for 2010/2011 at paragraph 6.4.
 

 
 

     As part of the normal arrangements, within the coming year’s budget, grant funded projects were identified as being included subject to grant approval. In addition, it was a requirement that major projects be reported to the Executive before the tender stage.
 

 
 

     RESOLVED to recommend to the County Council:-
 

 
 

Ÿ

To confirm the narrative Interim Capital Plan as at Appendix B of the report with amendments.
 

 
 

Ÿ

To adopt Capital Budget proposals for 2010/11 with commitments into future years, including as far as possible, grant aided projects.
 

 
 

Ÿ

To approve the earmarking of core resources in future years of the Interim Capital Plan.
 

 
 

Ÿ

To update the Interim Capital Plan including commitments, the 2010/11 budget and all reasonably foreseeable Capital Projects and funding sources.
 

 
 

Ÿ

To authorise the Corporate Director (Finance), in consultation with the Portfolio Holder for Finance, to complete the draft plan based on the most recent information available.
 

 
 

9.  OUTCOME OF THE CONSULTATION UNDERTAKEN ON COUNCIL PRIORITIES, MEDIUM                   TERM FINANCIAL STRATEGY AND BUDGET PROPOSALS FOR 2010/11.
 

 
 

     Reported by the Head of Service (Policy) - That the above consultation document was issued for consultation with stakeholders on 18 January and comments requested by 5 February,2010.
 

 
 

     In addition, a further series of public meetings were held between 20 January and 3 February. A schedule detailing these meetings and Council committees/partnerships which had considered the document was attached at Appendix 2. Observations made at these meetings were listed at Appendix 3.
 

 
 

     Over 450 people attended the public meetings. A summary of the issues raised at these meetings was listed at Appendix 4.
 

 
 

     A number of individuals had made representation relating specifically to the library service and heritage sites, in response to proposals relating to the Affordable Priorities Programme. These were summarised at Appendix 5.
 

 
 

     Observations received from other stakeholders, e.g Town and Community Councils and organisations were included at Appendix 6.
 

 
 

     Positive feedback was received on the value of public meetings as a means of engaging with communities, although the timescale for responding to the consultation was short.
 

 
 

     A number of comments were raised at the public meetings and in written representations relating to the proposed Council priorities and these were summarised at paragraph 2 of the report. A summary of specific comments received relating to the 5 strategic objectives was also provided at Paragraph 2 if the report.
 

 
 

     The Executive was requested to consider the specific comments summarised within the report and take into account the information included in the appendices to this report as they related to Council priorities. Proposals needed to be finalised and submitted to the County Council for adoption. These objectives provided the basis for the Council’s Corporate Improvement Plan for 2010/11 which would be supported by business plans.
 

 
 

     The feedback contained in this report relating to both the Council’s medium term financial strategy and budget proposals for 2010/11 needed to be considered in the context of a separate report to this Committee by the Corporate Director (Finance).
 

 
 

     Observations received after the expiration of the consultation period from the Countryside Council for Wales and the Anglesey Economic Regeneration Partnership were tabled at the meeting.
 

 
 

     RESOLVED to recommend to the County Council:-
 

 
 

Ÿ

That the Strategic Priorities contained in the consultation document be accepted, subject to those modifications agreed by the Executive on 16th February, 2010, in response to the consultation.
 

 
 

Ÿ

To take on board the observations received on the Council’s medium term financial strategy and budget proposals for 2010/11 in the context of a separate report to this Committee by the Corporate Director (Finance).
 

 
 

10. “COLLABORATIVE AGREEMENT” (GENESIS)
 

 
 

     Reported by the Corporate Director (Education and Leisure) - That the aim of the Genesis Wales 2 - Anglesey project was to increase labour market participation specifically concentrating on those furthest away from the labour market and to move them closer. The project worked with individuals 16 years of age and over, living in Anglesey who were economically inactive.The original Genesis Cymru Wales project had helped over 15,000 people to increase their employment opportunities by addressing barriers such as low skills, transport costs to training and lack of self-esteem.
 

 
 

     A project delivery team was based in each of the 22 Local Authorities across Wales, with a central WAG DCELLS  Operational Team based in Bedwas, Caerphilly.
 

 
 

     The Genesis 2 Anglesey Team continued to help and support those who were furthest away from the labour market and aimed to help a minimum of 543 participants during the lifespan of Genesis 2.
 

 
 

     Genesis 2 was funded by way of a grant, made available to the authority,and the Collaborative Agreement set out the terms for this funding and the conditions for payment, audit, monitoring etc.
 

     Within the Authority the project and staff were part of the Educational Department under the supervisory line of The Children and Young People’s Partnership. The collaborative agreement had been reviewed by the Legal and Financial departments.
 

 
 

     RESOLVED to approve the completion of the Collaborative Agreement between the Welsh Ministers and the Isle of Anglesey County Council and to authorise the Director of Education and Leisure to administer the project and to ensure that the Authority is able to claim back monies spent on the project to date and any further expenditure.  
 

 
 

 
 

                                               The meeting concluded at 2:40pm
 

 
 

                                                  COUNCILLOR C.McGREGOR
 

                                                                   CHAIR.