Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
Agenda Item No______9_______
2011/12 BASE BUDGET AND PROJECTIONS FOR 2012/13 TO 2014/15
Summary:
This report presents for approval the proposed budget for 2011/12 for
both revenue and capital and also provides indicative budgets for the
following three financial years 2012/13 to 2014/15.
Conclusions:
The budget is presented for approval each year. This report presents
the budget for 2011/12 along with the financial projections for the
following three years. The budget has been produced based on the
assumptions detailed in the current Medium Term Financial Plan
(updated where necessary) as reported to Members in November and
where applicable takes account of the final grant settlement
announcement made on 31 January 2011. The report outlines those
assumptions and documents the financial risks to the Council in
setting the annual budget and forecasting future spending plans and
resources.
Recommendations:
It is recommended that Members agree and recommend to Full
Council:
a) The 2011/12 revenue account budget as outlined at Appendix A
and that the surplus of £58,064 be allocated to the restructuring
reserve;
b) The demand on the Collection Fund, subject to any amendments as
a result of final precepts be:
(i)
£5,736,464 for District purposes
(ii)
£1,447,722 (subject to confirmation of one final
precept) for Parish/Town precepts;
c) The movement on the reserves as detailed at Appendix E;
d) The updated Capital Programme and it’s financing for 2010/11 to
2012/13 as detailed at Appendix F ;
e) The new capital bids as detailed at Appendix G;
f) That Members note the current projections for 2012/13 to 2014/15.
Cabinet member(s):
Ward(s) affected:
All
All
Karen Sly, Financial Services Manager, 01263 516243,
Karen.sly@north-norfolk.gov.uk
Contact Officer, telephone number,
and e-mail:
1.
Introduction
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
1.1
This report contains the details of the 2011/12 Revenue Base Budget and the indicative
projections for the following three financial years. The opportunity has also been taken to
restate the assumptions that underlie the budget and to identify where these have
changed since the presentation of the Medium Term Financial Strategy to Members in
November 2010.
1.2
An updated Capital Programme has also been included covering the period 2010/11 to
2012/13.
1.3
This report will also be considered by Overview & Scrutiny Committee on 18 February
2011 and then presented for approval by Full Council on 23 February 2011.
1.4
The Financial Strategy covering the period 2011/12 to 2014/15 was presented to
Members in October 2010. At that time the forecast budget gap over the next four years
was just over £2 million. This position took account of the known spending pressures at
the time and also forecast grant reductions of 25% over the next four years and council
tax freeze for 2011/12.
1.5
Since October the detail of the budget for 2011/12 has continued to be worked on by
both officers and Members resulting in the budget now presented in this report which
includes the provisional grant settlement figures announced in December 2010.
2.
Finance Settlement - Overview
2.1
On 13 December 2010 the Secretary of State for Communities and Local Government
announced the two-year provisional settlement for local government, covering 2011/12
and 2012/13. The settlement included allocations of formula grant (Revenue Support
Grant and Redistributed Business Rates) and other government grants for each of the
next two financial years.
2.2
Some of the key messages from the announcement included:
•
Government formula grant funding for local authorities in 2011/12 (excluding the Police
grant) falls by 12.1% to £24.9 billion. Of this sum £19 billion comes from redistributed
business rates leaving only £5.9 billion revenue support grant from general taxation.
•
Formula grant funding for 2012/13 falls by a further 7.8% to £22.9 billion.
•
A number of specific and special grants have been withdrawn since the government took
office or are now incorporated into the formula grant.
•
Headline figures show reductions in ‘revenue spending power’ for local authorities of no
more than 8.9% both in 2011/12 and 2012/13. ‘Revenue spending power’ is a new
concept and in broad terms includes formula grant, council tax and some specific grants
including benefits administration subsidy and the homelessness prevention grant.
Therefore, it does not refer to the change in formula grant after rebasing which has been
the often quoted headline figure in the past.
•
Transition grant funding has been added of £85 million in 2011/12 (benefiting just 37
authorities) and £14 million in 2012/13 (benefiting 12 authorities, all shire districts).
•
The provisional settlement allows for the distributional changes in areas of responsibility
such as the transfer of concessionary fares from districts to counties.
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
•
The provisional settlement confirms total grant funding of £650 million to fund the
implementation of a council tax freeze in 2011/12. The £650 million equates to the
additional income which would be generated from a 2.5% council tax increase. There
will be funding to continue support of this amount in the four years of the spending
review. This means that in ‘revenue spending power’ terms local authorities in the years
2012/13 to 2014/15 should be no worse off from freezing council tax in 2011/12.
However, there will be no additional funding to support any further freezes from 2012/13
onwards.
2.3
The final settlement for 2011/12 was subsequently announced on 31 January 2011
along with an updated provisional settlement for 2012/13, this resulted in an additional
£44,762 being allocated in 2011/12 and a reduction of £60,958 in 2012/13 compared to
the provisional announcements.
3.
Provisional Finance Settlement – North Norfolk District Council
3.1
The following sections aim to outline the implications to NNDC of the provisional
settlement. Like all authorities, NNDC receives formula grant. The basic element of the
formula grant is a standardised amount called the central allocation. For 2011/12 all
shire districts will receive as a central allocation of some £49.51 per head of resident
population.
3.2
The central allocation is increased by an amount relating to the relative need to spend of
each authority assessed by taking into account various “indicators”. For shire districts
these include resident population, population density and sparsity, day visitors, benefit
claimants and add-ons for fixed costs, flood defence, coast protection and capital
financing. For North Norfolk the relative needs enhancement equates to £37.45 per
head of population in 2011/12.
3.3
A reduction then takes place reflecting relative resources (the ability to raise income
from council taxes) which for NNDC is £17.05 per head of population in 2011/12.
3.4
These three elements together produce a formula grant figure for North Norfolk of
£69.91 per head of population in 2011/12. To ensure that authorities receive at least a
minimum grant change (called the ‘floor’) the results are adjusted by a mechanism called
floor damping. For the NNDC in 2011/12 floor damping results in a reduction in the total
of £2.21 per head of population leaving a final figure for formula grant of £67.70 per
head.
3.5
The headline cash reduction figures for the total formula grant are summarised in Table
1 below. The rebased figure for 2010/11 is actual grant allocated for the year after taking
account of a number of adjustments to compare between years on a like for like basis,
that is taking account of changes in responsibilities, for example the transfer of
concessionary fares from districts to counties.
Table 1
2010/11
2010/11
2011/12
2012/13
2013/14
2014/15
Actual
Rebased
Final
Provisional
Forecast
Forecast
Total
9,006,858 8,226,642 7,059,138
6,171,366 5,851,689
Formula
Grant £000
Reduction
- 1,167,504
887,772
319,677
£000
Reduction %
14%
13%
5%
(These figures closely match the average of shire district councils.)
5,404,035
447,654
8%
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
3.6
Table 1 above shows the actual cash reduction in grant for 2011/12 is £1,167,504
representing a 14% reduction in cash terms and for 2012/13 is £887,772 representing a
reduction of 13%. This is after the impact of the floor damping mechanism which
resulted in a reduction in grant for NNDC of £235,845 in 2011/12 and £206,426 in
2012/13. The floor damping mechanism ensures all authorities receive a maximum
reduction, in very simple terms the scheme works by taking grant from those authorities
above the floor to be allocated to those below the floor to bring them to the floor. For
NNDC it can be argued the effect of floor damping is that formula grant support is not
being received in full for the increased spending in recent years on coast protection and
internal drainage board levies (flood defence).
3.7
At the same time as the provisional finance settlement was announced, a number of
service related grants were allocated. The two grants relevant to the Council are the
Benefits Administration Grant and Homelessness Prevention Grant.
3.8
3.7.1
Benefits Administration Grant – This grant was confirmed as being £768,869 for
2011/12 and represents a reduction of £36,017 (4.5% compared to the previous
years). No announcement has yet been made for the following financial year,
however it is expected that further reductions to this grant will be made.
3.7.2
Homelessness Prevention Grant – Grant allocation of £120,470 was announced
for 2011/12, this has been factored into the budget for 2011/12.
Within the Comprehensive Spending Review the government announced plans for
funding to be made available for the New Homes Bonus Scheme. A consultation on the
scheme commenced in November 2010 which ended on 24 December 2010. The New
Homes Bonus is a new scheme designed to incentivise and reward for councils and
communities who wish to build new homes in their area. The government has set aside
nearly £1 billion over the Comprehensive Spending Review period for the scheme,
including nearly £200 million in 2011/12 in year 1 and £250 million for each of the
following three years. Funding beyond those levels will come from reductions in formula
grant. The Government believes this will be a simple, powerful, transparent and
permanent feature of the local government finance system. The government has yet to
publish final details of the new scheme, any updates will be provided at the meeting. The
following does outline a number of the key features:
• The bonus will be paid as a grant which in summary will from 2011/12 match fund the
additional council tax for each new home and property brought back into use, for each
of the 6 years after that home is built with an additional amount for affordable homes.
The proposed addition is £350 for each of the six years for each affordable home built.
• The match funding will be split between upper (county and possibly police) and lower
tier authorities (districts). The ratios to be used for the split are yet to be determined
but the consultation paper suggested that 80% could come to the lower tier
authorities.
• The value of the bonus should increase for at least six years. The payment for
2011/12 will be based upon the growth in new homes in the year to October 2010.
The 2012/13 bonus will reflect growth in the two years to October 2011. In the third
year the bonus will be based on the growth in the first, second and third years of the
scheme and so on.
• Local authorities will be able to decide how to spend the funding in line with local
community wishes. The government expects local councillors to work closely with their
communities – and in particular the neighbourhoods most affected by growth – to
understand their priorities for investment and to communicate how the money will be
spent and the benefits it will bring. This may relate specifically to the new development
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
or more widely to the local community. For example, they may wish to offer council tax
discounts to local residents, support frontline services like bin collections, or improve
local facilities like playgrounds and parks.
• The bonus will be paid through section 31 of the Local Government Act 2003 as an
unringfenced grant.
3.9
It is as yet difficult to assess the full impact of the new homes bonus in financial terms.
Broadly, growth in any year is to be calculated as new dwellings less any demolitions
plus or minus the net change in empty dwellings. With more and more of the funding in
later years coming from reductions in formula grant rather than additional government
money it may only be those authorities who achieve relatively high levels of growth over
the years that will benefit in net terms from the bonus.
3.10
Planning Fee Increases – In November 2010 the Department for Communities and Local
Government launched a consultation paper on proposals for changing application fees.
Planning fees are currently set nationally but the consultation paper proposes changes
to the planning application fees regime which would decentralise responsibility for setting
fees to local planning authorities with a view to breaking even. If accepted and approved
by Parliament, the changes would be implemented from April 2011, with a six month
transition period until October 2011.
4.
Revenue Account Base Budget
4.1
The detail of the revenue budget now presented for approval is included in Appendix A
which shows the overall position in the form of the General Fund Summary. Further
detail on the individual service budgets included at Appendix B which details the
movement of the 2011/12 budget compared to the base budget for 2010/11.
4.2
Due to the forecast budget cuts facing local authorities no growth bids were invited for
revenue expenditure for 2011/12. Capital bids were invited but these were only
requested where they related to health and safety or invest to save projects. The capital
programme is discussed in detail at Section 8.
4.3
As part of approving the budget for the current year the following Work-streams
commenced which were anticipated to deliver ongoing savings:
4.4
a)
Management and service structural review;
b)
Service prioritization and budget savings;
c)
Shared services;
d)
Contract procurement.
Savings and additional income from these workstreams were originally forecast to
deliver £461,799 in 2010/11 increasing to £538,060 per annum from 2011/12. The
progress in achieving these savings has been continually monitored as part of the
ongoing budget monitoring process. The updated figure now included in the 2011/12
base budget for the workstreams savings is £520,027. Some of these savings delivered
a part year saving in the current year increasing to a full year saving for 2011/12
onwards. Achievement of these savings has been monitored as part of the current years
budget monitoring reports and the full savings where applicable have now been included
from 2011/12.
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
4.5
The underlying assumptions contained within the revenue base budget for 2011/12 are
as follows:
4.5.1 Council Tax – The budget assumes a council tax freeze in 2011/12, thereafter
increases of 2.5%. This means that the district element of the council tax remains at
£138.87 for 2011/12.
4.5.2 Employee budgets – The revenue budget does not make any allowance for an
inflationary pay award for 2011/12 and 2012/13, for each of the following two years a 1%
increase has been assumed, however this is subject to national negotiation. For
individuals earning £21,000 or less an annual increase of £250 has been assumed for
each of the next two financial years. There is also an allowance for turnover savings of
2% as in previous years. Where annual increments are due these have continued to be
factored in. The employer pension contribution rates for the next three financial years
are determined by the results of the pension fund tri-annual revaluation as at 31 March
2010. In previous years the contribution rate has increased annually, however from
2011/12 there is a proposal to stabilize the contribution rate at 14.5% of the payroll plus
fixed monetary amounts for the next three years. These assumptions have been
factored into the 2011/12 budget and future forecasts.
4.5.3 Fees and Charges – Full Council in December 2010 approved the fees and
charges for 2011/12. The impact of the fee increases have been factored into the
budget. Further commentary is provided at section 5.
4.5.4 Contract inflation – The most significant of the Council’s contracts is the Waste
contract for which Members will be aware of the result of the procurement process that
was undertaken during 2010/11. The new contractor prices have been included in the
2011/12 budget for all waste, cleansing and grounds maintenance services as included
in the contract tendered.
4.5.5 Investment income – The investment income earned from the Council’s
investments is anticipated to remain at similar levels to that being achieved in the current
financial year. A total of £550,000 is anticipated for the 2011/12. The primary concern is
the security of the sums invested and this remains the main consideration when
selecting counterparties. The average investment rate anticipated in the forward year is
2.42% compared with 2.19% for the revised estimates for 2010/11.
4.6
Savings - In reviewing budgets in the normal way as part of the budget process budget
headings were challenged and reviewed taking into account spending patterns and
income received in previous years and in the year to date. This resulted in a number
savings and additional income being identified to be taken from 2011/12. Areas included
a number of external professional fees, members travelling and subsistence and
planning fee income. The largest saving included in the 2011/12 budget relates to the
new waste, recycling, cleansing and grounds maintenance contract which was reported
to Council on 14 October 2010, the saving included in the 2011/12 is just under
£220,000.
4.7
Cabinet and Corporate Management Team started to consider a range of savings in
November 2010, further meetings were held in December to accept those savings and
additional income that should be recommended for approval in the 2011/12 budget. The
savings and income now included in the 2011/12 and future years budgets are
summarised in Table 2, further details are provided at Appendix C.
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
Table 2 – 2011/12 Savings and Additional Income
Service Area
2011/12
2012/13
£
£
Planning and Building Control
35,707
22,879
Conservation and Design
10,000
10,000
Land Charges
8,587
8,587
Tourism
0
34,000
Regeneration Management
4,000
4,000
Housing Service
21,337
21,337
Waste & Cleansing
0
11,565
Environmental Health
8,400
8,400
Sports Centre
10,115
21,371
Media and Communications
47,240
47,240
Legal Services
55,000
55,000
Customer Services
10,544
21,088
Car Parking Management
40,000
40,000
Revenues and Benefits
77,254
85,077
Organisational Development
56,284
56,284
Financial Services and Internal Audit
68,800
87,000
Partnership and Community Engagement
105,000
140,000
Sub Total Savings
558,268
673,828
Additional Income/Grant:
Planning Fee Increase
50,000
50,000
New Homes Bonus
350,000
200,000
Homelessness Prevention Grant
120,470
71,000
Leisure Facilities Income
37,718
49,030
Car Parking
20,000
20,000
Sub Total Additional Income/Grant
578,188
390,030
Total Savings/ Income
1,136,456 1,063,858
2013/14
£
22,879
10,000
8,587
34,000
4,000
21,337
11,565
8,400
21,371
47,240
55,000
21,088
40,000
85,077
56,284
87,000
140,000
673,828
2014/15
£
22,879
10,000
8,587
34,000
4,000
21,337
11,565
8,400
21,371
47,240
55,000
21,088
40,000
85,077
56,284
87,000
140,000
673,828
50,000
100,000
0
51,079
20,000
221,079
894,907
50,000
100,000
0
53,308
20,000
223,308
897,136
(Note – All savings are shown gross. Any one off redundancy or severance costs
associated with delivering these savings will be met as one off costs from the
restructuring earmarked reserve).
4.8
Alongside the announcement of the provisional finance settlement grant some service
specific grants were also announced namely the homelessness and benefits
administration subsidy, these have been reflected in the budget now presented for
approval.
4.9
The General Fund Summary presented at Appendix A shows a balanced budget for
2010/11 and is summarised in Table 3.
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
Table 3 - Variance of 2010/11 to 2011/12
Base Budgets
Net Cost of Services
Non Service Expenditure/ Income
Net Budget Requirement
Income:
Local Taxpayers – Parishes
Local Taxpayers – District Council
Government Grant
Council Tax Freeze Grant
Total Income
(Surplus)/Deficit
Variance
£
2010/11
Updated Base
Budget
£
21,177,180
(4,996,258)
16,180,922
2011/12
Base
Budget
£
16,925,445
(2,597,184)
14,328,261
(4,251,735)
2,399,074
1,852,662
(1,427,268)
(5,746,796)
(9,006,858)
(1,447,722)
(5,736,464)
(7,059,138)
(143,000)
(14,386,324)
(58,064)
(20,454)
10,332
1,947,720
(143,000)
1,794,598
(58,064)
(16,180,922)
0
(Note: Reductions in expenditure are shown in (brackets)
4.10
Non Service Expenditure and Income includes the adjustments for notional items that
are required to be charged within Net Cost of Services, for example, Financial Reporting
Standard 17 pension costs and capital charges. A significant change to the figures
presented from 2010/11 onwards is in the treatment of Disabled Facilities Grant
expenditure. This is now considered to be revenue expenditure and as such is included
in the subjective analysis under “supplies and services”. The grant received from Central
Government is also a revenue grant against which the expenditure can be charged. The
remaining balance (expenditure) is then subject to an adjustment where by it is charged
to capital (Revenue Expenditure Charged to Capital Under Statute; REFFCUS). The
grants themselves will continue to be monitored as part of the capital programme.
4.11
Appendix B shows the detail of the service movements for each of the four service
areas. Table 4 provides a summary of the main movements in Net Cost of Services with
any notional charges shown separately.
Table 4 – Movement in Net
Cost of Services
Employees
Premises
Transport
Supplies and Services
Third Party Payments
Transfer Payments
Income
Total Direct Costs and Income
Notional Charges:
Capital Charges
FRS17
Reffcus
Total Notional Charges
Total Net Costs
Variance
£
Percentage
movement
%
2010/11
Updated Base
Budget
£
11,142,104
2,657,467
1,352,214
11,125,978
260,227
28,528,035
(37,907,329)
17,158,696
2011/12
Base
Budget
£
10,368,581
2,520,612
392,584
9,643,076
34,413
32,839,013
(42,379,517)
13,418,762
(773,523)
(136,855)
(959,630)
(1,482,902)
(225,814)
4,310,978
(4,472,188)
(3,739,934)
(6.9)
(5.2)
(71.0)
(13.3)
(86.8)
15.1
11.8
(21.8)
841,459
(259,458)
3,436,483
4,018,484
21,177,180
1,480,838
(251,277)
2,277,122
3,506,683
16,925,445
639,379
8,181
(1,159,361)
(511,801)
(4,251,735)
76.0
(3.2)
(33.7)
(12.7)
(20.1)
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
4.12
The movement shown under transport in table 4 largely represents the removal of costs
in relation to the concessionary fares scheme which transfers to Norfolk County from
April 2011. Within Supplies and Services the reduction in budget for 2011/12 mainly
represents the end of the pathfinder project for which there will be a corresponding
reduction in income, plus a number of one off budgets have been removed which were
either funded by one off grants or the use of reserves, for example costs associated with
the Local Development Framework.
4.13
This report recommends that the surplus of £58,064 for 2011/12 be allocated to the
restructuring reserve to fund one off costs associated with restructuring, further details
on this reserve are provided at 7.5.
5.
Fees and Charges
5.1
Detailed proposals for fees and charges for 2011/12 were included within the 2010/11
revised budget report to Cabinet on 29 November which was subsequently approved by
Full Council on 14 December. Generally non statutory fees and charges have been
increased by between 2.5% and 3% from 1 April 2011 unless market conditions and
current demand have indicated different percentages should be applied.
5.2
Proposals for changes to Planning Application fees were announced on 15 November
along with a consultation paper. Fees for planning applications are currently set
nationally and the new legislation (subject to approval) will allow Local Authorities to set
their own fees with the view to recovering costs.
5.3
The budget for 2011/12 does include £50,000 additional income from planning fees as a
result of increasing the fees chargeable from April 2011.
6.
Council Tax 2011/12
6.1
Table 5 below summarises how the budget for 2011/12 will be financed and the District’s
net call on the collection fund for 2011/12. These figures assume a council tax freeze in
the District element of the Council Tax for 2011/12, more detail is provided at Appendix
D.
Table 5 – Council Tax Summary
£
Total District amount to be met from Government Grant and Local taxation
12,880,539
Less: Revenue Support Grant
(1,666,790)
Redistributed Business Rates
Council Tax Freeze Grant
District Net Call on Collection Fund – excluding Parish Council Precepts
Surplus
(5,392,348)
(143,000)
(5,736,464)
(58,064)
6.2
A Council Tax Base of 41,228 Band D equivalent properties was set by Full Council on
14 December 2010. Based on this figure, and with no increase to the District Council
Tax, a Band D would continue to be £138.87 for 2011/12.
6.3
Provisionally the increase overall in Parish and Town Council precepts is 1.3% which will
be the overall increase in the billed District Council Tax Band D. One Parish Council
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
precept has still to be finalised and there may be minor changes between this report and
the final recommendation to Full Council in February 2011 as part of the budget and
council tax report.
7.
Reserves
7.1
The current position on the General and Earmarked Reserves is attached at Appendix E.
The statement provides the latest forecast for use of reserves in the current financial
year along with the budgeted movements in 2011/12 and proposed movements in the
following three financial years.
7.2
There are three main reasons for holding reserves:
7.2.1 To provide a working balance to help cushion the impact of uneven cash flows
and avoid unnecessary temporary borrowing – this forms part of the General Fund
Reserve.
7.2.2 A contingency to cushion the impact of unexpected events or emergencies – this
also forms part of the General Fund Reserve.
7.2.3 As a means of building up funds, referred to as earmarked reserves, to meet
known or predicted requirements. Earmarked reserves are accounted for separately but
remain legally part of the General Fund.
7.3
As part of the budget process the opportunity has been taken to critically review all
reserves along with the current commitments against them. This has resulted in the
release of a number of previously earmarked reserves of totaling £829,477.
7.4
Of the £829,477, £700,000 has been allocated to the general reserve to be used as an
available balance to help cushion the impact of the grant cuts facing the authority over
the next four years. The balance of £129,477 has been transferred to the restructuring
reserve.
7.5
A number of the savings proposals that have been put forward for approval as part of the
budget will require some one-off costs to be funded from the restructuring reserve in the
year. Further work on a number of the savings proposals is required and therefore the
exact costs that will need to be funded from this reserve have not yet been quantified.
Business cases will still need to be approved and signed off in the usual way by the
designated group consisting of CMT, the Leader and the Portfolio Holder with
responsibility for Organisational Development. Delegated Authority was approved in
September 2010 for monies to be released from the restructuring reserve as part of
approving the business case, this will continue as business cases are submitted for
approval and funds remain in the relevant reserve.
7.6
It is important to remember that using reserves in this way represents one off funding
only and is not a long term solution to produced a balanced and sustainable budget. It
only defers the problem to future years. In addition reducing the available balances for
investments has an impact on the level of investment income earned as they are not
available to earn future investment income.
7.7
After taking account of the planned movements to and from reserves, this will give a
forecast balance on the general reserve at 1 April 2012 of £1,465,892. After taking
account of planned use over the next four financial years this gives a revised balance of
£965,892.
Cabinet
14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
7.8
The level of the reserves and their use will continue to be monitored and a
comprehensive statement about the adequacy of the reserves will be included within the
Chief Financial Officer’s report which forms part of the annual Council Tax and Budget
report to Full Council in February.
8.
Capital
8.1
This section of the report provides details of the 2011/12 capital programme for
approval. Regular updates on the current capital programme are provided as part of the
budget monitoring reports. This report shows the updated capital programme along with
details of new capital projects being recommended for approval as part of the 2011/12
programme of capital works.
Current Capital Schemes
8.2
The current capital programme was last updated within the Revised Budget Report which
was approved by Council in November 2010. At that time account was taken of any
known slippage between financial years. The programme now reported and included at
Appendix F incorporates slippage previously identified and also the following project
amendments that have occurred since that approval, namely:
8.3
General Fund – Non Housing
a) E Payments – Slippage of £33,700 has been requested due to delays in
implementation following the Customer Services Strategy Review.
b) Playgrounds – Due to other work priorities it has not been possible to progress the
Sadlers Wood scheme in 2010/11, and as such the full budget of £31,900 is
requested for slippage into the new financial year.
c) Red Lion Toilets – Due to delays in planning it has not been possible to issue tender
documents in relation to this scheme. The remaining budget of £32,000 is therefore
requested for slippage into 2011/12.
d) Car Park Ticket Machines – £16,000 of the remaining budget is requested for
slippage into 2011/12, in order to purchase ticket machines in the new financial year.
There is a separate capital project bid included within this report, for the purchase of
22 further machines and it is anticipated that the remaining budget will be used
alongside the new bid sum, for the purchase of these replacement machines.
e) Car Park Environmental Improvements – Works in relation to this scheme have been
partially undertaken, but the scheme is currently on hold following the contractor
going into administration. Slippage of £44,000 is therefore requested to allow this
scheme to be completed in 2011/12.
f)
Remote Access – Slippage of £9,000 has been requested following a slight delay in
implementation of the project.
g) Street Signs – Issues surrounding the restructure in Environmental Health, together
with staff changes has resulted in a significant delay in the delivery of this project.
As such £42,000 has been requested for slippage into 2011/12 to allow the
remaining signs to be purchased and installed.
h) Waste Management and Environmental Health IT System – Whilst some of the
remaining elements of the original project have been progressed recently, it is still
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14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
anticipated that not all of the works will be completed in this financial year. A total of
£26,000 has therefore been requested to be slipped into 2011/12.
8.4
i)
North Norfolk Enterprise Hub and Innovation Centre – This scheme has been on
hold in 2010/11 following the withdrawal of other external funding. The remaining
budget balance of £39,705 has been requested for slippage into the new financial
year.
j)
Cromer Pier - Tenders for this scheme are unlikely to be approved before March
2011, and as such the £619,000 budget is requested to be slipped into 2011/12,
when the major works will be undertaken.
General Fund Housing
a) Housing – Private Sector Renewal Grants – This grant programme will be unlikely to
spend more than £60,000 during the financial year, and as a result the balance of
£814,355 is to be slipped into the 2011/12 financial year. This sum, together with
£345,501 of slippage identified from 2009/10, is subsequently requested for virement
to other Housing Schemes in 2011/12; £500,000 to Disabled Facilities Grants and
£659,856 to Housing Associations.
b) Housing - Disabled Facilities Grants – Due to an anticipated increase in the
expenditure required for Disabled Facilities Grants, a virement of £500,000 has been
requested from Private Sector Renewal Grants, to occur in the 2011/12 financial
year.
c) Housing – Housing Associations - Following approval of the revised budget two
schemes identified as commencing in 2010/11 have been subject to delay. As such,
a total of £325,400 has been requested for slippage from the current financial year
into 2011/12. In addition to this a further virement of £659,856 has been requested
from Private Sector Renewal Grants in the 2011/12 budget, to fund other schemes
which already have planning permission and are ready to start on site.
8.5
Coast Management Capital Programme
a)
The Coast Management Capital Programme, updated to reflect the latest approvals
is included within the overall Capital Programme at Appendix F. There have been
no further amendments since the Revised Capital Budget report for 2010/11. The
Coast Protection element of the Capital Programme is fully funded from external
grant. Other schemes will be incorporated into this section of the capital programme
only as and when external grant funding is identified.
b)
The Pathfinder Grant has been fully allocated against projects. As Members will be
aware the grant was paid as revenue and capital, however, there is greater demand
on revenue projects. The grant is not ring fenced, i.e. it can be used for funding any
expenditure, the only restrictions are that the capital grant must be used on capital
expenditure. This report is seeking approval to switch capital grant of £200,000 to
fund projects within the overall capital programme that would have previously been
funded from the capital projects reserve which is a funding resource that is available
for use on capital or revenue expenditure. This will ensure that the Pathfinder
revenue can be fully funded to achieve the aims and objectives of the project.
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14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
New Capital Schemes
8.6
In addition to these amendments, approval is also being sought for nine further capital
projects, as identified in Appendix G.
8.7
The first scheme relates to the provision of Electricity at Holt Country Park. The
anticipated budget requirement of £13,000 would be used to purchase a generator and
water heaters at the park, to meet minimum workplace and customer Health and Safety
Standards.
8.8
A second computer based scheme relates to the procurement of an upgrade to the
current Civica System, which is core to the delivery of the Revenues and Benefits
Service. A budget requirement of £240,000 has been identified for this project, although
this will be dependent upon the outcome of the shared services review.
8.9
Seven further projects have been informed by the Asset Management Plan.
projects are:-
These
a) Cromer Pier and West Promenade Refurbishment Project (£200,000) – This scheme
relates to the major refurbishment of the promenade and the public toilets, including
additional rental units / facilities to regenerate the area.
b) Sheringham East Promenade Public Conveniences (£85,000) – At the Cabinet meeting
on the 10 January 2011, a capital project for the construction of disability discrimination
legislation compliant public conveniences on the East Promenade at Sheringham, was
supported.
c) North Walsham Regeneration Scheme (£70,000) – Following on from the Leadership of
Place project, and the joint County and District Council Asset Review, this scheme
identifies funding to pump-prime development in North Walsham, thereby providing a
more coordinated public sector service provision in the area.
d) Car Park Improvements – General Works, Resurfacing and Signage (£52,000) – There
is a need to invest in car parks as a major source of funding to the Council, and this
scheme looks at undertaking improvements to a range of car parks to bring them up to
the Disability Discrimination Act and Car Parking Orders compliance levels.
e) Provision of Car Park Ticket Machines (£103,000) – As part of the Capital Programme
for 2009/10, approval was given to a scheme to replace a number of car park ticket
machines. This bid seeks to replace the machines in the remaining 22 locations.
f)
Fakenham Community Centre (£45,000) - This funding is identified as contributing
towards providing solutions to the provision of community and resource use within the
town, following on from the County and District’s intention to review options for the future
of the site on which the Fakenham Community and Fakenham Connect buildings are
located.
g) Worstead Churchyard Wall (£15,000) – As a closed churchyard the District Council has
a responsibility for the upkeep and maintenance of this structure. The existing
churchyard wall is in a dilapidated state and requires a partial rebuild in order to ensure
that it does not collapse onto the pavement or roadway.
8.10
The total of the estimated project costs associated with these capital bids is £823,000, to
be profiled as follows; £618,000 in 2011/12, £105,000 in 2012/13 and £100,000 in
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14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
2013/14. It is anticipated that each of the bids will be funded from reserved capital
receipts.
8.11
The Asset Management Plan for 2010 is included elsewhere on this agenda and provides
details of the Council’s assets and the programme of future improvements. There is a
Leadership of Place project currently being undertaken in North Walsham which is a
review of the public sector asset base in the town. The following capital funding is
allocated to either current or future projects within North Walsham:
Project
Car Park Improvements
Public Convenience Improvements
Future Project Funding (Regeneration Schemes)
North Norfolk Enterprise and Innovation
Total
8.12
£
20,000
69,000
70,000
39,705
198,705
Once approval for the new capital bids have been received the capital programme will be
amended to reflect these changes. The certainty of new capital receipts will be monitored
as part of the ongoing budget monitoring process and where applicable recommendations
will be made to amend the capital programme and it’s financing.
Capital Programme Funding
8.13
There are a number of sources of funding available to fund capital expenditure. The
following outlines those which are available to the Council:a) External Contributions or Grants – e.g. the capital element of the Housing and Planning
Delivery Grant, Department of the Environment, Food and Rural Affairs and other third
party contributions.
b) Reserves – Available capital and revenue reserves can be used for funding capital
expenditure, e.g. Capital Projects Reserve. Following the LSVT in 2006, the Council
receives a share of the Victory Housing Trust VAT shelter receipts. These receipts are
currently going into the Capital Projects Reserve, and may therefore be used to fund
capital expenditure.
c) Capital Receipts – Capital receipts are generated from asset disposals and can only be
used to fund capital expenditure or to repay debt. (Use for the repayment of debt is not
applicable at the moment as the Council is currently debt free.) Following the LSVT in
2006 the Council receives a share of the right to buy capital receipts from Victory
Housing Trust (Preserved Right to Buy).
d) Borrowing – Under the Prudential Framework the Council is able to fund expenditure
from borrowing provided that they can demonstrate affordability and need. Whilst the
Council maintains a level of capital receipts the need to borrow cannot be demonstrated.
The Council does not therefore intend to enter into any prudential borrowing; this has
been reflected in the Treasury Strategy and Prudential Indicators for 2011/12 which are
included elsewhere on this Agenda.
9.
2012/13 to 2014/15 Future Projections
9.1
As previously mentioned the two year grant settlement has been announced covering
2011/12 and 2012/13. Whilst this report is only seeking approval of the 2011/12 budget
the opportunity has been taken to prepare detailed projections for the following three
years 2012/13 to 2014/15. These are indicative budgets only at this stage but are very
important in highlighting the future funding gaps facing the authority. A high level
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14 February 2011
Overview & Scrutiny
18 February 2011
Full Council
23 February 2011
summary of these two years is included as part of Appendix A. This shows a savings
requirement of £908,342 in 2012/13, increasing to £941,341 in 2013/14 and to
£1,658,597 in 2014/15.
9.2
It is essential that budget planning for the 2012/13 financial year commences at an early
stage following the election of the new Council in May 2011 in order that a sustainable
budget can be set for future financial years.
10.
Implications
10.1
The overall budget for 2011/12 is balanced and will be recommended to Full Council for
approval on 23 February 2011. The risks to the Council are highlighted below.
10.2
The current economic climate serves to increase the risks to the Council in setting out its
annual forecast for the forward year. For example the direct impact it has on the level of
investment income and also a number of demand led services for example planning and
car parking. Members’ attention is also drawn to the following risk areas:
10.3
Savings and additional income – The budget for the forward year contains estimates for
a number of savings accepted by Cabinet and CMT. The delivery of these savings is
vital to the overall budget position. In reviewing the level of savings to be achieved
attention has been given to the realistic time frame to set the arrangements in place
especially where these concern staffing reductions. Where applicable some of the
implementation dates reflect a part year reverting to a full year saving from 2012/13. It is
also important to highlight that some savings are still subject to a consultation process
with staff. It is critical that the delivery of these savings is closely monitored by CMT and
Cabinet as part of the ongoing budget process for 2011/12.
10.4
Planning Income – The budget assumes additional income from planning applications
fees from an increase in volume and an assumed fee increase from April 2011. The
increase in volume has been informed by the volume in the current year, the fee
increase is still subject to approval as outlined at 5.2.
10.5
New Homes Bonus – The budget assumes £350,000 will be received from the new
homes bonus scheme in 2011/12, again the scheme is yet to be finalized and therefore
this does present a financial risk that the level of income may not be achieved as
budgeted.
10.6
Use of reserves – The budget assumes the one off use of reserves in the year totaling
£200,000 in 2011/12 but the forward projections do assume further use totaling
£500,000 over the following three years. This does mean that once used the balance in
not available to be drawn upon in the future. As outlined at 7.3 a number of previously
earmarked reserves have been released to the general reserve, this does include the
concessionary fares reserve. Whilst the responsibility for administering the scheme will
transfer to the County from 1 April 2011, any outstanding costs for the scheme for
example as a result of appeals that relate to the period upto 31 March 2011 will remain
payable by the Districts.