Report to the Leader of the County Council and Cabinet Members for
Highways and Transport, Public Protection and Waste, and Environment,
Planning and Cultural Services
Report submitted by: Interim Executive Director for Environment
Date: 17, 18 & 19th February 2014
Part I - Item No. 1
Electoral Divisions affected:
All
Environment Directorate Revenue Budget 2014/15
(Appendices 'A' & 'B' refer)
Contact for further information:
David Ainscough 01772 534745
dave.ainscough@lancashire.gov.uk
Executive Summary
At its meeting on 6 February 2014 the County Council's Cabinet issued directorates
with recommended cash limits for 2014/15 and agreed the measures necessary to
set a budget within the cash limits.
Subject to approval of the revenue budget 2014/15 by Full Council on 20 February
2014, the Cabinet Members are recommended to approve a proposed cash limit
for each DFM scheme within the overall Directorate budget for 2014/15. At the
cabinet meeting on 6 February 2014 a cash limit for 2014/15 for the Directorate
was set at £180.318m. Details of the cash limit, and the allocation over individual
Devolved Financial Management (DFM) schemes, are set out in this report.
Recommendation
The Leader of the County Council and the Environment Directorate's Cabinet
Members are asked to:
1) Approve the allocation of resources for each DFM scheme within the overall
Directorate budget for 2014/15, as shown in Appendix 'A', and
2) Note the risks that exist within the Environment Directorate's budget for
2014/15 and the measures being taken to manage those risks.
Background and Advice
1. Directorate budget position in 2013/14
The Environment Directorate is presently predicting a significant underspend of
over £4m in 2013/14. The largest contribution towards this underspend comes
from the Waste budget (£2.5m), which largely comprises one-off savings that will
not be repeated in future years. The budget set out in this report does however
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assume that ongoing savings of £1.4m can be achieved in the Waste budget in
2014/15 and future years.
Similarly significant underspends are arising in the current year on
Concessionary Travel and subsidised bus services of which savings of £1.705m
and £1.827m respectively have been assumed in setting the 2014/15 budget.
2. 2014/15 budget process
The budget process for 2014/15 has been conducted in an extremely challenging
environment that sees the Council face a requirement to deliver savings of £76m
in 2014/15 rising to a total saving of £300m by 2017/18.
Consequently the Cabinet has continually reviewed the match between the
Council's expenditure and resource forecasts and agreed a series of savings
during the year with the aim of maintaining a balanced budget position. As
reported to the Cabinet on 9 January 2014 and 6 February 2014, while a range of
uncertainties remain on the resource side it is possible to recommend cash limits
for services.
The Directorate's proposals to meet the cash limit recommended by Cabinet are
set out below and take account of the following factors specific to the Directorate:



The budget assumes that the County Council will administer the Bus
Services Operator Grant in 2014/15, which formerly was given directly to
the bus operators by the Government. This has been assumed to be self
financing with the grant offsetting exactly the amount of money the County
Council expects to expend. However this may not be the case and needs
to be kept under review as we progress through the year.
The waste budget has been formulated on a continuation of service basis
with savings being achieved through various initiatives designed to reduce
costs. However, the waste budget is particularly volatile at the moment
and so individual budgets may have to be amended as we progress
through the year to address issues as they arise. Even so the intention
would be to remain within the overall waste budget as set out in this report.
The Directorate's revenue budget has been increased to take account of
the running costs of Preston Bus Station as a consequence of the transfer
of ownership to the County Council.
3. Directorate budget 2014/15
Following the process and decisions taken by Cabinet set out above, the
directorate cash limit recommended by Cabinet totals £180.318m; the allocation
across DFM budgets is set out in Appendix 'A'.
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The build up of the cash total is set out in the table below:
2014/15
£m
Adjusted base
2014/15
£m
185.690
Price changes
Which includes the following:
Pay Increase (2%)
Pension Increase
Landfill – Gate Fee and Landfill Tax
Waste PFI
HWRC SITA Management Fee
Energy Price/Transmission Increases
Bus Operator Payments
Concessionary Travel
Highway/Severe Weather
Other Minor Price Increases
0.574
0.257
2.051
1.116
0.261
0.303
0.787
1.060
0.615
0.090
7.114
0.034
0.063
0.097
Volume
Which includes the following major pressures:
Street Lighting Energy
Highway Maintenance
Forecast base
192.901
Efficiency Savings and Cost Reductions agreed by the
Cabinet:
10% Efficiency Savings
-5.156
Reduction In Costs
Impact of Living Wage
Review of demand level on concessionary travel
Review of employers pension contribution
Pay Increase (1% rather than 2%)
0.106
-0.645
-2.082
-0.288
-2.909
Reducing The Costs of Being in Business
Printing/Postage/Council Infrastructure
Business Mileage
Energy Management (Price)
Management Savings
-0.394
-0.153
-0.569
-0.777
-1.893
Policy Options
Street Lighting Energy (Consumption)
Highway Infrastructure Sponsorship
Members priority contingency
Targeted Parking Enforcement
Environment & Community Project/Forest of Bowland
-0.170
-0.050
-0.220
-0.050
-0.118
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Public Rights of Way & Countryside service reductions
Winter Service
Sustainable Drainage Consenting & Enforcement
Withdrawal of adult cycle training
Safer Travel Unit Training
Business Travel Planning
Speed Management Provision
Operational learning & development within highways
service
New Traffic systems maintenance contract
Transfer of Parking services front line call handling into
Parking services
District/Parish Public Realm Agreements – Highways –
Green space maintenance
Bus shelter maintenance
Vehicles and associated checks carried out on
subsidised services
Review of bus subsidies
Enhancement of community transport services
Lancashire Permit Scheme
Waste – Third party recycling credits
-0.094
-0.447
-0.150
-0.014
-0.018
-0.003
-0.040
-0.025
-0.100
-0.075
-0.144
-0.025
-0.025
-0.647
+0.500
-0.200
-0.280
Additional Costs
Preston Bus Station
Reductions in Cost Base
Reduce Street Lighting Energy Budget to match current
spending
Transfer of repair and maintenance budgets to
Corporate
Provisional cash limit
-2.395
0.190
-0.270
-0.150
-0.420
180.318
4. Allocation of Resources for 2014/15
It is proposed that the directorate cash limit recommended by Cabinet of
£180.318m for 2014/15 is allocated across DFM budgets as set out in Appendix
'A'. This revenue budget position will form part of the Cabinet’s proposals to
County Council on 20 February 2014.
The Directorate operates a Commissioning approach to budget setting and
allocates its budget on a district footprint. The Directorate uses pre-determined
formulae to do this. The formulae proposed for 2014/15 is presently being
considered by officers and will be reported for approval separately.
5. Fees and Charges
The budget assumes increases in the Directorate's fees and charges as set out in
Appendix 'B'.
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Consultations
There has been a two stage budget consultation process for the 2013/14 budget:

Stage 1 consulted on service priorities with:
*
*
*
*

The Life in Lancashire Panel
3 Tier Forums
The 50Plus Assembly
The general public
Stage 2, conducted after the Cabinet's meeting on 9th January 2014 which
considered priority areas for investment and protection
*
*
*
*
*
*
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District and Unitary Councils
The Police and Crime Commissioner for Lancashire
Lancashire Constabulary
Lancashire Fire and Rescue Service
Trade Unions
The Youth Council and
Business representatives
Stage 2 consultations responses were reported to the Cabinet on 6th February
2014.
Implications:
This item has the following implications, as indicated:
Risk management
There are a number of financial risks in this budget which need to be considered and
managed as the year progresses. The main ones are listed below:




Waste – The waste budget remains volatile. In particular, the amount of waste
going to landfill has a significant impact on the Directorate's financial position.
Also, the contractual arrangements through the waste PFI is also volatile and
will require budget adjustments and close monitoring throughout the year;
Highway Maintenance – The poor weather we have experienced over recent
years is placing increasing pressure on our highway maintenance budgets,
particularly drainage budgets and severe weather response. We will pay close
attention to these budgets during the course of the financial year and amend
our programmes of activity in response to any significant overspending arising
in these areas.
There remains a key pressure on the gritting budget which, despite a mild
start to the 2013/14 winter, is still showing signs of overspending. Gritting will
not stop even if the budget has been fully spent and so, in such situations, will
create a pressure on the rest of the budget.
The extent of the savings required by the Directorate in 2014/15 to stay within
the cash total will need to be closely managed to ensure delivery and our
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

ability to remain within budget. There are a number of savings which still
need to be fully worked up and these will be the focus of significant activity
and close monitoring as the year progresses.
The delivery of some of the savings, particularly the proposed introduction of
a permit scheme, relies on external organisations undertaking some activity
and as such is not fully in the County Council's control.
Despite the overall underspend there are a number of budget pressures in
2013/14 which will need to be addressed. In particular pressures on salaries
caused by the commitment to pay increments in April, the additional costs of
the ongoing switch team and the additional management reductions required
all need to be addressed, as will the shortfall in the value of recharges to
capital, which has been an ongoing problem for a number of years.
The budget assumes that Landfill Tax will be fixed after 2014/15. Therefore, any
future landfill tax increases beyond 2014/15 will create further financial pressures
which will need to be addressed as we prepare the wider budget strategy for
2015/16 and beyond.
List of Background Papers
Paper
Date
Contact/Directorate/Tel
Revenue budget working
papers
January 2014
D Ainscough, Treasurer's
Directorate, 01772 534745
Consultation Responses:
3rd Party Recycling Credits
January 2014
School's Forum Response
Reason for inclusion in Part II, if appropriate
N/A.
Sharon Montgomerie
Environment Directorate,
01772 530544