Knowsley Council Inquiry Budget

Agenda Item 10 METROPOLITAN BOROUGH OF KNOWSLEY To:

The Chairman and Members of the Cabinet

Meeting:

11 February 2009

Wards Affected:

All

Portfolio Areas:

All

Non-Key Decision

REPORT OF THE BOROUGH TREASURER, THE CHIEF EXECUTIVE AND EXECUTIVE DIRECTORS

2009/10 REVENUE BUDGET

1.

PURPOSE OF THE REPORT On 4 March 2009, the Council will meet to consider its 2009/10 budget and Council Tax. This report sets out budget proposals from Portfolio Holders and additional information, which the Cabinet can use to inform its final 2009/10 revenue budget proposals to the Council.

2.

RECOMMENDATIONS Members of the Cabinet are recommended to make proposals to the Council on the 2009/10 revenue budget based upon the information set out in this report and the accompanying reports on the agenda.

3.

BACKGROUND TO THE 2009/10 REVENUE BUDGET

3.1

In finalising its proposals for the Council’s 2009/10 revenue budget, the Cabinet is asked to consider the proposals set out in this report, and also the wider context of the following areas which are each the subject of separate reports elsewhere on this agenda:•

the proposed Corporate Plan for 2009/10;

•

the Medium-Term Financial Plan;

•

proposals for the 2009/10 Capital Programme; and,

•

the latest forecasts of the 2008/09 budget position.

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3.2

3.3

3.4

This report illustrates how a set of balanced budget proposals for 2009/10 could be developed based on the latest information on the following revenue budget items:•

Portfolio Local Service Agreement budget proposals;

•

Options for efficiency, savings and fees and charges identified by Scrutiny Committees and Portfolio Holders;

•

Recommendations from the Service Review Programme;

•

Legislative changes, i.e. where new statutory responsibilities have been placed on the Council;

•

Statutory, demand-led and demographic changes which impact upon the level of service which the Council needs to provide;

•

Assumptions and known increases regarding levies and inflation; and,

•

Confirmation of the Local Government Finance Settlement.

Where the report discusses budget pressures, efficiencies and funding options, these will be divided into two categories:(a)

‘permanent’ items – which have an ongoing impact in 2009/10 and future years; and,

(b)

‘temporary’ items - which have a short-term impact.

Links to Corporate Objectives and Service Performance

3.4.1 In line with the Council’s policy of linking performance to financial resources through Local Service Agreements, the Cabinet’s budget proposals should be considered in conjunction with the Council’s 2009/10 Corporate Plan, which is discussed elsewhere on this agenda. 3.4.2 The resources available to each Portfolio, both capital and revenue, will be set out within Local Service Agreements, which demonstrate the relationship between the use of resources and performance. Subject to the Council’s approval of the 2009/10 budget proposals, these Local Service Agreements will be presented for discussion and approval by Portfolio Holders and the Leader of the Council early in 2009/10.

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3.5

Budget Consultation Process

3.5.1 Consultation has taken place with the following key stakeholders:•

Scrutiny Committees;

•

All individual Members of the Council;

•

Parish and Town Councils;

•

The Chamber of Commerce; and,

•

Trade Unions.

3.5.2 The outcomes of this consultation are reflected in this report. Any further formal representations received before the Cabinet considers this report will be presented at the meeting.

4.

2009/10 PORTFOLIO BUDGET PROPOSALS

4.1

Portfolio Budget Reports Individual Portfolio budget proposals are detailed in the specific reports, which were considered by Portfolio Holders during December 2008. Full details of all Portfolio budgets are available on request from the Borough Treasurer, and the key issues are summarised in this report. Since the Portfolio reports were prepared in December 2008, a number of updates have been made to the estimates, which were available at that time. Where appropriate, this updated information is included in the figures below, having been discussed with the relevant Portfolio Holder.

4.2

Indicative Cash Limits

4.2.1 In developing their budgets, Portfolio Holders have proposed indicative cash limits, which are required to fund approved levels of service delivery. These indicative cash limits are based upon the approved 2008/09 base cash limits, and include an adjustment of £0.350m to the base cash limit for the Regeneration, Economy and Skills Portfolio to address the ongoing impact of the current economic slowdown (detailed in the 2008/09 Budget Monitoring Report elsewhere on this agenda). 4.2.2 Portfolio Holders have then considered adjustments to their base cash limits to reflect the following items:(a)

Service Reviews The 2009/10 impact on Portfolios of savings and efficiencies approved as part of the Council’s Service Review Programme is detailed in Appendix A. As a result of these reviews, Portfolio

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Holders have requested that the Cabinet should endorse permanent cash limit reductions of £3.624m in total (as detailed in the table below). This total includes a number of cross-Council Service Reviews where savings targets have been identified but where the impact on individual Portfolios has yet to be determined. These savings targets are not reflected in individual Portfolio cash limits at this stage, and will be allocated during 2009/10:Portfolio

(b)

Total £m

Children's Services Community Safety and Social Inclusion Corporate and Customer Services Finance and Information Technology Health and Social Care Leader Leisure, Community and Culture Neighbourhood Delivery Regeneration, Economy and Skills Savings to be allocated to Portfolios

0.000 0.000 (0.125) (0.125) (0.709) 0.000 (0.173) (0.042) (1.200) (1.250)

Total

(3.624)

Scrutiny Committees Budget Consultation The outcome of the Scrutiny Committees budget consultation exercise was that options for achieving budget reductions of £1.288m through service efficiencies, savings and new fees and charges were identified for consideration by Portfolio Holders. A further £0.969m of options were not approved. The items identified by Scrutiny Committees are summarised at Appendix B. It should be noted that many of the options rejected by the Scrutiny Committees have nevertheless been included in the potential savings options discussed in section 10.2 below to allow re-assessment in the light of the investment requests. Full details of each option have been considered by the relevant Portfolio Holders and the information is available on request from the Borough Treasurer. Portfolio Holders now request that the Cabinet endorses these options for implementation in 2009/10 and agrees the associated permanent cash limit reductions of £1.288m (as summarised in the table below):-

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Portfolio

(c)

Total £m

Children's Services Corporate and Customer Services Finance and Information Technology Health and Social Care Leader Leisure, Community and Culture Neighbourhood Delivery Regeneration, Economy and Skills

0.121 0.231 0.323 0.000 0.035 0.050 0.040 0.488

Total

1.288

Value for Knowsley In addition to the efficiencies identified by Scrutiny Committees, a further initiative has been developed across the Council in consultation with the Corporate Performance Scrutiny Committee. The ‘Value for Knowsley’ initiative will help to consolidate a range of efficiencies, best practice and new ways of working to ensure that the best possible value for money is being achieved from the resources the Council has at its disposal. Challenging targets have been set for each Portfolio, and a range of potential initiatives has been identified which Portfolios can undertake in 2009/10 to meet these targets. In a number of areas, the detail for these initiatives is still to be determined, but the overall range of initiatives is considered sufficient to ensure that an overall target of £0.756m can be set. Portfolio Holders therefore request that Portfolio cash limits be adjusted as follows:Portfolio Value for Knowsley Targets

Total £m

Children's Services Community Safety and Social Inclusion Corporate and Customer Services Finance and Information Technology Health and Social Care Leader Leisure, Community and Culture Neighbourhood Delivery Regeneration, Economy and Skills

(0.138) (0.007) (0.120) (0.050) (0.176) (0.049) 0.000 (0.093) (0.123)

Total

(0.756)

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4.2.3 Based on the proposals set out above, Portfolio Holders have proposed indicative cash limits required to deliver currently approved service levels and which also incorporate the outcomes of the Service Review Programme and the Scrutiny Committee consultation. The resultant indicative cash limits are shown in the table below:Portfolio

Base Cash Limit

Scrutiny Committee Options

Value for Knowsley

Service Reviews

£m

£m

£m

£m

Indicative Cash Limit (Approved Service Levels) £m

Children's Services

10.836

(0.121)

(0.138)

0.000

10.577

Community Safety and Social Inclusion

0.978

0.000

(0.007)

0.000

0.971

Corporate and Customer Services

10.150

(0.231)

(0.120)

(0.125)

9.674

Finance and Information Technology

10.367

(0.323)

(0.050)

(0.125)

9.869

Health and Social Care

57.991

0.000

(0.176)

(0.709)

57.106

5.942

(0.035)

(0.049)

0.000

5.858

Leisure, Community and Culture

11.499

(0.050)

0.000

(0.173)

11.276

Neighbourhood Delivery

10.229

(0.040)

(0.093)

(0.042)

10.054

Regeneration, Economy and Skills

15.137

(0.488)

(0.123)

(1.200)

13.326

(1.250)

(1.250)

Leader

Council-wide unallocated Service Review targets (*) Total

*

133.129

(1.288)

(0.756)

(3.624)

127.461

Further adjustments to Portfolio cash limits will be made during 2009/10 to reflect targets for the Council-wide service efficiencies and savings.

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4.2.4 It should be noted that Portfolios are currently forecasting an overall 2008/09 cash limit surplus of £0.151m (discussed in the 2008/09 Budget Monitoring report elsewhere on this agenda). Subject to the Cabinet’s decisions on the 2008/09 outturn position, there may be a requirement to make further adjustments to the 2009/10 cash limits to reflect any ongoing impact of this position.

5.

NON-CASH LIMIT BUDGETS AND LEVIES

5.1

Non-Cash Limit Budgets

5.1.1 It should be noted that Portfolios are currently forecasting an overall 2008/09 non-cash limit surplus of £0.461m (discussed in the 2008/09 Budget Monitoring report elsewhere on this agenda). In order to maintain existing levels of service, non-cash limit budgets for 2009/10 would total £11.483m. These budgets include the costs of financing capital expenditure (such as interest payments and other debt charges). In 2009/10, the proposed budget for net capital financing costs is £8.091m, although it should be noted that this estimate is based on current interest rate forecasts and is therefore subject to the highly volatile financial and economic conditions, which are currently being experienced. 5.1.2 Any future Council decisions on funding unsupported borrowing through the prudential borrowing system would also affect these costs. Current estimates suggest that every £1.000m of additional borrowing would cost the Council around £0.068m per annum. 5.1.3 There are a number of other non-cash limit budgets for expenditure over which Portfolios have little or no management control and which are therefore managed outside Portfolios. The total budget for these items in 2009/10 is £3.392m, including £2.467m for ongoing pension costs and £0.294m for external audit and assessment fees. 5.2

Levies A total of £20.814m is estimated for levies from third party bodies in 2009/10. These estimates are based on the latest available information and may be subject to change when official notification from the levying bodies is received. The main increase is the Merseyside Waste Disposal Authority Levy. The estimate is based on a forecast increase of 7% (£0.508m) which takes the annual levy to £7.743m. This increase reflects the positive impact of Knowsley’s recycling initiatives and has meant that the Council has a relatively lower share of the levy increase in 2009/10 – the average increase across Merseyside is likely to be 12%. This ‘above inflation’ increase was expected and is due to increasing rates of landfill tax and the expected costs of new waste

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processing facilities on Merseyside. increase by 4%. 5.3

Other levies are forecast to

Revenue Budgets funded from Area Based Grant and Specific Grant Allocations

5.3.1 The Government’s Area Based Grant to the Council is not ring-fenced to any particular service. The latest information on the grant amounts available in 2009/10 is detailed in Appendix C to this report. 5.3.2 For 2009/10, it is proposed that Cabinet should agree to ‘passport’ the Area Based Grant to the relevant Portfolios for currently approved levels of service based on previous year allocations. Members are asked to note that a review of the passporting arrangements will be undertaken during 2009/10 to ensure that the allocation of Area Based Grant remains consistent with Council priorities. It should be noted that the 2010/11 allocation is indicative and formal approval is due to be confirmed by December 2009. As part of this review, the ability to reallocate a proportion of the funding to other Council priorities will be investigated. Portfolios will also receive a number of specific grants, and the information known to date is again shown in Appendix C to this report. 5.3.3 Subject to the Cabinet’s approval of this approach, the appropriate expenditure and income figures will be reflected in Portfolio budgets for 2009/10. Performance against these budgets will be reported to Portfolio Holders as part of the monthly budget monitoring process. 5.4

Working Neighbourhoods Fund

5.4.1 Three-year figures were announced in December 2007 showing Knowsley receiving a total of £31.554m from the Working Neighbourhoods Fund. In addition, NHS Knowsley has contributed £4m and a further £0.562m has been received through the Local Authority Business Growth Initiative. This has resulted in a total resource of £36.116m over three years from 2008/09 to 2010/11. 5.4.2 The Knowsley Partnership Executive Team is developing proposals to utilise this funding in addressing the Borough’s Sustainable Community Strategy priorities. The funds are targeted at one-off employment, training and worklessness initiatives and are not intended for general use in balancing the Council’s budget. Proposals on allocations will continue to be reported to the Cabinet for decision during the year. In total, £20.836m has been commissioned to date, and this leaves available resources of £15.280m to meet key priorities over the threeyear period. Further details are contained as part of the Medium-Term Financial Plan, which is discussed in a report elsewhere on this agenda.

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6.

CONTINGENCY BUDGETS BUDGET PROPOSALS

6.1

Each year, the Council sets aside contingency budgets for a number of expected unavoidable in-year budget pressures, which will need to be funded if the Council is to maintain approved service levels. These budgets are held centrally and transferred to Portfolios during the year as cash limit increases, subject to the financial impact of each item being clarified. For 2009/10, it is proposed that such contingency budgets should include the following items:•

NOT

INCLUDED

IN

PORTFOLIO

Pay, Contract and Income Inflation (£5.794m) This budget includes resources to address the impact of the annual local government pay award. National negotiations are currently under way relating to both the 2008/09 and the 2009/10 award. The impact of the 2008/09 award is discussed in the 2008/09 Budget Monitoring report elsewhere on this agenda, and it is proposed that the 2009/10 contingency budget should assume a 2.75% pay award in 2009/10. The budget also provides capacity to deal with increases in contract prices, which the Council is contractually obliged to pay to third parties and suppliers. The estimates also assume that Portfolios will increase existing fees and charges by an average of 3% in line with inflation as discussed in the report on Fees and Charges elsewhere on this agenda.

•

Specific Contingency Budgets (£1.307m) The specific contingency budgets include a number of individual items, which have been approved in previous years, but which remain held centrally pending allocation to individual cash limits. These include resources of £0.500m to address the ongoing affordability of the Building Schools for the Future programme, and £0.418m for other initiatives such as the management of the Council’s tree stock and implementation of Working Together legislation.

•

Contribution to General Balances (£0.290m) In line with the approach set out in the Council’s Medium-Term Financial Plan, the contingency also includes a budgeted contribution of £0.290m to the Council’s general balances to ensure that the Council has sufficient resources to maintain them at 3% of the Council’s overall revenue budget. Although a review of this policy will be undertaken during the year, it is felt prudent to

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maintain this policy during 2009/10 due to the following key factors:•

The 2009/10 budget is underpinned by significant levels of savings which have to be achieved during the year;

•

The current economic recession and financial market uncertainty; and,

•

The outcome and implications of major issues such as Job Evaluation/Single Status, which will be resolved during 2009/10.

6.2

Based on the items set out above, it is proposed that total contingency budgets of £7.391m should be included in the Cabinet’s 2009/10 budget proposals in order to protect and maintain currently approved levels of service.

7.

2009/10 PERMANENT RESOURCES

7.1

Central Government Formula Grant In January 2009, the Government confirmed the 2009/10 Local Government Finance Settlement. The total Formula Grant for Knowsley in 2009/10 will be £116.746m, which represents an increase of 1.75% on 2008/09. This is the second year of a three-year fixed grant settlement.

7.2

Council Tax Receipts The approach outlined in the Medium-Term Financial Plan assumes an annual 4% increase in Council Tax, which results in a forecast total for 2009/10 of £49.405m. Any Police and Fire and Civil Defence Authority precept increases are not contained within this illustrative increase. A 1% increase in Council Tax in Knowsley would generate approximately £0.475m of additional annual income from 2009/10. The Government retains capping powers for use where it feels Council Tax increases are “excessive”. Current indications suggest that the capping limit will be 5% for 2009/10.

8.

INDICATIVE BUDGET POSITION AT MAINTAINED SERVICE LEVELS

8.1

The financial issues outlined in sections 5 and 6 of the report above reflect the significant and unavoidable budget pressures which the Council must fund in order to maintain services at approved service levels. These pressures are significantly greater than the additional resources available to the Council from Central Government and current Council Tax receipts. The Portfolio Holders’ proposals in section 4 of the

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report above show how substantial resources can be released from cash limits to help offset these costs. 8.2

Assuming approval of the recommendations from Portfolio Holders set out in section 4 of the report above, the overall 2009/10 budget position is summarised below. The budget projections for maintaining services at currently approved service levels in 2009/10 result in a shortfall in resources of £0.998m:Revenue Budget Projections (at currently approved service levels) Indicative Portfolio Cash Limits Non-Cash Limit Budgets Levies Inflation and Unallocated Contingencies Sub-Total Forecast Resources (at 4% Council Tax Increase)

2009/10 £m 127.461 11.483 20.814 7.391 167.149 (166.151)

Shortfall

0.998

9.

ADDITIONAL PRESSURES ON THE COUNCIL’S BUDGET

9.1

In addition to the shortfall at maintained service levels, there are a number of further budget pressures arising from proposals to develop or extend service delivery in 2009/10 and also relating to services where existing funding sources are due to cease in 2009/10. The Cabinet is asked to consider allocating additional permanent and temporary resources to fund these pressures as detailed below. Full details of each of these pressures are available on request and can be accessed on the Council’s Intranet. A link will be circulated to Members prior to the Cabinet meeting, and copies of the information will be available at the meeting.

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9.2

Requests for Growth - Existing Policy Permanent resources are required to address the impact of implementing existing policy beyond approved service levels in order to meet increased levels of demand or legislative change in the following areas:Portfolio Health and Social Care Corporate and Customer Services Neighbourhood Delivery TOTAL

9.3

Requests for Growth - Existing Policy (Permanent Budget Increase) Older People’s Social Care - Increased Demand Child Protection Legal Costs - Increased Demand Dog Wardens Service - Legislative Change

2009/10 £m 0.900 0.063 0.026 0.989

Requests for Growth - Ongoing Funding for Pressures previously funded through Temporary Resources (‘Mainstreaming’) Portfolios are also seeking permanent funding for the following items where existing funding sources have ceased:Portfolio Community Safety and Social Inclusion

Requests for Growth - Ongoing Funding (Permanent Budget Increase) Community Support Officers

2009/10 £m 0.142

Community Safety and Social Inclusion

Prolific Offenders

0.090

Leader Regeneration, Economy and Skills

Environmental Pride Community Centre Caretakers

0.329 0.285

Neighbourhood Delivery TOTAL

Security Services

0.100 0.946

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9.4

Requests for Growth - New Policy Portfolios Holders have identified requirements for permanent resources for the following items that represent potential new policy commitments:Portfolio Regeneration, Economy and Skills Children’s Services Neighbourhood Delivery TOTAL

9.5

Requests for Growth - New Policy (Permanent Budget Increase) Street Lighting Private Finance Initiative Scheme Affordability Gap Targeted Youth Support Community Skips

2009/10 £m 1.000 0.353 0.049 1.402

If all of these requests are included within the Council’s approved budget for 2009/10, the overall shortfall in resources would rise from £0.998m to £4.335m as set out below:2009/10 Permanent Revenue Pressures

Shortfall at Approved Service Levels Requests for Growth:Extension of Existing Policy Replacement Funding (‘Mainstreaming’) New Policy Initiatives TOTAL PERMANENT SHORTFALL

2009/10 £m 0.998 0.989 0.946 1.402 4.335

9.5.1 The Cabinet is requested to consider the extent to which the above requests for additional permanent funding should be incorporated into its 2009/10 budget proposals to the Council. Potential options for funding the overall shortfall are set out in section 10 of this report. 9.5.2 If approved, the additional resources would be held centrally as contingency budgets and transferred to Portfolios as cash limit increases during 2009/10, i.e. once the financial impact of each proposal is clarified. If these requests are not included within the Council’s approved budget for 2009/10, then the new service investments should not be taken forward, and appropriate action will need to be taken to ensure that there is no financial pressure on the Council in 2009/10.

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9.6

Portfolio Requests for Additional Temporary Resources Portfolios are also seeking temporary additional resources (i.e. in 2009/10 only) to fund the one-off service investments shown in the table below. Full details of each of these pressures are available on request and can be accessed on the Council’s Intranet. A link to the Council’s Intranet will be circulated to Members prior to the Cabinet meeting, and copies of the information will be available at the meeting:-

2009/10 Temporary Revenue Pressures

2009/10 £m

Future Schooling in Knowsley and Building Schools for the Future Programme Development Costs Street Lighting Development Costs Waste Planning Inquiry Costs Family Intervention Services Development

1.500 0.366 0.150 0.300

TOTAL TEMPORARY PRESSURES

2.316

9.7

Again, potential options for funding these requests are set out in section 10 of this report. The Council also faces significant workforce development challenges in the future arising from the outcome of the ongoing Single Status negotiations and changes in future service delivery methods. The Council’s current aim is to ensure that the overall outcome is cost neutral.

9.8

If approved, these resources would be held centrally as contingency budgets and transferred to Portfolios as cash limit increases during 2009/10, i.e. once the financial impact of each proposal is clarified. If these requests are not approved, then the service developments should not be progressed in 2009/10.

9.9

In addition to these items, the 2009/10 Capital Programme report elsewhere on this agenda sets out proposals from Portfolio Holders for investment in capital schemes.

10.

POTENTIAL FUNDING FOR 2009/10 BUDGET PRESSURES

10.1

A number of potential options are available for funding the budget pressures detailed in section 9 of this report. These are set out below.

10.2

Additional Service Efficiencies and Service Savings

10.2.1 With the assistance of the Scrutiny Committees and taking into account the outcomes of Service Reviews, Portfolio Holders have already identified significant efficiencies and savings in their budget proposals of £5.668m (see section 4 above - Scrutiny Committee proposals £1.288m, Value for Knowsley £0.756m and Service Reviews £3.624m). However,

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due to the potential shortfall of resources, Portfolio Holders have also reconsidered the items which were not approved by Scrutiny Committees as well as identifying a range of further options for releasing permanent resources. 10.2.2 In total, the further savings options available to the Cabinet would release a potential £4.690m of permanent resources. A summary is set out in Appendix D. Full details of each of these pressures are available on request and can be accessed on the Council’s Intranet. A link to the Council’s Intranet will be circulated to Members prior to the Cabinet meeting, and copies of the information will be available at the meeting. 10.3

Resources for Safer, Cleaner, Greener Initiatives On 10 December 2008, the Cabinet agreed that £1.800m of available permanent funding should be earmarked by the Council to fund new initiatives to promote a safer, cleaner and greener environment in Knowsley. A number of the pressures discussed in this report may fall into this category and these resources could therefore be considered as a potential source of funding for those items.

10.4

Additional Service Reviews In addition to the approved Service Review outcomes identified in section 4 of the report above, Portfolio Holders have identified further areas where there is potential to release additional resources during 2009/10. Full details of the proposed reviews are currently being finalised. However, plans are already sufficiently robust for the targets shown below to be considered:Service Review

Transport * Business and Administrative Support * Bereavement Services * Learning and Development Policy and Performance TOTAL *

10.5

2009/10 Target £m 0.050 0.030 0.020 0.100 0.050 0.250

In addition to the current savings targets allocated to these Service Reviews.

Council Tax Each 1% increase in the Council Tax in 2009/10 will provide additional permanent funding of approximately £0.475m. Alternatively, the resources generated by a 1% increase in Council Tax could fund approximately £7m in capital investment through borrowing. The Government has announced an expectation that the average increase

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nationally should be “substantially below 5%”, and it is therefore likely that any increases above 5% will be capped. 10.6

2008/09 Revenue Budget Resources Each year, as part of the budget monitoring process, the Cabinet determines the treatment of the revenue budget outturn position. The current forecast for 2008/09 is set out in the 2008/09 Budget Monitoring report elsewhere on this agenda, and it is proposed that decisions relating to the impact of the forecast outturn position on the 2009/10 budget should only be made at the final outturn stage. This will ensure that such decisions take account of the actual final position, the need to contribute towards provisions for bad debts and other commitments to ensure that they remain robust and in line with audit recommendations; and the need to address any unresolved Portfolio deficits.

10.7

Capital Resources The latest forecasts included in the 2009/10 Capital Programme report elsewhere on this agenda indicate that, subject to market conditions, potential capital resources of £4.371m will be available for allocation during 2009/10. The Government’s rules surrounding the use of capital resources mean that the Council is only able to use capital resources to fund capital and not revenue budget pressures. The Council’s capital programme for 2009/10 is discussed in detail in the 2009/10 Capital Programme report. The use of prudential unsupported borrowing to deal with capital pressures would have a revenue implication in terms of the budget required to repay the debt and interest charges. These costs would have to be reflected in the revenue budget if any such additional borrowing is undertaken.

10.8

Safer, Stronger Communities Resources A one-off balance of £0.593m remains from the 2008/09 allocation of Safer, Stronger Communities grant funding, which could be used to fund temporary pressures in 2009/10. There are no restrictions on the service areas for which this funding can be used.

10.9

External Funding Sources The Council has a successful track record of accessing external funding sources. Funding contributions may be available for any additional proposed schemes or initiatives, which fit with the relevant funding body’s specified criteria. It is important that permanent spending proposals be not underpinned by time-limited funding unless a clear future-funding plan is in place.

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10.10 Partner Contributions As the key organisations across the public, community and voluntary sector work closely together to meet the aspirations of the Sustainable Communities Strategy, there may be opportunities to work closely together on priority initiatives. This may provide additional funding sources through partners’ contributions. Again, the temporary or permanent nature of the contribution would need to be taken into account. 10.11 Revenue Reserves Available in 2009/10 The Council’s reserves represent funding that the Council has previously set aside for specific temporary budget pressures. As part of the ongoing budget monitoring process, the Cabinet completed a robust review of the Council’s reserves during 2008/09 to ensure that they remained appropriate and aligned to the Council’s priorities. Members will recall that the Council was able to set aside resources of £3.180m in November 2008 as a contribution towards temporary spending pressures. Since then, a further £0.529m has been identified, thereby bringing the total reallocated to £3.709m. In accordance with the Cabinet decision of 12 November 2008, £1.500m of these reserves has been allocated to fund the costs of the Kirkby Town Centre Public Inquiry. A balance of £2.209m is therefore available to address temporary pressures in 2009/10 or future years.

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10.12 Based on the above information, the additional permanent and temporary resources which are available to address unfunded budget pressures are summarised below:Available Permanent Resources

Total £m

Options for Additional Efficiencies, Savings and Fees and Charges

4.690

Resources for Safer, Cleaner Greener Initiatives

1.800

Additional Service Review Targets

0.250

Additional 1% Increase in Council Tax (i.e. above 4% planning level)

0.475

Additional External Funding

?

Partner Contributions

?

TOTAL

7.215 Available Temporary Resources

Total £m

Released Revenue Reserves

2.209

Safer, Stronger Communities Fund

0.593

Additional External Funding

?

Partner Contributions

?

TOTAL

2.802

10.13 In addition to limiting the amount of additional investment requests taken forward, these funding options provide choices for Members in terms of proposing a balanced budget for 2009/10.

11.

RESOURCE IMPLICATIONS

11.1

Financial

11.1.1 The body of the report deals wholly with financial implications. 11.1.2 In summary, there is an overall shortfall in the Council’s permanent revenue budget at approved service levels of £0.998m. If all requests for growth set out in this report were to be approved, the permanent budget shortfall rises to £4.335m. Options for releasing resources of up

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to £7.215m of permanent funding have been identified to address this shortfall. 11.1.3 Temporary revenue budget pressures of £2.316m have been identified. Options for releasing temporary resources of £2.802m have been identified to address these pressures. 11.2

Human Resources The report has no direct impact on human resources, but decisions on the use of resources will have an impact on services and in turn may affect employees.

11.3

Information Technology The report has no direct impact on information technology, but decisions on the use of resources could have an impact on the future use of technology within the Council.

11.4

Physical Assets The report has no direct impact on physical assets, but decisions on how resources are utilised during the year could have an impact on the Council’s assets.

12.

IMPACT ON POPULATION GROUPS The Cabinet’s proposals for the use of resources may affect performance and the delivery of services to the public. Any proposals to increase the level of Council Tax will also have an impact on individual taxpayers in the Borough.

13.

RISK ASSESSMENT

13.1

The Council must set its budget and Council Tax for 2009/10 by 11 March 2009. The Cabinet is therefore asked to forward proposals on the budget to the Council’s meeting on 4 March 2009 to ensure that the Council’s statutory duty is met.

13.2

In developing a balanced budget, the Cabinet needs to consider an appropriate increase in Council Tax for 2009/10. The Cabinet should take into account the Government’s expectation that the average national increase should be substantially below 5%, and the consequent risk that any increases above this are likely to be subject to capping.

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13.3

Temporary funding should only be used to fund temporary budget pressures to avoid the risk that the budget automatically becomes unsustainable in future years. Alternatively, further permanent funding solutions would need to be identified during the coming year for the 2010/11 budget.

13.4

To set a balanced 2009/10 budget, the Cabinet’s proposals will need to approve significant levels of service efficiencies, savings, income changes and service review recommendations. There is a significant risk that the budget will not be balanced, if the estimated full-year impact of these is not achieved. It is vital that decisions and action to achieve these savings are implemented in a timely manner and monitored throughout the year to ensure early warning of any potential problems.

14.

COMMUNICATIONS ISSUES

14.1

The Cabinet’s budget proposals will be submitted to the Council on 4 March 2009, when the Council Tax is also scheduled to be set. The resulting bills and supporting information will then be communicated to Knowsley taxpayers. By law, the 2009/10 Council Tax bills must for the first time include a summary of the efficiencies, which the Council has achieved. This figure will be identified following the decision made at the budget setting meeting on 4 March 2009.

14.2

This report takes into account the outcome of the consultation process with Scrutiny Committees, which took place during 2008/09. Options for achieving efficiencies, savings and fees and charges have been considered by Portfolio Holders in developing their budget proposals. Following the completion of the budget process, feedback will be provided to the Scrutiny Committees during 2009/10 on the progress made by Portfolios in implementing the approved options.

14.3

Issues raised through consultation with other stakeholders have been incorporated into this report where possible or will be raised at the Cabinet meeting.

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15.

CONCLUSIONS

15.1

The Council will meet to set its 2009/10 budget and Council Tax on 4 March 2009.

15.2

In summary, there is an overall shortfall in the Council’s permanent revenue budget at approved service levels of £0.998m. If all requests for growth set out in this report were to be approved, the permanent budget shortfall rises to £4.335m. Options for releasing resources of up to £7.215m of permanent funding have been identified to address this shortfall.

15.3

Temporary revenue budget pressures of £2.316m have also been identified. Options for releasing temporary resources of £2.802m have been identified to address these pressures.

15.4

The report sets out the culmination of several months’ work by Portfolio Holders and Scrutiny Committees to identify significant levels of savings and efficiencies.

15.5

Based upon the information set out in the agenda for this meeting, and any other information that the Cabinet wishes to consider, the Cabinet is asked to develop proposals for a balanced 2009/10 budget.

15.6

The full and timely implementation of any proposed efficiencies, savings and Service Review recommendations is essential if those proposals are to represent a sustainable budget for the Council.

JAMES DUNCAN Borough Treasurer

SHEENA RAMSEY Chief Executive

EXECUTIVE DIRECTORS

Contact Officer:-

Dan Barlow Ext. 3622

Appendices:Appendix A – Impact of Approved Service Review Savings in 2009/10 Appendix B (i) Summary of 2009/10 Budget Options proposed by Scrutiny Committees (ii) Summary of 2009/10 Budget Options rejected by Scrutiny Committees Appendix C – Summary of Portfolio Grant Funding Appendix D – Summary of Proposals for Permanent Savings and New Fees and Charges Background Documents:Accompanying Agenda Items – Cabinet 11 February 2009 2008/09 Portfolio Budget Monitoring Reports 2009/10 Portfolio Budget Reports

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APPENDIX A IMPACT OF APPROVED SERVICE REVIEW SAVINGS IN 2009/10 2009/10 £m Ongoing Impact of 2007/08 Reviews Customer Services Domiciliary Care Sports - Phase 1 Procurement

Impact of 2008/09 Reviews - Latest Estimates Assets and Estate Management Transport Highways Sports - Phase 2 Civic Suites – rephased Libraries Cultural Services Bereavement Services Day Care Information Technology Business and Administrative Support

TOTAL SERVICE REVIEW IMPACT (included within deficit at existing service levels)

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(0.250) (0.600) (0.300) (1.150)

(0.600) (0.150) (0.600) (0.040) (0.096) (0.037) (0.042) (0.109) (0.500) (0.300) (2.474)

(3.624)

APPENDIX B (i) SUMMARY OF 2009/10 BUDGET OPTIONS PROPOSED BY SCRUTINY COMMITTEES Portfolio

Scrutiny Committee

Type of financial impact

Description of Option

Children’s Services

Children and Young People's Scrutiny Committee

Efficiencies

Reduction by 10% on non-salary budget

0.022

Savings Savings

5% reduction in clothing grants Review criteria for free swims Reduction in family support services

0.049 0.050 tbc

Efficiencies

Staffing Review

0.035

Efficiencies

Review of Golf Course

0.050

Efficiencies

In house emptying of dog fouling bins

0.010

Introduction of a 4 day week KPMG Review DND - Getting "fit for purpose"

0.030 tbc

Health and Social Care

Leader

Leisure, Community and Culture Neighbourhood Delivery

Children and Young People's Scrutiny Committee Scrutiny Coordinating Committee: Corporate Performance Health and Wellbeing Scrutiny Committee Economic Development & Environment Scrutiny Committee

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Total £m

APPENDIX B (i) contd

Portfolio

Scrutiny Committee

Type of financial impact

Description of Option

Regeneration, Economy and Skills

Economic Development & Environment Scrutiny Committee

Efficiencies

Contract Review

Explore possibility of merging Division with Chamber to develop a "Knowsley Economic Development Company" Could also explore working relationship with Halton EDU or Chamber

Fees and charges

Savings

Total £m

0.005

nil in 0910

KPMG Review Increase costs for providing info / copies / research Learning and Skills Council bids - improved income generation from contracts

0.300 0.002

Legislative charges incurred to discharge planning conditions New ESF / ERDF Funding - improved income generation from contracts

0.012

Review of Archaeological Service Recovery of overhead costs from externally funded programmes (also non cashable savings from possibility of accountable body status for sub-regional external funds and sponsorship for events)

0.005 0.050

Service Improvement Programme

0.050

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0.024

0.040

APPENDIX B (i) contd Portfolio

Scrutiny Committee

Corporate and Customer Services

Safer, Stronger Communities Scrutiny Committee Scrutiny Coordinating Committee: Corporate Performance

Type of financial impact Efficiencies

Reduction in the twinning budget

0.010

Efficiencies

Reduction in post entry training

0.004

Review of Credit Management arrangements and Legal debt recovery processes

0.020

Review of IT replacement policy Review of Lexcel accreditation Review of members publications and meals / refreshments Staffing Reviews Increased income from Registrars Service

0.035 0.010 0.011

Fees and charges Savings

Finance and Information Technology

Safer, Stronger Communities Scrutiny Committee Scrutiny Coordinating Committee: Corporate Performance

Description of Option

Total £m

0.060 0.020

Review of opening hours-close cash office at 2pm every day Review of opening hours-close cash office on Saturdays Review of opening hours-close contact centre 2 hours earlier Review of opening hours-close contact centre on Saturdays Review of opening hours-reduce One Stop Shops opening hours by 1 hour on Saturdays

0.030

Efficiencies

Staffing Reviews

0.005

Efficiencies

Reduction in post entry training

0.005

Review of IT replacement policy Staffing Reviews

0.030 0.048 0.060 0.095 0.010

Fees and charges

Increasing Direct Debit payments for Council Tax Increasing legal costs recovered Partnership Working

TOTAL OF OPTIONS PROPOSED BY SCRUTINY COMMITTEES

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0.011 0.011 0.005 0.004

0.030 0.040

1.288

APPENDIX B (ii) SUMMARY OF 2009/10 BUDGET OPTIONS REJECTED BY SCRUTINY COMMITTEES Portfolio

Scrutiny Committee

Type of financial impact

Description of Option

Health and Social Care

Health and Wellbeing Scrutiny Committee

Efficiencies

Close 1 respite care home and offer alternatives

0.100

Leisure, Community and Culture

Health and Wellbeing Scrutiny Committee Economic Development & Environment Scrutiny Committee

Savings

Frozen meal service Reduce support to sports clubs

0.050 tbc

Efficiencies

Closure of staff canteen - Stretton Way

0.030

Fees and charges

Introduce charge of £20 for the collection of large bulky waste (£15 would raise £0.169m; £10 would raise £0.113m)

0.113

Introduction of charging for replacement recycling (blue and grey) bins

0.136

Introduction of charging for the collection of green garden waste Introduction of charging for car parking

0.540

Neighbourhood Delivery

Regeneration, Economy and Skills

Economic Development & Environment Scrutiny Committee

Fees and charges

TOTAL

Total £m

tbc

0.969

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APPENDIX C SUMMARY OF PORTFOLIO GRANT FUNDING 2008/09 £m

2009/10 £m

Dept of Communities and Local Government Safer, Stronger Communities Fund Neighbourhood Element Supporting People Admin Working Neighbourhoods Fund Climate Change Young Peoples Substance Misuse Partnership Deprived Area Fund

1.239 0.133 9.391 0.023 0.075 0.783

0.774 0.123 10.897 0.023 0.075 0.000

Dept of Children Schools and Families Schools Development Grant - LEA Element) Extended Schools Start up Costs Primary National Strategy - Central Coordination Secondary National Strategy Central Coordination Secondary National Strategy Behaviour & Attendance Schools Improvement Partners Education Health Partnerships School Travel Advisers Choice Advisers School Intervention Grant 14-19 Flexible Funding Pot Sustainable Travel General Duty Extended Rights to Free Transport Connexions Children's Fund (total) Positive Activities for Young People Teenage Pregnancy Children’s Social Care Workforce (HRDS & NTS) Youth Taskforce Care Matters White Paper Child Death Review Process Young Peoples Substance Misuse Children’s Trust Fund Preventing Violent Extremism

2.580 0.378 0.124 0.150 0.068 0.078 0.103 0.021 0.037 0.052 0.043 0.013 0.012 1.997 0.829 0.556 0.124 0.092 0.100 0.174 0.036 0.028 0.005 0.008

2.580 0.824 0.124 0.150 0.068 0.078 0.077 0.021 0.037 0.052 0.042 0.013 0.028 2.095 0.829 0.859 0.124 0.091 0.100 0.238 0.037 0.028 0.006 0.000

Dept of Health Adult Social Care Workforce (HRDS & NTS) Carers Child & Adolescent Mental Health Services Learning Disability Development Fund Local Involvement Networks Mental Capacity Act & Ind Mental Capacity Advocate Service Mental Health Preserved Rights

0.553 0.954 0.468 0.229 0.140 0.105 0.732 1.347

0.566 1.014 0.487 0.229 0.139 0.132 0.770 1.294

Home Office - Building Safer Communities

0.216

0.216

Dept for Transport - Highways Detrunking

0.223

0.229

24.219

25.469

AREA BASED GRANT

TOTAL AREA BASED GRANT

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APPENDIX C contd

Specific Grant Supporting People Local Authority Short Breaks Extended Schools Standards ContactPoint (IS Index) Music Services Youth Opportunity Fund Parenting Practitioners Grant Free Entitlement for 3-4 year olds Social Care Reform Dedicated Schools Grant (Indicative Allocations) Ethnic Minority Achievement School Lunch Grant Targeted Support – Primary Targeted Support – Secondary Sure Start, Early Years & Childcare Housing & Council Tax Benefit Admin Subsidy Homelessness TOTAL

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2008/09

2009/10

£m

£m

7.381 0.040 0.259 0.174 0.359 0.208 0.050 0.000 0.343 96.764 0.055 0.270 0.749 1.024 6.382 2.215 0.040 116.314

7.381 0.246 0.475 0.000 0.359 0.278 0.050 0.229 0.799 98.699 0.064 0.270 0.000 0.000 6.701 2.161 0.040 117.752

APPENDIX D SUMMARY OF PROPOSALS FOR PERMANENT SAVINGS AND NEW FEES AND CHARGES Portfolio

Proposal

Children's Services Increase Charges to Schools for Children’s and Family Services Directorate’s support services Reduce Management costs within Directorate Streamline Special Educational Needs Area Support Provision Cease Football Scholarships (2010/11 impact) Cease Books and Equipment grant to under 19s. Reduce school uniform grant Reduce eligibility for clothing grants Cease Youth Offer for free swims Cease Governor Support Service (£0.040m future years) Children's Services Total Community Safety and Social Inclusion Review Anti Social Behaviour Unit management structure (£0.032m future years). Community Safety and Social Inclusion Total Corporate and Customer Services Reduce Business Management support within Directorate Review of hospitality and members and officers meals No replacement of second mayoral car (Option 1) Reduced reception cover for Registrars Service Reduce cash office hours Relax target for Contact Centre call response times Relax target for One Stop Shop waiting times Cease Planning consultation advice Reduce support in relation to doorstep crime. Reduce Enforcement Service support Corporate and Customer Services Total

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2009/10 Total (£m) 0.210 0.100 0.080 0.000 0.008 0.049 0.049 0.150 0.027 0.673

0.011 0.011

0.082 0.006 0.008 0.035 0.040 0.050 0.045 0.035 0.028 0.031 0.360

APPENDIX D contd

Portfolio

Proposal

Finance and Information Technology Stop NWEGG subscription Charging interest on outstanding sundry debtors (Fees & Charges) Invoice Scanning brought in house (£0.040m future years) Reduce IT support to Directorates (£0.090m future years) Reduce financial support to Directorates Reduce Council tax recovery procedures Reduce debt recovery support (£0.025m future years) Reduce Internal Audit plan Reduce financial support to key projects Reduce fraud investigation Reduce quality checks on benefit reviews Reduce benefit take up activity Finance and Information Technology Total Health and Social Care Early receipt of PCT income Additional savings from home care modernisation (reducing to £0.034m in 2010/11) Direct delivery of meals Termination of contract for step up/down beds Transfer of responsibility for all night sitting funding Reduce the purchasing Budgets available to the urgent response team Reduce Council contribution to Mental Health Drop in Facilities Reduce Management and supervisory staffing levels Reduce staffing levels in supported living network homes Review of respite care (increasing to £0.070m in 2010/11) Review of preventative family support services Cap individual purchasing budgets Reduction in services funded from the Mental Health Grant Health and Social Care Total

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2009/10 Total (£m)

0.009 tbc 0.028 0.010 0.080 0.025 0.020 0.032 0.035 0.032 0.045 0.025 0.341

0.100 0.084 0.045 0.027 0.034 0.026 0.010 0.045 0.025 0.030 0.050 0.125 0.015 0.616

APPENDIX D contd

Portfolio

Proposal

2009/10 Total (£m)

Human Resources Reduce HR support to Directorates Human Resources Total

0.130 0.130

Leader's Portfolio Reduce the services provided by the Policy Unit. Cease plans to produce a Council A to Z guide. Reduce Neighbourhood partnership activities Reduce Knowsley news to 4 editions Relocate Areas Bases Cease hard copy publication of Spotlight Cease allocation of Community Chest Grant. Reduce voluntary sector grant budget Leader's Portfolio Total

0.070 0.050 0.024 0.020 0.064 0.014 0.050 0.100 0.392

Leisure, Community and Culture Review of Play Service Stockbridge Village Redevelopment - closure of Heatwaves Reduce support to boxing Limit bank holiday opening times Leisure, Community and Culture Total

0.070 0.100 0.020 0.010 0.200

Neighbourhood Delivery Closure of Stretton Way Canteen Charges for Bulky Household Waste (Fees & Charges). Reduce Grass Collections Service Standard Reduction in Service Standard - Street Cleansing (maximum option) Annual charge for Green Garden Waste (Fees & Charges). Charges for Replacement Blue and Grey Recycling Bins (Fees & Charges) Neighbourhood Delivery Total

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0.030 0.113 0.143 0.515 0.540 0.136 1.477

APPENDIX D contd Portfolio

Proposal

2009/10 Total (£m)

Regeneration, Economy and Skills Review of market service Introduction of car parking charges in 2010/11 (Fees & Charges) Reduce highways maintenance Cease contribution to Mersey Partnership Review of building control services (2010/11 impact) Review of the planning service (2010/11 impact) Cease business investment service (£0.250m future years) Regeneration, Economy and Skills Total

0.025 0.000 0.200 0.140 tbc tbc 0.125 0.490

Grand Total

4.690

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