POLICY & RESOURCES COMMITTEE

Subject: +ate $, Meet%ng: Re/$rt $,: C$ntact O,,%cer: 1ame: Ema% : :ard;0< a,,ected: !OR GE1ERAL RELEASE

Agenda Item 121

Brighton & Hove City Council

Genera !und Re"enue #udget & C$unc% Ta& 2'1()1* 1- !ebruar. 2'1( E&ecut%"e +%rect$r $, !%nance & Re0$urce0 Mar2 Ire and 3ame0 4enge"e d Te : 25612(' 25612(2

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Note: The special circumstances for non-compliance with Access to Information Proce ure !ule " an #ection $%%B&'( of the )ocal *overnment Act $+,- are that information on the -%$./$' financial position was still 0eing finalise an officers were awaiting critical information a0out the council ta1 threshol &the threshol a0ove which an increase in council ta1 re2uires confirmation from a local referen um( an the final )ocal *overnment *rant #ettlement for -%$'/$" from the 3epartment for Communities an )ocal *overnment &C)*(4 17 $4$ PURPOSE O! REPORT A1+ POLICY CO1TE=T: This report sets out the final proposals for the *eneral 5un !evenue Bu get an Council Ta1 for -%$'/$"4 It ta6es into account fee 0ac6 an evi ence receive 0y the council through consultation7 the scrutiny process an e2ualities impact assessments4 It also sets out the approach to the 0u get setting process in particular the lin6s to the Corporate Plan an highlights ways in which investment in 6ey preventative services is 0eing sustaine an in some cases enhance 4 The report ta6es into account the recent ecisions ma e 0y Policy & !esources Committee on the council ta10ase an 0usiness rates ta10ase an 0y 5ull Council on council ta1 iscounts an e1emptions4 The original proposals were also pu0lishe prior to the Provisional )ocal *overnment 5inance #ettlement so a num0er of changes to fun ing assumptions have also 0een ma e4 The core of the 0u get is 0ase on an assume council ta1 threshol increase of -84 However7 the propose increase in council ta1 is '4,"8 which7 if agree 7 woul re2uire a referen um in accor ance with Chapter I9:A of the )ocal *overnment 5inance Act $++- an associate regulations4

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RECOMME1+ATIO1S: That Policy & !esources Committee:;

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!ecommen s to Council: The core elements of the -%$'/$" *eneral 5un !evenue Bu get proposals containe in the 0o y of this report which have 0een 0ase on a threshol council ta1 increase7 su0<ect to recommen ation -4.7 inclu ing: The -%$'/$" 0u get allocations to services as set out in appen i1 $4 The council=s net *eneral 5un 0u get re2uirement for -%$'/$" of >--"4.m4 The 0u get savings pac6age as set out in appen i1 '4 The contingency 0u get of >'4.,m as set out in ta0le ?4 The reserves allocations as set out in paragraph .4.+ an ta0le @4 The 0orrowing limit for the year commencing $ April -%$' of >.?%m4 The annual Ainimum !evenue Provision statement as set out in appen i1 $%4 The Pru ential In icators as set out in appen i1 $$ to this report4 The propose responses to the scrutiny recommen ations as set out in appen i1 $@4

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A '4,"8 increase in the Brighton & Hove element of the council ta1 with: the a itional resources generate 0eing use to re uce the 0u get savings pac6age as set out in appen i1 $,B the revise 0u get allocations as set out in appen i1 $,B the fun ing of the costs associate with hol ing a referen um in accor ance with Chapter I9:A of the )ocal *overnment 5inance Act $++- an associate regulations as set out in appen i1 $,B the #u0stitute Bu get inclu ing a itional costs as set out in appen i1 $, which woul come into effect if a referen um re<ecte the propose '4,"8 increase in council ta14

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That the C2ualities Impact Assessments set out in Appen i1 $. 0e note 4 Note the revise Ae ium Term 5inancial #trategy an resource pro<ections for -%$'/$" to -%$+/-% as set out in appen i1 ?4 Note that supplementary information nee e to set the overall council ta1 will 0e provi e for the 0u get setting Council as liste in paragraph '4'4 5or the purposes of enacting the Business !ates iscount an relief changes announce in the government=s Autumn #tatement -%$.7 grant elegate authority to the C1ecutive 3irector of 5inance & !esources to esign an

a minister the scheme in accor ance with government gui elines as set out in paragraph .4$,4 -7 CO1TE=T) #AC>GROU1+ I1!ORMATIO1: Structure $, t9e re/$rt .4$ The report provi es full information on function an fun ing changes an other legal an financial matters that have resource implications for the -%$'/$" 0u get4 The full set of information provi e in this report is liste here as an ai to navigation: L$ca G$"ernment !%nance Sett ement - up ates are given on the latest position regar ing government grant announcementsB Re,erendum T9re09$ d and C$unc% Ta& !ree?e Grant ; information is provi e a0out recent government announcementsB #u0%ne00 Rate0 Retent%$n ; up ate forecasts of the council=s share of 0usiness rates for this year an ne1t are inclu e B #etter Care !und ; information a0out the preparation an planne changes relating to the Better Care 5un B Sc9$$ 0 !und%ng ; Information on 3e icate #chools *rant &3#*( an Pupil PremiumB Ot9er G$"ernment Grant0 and 1e@ 4$me0 #$nu0 - Information on other government grants with etails in appen i1 @ an the New Homes Bonus final allocations for -%$'/$"B !ee0 and C9arge0 ; Aore information of the 5ees an Charges is given within the Bu get #trategy appen i1 .B Re0er"e0 P$0%t%$n - a re-assessment is inclu e of the level of reserves availa0le to fun one-off items of e1pen iture an / or provi e short term support for the 0u get4 A full review of reserves is inclu e in appen i1 ,B E&/end%ture E0t%mate0 - inclu ing information on the latest position in -%$./$'7 internal transfers an other a <ustments7 an analysis of 0u get changes since -%$./$'7 inflation7 ris6 provisions7 commitments an reinvestment7 investment in preventative services an service pressuresB #udget Strateg%e0 and Sa"%ng0 - inclu ing savings proposals an potential staffing implicationsB Annua M%n%mum Re"enue Pr$"%0%$n ;MRP< Statement and Prudent%a Ind%cat$r0 ; information on the full statement is attache at appen i1 $% an the pru ential in icators are shown in appen i1 $$B C$r/$rate #udget0 %nc ud%ng C$nt%ngenc. - information on changes to the main corporate 0u gets inclu ing the resources hel in contingency for -%$'/$"B

C$unc% Ta& ; inclu ing council ta17 referen um an the supplementary information re2uire for Bu get CouncilB Med%um Term !%nanc%a Strategy - Information on the financial strategy over the ne1t @ years is inclu e in appen i1 ? alongsi e an assessment of ris6s in appen i1 +B Re/$rt $, t9e C9%e, !%nance O,,%cer ; inclu ing the ro0ustness of estimates7 a e2uacy of reserves7 an an assurance statement 0y the council=s section $"$ officerB C$mmun%t. EngagementA C$n0u tat%$n and Scrut%n. ; etails of consultation an engagement inclu ing a summary report on 0u get consultation an the report from scrutiny in appen i1 $" an $@4

Pr$jected Re0$urce0 a"a% ab e %n 2'1()1* Local Government Finance Settlement .4The final )ocal *overnment 5inance settlement was announce on the "th 5e0ruary -%$' 0ut some government grant information still remains unpu0lishe 4 The 5inal settlement contains the fun ing assessment for -%$'/$" an illustrative figures for -%$"/$@4 The ta0le 0elow shows comparisons with -%$./$'4 Tab e 1 Brighton & Hove City Council 5inal -%$./$' > million !evenue #upport *rant &!#*( *overnment assume 0usiness rates income retaine 0y the council Top-up *rant Total 5un ing !e uction Percentage Note: #ome ta0les may not a .4. ,,4@""%4%,+ $4"?$ $-+4.$$ 5inal -%$'/$" > million @.4''"$4%"" $4@$$ $$@4$%? -$.4-%. -$%4-8 up e1actly ue to roun ing4 Illustrative -%$"/$@ > million '"4'". "-4'@' $4@"@ ++4",-$@4".@ -$'4-8

The government assume level of 0usiness rates retaine locally is use in the grant calculation an is ifferent from the actual 0usiness rates forecast to 0e collecte locally which is shown later in this report4 The top-up grant was etermine when the 0usiness rates retention system was intro uce to smooth changes from the previous system an is increase 0y inflation each year4 The re uctions in fun ing shown in ta0le $ are cash re uctions in fun ing an e1clu e changes in specific government grants4 In real terms i4e4 ta6ing into

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account inflation7 the percentage re uctions increase to -$-4.8 for -%$'/$" an -$"4,8 for -%$"/$@4 .4" The government uses a Dspen ing powerE calculation in the settlement to ma6e comparisons 0etween authorities4 It oes not measure li6e-for-li6e changes in fun ing from one year to the ne1t 0ut inclu es reallocate fun ing such as possi0le contri0utions from the NH# to support social care 0u gets an sprea s these over a much 0igger fun ing 0aseline which inclu es other grants an council ta14 Their calculation oes not reflect all of the new 0ur ens place on local authorities to provi e a itional services neither oes it ta6e into account inflation7 emographic an other cost pressures that councils are facing4 The ta0le 0elow shows the Dspen ing powerE changes as set out 0y C)* in the final settlement4 Tab e 2 CLG S/end%ng P$@er ,%gure0 Brighton & Hove City Council Provisional -%$'/$" Illustrative -%$"/$@ .4@ -.4'8 --4%8 National Average --4+8 -$4?8 Fnitary Average --4+8 -$4?8

In -%$'/$" the highest re uctions in spen ing power are in the poorer areas with the greatest nee s such as Hull an )iverpool which have re uctions of -"4"8 an "4'8 respectively4 Ghereas wealthier areas with lower nee s such as Central Be for shire an Go6ingham have small increases in spen ing power4 A similar pattern is repeate in -%$"/$@4 Re,erendum T9re09$ d and C$unc% Ta& !ree?e Grant

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The *overnment has announce that the threshol a0ove which an increase in council ta1 re2uires confirmation from a local referen um will 0e -84 All authorities must also 0e min ful of the impact of changes in levies on the referen um trigger4 Any proposal to increase council ta1 a0ove the threshol will nee to 0e accompanie 0y an agree su0stitute 0u get which woul nee to 0e implemente if the increase is vote own in the referen um4 The *overnment ha earlier announce that council ta1 freeHe grant for -%$$/$-7 -%$./$'7 -%$'/$" an -%$"/$@ will 0e protecte in 0aseline fun ing in future years4 This means that there is no specific Icliff e ge= when the freeHe grants en for the authorities that have accepte the grant fun ing as the fun ing re uction will now 0e sprea across all authorities whether they have ha a council ta1 freeHe in those years or not4 The grant settlement inclu es new council ta1 freeHe grants for -%$'/$" an -%$"/$@ e2uivalent to a $8 increase in council ta1 for those councils who agree to freeHe their council ta1 in -%$'/$" an /or -%$"/$@4 However7 the grant will 0e calculate using the council ta1 0ase 0efore a <ustments are ma e for the council ta1 re uction scheme ma6ing the grant for Brighton & Hove a0out >$4-m in each year4

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5ull Council on -, 5e0ruary -%$' will etermine 0oth the 0u get an council ta1 for -%$'/$" 0ut a ecision to freeHe the council ta1 ne1t year will re2uire appro1imately >%4?m a itional recurrent savings to 0e i entifie an agree compare to the threshol increase of -84 Increases a0ove the threshol will generate appro1imately >$m a itional resources for each $8 increase in council ta1 0ut will also generate one-off costs lin6e to the referen um as set out later in this report4 The impact of implementing council ta1 freeHes in -%$$/$- an -%$-/$.7 instea of the ma1imum allowa0le increase of .4"87 has re uce the potential resources availa0le to the council in -%$'/$" 0y appro1imately >'4'm4 !$reca0t #u0%ne00 Rate Retent%$n %nc$me ,$r 2'1()1*

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3etails of the li6ely 0usiness rate retention income forecasts were set out in the report to the January meeting of Policy & !esources Committee4 It was agree that the final figure for -%$'/$" which ha to 0e etermine 0y .$ January -%$' woul 0e elegate to the C1ecutive 3irector for 5inance & !esources in consultation with the Chair of Policy & !esources Committee 0ecause of the late release of forms an gui ance 0y C)*4 Ta0le . 0elow shows the forecasts of the council=s '+8 share of 0usiness rates income for -%$./$' an -%$'/$" agree 0y the C1ecutive 3irector for 5inance & !esources4 The increase in the forecast of the council=s share of 0usiness rate income shown in ta0le . 0elow of <ust un er >,4'm 0etween -%$./$' an -%$'/$" is ue to the removal of a >@m one-off provision for refun s ma e in -%$./$'7 the assume annual uplift in the 0usiness rates poun age of -8 an the estimate forecast growth in the 0ase4 Tab e - - 5orecasts of the council=s '+8 share of local Business !ate income -%$./$' > million Council forecast Cstimate #afety Net grant #4.$ *rant to compensate for the changes announce in the -%$- an -%$. Autumn #tatementsK Total forecast council share 5orecasts ma e this time last year Change in 0usiness rates forecast K ''4-%? $4++@ $4.%% -%$'/$" > million "$4"?% .4$?"

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It is unclear how long the *overnment will continue to pay some of these compensation grants4 The ecision to cap the inflationary increase at -8 will nee to 0e pai every year from now on otherwise the council will lose the e2uivalent of >%4@m fun ing per annum4

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The forecasts for 0usiness rate income in 0oth years have increase 0y a0out >-m since last year although in -%$./$' the improvement has 0e offset 0y an e2ual re uction in the safety net payment4 The improvement is a result of lower than anticipate appeals an refun s7 increases in the 0usiness rates 0ase an the forecast 0enefits of a itional wor6 planne for -%$'/$" to verify the ata on the 0usiness rates register4 The council a opte a strategy of allowing for all future appeals an refun s in -%$./$' 0ecause this approach potentially ma1imise resources over the longer term4 C)* have yet to pu0lish raft regulations setting out how to account for appeals an refun s an the gui ance they have so far provi e conflicts with proper accounting practice4 However7 the strategy a opte is also fle1i0le enough to cope with changes to the regulations within the current resource envelope set asi e4 In -%$,/$? a new revaluation will 0e implemente an it is unclear how su0se2uent appeals against the -%$, rating list will 0e treate 4 Mualifying Business !ates payers will 0e entitle to some new iscounts from $ April -%$'7 following an announcement of changes in the *overnment=s autumn statement4 C)* a vise )ocal Authorities on -.r January that they shoul use their iscretionary powers to set up two of these iscounts at a local level7 in tan em with the government=s gui elines4 The cost of the iscounts will 0e fully reim0urse later via #ection .$ grant4 There will 0e a >$%%% iscount for shops7 cafes7 restaurants an 0ars with a !atea0le 9alue of less than >"%7%%%4 #ome e1clusions apply7 such as 0an6s7 0etting shops7 estate agents7 me ical services7 solicitors an accountants4 A "%8 iscount will 0e availa0le for 0usinesses that move into retail premises that have 0een empty for at least one year4 The iscount will last for a ma1imum $? months7 an is availa0le 0etween $ April -%$' an .$ Aarch -%$@4 This scheme overlaps with our own Cmpty Property Nccupation 3iscount7 which also provi es support for 0usinesses reoccupying empty properties4 However7 in our scheme the iscount is $%%8 for si1 months for properties with a !atea0le 9alue of less than >-"7%%%7 an a iscount of "%8 for si1 months if the !atea0le 9alue is 0etween >-"7%%% an >."7%%%4 Ge will 0e 0ringing 0ac6 proposals to this committee to reconcile the two schemes7 0ut in the meantime we will nee to enact the *overnment=s initiative in time for $ April -%$'4 #etter Care !und

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In the July #pen ing !eview7 the *overnment announce >.4?0n per annum nationally from -%$"/$@ for an Integrate Transformation 5un &now 6nown as the Better Care 5un ( across a ult social care an health4 >$4+ 0illion of this fun ing is alrea y provi e to local authorities in the e1isting NH# 5un ing for #ocial Care or in other sources of grant fun ing such as Carers *rant an 3isa0le 5acilities *rant4 The poole Better Care 5un revenue 0u get for -%$'/$" is >"4@.-m inclu ing an anticipate a itional transfer from the NH# of >$4%-'m in -%$'/$" to support preparations for implementation in -%$"/$@4 In -%$"/$@ the Better Care 5un Plan will 0e create from the following e1isting fun ing streams7 a significant proportion of which is alrea y 0eing spent 0y the local authority on <oint health an social care priorities4 The sums currently

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allocate for health an social care in Brighton an Hove in this way are i entifie in the ta0le 0elow4 Table 4 : 2014/15 allocation of Better Care Fund Funding Stream !und%ng Stream 1at%$na BP$tC #r%g9t$n & 4$"eC0 Current A $cat%$n 2'1()1* D m% %$n n/a %4@%% $4'%% %4@,' %4,-, '4@%? $4%-'

NH# 5un ing Carers Brea6 5un ing CC* !ea0lement 5un ing A ult #ocial Care Capital *rant 3isa0le 5acilities *rant &Capital( Current transfer from NH# to #ocial Care A itional transfer from NH# &-%$'/$"( .4-%

D m% %$n $7+%% $.% .%% $-+ --" +%% -%%

Provisional figures in relation to Brighton an Hove=s allocation for -%$"/$@ were release 0y NH# Cnglan on -%th 3ecem0er -%$. as 0elow: Tab e *: Pr$"%0%$na ,%gure0 ,$r 2'1*)1E NH# Brighton & Hove CC* #ocial Care Capital *rant 3isa0le 5acilities *rant T$ta #etter Care !und > million $?4%@" %4@?' %4+$$ 157EE'

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An element of the fun will 0e epen ent on performance an outcomes will 0e agree as part of the Better Care 5un Plan against which achievements will 0e monitore 4 There are clearly ris6s associate with the performance nature of the fun ing an a ris6 mitigation approach will also 0e agree 0etween partners4 Sc9$$ 0 !und%ng

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5or -%$./$' the 3e icate #chools *rant &3#*( was split into . notional 0loc6s: schools7 early years an high nee s4 The 3epartment for C ucation &3fC( will continue the Ainimum 5un ing *uarantee &A5*( at minus $4"8 per pupil in -%$'/$"4 Aost of the arrangements put in place in -%$./$' will remain 0ut the 3fC is ma6ing some changes that are esigne to further stan ar ise the fun ing formulae that are in operation across the country4 The 6ey changes 0eing implemente in -%$'/$" are as follows: )ocal Authorities &)As( must ensure that at least ?%8 of elegate fun ing is allocate through pupil-le factors4

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The unit rates applie for age weighte pupil units must 0e set at a minimum of >-7%%% for primary age pupils an >.7%%% for secon ary4 The primary low attainment factor will inclu e those pupils who faile to achieve a goo level of evelopment in the -%$. assessments4 This will only apply to this cohortB for ol er year groups in the school7 there will still 0e the choice 0etween using the threshol s of ,. an ,? points 0ecause they were assesse un er the ol profile &Brighton & Hove have opte to use ,? points(4 The secon ary low attainment factor will now 0e 0ase on the num0er of pupils not achieving level ' in Cnglish $r Aaths at 6ey stage -4 This is a change from the -%$./$' year where the measure was 0ase the num0er of pupils not achieving level ' in Cnglish and Aaths4 )ocal Authorities are now a0le to set ifferent lump sums for primary an secon ary schools4 The ma1imum lump sum has now 0een set at >$,"7%%%4 Brighton & Hove is continuing to allocate a lump sum of >$"%7%%% to all mainstream schools4 )ocal Authorities may top slice the 3#* to provi e a falling rolls fun that may 0e use to protect schools with falling rolls where a population 0ulge is e1pecte in the future7 0ut where a goo an necessary school currently has surplus places an faces an unmanagea0le fun ing shortfall in the short term4 Brighton & Hove is not proposing to a opt such a fun 0ut will7 instea 7 shoul circumstances arise7 consi er using the schools= contingency 0u get for this purpose4 #pecialist #pecial C ucation Nee s &#CN( places &units an facilities( in mainstream schools7 whether fille or unfille 7 o not count towar s a school=s pupil num0ers for the purpose of calculating its 0u get through the fun ing formula4 The change is to avoi ou0le counting4 The ate for informing mainstream schools of their 0u get shares is 0eing move forwar from $" Aarch to -? 5e0ruary4

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In -%$'/$"7 the pupil premium 0u get will increase from >$4?," 0illion to >-4" 0illion nationally4 #chools will receive >$7.%% per primary pupil who is currently eligi0le for free school meals &5#A( or has 0een eligi0le for 5#A in the past @ years &5#A ICver @=( an >+." for secon ary 5#A ICver @= pupils4 The government are intro ucing a higher rate of >$7+%% for loo6e -after chil ren4 They are also e1ten ing the eligi0ility criteria to inclu e those pupils who have 0een in care for one ay or more7 as compare with the si1 months in care currently re2uire 4 #chools will also receive >$7+%% for eligi0le pupils who have 0een registere on the school census as having 0een a opte from care or leaving care un er a special guar ianship or resi ence or er4 The service premium will continue to 0e e1ten e so that in -%$'/$"7 any pupil in reception to year $$ who has 0een flagge as a service chil since -%$$ will continue to receive the premium &ICver '= measure(4 The service chil premium will 0e pai to schools at the rate of >.%% per pupil4 The 0u get proposals inclu e in appen i1 ' involve some fun ing changes 0etween the 3#* an the *eneral 5un B these changes are in relation to

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legitimate uses of the 3#* an a report etailing the changes has 0een provi e to an agree at the #chools 5orum4 Ot9er G$"ernment Grant0 .4-? The grant allocations for -%$'/$" an -%$"/$@ have 0een inclu e in appen i1 @ with the -%$./$' allocations for comparison4 #ome grant allocations for ne1t year have not yet 0een announce an where these are critical to the setting of the -%$'/$" 0u get forecasts have 0een inclu e 4 There are some significant changes in -%$"/$@ with the en ing of the #ocial 5un grant of >%4,"m an a -%8 propose re uction of the C ucational #ervices *rant4 A significant num0er of grants for -%$"/$@ have not yet 0een announce 4 1e@ 4$me0 #$nu0 .4.% The New Homes Bonus &NHB( is a fun ing incentive for local authorities largely to facilitate the 0uil ing of new homes in their area an 0ring empty homes 0ac6 into use4 The fun ing allocation for the fourth tranche was announce in 3ecem0er -%$. an the council will receive >%4@?%m e1tra in -%$'/$"7 of this >%4""'m is from new properties7 >%4$$-m from a re uction in long term empty properties an >%4%$'m from affor a0le homes elivere 4 Aem0ers are remin e that NHB is fun e 0y top-slicing local authority grant an for the council the loss of !#* ue to the top-slice in -%$'/$" is appro1imately >$4,"m4 #o there is a net loss of fun ing for the council of a0out >$4$m from the fourth tranche alone4 !ee0 and C9arge0 .4.In recent years the consumer price in e1 has 0een increasing 0y over .8 per annum whilst the council ha applie a stan ar rate of -8 an over time this ifference has 0een har er to sustain4 5ees an charges 0u gets for -%$'/$" are assume to increase 0y a stan ar inflation rate of -4"8 with the e1ception of par6ing charges which are planne to remain at -%$./$' levels7 an penalty charge notices &par6ing fines( where the levels of fines are set 0y government an cannot 0e change in epen ently4 The Council=s Corporate 5ees & Charges Policy re2uires that all fees an charges are reviewe at least annually an shoul normally 0e increase 0y either: the stan ar rate of inflation7 statutory increases7 or actual increases in the costs of provi ing the service as applica0le4 Non-statutory increases a0ove the stan ar rate of inflation an /or changes to concessions or su0si ies shoul 0e reporte to an consi ere at the relevant service committee4 Ghere appropriate7 etails of fees an charges changes for -%$'/$" have 0een presente to the relevant service committee prior to Bu get Council4 In a ition7 an overarching review of fees an charges has 0een un erta6en to ensure there is no isproportionate or cumulative e2uality impact of propose changes to fees an charges on vulnera0le7 minority or other groups4 The results of this review have 0een inclu e in appen i1 $.4

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Re0er"e0 .4.' The wor6ing 0alance is planne to 0e maintaine at >+m over the perio of the Ae ium Term 5inancial #trategy4 The review of reserves an the wor6ing 0alance is inclu e at appen i1 ,4 The following ta0le shows the pro<ecte general reserves position assuming spen ing is in line with the latest pro<ections for -%$./$' shown in the TBA month + report4 The ta0le inclu es the release of specific reserves to support the -%$'/$" 0u get with allocations i entifie in paragraph .4.+4 Tab e E F Genera Re0er"e0 Una $cated genera re0er"e0 at 1 A/r% 2'1Cstimate Collection 5un surplus for -%$-/$. an -%$./$' Cstimate net refun of !evenue #upport *rant in -%$'/$" to reflect that the top slice for New Homes Bonus fun ing in the national grant settlement was overestimate 0y the *overnment !elease fun s from the Gaste P5I reserve instea of ta6ing a recurrent >%4$ m saving Nne off pay an pension provision within the -%$./$' 0u get !elease all remaining reserves for e2ual pay an pay mo ernisation T$ta Re0$urce0 C$mm%tment0 TBA Aonth + forecast overspen &incl4 share of NH# #," services( 5un part year effect of -%$'/$" savings 5un part year effect of a itional 95A savings #alt ean )i o matche contri0ution GG$ !emem0rance !ug0y Gorl Cup Top up restructure an re un ancy reserve for lia0ilities in -%$'/$" an future years 5un ing set asi e for the )ocal election in -%$" Carmar6 fun ing for Pension fun as set out in triennial review Cstimate one off fun ing for a new Business !ates system #a ance $, $ne6$,, re0$urce0 A $cat%$n0 ,$r 2'1()1*: Implementation fun ing for A ult #ocial Care reforms Nne off ris6 provision A itional contri0ution to Ao ernisation 5un -%$'/$" Contri0ution to the Ao ernisation 5un -%$"/$@ ICT short term resources for contract pressures #a ance $, re0er"e0 a"a% ab e F #a0e /$0%t%$n 2'1-)1( DCm '71E' $4??, %4$,@

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$4"@% $4+%% $4+%% G7*H-%4+.+ -%4?++ -%4-"% -%4%-% -%4%-% -%4-%% -$4%%% -%4-"% -%4-'+ -%4$%% -7E*E -%4"%% -$4"%% -%4."% -%4,%% -%4.%% '7-'E

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The one off resources availa0le reflect the latest pro<ection of the Council=s element of the collection fun surplus4 The planne >%4$%%m recurrent saving relating to the Gaste P5I reporte in the 3ecem0er Bu get report has 0een switche to release one off resources from the Gaste P5I reserve instea 4 The -%$./$' TBA position inclu es an earmar6e >$4+m for potential pay relate matters an this is release to support the allocations7 principally the top up of the restructure an re un ancy reserve4 Provisions for any remaining lia0ility for single status an pay mo ernisation have 0een i entifie an the remaining reserves of >$4+m can now 0e release to support the 0u get4 The ta0le a0ove inclu es the following commitments : The month + forecast overspen of >%4+.+m will nee to 0e finance from one off resources4 The 0u get proposals inclu e in appen i1 ' re2uire one off resources of >$4$'+m 0ecause the lea -in times7 primarily ue to consultation re2uirements7 mean that not all the propose savings for -%$'/$" can 0e elivere from $ April -%$'4 The #alt ean )i o report to Policy an !esources Committee in 3ecem0er -%$. committe a >%4%-%m contri0ution towar s the #alt ean CIC=s re evelopment pro<ect to match the contri0ution 0y )ewes 3C4 An allocation of >%4%-%m to support events to mar6 the start of GG$ inclu ing an enhance Arme 5orces 3ay an !emem0rance 3ay4 Policy & !esources committee on the -+th Novem0er -%$- approve a commitment of >%4-m to support the !ug0y Gorl Cup -%$" 0i 4 The restructure an re un ancy reserve was use in -%$./$' to support the voluntary severance scheme &9##( an nee s to 0e toppe up with >$4%m to support savings an service re esigns in -%$'/$" an future years >%4-"m set asi e to fun costs of the local elections in -%$"4 This reflects the e1pecte lower costs as it will occur at the same time as the *eneral Clection4 #et asi e >%4-'+m for a one off contri0ution to the pension fun as recommen e in the triennial review4 The Business !ates !etention forecast -%$'/$" presente to Policy & !esources on the $@th January -%$' highlighte the nee for a replacement Business !ates computer software system an >%4$m has 0een set asi e to support its implementation4

.4.?

.4.+

The allocation of the remaining resources for -%$'/$" are propose for the following reasons: The scale of the A ult #ocial Care reforms7 in particular to implement the Care Bill an the lac6 of certainty a0out the a e2uacy of fun ing to support those changes mean that one off resources have 0een set asi e as part of this 0u get setting process to support the changes4 This is e1plaine in more etail in appen i1 "4

A one of ris6 provision has 0een set asi e to a ress one off or short term ris6s to the council=s 0u get not i entifie at 0u get setting time4 The resources set asi e so far for the Ao ernisation 5un are fully committe in -%$'/$"4 5urther e1pansion of the 9fA programme will re2uire a itional one off investment in wor6force evelopment an training to support the culture change aspects of the Ao ernisation programme4 In a ition7 the refresh of the 95A programme an the longer term aim to eliver further vfm savings will re2uire planne investment in managing this programme4 >%4,m has 0een set asi e for -%$"/$@ to provi e certainty of fun ing an this fun ing coul 0e 0rought forwar epen ing on the timing of 0usiness cases4 Bu gets for certain ICT contracts are currently insufficient4 These are 0eing formally reviewe with a view to consi ering a ifferent sourcing mo el4 #hort term resources have 0een i entifie to 0ri ge the gap while those options are e1plore an the financing will nee to 0e revisite in -%$"/$@4

E&/end%ture E0t%mate0 Late t !o ition in 201"/14 .4'% The Aonth + Targete Bu get Aanagement &TBA( report elsewhere on the agen a shows a pro<ecte overspen of >%4,".m on council controlle 0u gets an an estimate >%4$?@m share of the pro<ecte overspen of NH# controlle s," services4 The overall position is a significant improvement since month , was presente to Policy & !esources Committee4 This is mainly riven 0y improvements to the spen ing forecasts for A ults #ocial Care an Cnvironment7 3evelopment & Housing irectorates4 2'1-)1( Adju0ted #a0e #udget #nternal Tran fer and $t%er &d'u tment .4'$ Internal transfers relate to changes in responsi0ility 0etween services an corporate 0u gets4 In -%$./$' the main transfers consist of the change in accounting for corporate insurance from a centrally hel 0u get to services an the transfer from property rents within 5inance an !esources to financing costs4 The latter is to reflect the use of the capital receipt from the American C1press isposal to offset the loss of rent4 Internal transfers also inclu e the realignment of 0u gets to reflect the outcome of pay mo ernisation an the transfer of the accelerate service re esign savings4 2'1()1* #udget &nal( i of Budget C%ange bet)een 201"/14 and 2014/15 .4'The following ta0le shows how the 0u get has change since -%$./$'4

Tab e G: Ana .0%0 $, budget c9ange0 Re"%0ed 2'1-)1( ba0e budget Pay an Inflation !ecurrent ris6 provision Nne off !is6 Provision Commitments & !einvestment 3emographic an cost service pressures 5ull year effect of -%$./$' savings #avings pac6age -%$'/$" &5ull year effect >$@4,m( Change in use of reserves Pr$/$0ed #a0e #udget 2'1()1* .4'.

D m% %$n 22H71 .4@ $4% $4" --4" @4" -$4-$"4@ .4+ 22*7-

Appen i1 $ shows a etaile 0rea6 own of the propose 0u gets an 0u get changes for each service4 *a( and general inflation a um!tion

.4''

The 0u get estimates for -%$'/$" assume a $8 increase in employee costs an %4"8 increase in the contri0ution rate to the Cast #usse1 pension scheme4 The living wage commitment an changes to the council=s overall pay framewor6 have alrea y 0een ta6en into account in the 0ase 0u get for -%$'/$"4 The provision for general inflation ranges 0etween %8 an -8 epen ing on the type of 0u gete e1pen itureB fees an charges are assume to increase 0y -4"8 as escri0e in paragraph .4.- with the e1ception of par6ing income an penalty charge notices4 Increases in costs a0ove assume inflation level will 0e manage through services 0u get strategies unless the increase is significant an is i entifie as a corporate service pressure4 +i , *rovi ion included in t%e 2014/15 budget

.4'"

.4'@

A >$4%m recurrent ris6 provision an >$4"m one off ris6 provision has 0een 0uilt into the -%$'/$" 0u get in recognition of the financial ris6s inclu e within the overall 0u get pac6age4 This is in line with the recommen ations of the Chief 5inance Nfficer as set out in section @ of this report4 C$mm%tment0 and Re%n"e0tment

.4',

3etails of the commitments an reinvestment in services in a off allocations from reserves are shown 0elow

ition to the one

>%4$%m reinvestment into Aa<or Pro<ects support to put 0u get on a more sustaina0le 0asis an release pressure on the capital programmeB >%4%-m recurrent fun ing to support the *reater Brighton Cconomic Partnership >%4-,m recurrently for the concessionary fares 0u get4

 .4'?

>%4--m to maintain the Council Ta1 !e uction #cheme after the loss of transitional fun ing4

These allocations are offset 0y a re uction in the pay mo ernisation provision of >%4".m as the scheme is now implemente B a itional unringfence grants of >%4@?m for New Homes Bonus an an a itional >$4+%m over the -%$./$' allocation of #.$ grants from government to compensate the loss of Business !ates income as a result of government announcements4 #nve tment in *reventative Service

.4'+

Investment in preventative services has again 0een protecte as far as possi0le recognising that to with raw investment is li6ely to lea to greater me ium an longer term costs4 This inclu es no re uctions in support for carersB no changes to eligi0ility criteria across social careB an carefully manage efficiency savings across other areas inclu ing #upporting People7 an Chil ren=s an A ults #ocial Care &via the 95A programmes(4 The investment in support for the #tronger 5amilies7 #tronger Communities initiative an efforts to more closely align the su0stantial ring-fence Pu0lic Health 0u get with other preventative services will also support innovation4 Impacts of government grant re uctions7 inclu ing re uctions in grants to the community & voluntary sector7 are7 wherever possi0le7 manage through efficiency7 i entifying alternative provision or re-commissioning services across partnerships an Pu0lic Health to ensure minimal impact on preventative wor64 There will also 0e su0stantial a itional investment through the implementation of the Better Care 5un which is focuse on greater integration of services with health7 re ucing acute care costs an episo es7 an improving availa0ility of an access to services as etaile in appen i1 "4 #ervice pressure investment in Chil ren=s #ervices also inclu es appro1imately >%4'%%m to continue support for Carly Help strategies an initiatives which are proving to 0e effective an re uce overall care pathway costs4 Nther aspects of the revenue 0u get strategy an capital investment programme also support preventive strategies4 5or e1ample7 propose investments in housing inclu ing C1tra Care Housing evelopment4 Consi eration is also given to preventative impacts in fees an charges proposals7 for e1ample7 the freeHing of Carelin6 charges to ensure no impact on the ta6e-up of this preventive service4 Service *re ure

.4"%

.4"$

.4"-

The 0u get estimates for priority service pressures have 0een reviewe since 3ecem0er an the propose allocations for emographic growth an other service pressures are >@4"%?m4 The fun ing to cover re uctions in unringfence grants which has re uce from >%4"%%m to >%4'-.m following the announcement of the local government settlement an the fun ing for Homelessness has 0een amen e to reflect the re uction in savings for this area4 The current tren s on the council=s corporate critical 0u gets have 0een ta6en into account in etermining levels of service pressure fun ing4 An a itional >$4%m fun ing has 0een allocate to A ult #ervices to reflect the un erlying activity levels on the Community Care Bu get4 The etaile

allocation of #ervice Pressures fun ing is set out in the *eneral 5un Bu get #trategy at appen i1 .4 #udget Strateg%e0 and Sa"%ng0 .4". The -%$'/$" gap was >-4'?m when reporte to 3ecem0er Policy & !esources an this has now 0een close 4 A summary of the changes ma e to the 0u get proposals since 3ecem0er is given in appen i1 -4 This means the overall full year savings re2uirement is >$@4,'m an the part year savings are >$"4@m4 The overarching Bu get #trategy inclu ing 9alue for Aoney is inclu e in appen i1 .43etails of the service Bu get #trategies7 how they lin6 to the corporate plan an savings proposals are inclu e in appen i1 '4 Sta,,%ng Im/ %cat%$n0 .4"" The staffing 0u get for -%$'/$" inclu es fun ing for a >,4@" living wage4 An assumption of an increase of $8 in pay has 0een inclu e an %4"8 on the cost of pension contri0utions has 0een confirme from the outcome of the triennial review of the Cast #usse1 Pension 5un 4 At this stage in the 0u get process it is ifficult to etermine e1actly how many staff may 0e affecte 0y the proposals4 A 0roa estimate is that in -%$'/$" an estimate $%%-$"% posts may 0e remove from the council=s staffing structure as a result of the savings proposals set out in appen i1 "4 However actual num0ers will 0e epen ent on the etaile options propose an on the results of formal consultation where re2uire 4 #ome of these are alrea y vacant an some will 0ecome vacant through normal turnover4 Base on previous years= e1perience this is li6ely to account for at least half of the posts lost4 As in previous years it is planne to minimise the num0er of staff at ris6 of re un ancy through:

.4"'

.4"@

Controlling recruitment an only ma6ing permanent appointments in e1ceptional circumstances an when all other alternatives have 0een e1hauste B Hol ing vacancies where possi0le internally to increase the opportunities for re- eploymentB Ainimise the use of interim7 consultant an agency appointmentsB

.4", .4"?

These measures will continue as we wor6 with tra es unions an colleagues on the etaile staffing implications4 A 9oluntary #everance #cheme will 0e accessi0le for staff in service areas su0<ect to planne savings from re esign 0ut there will not 0e an open scheme across the wor6force4 This is 0ecause it is only a few months since an open scheme was offere an it is felt that a more targete approach to releasing staff in areas un ergoing change is nee e at this moment4 It is also propose to retain the previous enhance terms applie in the -%$. 9oluntary #everance scheme for any voluntary severance progresse as part of these 0u get proposals4

Annua M%n%mum Re"enue Pr$"%0%$n ;MRP< Statement and Prudent%a Ind%cat$r0 .4"+ The council is re2uire 0y law to prepare an annual statement on the amount of e0t that will 0e repai in the following year4 The statement for -%$'/$" is set out in appen i1 $%4 The pru ential capital finance system intro uce in -%%' re2uires the council to set a num0er of in icators for affor a0ility7 pru ence an sustaina0ility4 The recommen e in icators are set out in appen i1 $$4 Aem0ers shoul note the in icator for the authorise limit is a statutory limit re2uire to 0e etermine 0y full Council un er section .&$( of the )ocal *overnment Act -%%.4 C$r/$rate #udget0 .4@$ The council 0u get contains a num0er of corporate 0u gets that are monitore an controlle centrally4 3etails of the main corporate 0u gets ; concessionary fares7 insurance7 financing costs an contingency are set out in the following sections4 Conce .4@ionar( Fare

.4@%

The overall 0u get for reim0ursing local 0us operators for the cost of free travel for pensioners an the isa0le is forecast to increase 0y '4@8 to >$%4@m ne1t year4 The ma6es provision for the potential outcome of negotiations to e1ten the fi1e eals with the main 0us operators that were ue to en on .$ Aarch -%$'4 A report will 0e 0rought to this Committee for Aem0ers to consi er the new fi1e eals as soon as negotiations have 0een complete 4 The main reasons for the increase are: an inflation increase of -4+8B an an increase in the overall num0er of trips reflecting the intro uction of new routes to Crawley7 a new service in the spring from Brighton #tation an along the seafront an increase usage of the services along the coast towar s Gorthing an Portsmouth4 #n urance

.4@.

The costs of insurance have now 0een recharge in full to service 0u gets so the corporate 0u get re uces to Hero4 The total amount recharge in -%$'/$" of >.4$m represents a -4+8 re uction in costs over the previous year an covers 0oth the cost of insurance premia an the net cost of meeting successful claims against the council pai uring the year4 The council successfully reten ere the 0ul6 of its insurance cover in Aarch last year elivering the >%4.m anticipate savings 0uilt into the 0u get for -%$./$'4 A further re uction of >%4$m has 0een 0uilt into the 0u get for ne1t year to reflect lower payments on claims 0ase on current tren s4 Nver the me ium an longer term there is a significant ris6 that claims e1perience across the country this year arising from severe weather will a to future premia costs4 In a ition officers are aware that a num0er of councils have face significant increases in pu0lic lia0ility premiums following a reassessment of the way insurance companies are calculating ris64 The council

.4@'

coul face an increase from $ Novem0er which woul nee to 0e covere from the overall ris6 provision in contingency4 Financing Co t .4@" The financing costs 0u get reflects the cost of financing the council=s capital investment plans4 The council has a fully fun e capital programme in -%$'/$" epen ing on the achievement of certain capital receipts an the costs of fun ing the programme are provi e for in 0oth the general fun an housing revenue account revenue 0u gets4 The financing costs 0u get for -%$'/$" is forecast to 0e >?4+m7 a ecrease of '4-8 on the a <uste 0ase for the current year4 This is ue to a >%4.m re uction in anticipate general fun 0orrowing costs an >%4$m from higher investment income4 The re uction in 0orrowing costs reflects the fact that the council has not un erta6en any new 0orrowing in -%$./$' an has instea use reserves to finance the capital programme as the loss of investment interest is far less than the saving achieve 0y not 0orrowing4 Nver time the council will nee to 0orrow either when the reserves have 0een use or earlier when money mar6et con itions are right4 An estimate of these costs has 0een 0uilt into future pro<ections however they shoul 0e more than offset 0y higher levels of investment interest as pro<ecte short term interest rates rise4 The increase in investment income largely reflects 0etter than anticipate cash flows an a mo est increase in investment performance4 Contingenc( .4@, The council=s contingency 0u get inclu es provision for costs which are li6ely to occur 0ut for which the estimate cost cannot 0e a e2uately foreseen at this stage7 for e1ample for pay4 It also inclu es ris6 provisions an other resources awaiting transfer to services4 The propose contingency for -%$'/$" is >'4.,m as etaile in ta0le ?4 Tab e H: C$nt%ngenc. Corporate recurrent ris6 provision Corporate one off ris6 provision Pay provision for remaining pay mo ernisation changes Ao ernisation fun to support the 95A programme -%$'/$" Implementation fun ing for A ult #ocial Care reforms ICT short term resources for contract pressures Council ta1 re uction grant for Parish/*ar en Committees !esources to cover the impact of awaite government announcements on grants #ervice Pressure fun ing for electricity an gas T$ta C$nt%ngenc. D m% %$n $4%% $4"% %4$$ %4,% %4"% %4.% %4%$ %4$" %4$% (7-G

.4@@

C9ange %n u0e $, re0er"e0 .4@? The 0u get strategy for -%$'/$" raws on reserves to provi e one off ris6 provisionsB temporary fun ing to cover the part year effect of the savings pac6age an investment in the elivery of savings for future years4 COU1CIL TA= A1+ RE!ERE1+UM The minority *reen A ministration are proposing a council ta1 increase of '4,"8 which will trigger a referen um4 3etaile proposals showing how the a itional resources generate 0y the higher council ta1 will 0e use are given in appen i1 $, which also inclu es proposals for a su0stitute 0u get an estimates of the a itional one-off costs associate with the referen um4 A council ta1 increase of '4,"8 results in a 0an 3 council ta1 of >$7.'?4$$ an increase of >@$4$$ on this year4 A threshol increase of $4+,8 in the council ta1 results in a 0an 3 council ta1 for the city council element of the council ta1 of >$7.$-4." an increase of >-"4." on this year which coul 0e su0<ect to change epen ing on the final gui ance from C)* in relation to the treatment of levies4 In or er to propose an overall council ta1 for the city the council ta1es of the precepting authorities nee to 0e 6nown4 The Police an Crime Commissioner for #usse1 is proposing a council ta1 increase of .4@8 with the 0an 3 council ta1 increasing to >$'.4'- for -%$'/$"7 or the ma1imum permissi0le un er Central *overnment referen um principles7 whichever is lower4 Cast #usse1 5ire Authority is ue to set their -%$'/$" Ban 3 council ta1 on the $' 5e0ruary -%$'4 The 0u get for !otting ean Parish will 0e agree shortly4 Su!!lementar( Budget re!ort to Budget Council '4' Not all the 0u get an council ta1 information nee e to set the 0u get an council ta1 is availa0le at present therefore a itional information will 0e nee to 0e provi e for Bu get Council4 This will inclu e: Any other grants that are announce 0efore Bu get Council4 The Cnvironment Agency levy figure agree for -%$'/$" an any changes to the 0u get an council ta1 calculation resulting from the levy4 The agree council ta1 set 0y #usse1 Police Authority7 Cast #usse1 5ire Authority an !otting ean Parish4 The statutory council ta1 calculations re2uire un er the $++- )ocal *overnment 5inance Act4 The full 0u get an council ta1 resolution for Bu get Council4 5ee 0ac6 from the 0usiness ratepayers meeting hel on $$ 5e0ruary4

(7 '4$

'4-

'4.

*7 "4$

ME+IUM TERM !I1A1CIAL STRATEGY A1+ RIS> ASSESSME1T The Ae ium Term 5inancial #trategy &AT5#( set out in appen i1 ? shows the revise resources an spen ing pro<ections for -%$'/$" to -%$+/-%4 The

financial pro<ections show that proposals nee to 0e evelope to a ress a 0u get gap of nearly >+%m over the " year perio from -%$"/$@ onwar s4 The section after the pro<ections outlines how this might 0e achieve 4 "4All the pro<ections are 0ase on the 0est information currently availa0le an further wor6 has 0een un erta6en to refine the pro<ections an provi e Aem0ers with graphs showing tren s on 6ey in icators4 However7 in the current financial climate an with national elections in -%$" there are many uncertainties4 The ris6 assessment set out in appen i1 + e1plains in more etail the uncertainties facing the 0u get4 REPORT O! T4E C4IE! !I1A1CE ;SECTIO1 1*1< O!!ICER U1+ER SECTIO1 2* O! T4E LOCAL GOIER1ME1T ACT 2''#ection -" of the )ocal *overnment Act -%%. re2uires the Chief 5inance &#ection $"$( Nfficer of a local authority to report on the ro0ustness of the estimates inclu e in the 0u get an the a e2uacy of the reserves for which the 0u get provi es4 This report has to 0e consi ere 0y Policy & !esources Committee an the full Council as part of the 0u get approval an council ta1 setting process4 The 0u get reports on this agen a are focuse on the *eneral 5un !evenue Bu get -%$'/$" an the Capital Programme4 It also consi ers 6ey me ium term issues face 0y the council4 +obu tne @4of - timate

E7 @4$

There is inevita0ly an element of <u gement as 0u get estimates of spen ing an income are ma e at a point in time an may change as circumstances change4 This statement a0out the ro0ustness of estimates cannot give a $%%8 guarantee a0out the 0u get 0ut gives the council reasona0le assurance that the 0u get has 0een 0ase on the 0est information an assumptions availa0le at the time4 In setting the 0u get for -%$'/$"7 current e1pen iture tren s an service eman s have 0een consi ere 0y the C1ecutive )ea ership Team an Corporate Aanagement Team4 The 0u get for -%$'/$" has therefore 0een set ta6ing into account the tren s in the TBA + report an further pro<ections of future eman an cost4 Ghile Chil ren=s #ervices are showing an un erspen in -%$./$' an have 0een successful in achieving their 9alue for Aoney targets the corporate critical agency placements 0u get will nee close monitoring4 The focus on the Carly Help #trategy shoul help ensure that this e1pen iture shows ongoing re uctions4 A ult #ocial Care is showing a significant overspen in -%$./$' although that has re uce somewhat uring the course of the year7 partly from one off rather than recurrent measures4 Fnachieve savings are a 6ey contri0utor to that overspen an there remain challenges to elivery of those ne1t year4 The one off ris6 provision of >$4"m is inclu e in the 0u get to provi e some short term cover against those unachieve savings if nee e in -%$'/$"4 #ervice pressure fun ing has 0een allocate in the 0u get to cover pro<ecte tren s in eman inclu ing for e1ample )earning 3isa0ility transitions4 The un erlying pressures on the Community Care 0u get 0ase on the TBA + forecast mean that an a itional >$m recurrent service pressure fun ing has 0een a e to the A ult #ocial Care 0u get 0ringing the total to >-4"m4 At this stage no assumptions have 0een ma e a0out the success of the Better Care

@4.

5un at re ucing pressure on the Community Care Bu get in a alrea y propose savings targets4 @4'

ition to the

The council has emonstrate its a0ility to continue to eliver very challenging savings programmes4 The successful 95A programme has 0een 0ac6e 0y su0stantial investment particularly in pro<ect management capacity to un erpin its elivery an ensure a particular focus on trac6ing casha0le savings4 5or this reason there is a itional one off investment inclu e in this 0u get pac6age for the implementation of the ne1t phase of the 95A programme over the ne1t two years4 Githout this investment it is consi ere that the planne level of 95A savings will not 0e achieva0le4 A recurrent ris6 provision of >$m is inclu e in the 0u get to guar against any ris6s not 6nown at 0u get setting time inclu ing ris6s associate with the successful implementation of the wi e-ranging savings pac6age7 in particular the eman ing new targets for A ult #ocial Care 95A programme4 In total this 0rings the one off an recurrent ris6s provisions to >-4"m7 compare with >$4"m in -%$./$'4 &de.uac( of +e erve

@4"

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The recommen ation on the pru ent level of *eneral 5un wor6ing 0alance has 0een 0ase on the ro0ustness of estimates information an a ris6 assessment of the 0u get4 The analysis in icates a continuation of an un erlying pru ent level of wor6ing 0alance of >+m &e1clu ing school 0alances(4 This represents '4%8 of the council=s net revenue 0u get e1clu ing schools4 There is un ou0te ly greater financial ris6 in the new 0usiness rates retention system than in the previous fun ing mo el7 particularly as a result of the appeals process4 However we are min ful of the nee to 6eep reserves as low as possi0le an the value of successful appeals in -%$./$' was lower than ha 0een e1perience in the previous year4 All specific reserves have 0een reviewe in etail to ensure that they are set at an appropriate level4 This is set out in appen i1 ,4 Aany of the council=s earmar6e reserves fulfil a specific legal or financial re2uirement7 for e1ample the Insurance !eserve4 A significant re uction in the Gaste P5I reserve has 0een ma e as a result of the finalisation of the sharing agreement for income from electricity an commercial waste4 & urance Statement of t%e Council/ Section 151 $fficer

@4,

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In relation to the -%$'/$" general fun revenue 0u get the #ection $"$ officer has e1amine the 0u get proposals an 0elieves that7 whilst the spen ing an service elivery proposals are challenging7 they are nevertheless achieva0le given political an management will to implement the changes7 goo management7 an the soun monitoring of performance an 0u gets4 The council also has a goo recor of managing other potential financial ris6s that arise from time to time which provi e assurance that it can proactively manage ris6s such as e1ternal legal challenges7 capital cost variances an treasury management ris6s4

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In terms of the a e2uacy of reserves7 the #ection $"$ officer consi ers a wor6ing 0alance of >+m to 0e a e2uate ta6ing into account other reserves7 the ris6 provisions an the council=s trac6 recor in 0u get management4 A1ALYSIS & CO1SI+ERATIO1 O! A1Y ALTER1ATIIE OPTIO1S The 0u get process allows all parties to put forwar via0le alternative 0u get an council ta1 proposals to Bu get Council on -, 5e0ruary -%$'4 Bu get Council has the opportunity to e0ate 0oth the proposals recommen e 0y Policy & !esources Committee at the same time as any via0le alternative proposals4 All 0u get amen ments must have 0een Dsigne offE 0y finance officers no later than $- noon on Aon ay -'th 5e0ruary -%$'4 COMMU1ITY E1GAGEME1TA CO1SULTATIO1 A1+ SCRUTI1Y The results of the consultation an engagement processes are shown in appen i1 $"4 In a ition further meetings were hel with the Nl er People=s Council7 Oouth Council7 Community Gor6s an the #chools 5orum4 Consultation with the representatives of Business !atepayers must 0e 0ase on 0u get proposals an is ta6ing place after pu0lication of this report an the fee 0ac6 will 0e inclu e in the final report to Bu get Council4 In a ition to formal consultations7 there have 0een a range of engagement events esigne to facilitate un erstan ing of the council=s overall 0u get position an o0tain general fee 0ac6 on proposals4 These inclu e : The #chools 5orum where a report on the potential areas of interest an impact of the *eneral 5un 0u get proposals were iscusse at a meeting on -% January -%$'4 The Nl er People=s Council where a range of technical 2uestions a0out the council=s fun ing position were e1plore an a secon meeting was hel to e1plore A ult #ocial Care proposals in more epth4 An event for Business !atepayers representatives on $$ 5e0ruary -%$' will provi e the opportunity to e1plain in more etail changes to Business !ates in -%$'/$" following government announcements an how the 0u get proposals an current initiatives continue to support economic activity in the city4 This follows engagement earlier in the year with the Cconomic Partnership4 Consultation an engagement with Community Gor6s in eveloping proposals7 particularly in Chil ren=s #ervices7 an through co-opte representation on the Bu get #crutiny Panels4 A cross-party roun ta0le meeting with Tra es Fnions4 3epartmental Consultative *roups &3C*s( which provi e an opportunity for further consultation with Tra es Fnions4

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The consultation an engagement activity influence the original 0u get proposals pu0lishe in 3ecem0er for e1ample through applying no inflationary increase to par6ing charges an protecting as far as possi0le spen on the pu0lic realm4 There are clearly a range of views hel a0out appropriate council ta1 levels4 #ome of the changes propose in this report an summarise in appen i1 - flow from further fee 0ac6 since the proposals were pu0lishe

inclu ing consi eration of the Bu get #crutiny Panel=s recommen ations4 These inclu e: concerns a0out the scale of savings in A ult #ocial Care which have le to the removal of the original proposal in relation to homecare7 a re uction in the saving for the A0le & Gilling service su0si y an greater lea in times for the savings on the )earning 3isa0ility Community Care 0u get4 The proposals for a '4,"8 council ta1 set asi e a significant proportion of the a itional resources to re uce the re2uire savings in A ult #ocial CareB provision of sufficient fun ing to ena0le the homewor6 clu0s in li0raries to guarantee they can continue to the en of the current school yearB minor changes to savings in Chil ren=s #ervices to ensure e2ual impact on council an community & voluntary sector service provisionB the removal of a saving for homelessness prevention with a compensating re uction in service pressure fun ing4

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The full response to the scrutiny report is shown in appen i1 $@4 CO1CLUSIO1: The council is un er a statutory uty to set its 0u get an council ta1 0efore $$ Aarch each year4 The recommen ations to Bu get Council containe within this report together with the recommen ations to follow in the supplementary report to full Council7 shoul ena0le the council to meet its statutory uty4 !I1A1CIAL & OT4ER IMPLICATIO1S: 5inancial Implications:

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These are containe within the main 0o y of the report4 Finance Officer Consulted: Mark Ireland )egal Implications: Date: 5 February 2014

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Policy & !esources Committee is responsi0le for formulating 0u get proposals for a option 0y the council4 Power to a opt the 0u get is veste in 5ull Council alone4 5or these purposes7 the D0u getE inclu es the allocation of financial resources to ifferent services an pro<ects7 propose contingency fun s7 an setting the council ta14 The provisions re2uiring local authorities to con uct referen ums over the setting of e1cessive Council Ta1 were intro uce through amen ments ma e 0y the )ocalism Act -%$$ to the )ocal *overnment 5inance Act $++-4 These provisions replace powers previously hel 0y the #ecretary of #tate to set limits for Council Ta14 #ection "-:B of the )ocal *overnment 5inance Act $++re2uires a 0illing authority to etermine whether its relevant 0asic amount of council ta1 is e1cessive4 If the amount is e1cessive7 the 0illing authority is

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re2uire to hol a referen um7 with a view to applying an alternative amount if the e1cessive amount is re<ecte in a referen um4 $%4" The etermination of whether a relevant 0asic amount of council ta1 is e1cessive must 0e ma e in accor ance with principles etermine 0y the #ecretary of #tate an approve 0y resolution of the House of Commons4 The 3epartment for Communities an )ocal *overnment &C)*( has alrea y ma e it 6nown that for the -%$'/$" financial year it is e1pecte that an increase of more than -8 will 0e regar e as e1cessive4 Therefore7 local authorities opting for an increase of more than -8 will 0e e1pecte to hol a referen um4 However7 they still nee to ma6e the re2uire etermination once the principles have 0een approve 0y the House of Commons4 Fsually any authority which oes nee to hol a referen um must o this 0y no later than the first Thurs ay in Aay4 The #ecretary of #tate is a0le to specify a ifferent ate as the latest ate for a referen um7 an in -%$' the latest ate is -- Aay4 This is also the ate of the Curopean elections4 It is possi0le for an authority to hol a referen um earlier than that7 0ut it woul nee to wor6 out a timeta0le that allows it to ma6e the re2uire etermination an comply with the notice re2uirements4 If an authority that is re2uire to hol a referen um oes not o so when it is re2uire 7 the authority=s su0stitute calculations will come into effect4 The )ocal Authorities &Con uct of !eferen ums( &Council Ta1 Increases( &Cnglan ( !egulations -%$- impose various re2uirements as to the con uct of the referen um7 inclu ing the wor ing of the 2uestion to 0e put to eligi0le voters4 Lawyer Consulted: Oli er Di!on C2ualities Implications: $%4? The process for assessing the e2ualities implications of the 0u get changes for -%$'/$" an an assessment of the cumulative impact is shown in appen i1 $-4 All the C2ualities Impact Assessments are inclu e at appen i1 $.4 #ustaina0ility Implications: $%4+ A car0on 0u get has 0een set for -%$'/$"4 This shows the level of spen on energy an the estimate car0on emissions across each car0on 0u get area an inclu es a planne '8 re uction in -%$./$' an again in -%$'/$"4 This mo est target will 0e challenging to meet on the 0asis of the current approach to car0on management4 Date: 4 February 2014

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$%4$% Car0on 0u gets provi e the organisation with a framewor6 of accounta0ility for re ucing car0on emissions from our 0uil ings7 street lights an fleet4 They were first intro uce in -%$-/$. an supporte 0y actions plans that set out how car0on 0u gets are to 0e achieve an these plans are reviewe an challenge once a year4 The council spen s aroun >,4"m each year heating an lighting its 0uil ings7 lighting our neigh0ourhoo s an travelling aroun the city to eliver 6ey services4 Gith rising energy an fuel prices an the purchase

of annual Car0on !e uction Commitment allowances7 the 0usiness case for re ucing car0on emissions is clear4 $%4$$ To ma6e significant savings in car0on emissions a ifferent approach is re2uire an the Nne Planet :ero Car0on approach provi es a fresh focus to car0on management4 Cnergy efficiency scoping wor6 is un erway for a set of 6ey corporate 0uil ings to help i entify a programme of investment4 Planne maintenance programmes for corporate an school 0uil ings each year a ress 6ey energy saving initiatives inclu ing oil to gas conversions an improvements to insulation4 Housing=s rolling investment programme for communal lighting an lifts continues to improve the overall efficiency of 0uil ings4 In a ition there will 0e long term investment in more energy efficient street lighting fun e from )ocal Transport Plan resources4 There will 0e a clear focus place on re ucing car0on emissions from 0uil ings through the Gor6styles phase . programmes re ucing 0oth the total num0er of 0uil ings occupie 0y the council an also ensuring improve energy efficiency in the retaine 0uil ings4 $%4$- The Council=s -%$-/$. Car0on !e uction Commitment footprint accounte for -.7'"- tonnes of CN- from council 0uil ings for which the council purchase >%4-?$m worth of C!C allowances at >$- per tonne4 This was -," tonnes less than in -%$$/$-4 5rom -%$'/$" allowances will rise to >$@ per tonne4 $%4$. Non half-hourly electricity prices increase 0y $"8 at the 0eginning of April -%$.7 half-hourly electricity an gas prices increase 0y $%8 an ,87 respectively7 in Ncto0er -%$.4 $%4$' The Council=s car0on 0u get ata up ate is etaile in appen i1 $' an profiles the spen an CN- car0on footprint for -%$-/$. across the council an sets out the targets for -%$./$' an -%$'/$"4

SUPPORTI1G +OCUME1TATIO1 A//end%ce0: $4 -4 Aovements in Bloc6 Allocations -%$./$' to -%$'/$" Changes in the 0u get pro<ections since the " 3ecem0er -%$. 0u get report to Policy & !esources Committee *eneral 5un Bu get #trategy Bu get #trategy for each main 0u get area an -%$'/$" A ult #ocial Care !eforms an Better Care 5un #ummary of special an specific grant allocations for -%$./$'7 -%$'/$" an -%$"/$@ !eview of the Council=s reserves inclu ing the planne use of reserves #ummary of the Ae ium Term 5inancial #trategy -%$'/$" to -%$+/-% Assessment of !is6s Ainimum !evenue Provisions statements Pru ential In icators -%$./$' to -%$"/$@ C2ualities Impact Assessment ; Cumulative impact C2ualities Impact Assessment ; In ivi ual Car0on Bu get for -%$'/$" #ummary report Bu get Consultation Ainutes of the Nverview an #crutiny Committee an the recommen e response !eferen um Bu get etaile savings proposals

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