Item 05 - General Services Budget Setting 2023_24 and 2024_25
West Dunbartonshire Council · 1 March 2023
Back to West Dunbartonshire Council — 1 March 2023 and its agenda
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer - Resources Council: 1 March 2023 Subject: General Services Budget Setting 2023/24 and 2024/25 – 2027/28 Budget Estimates and Council Tax Setting 1. PURPOSE 1.1 This report summarises the key issues relating to the revenue budget estimates and setting of council tax for 2023/24. It also provides budget estimates for 2024/25 to 2027/28. Note this is the first time the budget estimates have been extended to a five year window. Within the report the mid-range estimates are noted, with the best case and worst case estimates summarised at paragraph 4.15.1. 1.2 To provide Members with an update in relation to the capital budget. 1.3 To seek Members approval to set the General Services revenue and capital budgets for 2023/24 through approval of options to close the 2023/24 budget gap. 2. RECOMMENDATIONS 2.1 Members are asked to: a) Note the updated position regarding projections for the revenue budget in 2022/23 as identified at paragraph 4.1.1. b) Note the projected reserves position of the Council as at 31/03/2023 as identified at paragraph 4.1.5. c) Agree the revision to the use of the Service Concessionary One- Off Benefit as identified at paragraph 4.1.6. d) Note the projected outturn position for capital for 2022/23 as detailed in Appendix 5 including information in relation to the re- profiling of a number of projects and resources into future years. e) Approve the options to be used to set the General Services revenue budget for 2023/24 and assist with future projected budget gaps including consideration of proposed saving options and use of reserves. f) Note the management adjustments to be used to set the General Services revenue budget for 2023/24 and assist with future projected budget gaps. ITEM 05
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g) Agree the 2023/24 Council Tax rate. h) Approve the proposed updated capital plan from 2023/24 as detailed in Appendix 6. i) Agree that a report will be brought to a future meeting of the Corporate Services Committee to agree the 2023/24 West Dunbartonshire Leisure Trust management fee. 3. BACKGROUND 3.1 The provisional Local Government Finance Settlement for 2023/24 was published on 20 December 2022. Initial analysis of the settlement indicated a small detrimental impact on the Council’s budget gap. Council were advised of this as part of a verbal update provided at the Council meeting on 21 December 2022. The main reason for this impact was that the funding assumption previously reported was a flat cash settlement however, after, allowing for new policy commitments, the provisional settlement was marginally worse. 3.2 After the publication of the provisional settlement there is a period of review where Directors of Finance across all Scottish Local Authorities can raise queries with the Scottish Government. This year the number of queries exceeded 100 which reflects the complexity of the settlement and the need for it to be closely scrutinised and checked. This included the reinstatement of £32.8m of funding which the Scottish Government had previously provided for the 2021/22 Teacher’s Pay Award and had committed to baseline. This was removed from the provisional settlement by the Scottish Government without consultation with COSLA. This reinstatement, and other amendments, improved the overall settlement for the Council to a position which is slightly more favourable than flat cash however is still not a level of funding that reflects inflationary increases. Therefore it still remains a real terms cut to local government funding which requires the Council to identify savings options to bridge the budget gap. 3.3 A report to Council on 21 December 2022 reported an estimated 2023/24 budget gap of £21.142m in the mid-range and provided a range of options for Member consideration to close that gap. As a result of decisions by Council to approve a number of these options, in addition to £0.899m of management adjustments, the 2023/24, and future year budget gaps were reduced as set out in Exhibit 1. Exhibit 1: Mid-Range Budget Gap After 21/12/22 Council Meeting 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 21/12/22 Council Report 21,142 27,925 34,509 41,141 48,074 Saving Options Agreed 21/12/22 (3,019) (4,042) (4,184) (4,184) (4,184) Management Adjustments Reported 21/12/22 (899) (1,167) (1,356) (1,356) (1,356)
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Service Concessionary Savings (2,831) (3,259) (3,963) (4,328) (4,249) Updated Cumulative Budget Gap 14,393 19,457 25,006 31,273 38,285 3.4 This position has been further updated to reflect changes since 21 December 2022. The revised position is set out in the remainder of this report. 4. MAIN ISSUES 4.1 Budgetary Control Projection for 2022/23 and Review of Reserves 4.1.1 As at period 9, Officers were projecting a year-end adverse position of £1.472m. However, at its 26 October 2022 meeting, Council agreed to revise the allocation of Residential Care Costs to a 72% HSCP/28% Education split with a proportionate share of the budget being passed to the HSCP. This, when factored into future budgetary control reports, will increase the projected adverse variance by £1.419m to £2.891m. Of this, it is estimated that the projected impact of COVID is £0.748m which will be fully funded by Scottish Government COVID funds carried forward from 2021/22. This leaves an underlying adverse variance of £2.143m. For the purposes of this budget-setting report this is assumed to be the year-end position, however it should be noted this positon is subject to change by the year end. 4.1.2 Based on the updated 2023/24 draft budget (reflecting this report) the Prudential Reserve level has been calculated as £5.641m, which reflects 3% of net expenditure. This is a 1% increase to the prudential target (previously 2%) and was agreed by Council at its meeting on 21 December 2022. At the same meeting, Council agreed to fund this increase from the one off benefit generated by the Service Concessionary Financial Flexibility. The amount needed to meet the commitment to increase the prudential target to 3% has increased from the amount reported to Council on 21 December 2022 by £0.392m from £1.750m to £2.142m. 4.1.3 On 21 December Council also agreed the Service Concessionary Financial Flexibility one off benefit would be used to fund the Council’s 2022/23 projected overspend which was £1.5m as at the 21 December meeting but has increased by £0.643m to £2.143m as stated in paragraph 4.1.1. 4.1.4 On 21 December Council also agreed to earmark £1 million to provide a further £0.250m cost of living support each year for the next four years with this to be funded from the Council’s general reserves including the transfer of the balance of £0.990m from the Service Concessionary one off benefit. 4.1.5 Projected levels of reserves held by the end of 2022/23 are set out in Exhibit 2a.
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Exhibit 2a – Summary of Projected Unearmarked Reserves £,000 Unearmarked reserves as at 31/03/22 3,503 Changes Budgetary Control Projection 2022/23 (2,143) Allocation of Service Concessionary Financial Flexibility to fund overspend agreed 21 December 2022 1,500 Allocation of further use of Service Concessionary Financial Flexibility to fund increase in overspend since 21 December 2022 643 Allocation of Service Concessionary Financial Flexibility to fund increase in prudential target from 2% to 3% agreed 21 December 2022 2,138 Projected Unearmarked reserves as at 31/03/23 5,641 Prudential Target for 2023/24 (5,641) Projected Free Unearmarked Reserves 0 4.1.6 Exhibit 2b sets out the revised use of the one off Services Concessionary benefit to reflect the need to: provide additional amounts for the projected 2022/23 overspend increase the prudential target to 3% reduce the voluntary redundancy reserve to counter balance the additional amounts required reflect the 21/12/22 Council decision to invest in the Cost of Living Fund. Exhibit 2b – Revised Use of Service Concessionary One Off Benefit Change Required 21/12/22 Use £,000 Changes £,000 Revised Use £,000 One Off Benefit None 29,630 0 29,630 Voluntary Redundancy & Early Retirement Reserve Decrease (para 4.1.6) (15,000) 1,031 (13,969) Smoothing Fund for Three Year Service Transformation Programme None (6,000) 0 (6,000) Increase Prudential Target to 3% Increase (para 4.1.2) (1,750) (388) (2,138) Absorb Estimated 2022/23 Overspend Increase (para 4.1.3) (1,500) (643) (2,143) Scottish Government Pay Award Funding Provided as Capital Funds in 2022/23 and 2023/24 None (4,390) 0 (4,390) Cost of Living Support Increase (para 4.1.4) 0 (990) (990) Remaining Balance into General Reserves 990 (990) 0 4.2 Scottish Government Settlement to Councils 2023/24
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4.2.1 The Scottish Budget was announced by the Deputy First Minister on 15 December 2022 and the Local Government Finance Circular 11/2022 was published on 20 December 2022 (subsequently revised 10 January 2023) providing detail of the provisional total revenue and capital funding allocations for 2023/24 (one year only). The provisional total funding allocations form the basis for the annual consultation between the Scottish Government and COSLA ahead of the Local Government Finance (Scotland) Order 2023 to be presented to the Scottish Parliament in February 2023. 4.2.2 The Circular outlines that the Scottish Government will work in partnership with local government to implement the budget and the joint priorities in return for the full funding package worth £13.2 billion which includes: £260 million to support the local government pay deal and additional funding to ensure that payment of Scottish Social Services Council fees for the Local Government workforce which will continue to be made on a recurring basis. £72.5 million increase to the General Revenue Grant. £105 million to give effect to the devolution of Non-Domestic Rates Empty Property Relief. Maintained key in-year transfers worth over £1 billion and added a further net £102 million of resource to protect key shared priorities particularly around education and social care. £50 million capital to help with the expansion of the Free School Meals policy. Additional funding of £100 million to deliver a £10.90 minimum pay settlement for adult social care workers in commissioned services Consolidation of £30.5 million for the homelessness prevention fund. 2023/24 Scottish Government Funding for West Dunbartonshire Council 4.2.3 Officers have analysed the Scottish Government settlement to confirm the Council’s total 2023/24 funding compared to the funding made available in 2022/23 before adjusting for changes in funding which have associated commitments. This is summarised in Exhibit 3. Exhibit 3 – Summary of 2023/24 Funding vs 2022/23 Funding £,000 2022/23 Revenue Support Grant as per Budget Book 209,066 Remove one off Local Authority COVID Economic Recovery (LACER) Funding (774) Remove one off interim care funding (336) Add additional 2022/23 pay award funding 4,748 Updated 2023/24 Projected Funding 212,704 Impact of Settlement on Income 4,051 2023/24 Revenue Support Grant 216,755 4.3 Future Years Scottish Government Funding
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4.3.1 In terms of assumptions on future year Scottish Government funding the spending review published in May 2022 indicated the total budget for Local Government would remain flat cash until 2026/27. Whilst the 2023/24 settlement has resulted in a small cash increase it is still considered prudent to maintain an assumption of flat cash in the best case and mid-range scenario and a 1% reduction in funding in the worst case scenario. This assumption will be kept under review throughout 2023/24. 4.4 Council Tax 4.4.1 As the setting of Council Tax is subject to a political decision no assumptions have been made about any increase in 2023/24 or future years. However a modest growth in the Council Tax base has been assumed over the next five years as set out in Exhibit 4. Exhibit 4: Estimated Council Tax Income 2023/24-2027/28 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 Council Tax Income (before any increase) 38,126 38,126 38,126 38,126 38,126 Estimated Council Tax Base Growth 213 477 658 852 1,047 Total Council Tax Income 38,339 38,603 38,784 38,978 39,173 4.5 Total Funding 4.5.1 Exhibit 5 summarises the total estimated funding over the next five years within the mid-range scenario. Exhibit 5: Estimated funding 2023/24-2027/28 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 General Funding 216,755 216,755 216,755 216,755 216,755 Council Tax income 38,339 38,603 38,784 38,978 39,173 Total Funding 255,094 255,358 255,539 255,733 255,928 4.6 Base Budget 4.6.1 The base budget for 2023/24 starts off as the 2022/23 revenue budget of £251.693m and is then adjusted for the changes set out in the following paragraphs. 4.6.2 There are elements of Scottish Government funding that are provided as part of the settlement with the expectation that they are used to deliver the service/policy intended. The base budget needs to be adjusted to reflect the additional costs for delivering on these funding commitments and the budget increase is limited to the funding. These new
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commitments, or changes to previous commitments, are set out in Exhibit 6. Exhibit 6: Funding Commitments 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 HSCP Free Personal & Nursing Care 144 144 144 144 144 Share of Real Living Wage Funding 1,686 1,686 1,686 1,686 1,686 Increase in Criminal Justice 3 3 3 3 3 COUNCIL Whole Family Wellbeing Fund 602 602 602 602 602 Local Energy Strategy 75 75 75 75 75 Devolution of Empty Property Relief 862 862 862 862 862 Rapid Rehousing Transition Plan 13 13 13 13 13 Reduction in Additional Teachers Funding (66) (66) (66) (66) (66) Reduction in Teachers Induction Scheme (46) (46) (46) (46) (46) 1+2 Languages Funding Removed (34) (34) (34) (34) (34) Net Funding Commitments 3,239 3,239 3,239 3,239 3,239 4.6.3 There are a number of base budget adjustments required to reflect prior year decisions, one off costs in 2022/23 and/or decisions taken at the 9 March 2022 Council meeting. These are: Additional loan charges as consequence of capital growth items agreed by Council on 9 March 2022. Removal of a historic assumption that the HSCP requisition would reduce in line with the assumption on future Council settlements. Adjusting for historic assumption about ongoing recurring and procurement savings – I have assumed no further savings will be made from 2025/26 onwards. Remove one off contribution to cost of living fund Remove one off cost in 2022/23 for COVID related activity Remove one off cost in 2022/23 for hosting election Remove one off cost in 2022/23 for hosting community council elections. Remove one off cost in 2022/23 for foodbank support Remove one off cost in 2022/23 for water safety policy Adjust for the end of a commitment in relation to Clydebank Town Hall and ending loneliness funding Adjust to reflect profiling of previously agreed management adjustments Remove investment in Modern Apprenticeship scheme from
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2026/27 onwards. 4.6.4 In addition there is a need to adjust the base budget for decisions taken during 2022/23. These are summarised below. 4.6.5 When Council agreed the 2022/23 Budget on 9 March 2023 members agreed two things in relation to the cost of residential care: 1. Whilst the education budget needed to increase from £2.5m to £3.225m to cover increased costs, Education’s budget was capped at £2.5m with a budget assumption that the additional £0.725m was due to COVID and could be funded by the HSCP from either COVID funds or their reserves as they related to previous funding made available to the HSCP by the Council. 2. To move from a 50/50 share of costs to 77.3%/22.7% share On the grounds that the total budget to be shared was £5m (2x£2.5m) the 2022/23 education budget was then set at 22.7% of the £5m which was £1.135m. Subsequent to that decision: 1. A review was carried out which determined that the split should be 72%/28% rather than the 77.3%/22.7% agreed on 9 March 2022. 2. It was agreed that in moving to the revised 72%/28% split it was appropriate for the corresponding share of the 2022/23 budget to be passed from the Council to the HSCP. The total current estimated 2022/23 outturn for residential care costs is £7.437m. Applying an estimated 4% uplift to that in each of the next four years will require an uplift to the base education budget as set out in Exhibit 7. Exhibit 7: Increase to Education Budget for Share of Residential Care Costs 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 Projected Total Outturn (inc 4% annual uplift) 7,735 8,044 8,366 8,701 9,049 28% Education Share 2,166 2,252 2,342 2,436 2,534 2022/23 Education Base Budget 1,135 1,135 1,135 1,135 1,135 Base Budget Adjustment Required 1,031 1,117 1,207 1,301 1,399 4.6.6 The following base budget adjustments relate to information reported to Council on 21 December 2022: increase of £5.640m to reflect the extent the 2022/23 pay award exceeded the 2% assumption already built into the budget decrease of £0.978m due to the reversal of the national insurance contribution increase
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decrease of £0.300m for removal of historical abuse case redress provision decrease of £0.159m for savings identified through the annual recurring exercise – this has needed to be reduced by £0.065m as a review undertaken in January identified some double counting between these savings and reported management adjustments decrease of £0.276m to reflect an assumption about the impact of the proposed changes to terms and conditions – note this is subject to negotiations. 4.6.7 The revised base budget is shown in Exhibit 8. Exhibit 8: Revised Base Budget Para 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 Base Budget 4.6.1 251,693 251,693 251,693 251,693 251,693 Funding commitments 4.6.2 3,239 3,239 3,239 3,239 3,239 Additional loan charges 4.6.3 175 173 170 168 165 HSCP requisition assumption 4.6.3 725 725 0 0 0 Recurring saving and procurement assumption 4.6.3 (600) (1,200) (1,200) (1,200) (1,200) One off Cost of Living contribution 4.6.3 (400) (400) (400) (400) (400) 22/23 COVID costs 4.6.3 (385) (385) (385) (385) (385) 22/23 election costs 4.6.3 (150) (150) (150) (150) (150) 22/23 community election costs 4.6.3 (45) (45) (45) (45) (45) 22/23 foodbank support 4.6.3 (20) (20) (20) (20) (20) 22/23 water policy 4.6.3 (30) (30) (30) (30) (30) Clydebank Town Hall and Ending Loneliness 4.6.3 (87) (87) (87) (87) (87) Profile of previous management adjustments 4.6.3 (157) (157) (157) (157) (157) Modern apprenticeship scheme 4.6.3 0 0 0 (250) (250) Residential care costs 4.6.5 1,031 1,117 1,207 1,301 1,399 22/23 pay award 4.6.6 5,640 5,640 5,640 5,640 5,640 Reverse NI increase 4.6.6 (978) (978) (978) (978) (978) Historical abuse redress 4.6.6 (300) (300) (300) (300) (300) Annual recurring 4.6.6 (94) (94) (94) (94) (94)
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savings (adjusted) Terms and conditions 4.6.6 (276) (276) (276) (276) (276) Revised Base Budget 258,981 258,465 257,827 257,669 257,764 4.7 Employee Costs 4.7.1 In terms of 2023/24 employee budgets, the expectation would be that the budget would reflect the 2022/23 budget plus any increase due to pay awards, incremental progression, and a built in assumption of 4% savings being generated through turnover. 4.7.2 The 2023/24 pay award has not been agreed yet and an estimate of 4% has been built into the budget in the mid-range (3% in best case and 5% in worst case). In terms of assumptions for years beyond 2023/24 I have assumed there will be pay awards of 2% in all three scenarios. As the pay 2023/24 pay award is not yet agreed there is a risk that it will differ from this estimate which may create a revenue cost pressure during 2023/24. 4.7.3 Exhibit 9 summarises the estimated changes to the employee budgets over the next five years for Council services. This includes an assumption that savings will be generated through turnover – this is set at 4% of employee costs for the majority of service areas but at a lower percentage for specific areas where it is recognised it is harder to achieve a 4% target. Note though that turnover saving targets are subject to a management adjustment in 2023/24 and future years. This has been built into the measures to balance the budget section of this report so is not included here to avoid a double count. Exhibit 9: Estimated Employee Costs 2023/24-2027/28 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 Pay award 6,296 9,570 12,910 16,316 19,791 Increments 755 1,510 2,265 3,020 3,775 Turnover Saving Assumption (56) (100) (144) (188) (232) Total Employee Increases 6,995 10,980 15,031 19,148 23,334 4.8 Non-Pay Inflation 4.8.1 Inflation has been included in the 2023/24 budget estimates and in future year estimates where it is considered necessary to ensure budgets are adjusted to reflect expected increases in costs. In terms of future years, an additional £0.500m annual general inflation has been built into the mid-range scenario (£0.250m in best case and £0.750m in worst case). 4.8.2 The overall additional budget requirement for non-pay inflation estimated over the next five years is summarised in Exhibit 10.
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Exhibit 10: Non Pay Inflation - 2023/24-2027/28 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 General Provision 0 500 1,000 1,500 2,000 Utilities – Gas 1,484 1,692 1,829 1,972 2,123 Utilities – Electricity 1,147 1,218 1,354 1,497 1,646 Utilities – Street Lighting 57 118 148 180 213 Non-Domestic Rates 23 45 67 89 111 ICT 30 62 94 126 158 Landfill Tax 12 24 36 48 60 Audit Fee 20 24 28 32 36 PPP Unitary Payment 139 316 457 605 760 West Dunbartonshire Leisure Trust Management Fee 200 400 600 800 1,000 Increase in recharged income (376) (742) (1,108) (1,474) (1,840) Total 2,736 3,657 4,505 5,375 6,267 4.9 Cost Pressures 4.9.1 Services operate on the basis of having to contain any cost pressures within current resources wherever possible however that is not always possible and it is necessary to ensure budgets are adjusted where necessary for unavoidable cost increases. The estimated pressures for Council services are noted in Exhibit 11. An allowance for unidentified pressures has been included from 2024/25 onwards at £1.0m per annum within the mid-range scenario, £0.750m in the best case and £1.5m in the worst case. Exhibit 11: Cost Pressures - 2023/24-2027/28 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 SEEMIS Membership Fees 1 3 5 7 9 Apprenticeship Levy 11 22 33 44 55 Impact of bank interest rate increases on loan charges 4,578 6,249 7,967 9,309 10,426 Waste charges due to change in legislation 1,400 1,400 1,400 1,400 1,400 Roads materials 212 212 212 212 212 2027/28 Local Government elections 0 0 0 0 200 Reduction in planning income 255 255 255 255 255 Reduction in licensing income 65 65 65 65 65 IFRS16 Software Costs 16 16 16 16 16 Cost of CCTV Operative Shift Allowance 14 14 14 14 14 Audit Fee increase in excess of inflation assumption 7 12 18 25 33 Website Software 16 16 16 16 16
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Organic waste cost increase 63 63 63 63 63 Bus contract renewals 113 113 113 113 113 PPP Uplift in excess of inflation assumption 548 287 98 97 96 Loss of rental income 63 16 16 16 16 Right size office accommodation budget for rates 30 31 31 32 33 Aurora House District Heating Costs 10 10 10 10 10 Cost of Non Domestic Rates Revaluations 357 817 974 1,877 2,067 Net increase in ICT License costs 256 312 367 417 467 Personal Hygiene Costs 10 10 10 10 10 Additional West Dunbartonshire Leisure Trust Fee due to 22/23 Pay Award 333 340 346 353 360 Allowance for Unidentified Pressures 0 1,000 2,000 3,000 4,000 Totals 8,358 11,263 14,029 17,351 19,936 4.10 West Dunbartonshire Health and Social Care Partnership (HSCP) 4.10.1 The Council, at the budget meeting on 9 March 2022, agreed an HSCP requisition of £81.4m (subsequently increased to £81.780m to reflect the final confirmation by the Scottish Government of the allocation of funding commitment). In addition there was £1.631m passed through to the HSCP for Criminal Justice Partnership Funding and £0.063m for Community Justice Transition Funding. This resulted in an overall 2022/23 requisition to the HSCP of £83.474m During 2022/23 there were adjustments made to that requisition as set out in Exhibit 12: Exhibit 12: In year adjustments to HSCP 2022/23 requisition £,000 Original Requisition 83,474 Adjustments in year Share of Residential Care Budget 1,419 Adult Disability Payment (distributed outwith 2022/23 settlement) 71 Transfer from HSCP to Homeless Service for Action for Children and Blue Triangle (82) Budget realignment for mobile and ICT licenses (8) Budget adjustment for SIP Trunking costs (3) Revised 2022/23 HSCP Requisition 84,871 4.10.2 There is an ongoing assumption that the Council’s allocation to the
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HSCP will be on the basis of ‘flat cash’ plus the appropriate share of the Health & Social Care funding commitments detailed in Local Government Finance Circular (adjusting for any one off funding not recurring). 4.10.3 Exhibit 13 sets out the requisition to the HSCP over the next five years based on the assumptions noted above. Exhibit 13: HSCP Payment - 2023/24-2027/28 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 Revised 2022/23 Requisition 84,871 84,871 84,871 84,871 84,871 Adjust for non-recurring interim care money provided in 2022/23 (336) (336) (336) (336) (336) Free Personal & Nursing Care 144 144 144 144 144 Share of Real Living Wage Funding 1,686 1,686 1,686 1,686 1,686 Increase in Criminal Justice 3 3 3 3 3 HSCP Requisition 86,368 86,368 86,368 86,368 86,368 4.10.4 The HSCP requisition has already been built into the base budget with the exception of adjusting for the £0.336m of non-recurring interim care money. 4.11 Budget Gap Prior to Measures to Balance Budget 4.11.1 The estimated budget gap prior to factoring in any potential options towards balancing the budget is summarised in Exhibit 14. Exhibit 14: Estimated Budget Gap Prior to Measures to Balance Budget Para 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 4.6.7 Revised Base Budget 258,981 258,465 257,827 257,669 257,764 4.7.3 Employee Cost Changes 6,995 10,980 15,031 19,148 23,334 4.8.2 Non-Pay Inflation 2,736 3,657 4,505 5,375 6,267 4.9.1 Cost Pressures 8,358 11,263 14,029 17,351 19,936 4.10.4 Adjust for Interim Care (336) (336) (336) (336) (336) Total Expenditure 276,734 284,029 291,056 299,207 306,965 4.5.1 Total Funding 255,094 255,358 255,539 255,733 255,928 Budget (Surplus) / Gap Cumulative 21,640 28,671 35,517 43,474 51,037 4.11.2 Exhibit 14 shows a 2023/24 budget gap prior to measures to balance the budget of £21.640m. 4.12 Measures to Balance the Budget – Previously Agreed
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4.12.1 There are a number of measures to balance the budget which were either agreed by, or reported to, Council on 21 December 2022 or via the Council’s Long Term Financial Strategy. These are summarised in Exhibit 15. Exhibit 15: Previously Agreed Measures to Balance Budget 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 Savings Options 3,019 4,042 4,184 4,184 4,184 Management Adjustments 899 1,167 1,356 1,356 1,356 Service Concessionary Recurring Savings 2,831 3,259 3,963 4,328 4,249 Assumed increase in sales, fees and charges 316 645 987 1,342 1,712 Total Previously Agreed Savings 7,065 9,113 10,490 11,210 11,501 4.13 Measures to Balance the Budget – For Council Approval 4.13.1 There are a further range of options to assist Members to balance the 2023/24 budget. These options are set out in the following paragraphs and can be categorised as either: Setting of Council Tax Saving Options Management Adjustments Use of Reserves 4.13.2 Setting of Council Tax - As per paragraph 4.4.1 the assumptions set out in this report make no assumptions about any increase in Council Tax. Each 1% increase in Council Tax would generate approximately £0.383m in income and increase the weekly bill to a Band D taxpayer by £0.26. Appendix 1 sets out an analysis of what rises in Council Tax between 3% and 12% would generate vs the increase in weekly Council Tax bills. This is provided for illustrative purposes. 4.13.3 Saving Options – In addition to the options considered by Council on 21 December 2022, officers have identified a further range of saving options for member consideration. A number of the saving options submitted for member consideration have multiple options contained within them which means there is a higher or lower value associated with them. The total value of the ‘higher value’ saving options is a recurring saving of £10.040m in 2023/24 rising to £11.969m in 2024/25 and £11.994m in future years. These options are summarised in Appendix 2 with full details of each option set out in Appendix 3. 4.13.4 Management Adjustments – Officers have also identified management adjustments which do not result in either potential redundancies or
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changes to policy and can be implemented without political approval. The total value of these management adjustments is a recurring saving of £1.232m in 2023/24 declining slightly to £1.020m in future years. These options are summarised in Appendix 2 with full details of each option set out in appendix 4. 4.13.5 Use of Reserves – On 21 December 2022 the Council agreed to earmark £6m from the one-off service concessionary financial flexibility to establish a smoothing fund to support a three year service transformation programme. There is an option to use this fund to help deliver a balanced 2023/24 budget however it should be noted that this is an option which is one-off in nature and use of it does not reduce the cumulative budget gap in future years. It would also not be prudent to use it all in one year as it was established to support transformation over a three year period. For the purposes of illustration it has been assumed that the £6m will be used evenly over the three year period. 4.14 Budget Gap After Measures to Balance Budget 4.14.1 The budget gap after applying all the measures to balance the budget is summarised in Exhibit 16. Exhibit 16: Budget Gap After Measures to Balance Budget Para 2023/24 £000 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 4.11.1 Estimated Budget Gap/(Surplus) Prior to Measures to Balance Budget 21,640 28,671 35,517 43,474 51,037 4.12.1 Measures Previously Agreed (7,065) (9,113) (10,490) (11,210) (11,501) Updated Gap/(Surplus) 14,575 19,558 25,027 32,264 39,536 4.13.3 Saving Options for Approval (10,040) (11,969) (11,994) (11,994) (11,994) 4.13.4 Management Adjustments (1,232) (1,020) (1,020) (1,020) (1,020) 4.13.5 Use of Reserves/ Smoothing Fund (2,000) (2,000) (2,000) 0 0 Remaining Cumulative Budget Gap / (Surplus) prior to Considering Council Tax 1,303 4,569 10,013 19,250 26,522 4.14.2 Exhibit 16 demonstrates that if Members agreed to all the proposals noted within this report, and the even distribution of the £6m smoothing fund over the three years, there is a remaining budget gap of £1.303m in 2023/24. Note though this is before the application of any Council Tax
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increase. If members agree to the assumptions set in exhibit 16 a rise in Council Tax of 3.4% would be required to deliver a balanced budget. 4.14.3 Members however may wish to balance the budget through a different combination of saving options, use of the smoothing fund and Council Tax increases. However it should be noted that, whilst there are a number of savings options built into these figures that could be reversed, accepting them now will assist with the continued challenging position in future years, especially as use of the smoothing fund is one-off in nature and, therefore, only delays the need to identify longer term recurring savings. This is illustrated by the projected budget gaps in 2024/25 and beyond in Exhibit 17. 4.15 Balancing Future Years Budget 4.15.1 The estimated cumulative budget (surplus) / gap in the period 2024/25 to 2027/28, assuming all 2023/24 saving options are approved and the smoothing fund is allocated evenly across each scenario is summarised in Exhibit 17. Exhibit 17: Future Year Estimated Cumulative Budget Gaps Budget Gap 2024/25 £000 2025/26 £000 2026/27 £000 2027/28 £000 Best Case 1,334 5,682 13,383 20,186 Mid-Range 4,569 10,013 19,249 26,522 Worst Case 9,478 17,859 29,959 40,074 4.16 Capital Plan Update 4.16.1 An update of the Council’s 10 year capital plan was approved by Council on 9 March 2022. A review of the plan was conducted during 2022/23 with changes to the plan approved at Council on 21 December 2022. Following this review projects have been amended or removed as agreed. Officers have undertaken any necessary reprofiling of the remaining projects and these are included in the appendices to this report. 4.16.2 The updated Capital Plan has some changes to projects from the previous plan, agreed in March 2022 and updated to reflect decisions taken by Council on 21 December 2022. The main change being to the new build Faifley Campus. The original estimated budget for Faifley Campus was £29.5m. However the stage 1 report produced by the appointed contractors and presented to the Learning Estate Project Board on 20 December 2022 has increased this estimate to £35.618m. The reasons for this being ongoing national increases in construction costs and inflation. The scope of the project has not increased and the project team will continue to drive efficiencies throughout the stage 2 process whilst reviewing the original scope. The funding to be provided by the Scottish Government is estimated to remain at the initial offer of £18.416m over 25 years however this will be confirmed at financial close of the project. In the meantime, unless the overall cost can be reduced
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through redesigning the project scope or delivering further efficiencies through value engineering, there is an assumption that the Council will need to fund the full difference between the final cost and the Scottish Government funding. 4.16.3 There are four appendices to this report in relation to the capital plan. Appendix 5 shows the forecast 2022/23 outturn Appendix 6 shows the anticipated spend on projects (revised capital plan) Appendix 7 shows the current resources available Appendix 8 provides information linking the capital plan to the Council’s Asset Management Plans. The loan charges linked to the capital plan reflect the values within the draft budget book. There are no new projects proposed for 2023/24. 4.16.4 In terms of affordability of the proposed plan it is the view of the Council’s Senior Management Team that the plan is affordable, though clearly it will have revenue implications for future years, these will require to be planned for in the normal manner through long term financial strategies and budget planning processes. It is intended to undertake a full review of the Council’s capital reporting process in 2023/24. 4.17 West Dunbartonshire Leisure Trust Management Fee 4.17.1 It is normal practice for the Council, as part of the budget setting process, to approve the West Dunbartonshire Leisure Trust Management Fee having consideration been given to the Trust’s business plan by the Corporate Services Committee. However there is a savings option which proposes reducing the Trust’s 2023/24 management fee and, consequently, it is not possible for the final fee to be included for consideration as part of this overall budget report. Once a decision has been made regarding the savings option, the fee can be confirmed. It should be noted that an indicative sum based on last year’s fee of £4.16m has been included within the base budget calculations for 2023/24 with an additional £0.200m for inflationary rises (as per paragraph 4.8.2) and £0.333m for the 2022/23 pay award (as per paragraph 4.9.1). As such it is considered there is sufficient expenditure already built into the budget to cover any agreed management fee. A report will be brought forward to a future meeting of the Corporate Services Committee to agree the revised 2023/24 management fee. 4.18 Growth Bids 4.18.1 Due to the scale of the financial challenges facing the Council in 2023/24 and beyond there was a strict approach taken to officer developed growth bids for this budget. Growth bids would only be considered if they were either cost neutral or ‘spend to save’ projects. There are no growth bids for member consideration as part of this budget report.
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5. PEOPLE IMPLICATIONS 5.1 The potential staffing implications are shown within the savings options appended to this report and will be subject to consultation processes where appropriate and managed in accordance with the Council’s Switch Policy (Organisational Change). Given the scale of the savings, a voluntary release programme has been underway for several months. While the aim is to secure sufficient numbers of volunteers to allow achievement of agreed savings without delay, any shortfall in this area would necessitate progression to consideration of compulsory redundancy. Discussions with the trades unions have begun on this possibility and appropriate and equality proofed selection criteria will be shared in due course. 6. FINANCIAL AND PROCUREMENT IMPLICATIONS 6.1 The Financial implications arising from the budget process are detailed in the report and appendices. The procurement implications arising from this report are those in relation to proposed savings in the procurement team, these are detailed in the appendices. 7. RISK ANALYSIS 7.1 Some of the capital plan projects have an assumption of match-funding and grant funding from Scottish Government and other agencies. There is a risk that some or all of these are not received. The business cases for these projects will require to be updated as funding becomes clearer and Members may be required to consider the financial affordability of continuing with the projects. The risk and impact of the saving options are detailed in the appendices. 8. EQUALITIES IMPACT ASSESSMENT (EIA) 8.1 All individual savings options have been screened and where relevant, impact assessed. 9. CONSULTATION 9.1 The views of all Chief Officers have been requested on this report and feedback incorporated herein. Discussions on the issues herein have been had with the Trade Unions and a summary copy of the saving options was provided to Trade Unions, political group leaders and the workforce in the week commencing 7 February 2022. 10. STRATEGIC ASSESSMENT 10.1 Proper budgetary control and sound financial practice are cornerstones of good governance and support Council and officers to pursue the five strategic priorities of the Council’s Strategic Plan.
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10.2 The General Services revenue budget contributes to all categories by providing funding in specific areas to help the Council achieve and develop these priorities. Laurence Slavin Chief Officer - Resources Date: 15 February 2023 Person to Contact: Laurence Slavin, Chief Officer - Resources, Church Street Offices, Dumbarton E-mail: laurence.slavin@west-dunbarton.gov.uk Appendices Appendix 1 – Analysis of Council Tax Increases Appendix 2 – Summarised Saving Options and Management Adjustments Appendix 3 – Detailed Saving Options Appendix 4 – Detailed Management Adjustments Appendix 5 – Capital Plan – 2022/23 – Forecast Outturn Appendix 6 – Capital Plan – 2023/24 – Proposed Spend Appendix 7 – Capital Plan – 2023/24 – Proposed Resources Appendix 8 – Capital Plan – 2023/24 – Links to Asset Management Plans Appendix 9 – Equality Impact Assessments Background Papers Long Term Finance Strategy Report – 27 October 2021 Financial Update Report to Council - 22 June 2022 Financial Update Report to Council - 21 December 2022