Budget Outlook 2023-24 to 2027-28
Argyll and Bute Council · 13 October 2022
Back to Policy and Resources Committee — 13 October 2022 and its agenda
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 13 OCTOBER 2022 BUDGET OUTLOOK 2023-24 TO 2027-28 1. EXECUTIVE SUMMARY 1.1 This report provides an update to the budget outlook 2023-24 to 2027-28, reported to the Policy and Resources Committee on 11 August 2022. 1.2 The estimates within the report are based on the mid-range scenario with best and worst case scenarios noted in Appendix 1. 1.3 The assumptions in respect of future years Scottish Government funding remain unchanged from those reported on 16 June 2022 and ranges between 0.5% reduction (best case) and 1.5% reduction (worst case) with a mid-range reduction of 1.0%. 1.4 There are no changes to my previous assumptions around the growth in Council Tax. For 2023-24 the Council tax base has been assumed to grow by 1% in the worst case scenario, 1.5% in the mid-range scenario and 2% in the best case. In future years this then drops down to 0.25% in the worst case scenario, 0.5% in the mid-range scenario and 0.75% in the best case. 1.5 Since the budget outlook was last reported to Policy and Resources Committee on 11 August 2022 there has been a change to the base budget in relation to the 2022-23 pay award. Negotiations are now at an advanced stage with the current proposal being a 5% undifferentiated pay offer, which includes a £3,000 cap for those earning above £60,000 based on a 37 hour week, and a commitment to ensure that everyone receives an increase of at least £1,925 or £2,000 depending on spinal column point. This results in additional costs totalling £5.852m. The Scottish Government has agreed to provide an additional £140m of recurring resource from 2022-23 to support the 5% pay offer and a further £120.6m of capital funding in 2022-23 and 2023-24 which will be baselined as General Revenue Grant from 2024-25 onwards to ensure that everyone receives an increase of at least £1,925 or £2,000. The net impact of this is an increase to the baseline of £2.112m in 2022-23. 1.6 As a result of the above there have been changes made to the assumptions in respect of employee costs for Council services as follows: Pay inflation for 2023-24 has been updated to 3.5% within the mid-range scenario based on the current 2022-23 pay negotiations which require the Council to fund a 3.5% increase in the current year. The best case and worst case scenarios remain at 2% and 5% respectively. Pay inflation for 2024-25 onwards reverts back to 2% in the mid-range and best case scenario, and 5% in the worst case scenario as previously reported.
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Increments between £0.345m and £0.690m with mid-range £0.690m remain as previously reported. 1.7 For non-pay inflation, only unavoidable/inescapable inflation has been built in for the best case and mid-range scenarios with a contingency of £0.250m built into the mid-range. A further general inflationary increase has been built into the worst case scenario. The estimates for non-pay inflation have increased by £0.198m with the main increases being utilities. 1.8 There are a number of cost and demand pressures for Council services built into each scenario. There have been no changes to these pressures since the last report on 11 August 2022. 1.9 In addition to the identified cost and demand pressures an allowance for unidentified cost and demand pressures has been included in mid-range and worst case scenarios of between £0.250m and £0.500m per year. 1.10 There will be a political decision to be made as to the future allocation to the Health and Social Care Partnership. As part of the budget agreed in February 2022, indicative allocations for 2023-24 to 2024-25 were agreed on the basis of a flat cash allocation. In the budget outlook I have assumed flat cash allocations across all three scenarios. 1.11 At this stage a 3% reduction to the Live Argyll Management fee has been included within the estimates. At the 2022-23 budget setting meeting in February 2022 it was agreed to defer the proposed 3% reduction to the Live Argyll management fee until 2023-24 subject to any future budget decisions. It was agreed that management would engage in early discussions with Live Argyll in relation to future approach to support effective longer term financial planning. 1.12 The budget gap in the mid-range scenario after allowing for the current base commitments, employee adjustments, non-pay inflation and cost and demand pressures and not factoring in any previous savings decisions or future potential options is an estimated gap over the five year period of £51.302m with a gap of £14.836m in 2023-24. 1.13 The measures to balance the budget over the next five years are as follows: Proposed increase to fees and charges of between 3% and 9% (6% mid- range). 3% reduction to the Live Argyll Management Fee. Management/operational savings agreed by Council in February 2022. Policy savings already agreed by Council in February 2022. Proposed increase to Council Tax (3% in all scenarios). Emerging savings options as part of 2023-24 budget setting process as detailed at 4.8.3. 1.14 In the mid-range scenario, the revised budget gap estimated over the five year period 2023-24 to 2027-28 is £33.011m with a gap of £7.284m in 2023-24.
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1.15 The budget gap in the best case scenario over the five years is £17.851m with a gap of £2.177m in 2023-24 and in the worst case scenario, the budget gap over the five years is £75.206m with a gap of £13.560m in 2023-24. A summary of all three scenarios is included within Appendix 1. 1.16 It is recommended that the Policy and Resources Committee consider the current estimated budget outlook position for the period 2023-24 to 2027-28.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 13 OCTOBER 2022 BUDGET OUTLOOK 2023-24 TO 2027-28 2. INTRODUCTION 2.1 This report provides an update to the budget outlook 2023-24 to 2027-28, reported to the Policy and Resources Committee on 11 August 2022. 2.2 The budget outlook has been prepared using three different scenarios, best case, worst case and mid-range. Relatively small variations in assumptions can lead to fairly significant changes in the outcome. In the paragraphs that follow, the mid- range outlook is shown, however, all three scenarios are detailed within Appendix 1. 3. RECOMMENDATIONS 3.1 It is recommended that the Policy and Resources Committee consider the current estimated budget outlook position for the period 2023-24 to 2027-28. 4. DETAIL 4.1 Funding Scottish Government Finance Settlement 4.1.1 There are no changes to my previous assumptions around the level of future Scottish Government funding. In my report in June, I advised that the Resource Spending review indicated that Local Government is expected to receive a flat cash settlement up to 2026-27. The flat cash position is at portfolio level and does not include any transfers to Local Government from other portfolios in-year. These transfers are likely not be confirmed until December 2022 and that, along with the fact that due to our declining population our settlement is usually worse that the average, lead me to the funding assumptions built into the outlook. The funding assumptions range between a 0.5% reduction (best case) and 1.5% (worst case) with a mid-range reduction of 1.0%. 4.1.2 The table below summarises the mid-range scenario estimates expressed in percentage terms and monetary value. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 % Change to Funding -1.0% -1.0% -1.0% -1.0% -1.0% Estimated SG Funding Reduction (2,016) (2,143) (2,122) (2,101) (2,080) Estimated SG Funding 214,330 212,187 210,065 207,964 205,884
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Council Tax 4.1.3 The Council Tax budget for 2022-23 was set at £55.262m which reflected a 3% inflation increase and 1.5% growth in the Council Tax base as agreed by the Council on 24 February 2022. 4.1.4 There are no changes to my previous assumptions around the growth in Council Tax. It has been assumed that a 1.5% growth in the mid-range (1% in worst case and 2% in best case) should be maintained for 2023-24 with the drop down to 0.5% in the mid-range in 2024-25. 4.1.5 Within this report, I will present the budget gap, prior to any Member based decisions and therefore at this stage in the report, the Council tax base is assumed to remain at the same level as 2022-23. 4.1.6 The table below summarises the estimated total funding in the mid-range scenario. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Estimated SG Funding 214,330 212,187 210,065 207,964 205,884 Council Tax Base 55,262 55,262 55,262 55,262 55,262 Council Tax Growth 829 1,109 1,391 1,674 1,959 Total Estimated Funding 270,421 268,558 266,718 264,900 263,105 4.2 Base Budget 4.2.1 4.2.2 The 2022-23 budget approved by Council on 24 February 2022 was £262.812m. Since the budget outlook was last reported to Policy and Resources Committee on 11 August 2022 there has been a change to the base budget in relation to the 2022-23 pay award. Negotiations are now at an advanced stage with the current proposal being a 5% undifferentiated pay offer, which includes a £3,000 cap for those earning above £60,000 based on a 37 hour week, and a commitment to ensure that everyone receives an increase of at least £1,925 or £2,000 depending on spinal column point. This results in additional costs totalling £5.852m. The Scottish Government has agreed to provide an additional £140m of recurring resource from 2022-23 to support the 5% pay offer and a further £120.6m of capital funding in 2022-23 and 2023-24 which will be baselined as General Revenue Grant from 2024-25 onwards to ensure that everyone receives an increase of at least £1,925 or £2,000. The net impact of this is an increase to the baseline of £2.112m in 2022-23. Once this recurring funding has been confirmed by Scottish Government the funding and cost elements of this adjustment will be identified independently within the budget outlook as opposed to a net adjustment figure. 4.2.3 For future years, there are adjustments required to the base budget from decisions by Council on 24 February 2022 and other adjustments, including the pay award detailed in paragraph 4.2.2, as noted in the table below:
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2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Base Budget 2022-23 262,812 262,812 262,812 262,812 262,812 Additional Funding in Finance Order (see paragraph 4.1.4) 6,315 6,315 6,315 6,315 6,315 Additional budget required in relation to the Teachers Pay Settlement 2021-22 (see paragraph 4.1.5) 121 121 121 121 121 Adjust for repayment of Loans Fund Principal Repayment Holiday 162 170 179 188 197 Remove one off 2022-23 Election costs (350) (350) (350) (350) (350) Remove one off 2022-23 Management/Operational savings 2,174 2,182 2,182 2,182 2,182 2022-23 Pay Award 2,112 2,112 2,112 2,112 2,112 Revised Base Budget 273,346 273,362 273,371 273,380 273,389 4.3 Employee Cost Changes Pay Award 4.3.1 As detailed in paragraph 4.2.2 negotiations regarding the pay award for 2022-23 are at an advanced stage and the base budget has been adjusted accordingly by £2.112m. 4.3.2 The current proposal is based on a 5% undifferentiated pay offer, which includes a £3,000 cap for those earning above £60,000 based on a 37 hour week, and a commitment to ensure that everyone receives an increase of at least £1,925 or £2,000 depending on spinal column point. The Council is required to fund a further 1.5% of the increase having already built 2% into the previously reported budget outlook. Based on this, the budget outlook has been updated to assume an increase of 3.5% again in 2023-24 as it is likely that the cost of living crisis will continue into next year and there will continue to be a requirement to increase the pay offer above the 2% that was previously estimated. This results in an additional pressure in 2023-24 of £2.234m. 4.3.3 For future years beyond 2023-24, the pay assumption reverts back to 2% in both the mid-range and the best case, reflecting that current indications are that inflation rates should begin to fall during 2023-24 and also that 2% is deemed to be affordable. For scenario purposes, 5% has been built into the worst case. Increments 4.3.5 There are no changes to my previous assumption around the cost of employee increments. It has been assumed that for future years, the best case is half of the previous year cost, for mid-range and worst case, it will be equal to the cost in
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2022-23 (£0.690m). 4.3.6 The table below summarises the employee cost increases in the mid-range scenario for Council services. The employee cost increases relating to Social Work within the Health and Social Care Partnership are summarised within paragraph 4.6.3. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Pay Award 5,234 8,339 11,506 14,737 18,032 Increments 690 1,380 2,070 2,760 3,450 Total Employee Cost Changes 5,924 9,719 13,576 17,497 21,482 4.4 Non-Pay Inflation 4.4.1 Over the last few years, the Council have only included non-pay inflation within the budget where it was deemed to be unavoidable or inescapable. In terms of the budget outlook, only unavoidable/inescapable non-pay inflation is built into the best case and mid-range scenarios with a general inflation allowance over and above this built into the worst case. 4.4.2 Given the current instability around inflation rates officers continue to review areas of non-pay inflation of significant value and volatility on an ongoing basis. The principle of only budgeting for unavoidable/inescapable remains, however, it has to be noted that in this current financial climate, some budgets with no inflation allowed for are now stretched beyond the point of containing the cost within budget and therefore the budget will now buy less than what it used to be able to buy (so in effect, we will see some cuts as a result). 4.4.3 When creating a budget outlook for future years, there is a risk that inflation assumptions could change during the year. Due to the current inflation uncertainty, it would be prudent to include a contingency for other inflation increases not included in the calculations. A contingency allowance of £0.500m is included within the worst case scenario and a £0.250m allowance included within the mid-range scenario each year. No contingency is included within the best case scenario. This contingency will either be required, reduced or removed to reflect changing circumstances before the 2023-24 budget process. 4.4.4 The table below summarises the non-pay inflation increases in the mid-range scenario for Council services since last reported on 11 August 2022 with more detail available in Appendix 2. The non-pay inflation increases relating to Social Work within the Health and Social Care Partnership are summarised within paragraph 4.6.3. Inflation Category 2023-24 Previous estimates £000 2023-24 Updated estimates £000 Increase £000 Utilities - Electricity, Gas, Oil, Water 1,190 1,314 124
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Street Lighting Electricity 116 116 0 Vehicle Fuel 60 60 0 Central Repairs - Outside Contractors 66 66 0 Waste PPP/Landfill Tax 502 502 0 NPDO/HUB Schools 1,034 1,074 40 Community Pool Subsidies 65 70 5 Residential Schools 91 90 (1) Pre-Primary Partner Providers 181 181 0 ICT 123 155 32 Catering Purchases and Milk 309 306 (3) Insurance 146 146 0 Bitumen – Roads 158 159 1 Contingency for unidentified/insufficient inflation estimate 250 250 0 Total 4,291 4,489 198 4.4.6 The inflation for years 2024-25 to 2027-28 is noted in the table below and is based on future years estimates of inflation at this point it time. It may be that the inflation could rise to a peak over the next couple of years and then fall again and this would alter the estimates in the table below, however, this is very difficult to predict and the estimates will be kept under review. 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Unavoidable/Inescapable 7,206 10,124 13,259 16,628 Total Non-Pay Inflation 7,206 10,124 13,259 16,628 4.5 Cost and Demand Pressures 4.5.1 Over the last few years, services have worked on the basis of having to contain any cost and demand pressures within current resources, however, there are a number of cost and demand pressures already identified for Council services which were reported as part of the budget in February 2022. Since the Policy and Resources Committee on 11 August 2022 there have been no further changes to the cost and demand pressures reported at that time. Officers are currently assessing the budget required in respect of the provision for 1140 hours. The Scottish Government reduced the funding for this area of spend in 2022-23 and it is likely that this may create a cost pressure for future years. The level of the cost pressure has not been quantified as yet and will be updated within a future budget outlook. 4.5.2 As with inflation, when creating a budget outlook beyond one year, there is a risk that unknown cost and demand pressures will emerge that have not been included within the outlook. It is suggested that no allowance for this is included within the best case scenario, a £0.500m general allowance is included within the worst case and a £0.250m allowance included within the mid-range scenario each year. 4.5.3 The cost pressures are detailed in appendix 3 and are summarised in the table
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below and will be subject to review during the financial year. 4.5.4 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Universal Credit – HB Admin Grant 40 80 120 160 200 Oracle Fusion 35 35 35 35 35 ASN Support 0 75 206 206 206 SEEMiS Membership Fees 9 11 13 16 16 Sustainable rate for partner providers 342 327 327 327 327 Election costs 0 0 0 0 300 HR System 100 (50) (50) (50) (50) Waste 7 25 78 (91) (91) Compliance with BMW Ban 0 400 1,600 1,150 0 Local Development Plan 0 50 0 50 0 House Loans 19 19 19 19 19 Parking 15 15 15 15 15 IT – Increased bandwidth in schools 26 26 26 26 26 Salt for Winter Maintenance 163 163 163 163 163 Cessation of red diesel 78 78 78 78 78 Insurance 414 414 414 414 414 Allowance for pressures in future years 250 500 750 1,000 1,250 Total Cost and Demand Pressures 1,498 2,168 3,794 3,518 2,908 4.5.5 The cost and demand pressures relating to Social Work within the Health and Social Care Partnership are summarised within paragraph 4.6.3. 4.6 Health and Social Care Partnership 4.6.1 The Council, at the budget meeting on 24 February 2022, agreed a base allocation to the HSCP of £69.005m for 2022-23 as well as indicative flat cash allocations for 2023-24 to 2026-27. On 2 March 2022 the Local Government Finance Circular 1/2022 was published which distributed additional funding of which £4.037m was required to be passed to the HSCP, therefore their allocation increased from £69.005m to £73.042m. 4.6.2 In the budget outlook, I have assumed flat cash allocations across all scenarios. These are only assumptions and it will be a matter for Council to consider as part of the budget process next year. 4.6.3 Social Work services have already identified a number of cost and demand pressures and these are summarised below and included within Appendix 4 for information purposes. It is expected that the HSCP absorb their cost and demand pressures from their funding allocation. Note that these only extend to three years rather than the five years within this Council budget outlook.
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2023-24 £000 2024-25 £000 2025-26 £000 Pay Inflation 1,104 1,757 2,423 Pay Increments 103 206 309 Non-Pay Inflation 3,490 6,981 10,680 Care Services for Younger Adults 412 832 1,261 Adult Services - Supported Living 344 686 1,029 Continuing Care for Looked After Children 250 500 750 Unknown Cost and Demand Pressures 500 1,000 1,500 Total Cost Increase estimates for Social Work 6,203 11,962 17,952 4.7 Estimated Budget Gap PRIOR to Measures to Balance the Budget 4.7.1 The budget gap in the mid-range scenario after allowing for the current base commitments, employee adjustment, non-pay inflation and cost and demand pressures is summarised in the table below. This is the budget gap prior to factoring in any previous savings decisions or potential options towards balancing the budget. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Base Budget 273,346 273,362 273,371 273,380 273,389 Employee Cost Changes 5,924 9,719 13,576 17,497 21,482 Non-Pay Inflation 4,489 7,206 10,124 13,259 16,628 Cost and Demand Pressures 1,498 2,168 3,794 3,518 2,908 Total Estimated Expenditure 285,257 292,455 300,865 307,654 314,407 Estimated Funding 270,421 268,558 266,718 264,900 263,105 Estimated Budget Surplus / (Gap) Cumulative (14,836) (23,897) (34,147) (42,754) (51,302) 4.8 Measures to Balance the Budget 4.8.1 In previous years, a general inflationary increase of 3% has been applied to fees and charges. Within the last reported budget outlook a range of between 2% (worst case) and 4% (best case) with a mid-range of 3% was included. However, in light of the increasing inflation we are experiencing on many cost areas, the calculations have now been updated to a range of between 3% (worst case) and 9% (best case) with a mid-range of 6%. This results in additional income of £0.390m in 2023-24 in the mid-range scenario. 4.8.2 A number of policy options were agreed at the Council meeting on 24 February
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4.8.3 2022 that impacted on 2023-24 and beyond. These are now factored into the budget outlook, reducing the budget gap. An ELT group have been exploring emerging savings options and early indications regarding these have now been incorporated into the budget outlook. These options are still being refined, and further options will continue to be explored, however initial estimates relating to those identified so far that have been incorporated into the budget outlook are noted in the table below. Potential Saving 2023-24 £000 Detail Education 700 Based on an assessment of forecast pupil numbers over the next 5 years. Service Concessions 4,000 Alteration to accounting treatment to align the repayment of borrowing relating to new schools over their asset life. Pension Scheme 100 Estimated savings in relation to additional voluntary contributions to the pension scheme. Commercial Income and Events 50 Estimated increase in commercial income and events. Rising to £0.250m from 2024-25 onwards. 4,850 These savings are of a recurring nature therefore the following has also been incorporated into the figures within the budget outlook. 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Emerging Savings Options 5,050 5,050 5,050 5,050 4.8.4 In terms of Council Tax, a 3% increase has been assumed across all scenarios, this being the increase applied in 2022-23. It will be a matter for Council to decide the level of Council Tax increase. 4.8.5 In respect of Live Argyll, at the budget meeting on 24 February 2022, Council agreed to defer the proposed 3% reduction in the management fee for 2022/23 and noted that this will be applied in 2023-24 and will be subject to any future budget decisions. 3% of the 2022-23 management fee equates to £0.122m and this reduction has been built into the budget outlook from 2023-24 onwards. No further reduction has been built in, this would be a matter for Council to consider. 4.8.6 The table below summarises the proposed measures to balance the budget in the mid-range scenario. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Fees and Charges Increase 746 1,502 2,269 3,048 3,838 Management/Operational Savings February 2021 20 20 20 20 20 Policy Savings February 128 128 128 128 128
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2021 Policy Savings agreed February 2022 3 6 6 6 6 Council Tax Increase 1,683 3,450 5,278 7,170 9,127 Reduction to Live Argyll Management Fee 122 122 122 122 122 Emerging Savings Options 4,850 5,050 5,050 5,050 5,050 Total Measures to Balance the Budget 7,552 10,278 12,873 15,544 18,291 4.9 Estimated Budget Gap AFTER Measures to Balance the Budget 4.9.1 The table below summarises the estimated budget gap in the mid-range scenario. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Estimated Budget Gap Prior to Measures to Balance Budget (14,836) (23,897) (34,147) (42,754) (51,302) Savings Measures 7,552 10,278 12,873 15,544 18,291 Estimated Budget Surplus / (Gap) Cumulative (7,284) (13,619) (21,274) (27,210) (33,011) Estimated Budget Surplus / (Gap) In Year (7,284) (6,336) (7,655) (5,936) (5,801) 4.9.2 In the mid-range scenario, the budget gap estimated over the five year period 2023-24 to 2027-28 is £33.011m with a gap of £7.284m in 2023-24. 4.9.3 The budget gap in the best case scenario over the five years is £17.851m with a gap of £2.177m in 2023-24 and in the worst case scenario, the budget gap over the five years is £75.206m with a gap of £13.560m in 2023-24. A summary of all three scenarios is included within Appendix 1. 4.9.4 The changes from the previous anticipated outlook reported to the Policy and Resources Committee on 11 August 2022 are summarised in the table below: 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Previously reported budget surplus / (gap) Cumulative (7,980) (15,124) (23,410) (30,004) (36,493) Adjustment to Employee Base Budget relating to 2022-23 Pay Award (2,112) (2,112) (2,112) (2,112) (2,112) Adjust Pay Inflation from 2% to 3.5% in 2023-24 (2,234) (2,278) (2,324) (2,371) (2,419)
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Adjustment to Non Pay Inflation (198) 65 352 667 1,013 Increase Fees and Charges from 3% to 6% 390 780 1,170 1,560 1,950 Emerging Savings Options 4,850 5,050 5,050 5,050 5,050 Revised Budget Surplus / (Gap) Cumulative (7,284) (13,619) (21,274) (27,210) (33,011) 4.10 Budget Working Group 4.10.1 As part of the 2021-22 and 2022-23 budgets, a cross party Budget Working Group (BWG) was established comprising of six Members from the administration, three Members from the opposition and two Trade Union representatives. The BWG did not have any decision making authority but could report to and make recommendations to either the Council or the Policy and Resources Committee. Its primary purpose was to engage with officers and provide scrutiny on the identification of savings options as they are developed. 4.10.2 Given the significant budget gap over the next five years it was agreed at Policy and Resources Committee on 16 June 2022 that a similar group will be established to support the 2023-24 budget approach. The first meeting of this group took place on 7 September 2022. 5. CONCLUSION 5.1 In the mid-range scenario, the budget gap estimated over the five year period 2023-24 to 2027-28 is £33.011m with a gap of £7.284m in 2023-24. Council officers are continuing to further develop savings options during 2022-23 and these will be presented to members at a future date to help balance the budget in future years. 5.2 5.3 This is a very challenging budget outlook position and the level of Scottish Government grant and the pay award are the two assumptions that could alter the figures significantly. At this advanced stage in negotiations relating to the pay award estimated figures have been incorporated into the budget outlook, however both this and the funding settlement will be kept under close review and the budget outlook updated as and when further information becomes available. It should be noted that service concession flexibility has now been agreed by the Cabinet Secretary for Finance and the Economy however a further discussion is now required with the newly appointed external auditors to refine this figure. The flexibility, should the Council approve to use, will provide a one-off gain in addition to a recurring saving. At this stage an estimated recurring saving of £4m has been incorporated into the budget outlook as a potential saving but this will be refined as discussions progress. 5.4 A cross party Budget Working Group has been established to support the budget approach. This group does not have any decision making authority but can report
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to and make recommendations to either the Council or the Policy and Resources Committee. 6. IMPLICATIONS 6.1 Policy - Sets out the budget outlook that provides the financial envelope for policy decisions. 6.2 Financial - Sets best, worst and mid-range scenarios in respect of the budget outlook. The medium to longer term financial strategy is being updated and the Council are actively continuing to pursue opportunities to mitigate against future budget gaps. 6.3 Legal - None directly from this report but Council will need to balance the budget. 6.4 HR - None directly from this report but there is a strong link between HR and budgets. 6.5 Fairer Scotland Duty - See below 6.5.1 Equalities None directly from this report but any proposals to address the estimated budget gap will need to consider equality issues. 6.5.2 Socio Economic Duty None directly from this report but any proposals to address the estimated budget gap will need to consider socio economic issues. 6.5.3 Islands Duty None directly from this report but any proposals to address the estimated budget gap will need to consider any island specific issues. 6.6 Climate Change The Council is committed to addressing climate change and reviews how Services are delivering this on an ongoing basis within the available budget resources. 6.7 Risk - None directly from this report but any proposals to address the estimated budget gap will need to consider risk. 6.8 Customer Service - None directly from this report but any proposals to address the estimated budget gap will need to consider customer service. Kirsty Flanagan Executive Director/Section 95 Officer 15 September 2022 Policy Lead for Finance and Commercial Services: Councillor Gary Mulvaney APPENDICES: Appendix 1 – Budget Outlook, Best, Worst and Mid-Range Scenarios Appendix 2 – Non Pay Inflation Appendix 3 – Cost and Demand Pressures (Council Services) Appendix 4 – Cost and Demand Pressures (Social Work) For further information contact Anne Blue, Head of Financial Services anne.blue@argyll-bute.gov.uk
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BUDGET OUTLOOK 2023-24 to 2027-28 APPENDIX 1 POLICY AND RESOURCES COMMITTEE - 13 OCTOBER 2022 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Base Budget 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 269,127 Base Budget Adjustments 4,219 4,235 4,244 4,253 4,262 4,219 4,235 4,244 4,253 4,262 4,219 4,235 4,244 4,253 4,262 Revised Base Budget 273,346 273,362 273,371 273,380 273,389 273,346 273,362 273,371 273,380 273,389 273,346 273,362 273,371 273,380 273,389 Pay Award 2,978 6,016 9,114 12,274 15,497 5,212 8,294 11,438 14,645 17,916 7,445 15,262 23,470 32,089 41,138 Pay Increments 345 690 1,035 1,380 1,725 690 1,380 2,070 2,760 3,450 690 1,380 2,070 2,760 3,450 Additional Teacher Costs (23) 23 23 24 24 22 45 68 92 116 (23) 23 23 24 24 Total Employee Cost Changes (Council Services) 3,300 6,729 10,172 13,678 17,246 5,924 9,719 13,576 17,497 21,482 8,112 16,665 25,563 34,873 44,612 Non-Pay Inflation - Council Services 4,059 6,564 9,243 12,109 15,176 4,489 7,206 10,124 13,259 16,628 6,519 11,050 15,811 20,822 26,103 Housing Benefits Admin Grant 40 80 120 160 200 40 80 120 160 200 40 80 120 160 200 Oracle Fusion running costs 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 ASN Support 0 0 198 198 198 0 75 206 206 206 0 145 444 444 444 SEEMIS Membership Fees 9 11 13 16 16 9 11 13 16 16 9 11 13 16 16 Sustainable Rate for Partner Providers 342 327 327 327 327 342 327 327 327 327 342 327 327 327 327 Election Costs 0 0 0 0 250 0 0 0 0 300 0 0 0 0 350 Software support for a new HR system & Backfill for project team. 50 (50) (50) (50) (50) 100 (50) (50) (50) (50) 150 (50) (50) (50) (50) Waste 7 25 78 (91) (91) 7 25 78 (91) (91) 7 25 78 (91) (91) Compliance with BMW Ban 0 200 800 800 0 0 400 1,600 1,150 0 0 875 3,500 1,500 0 Planning (Local Development Plan) 0 50 0 50 0 0 50 0 50 0 0 50 0 50 0 House Loans 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 Parking 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 IT - increased bandwidth in schools 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 Increase in cost of Salt for Winter Maintenance 147 147 147 147 147 163 163 163 163 163 179 179 179 179 179 Cessation of Red Diesel usage 78 78 78 78 78 78 78 78 78 78 78 78 78 78 78 Rightsize Council insurance budgets 414 414 414 414 414 414 414 414 414 414 414 414 414 414 414 Allowance for Cost and Demand Pressures Future Years 0 0 0 0 0 250 500 750 1,000 1,250 500 1,000 1,500 2,000 2,500 Total Cost and Demand Pressures 1,182 1,377 2,220 2,144 1,584 1,498 2,168 3,794 3,518 2,908 1,814 3,229 6,698 5,122 4,462 Total Estimated Expenditure PRIOR to measures to balance the budget 281,887 288,032 295,006 301,311 307,395 285,257 292,455 300,865 307,654 314,407 289,791 304,306 321,443 334,197 348,566 Scottish Government Grant 214,895 213,821 212,752 211,688 210,629 213,817 211,679 209,562 207,466 205,391 212,736 209,545 206,402 203,305 200,256 Specific Funding for Additional Teachers 515 512 509 506 503 513 508 503 498 493 510 502 494 487 480 Council Tax 56,367 56,790 57,216 57,645 58,077 56,091 56,371 56,653 56,936 57,221 55,815 55,955 56,095 56,235 56,376 Total Funding 271,777 271,123 270,477 269,839 269,209 270,421 268,558 266,718 264,900 263,105 269,061 266,002 262,991 260,027 257,112 Budget Surplus / (Gap) PRIOR to measures to balance the budget (10,110) (16,909) (24,529) (31,472) (38,186) (14,836) (23,897) (34,147) (42,754) (51,302) (20,730) (38,304) (58,452) (74,170) (91,454) Measures to Balance the Budget: Fees and Charges 1,119 2,253 3,404 3,048 5,757 746 1,502 2,269 3,048 3,838 373 751 1,135 1,524 1,919 Live Argyll - 3% decrease to management fee 122 122 122 122 122 122 122 122 122 122 122 122 122 122 122 Management/Operational Savings agreed February 2021 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Policy savings agreed February 2021 128 128 128 128 128 128 128 128 128 128 128 128 128 128 128 Policy savings reported Agreed February 2022 3 6 6 6 6 3 6 6 6 6 3 6 6 6 6 Council Tax Increase 1,691 3,445 5,265 7,152 9,109 1,683 3,425 5,227 7,092 9,021 1,674 3,403 5,188 7,031 8,933 Council Tax Increase (Growth element) 0 34 69 105 143 0 25 51 78 106 0 17 34 52 70 Emerging Savings Options 4,850 5,050 5,050 5,050 5,050 4,850 5,050 5,050 5,050 5,050 4,850 5,050 5,050 5,050 5,050 Total Measures to Balance the Budget 7,933 11,058 14,064 15,631 20,335 7,552 10,278 12,873 15,544 18,291 7,170 9,497 11,683 13,933 16,248 Budget Surplus / (Gap) Cumulative AFTER measures to balance the budget (2,177) (5,851) (10,466) (15,841) (17,851) (7,284) (13,619) (21,274) (27,210) (33,011) (13,560) (28,807) (46,770) (60,237) (75,206) Budget Surplus / (Gap) In Year AFTER measures to balance the budget (2,177) (3,674) (4,615) (5,376) (2,010) (7,284) (6,336) (7,655) (5,936) (5,801) (13,560) (15,247) (17,963) (13,468) (14,969) Best Case Scenario Worst Case ScenarioMid-Range Scenario
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NON-PAY INFLATION (COUNCIL) Appendix 2 Service Category Basis of Inflation Inflation Percentage Mid Range 2023/24 Council Wide Electricity Due to current market condition for electricity 20% increase mid range, with a 0.5% tolerance for best and worst case. 20.00% 481,154 Council Wide Gas Due to current market condition for gas 100% increase mid range, with a 0.5% tolerance for best and worst case. 75.00% 494,710 Council Wide Heating Oils Due to current market condition for heating oils 100% increase mid range, with a 0.5% tolerance for best and worst case. 100.00% 266,842 Council Wide Solid Fuel Based on estimates provided by facility services with a 0.5% tolerance for best and worst case. 8.00% 18,430 Council Wide Water Charges Current rate of inflation with a 0.5% tolerance for best and worst case. 9.10% 53,241 Council Wide Vehicle Fuel Historic rate carried forward from last year - will be reviewed during 2022-23 4.97% 60,396 Council Wide Central Repairs - Outside Contractors Based on labour and materials costs survey data from the Royal Institute of Chartered Surveyors (RICS) and information from the property team on the typical allocation of their costs between labour and materials. 3.40% 65,993 Council Wide Contingency for unidentified/insufficient inflation estimate £250k built in to mid-range and £500k built in to worst case scenario 250,000 Council Wide Insurances Current rate of inflation with a 0.5% tolerance for best and worst case. 9.10% 146,114 1,836,880 Education Pre-Primary Partner Provider Uplift Brought into line with the estimate within Social Work for the impact of the Real Living Wage on service costs. 5.00% 180,699 Education External School Placements Based on prior year uplifts 8.00% 90,261 Commercial Services Catering Purchases Figure used by facility services based on national estimates for year 1 with a 0.5% tolerance for best and worst case. 15.00% 306,332 Legal & Regulatory Support Leisure SLA-MAKI/Islay Pools Based on RPI at February 2022 with a 0.5% tolerance in the best and worst case scenarios. 8.18% 13,757 Legal & Regulatory Support Leisure SLA-Atlantis Based on RPI at May 2022 with a 0.5% tolerance in the best and worst case scenarios. 10.17% 56,367 Legal & Regulatory Support NPDO-Variable Element Based on year on year RPI uplift with a 0.5% tolerance for best and worst case. 8.18% 599,843 Legal & Regulatory Support NPDO-Utilities Rebate RPI at February 2022 with a 0.5% tolerance for best and worst case. 8.20% -23,945 Legal & Regulatory Support NPDO-Electricity Due to current market condition for electricity 20% increase mid range, with a 0.5% tolerance for best and worst case. 20.00% 89,930 Legal & Regulatory Support NPDO-Gas Due to current market condition for gas 75% increase mid range, with a 0.5% tolerance for best and worst case. 100.00% 159,308 Legal & Regulatory Support NPDO-Heating Oil Due to current market condition for heating oils 100% increase mid range, with a 0.5% tolerance for best and worst case. 100.00% 68,801 Legal & Regulatory Support NPDO-LPG Due to current market condition for gas 75% increase mid range, with a 0.5% tolerance for best and worst case. 75.00% 53,900 Legal & Regulatory Support NPDO-Water Current rate of inflation with a 0.5% tolerance for best and worst case. 9.10% 31,906 Legal & Regulatory Support HUB-Variable Element Based on year on year RPI uplift with a 0.5% tolerance for best and worst case. 8.18% 93,883 1,721,042 Customer and Support Services ICT Historic rate carried forward from last year - will be reviewed during 2022-23 15.00% 154,650 Roads and Infrastructure Waste PPP-Private Contractor Inflation Based on RPIX at February 2022 with a 0.5% tolerance for best and worst case. 7.09% 465,049 Roads and Infrastructure Waste PPP-Central Government Inflation Based on Landfill Tax increase between 21/22 and 22/23 with a 0.5% tolerance for best and worst case. 1.96% 36,765 Roads and Infrastructure Roads - Bitumen for Road Surfacing Based on price increases in 2022/23 with a 0.5% tolerance for best and worst case. 40.00% 158,512 Roads and Infrastructure Electricity - Street Lighting Due to current market condition for electricity 20% increase mid range, with a 0.5% tolerance for best and worst case. 20.00% 116,305 931,281 4,489,203 Council Wide Total Executive Director Douglas Hendry - Total Executive Director Kirsty Flanagan - Total Total Non-Pay Inflation in the Mid Range
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COUNCIL COST AND DEMAND PRESSURES 2023-24 to 2027-28 Department Service Cost/Demand Pressure 2023-24 £,000 2024-25 £,000 2025-26 £,000 2026-27 £,000 2027-28 £,000 2023-24 £,000 2024-25 £,000 2025-26 £,000 2026-27 £,000 2027-28 £,000 2023-24 £,000 2024-25 £,000 2025-26 £,000 2026-27 £,000 2027-28 £,000 Chief Executive's Unit Financial Services Universal Credit “Full” Service went live in Sept 2018, but managed migration has been deferred to 2021 and will not be completed until 2024. The DWP will reduce the Housing Benefit Administration Subsidy they pay to the Council as some claimants come off of Housing Benefit processed by Council staff and go onto Universal Credit processed by the DWP. The Council’s caseload has reduced marginally since implementation of Universal Credit but it is hard to predict just how quickly the rest of the working age caseload will migrate from Housing Benefit to Universal Credit between now and 2024. These figures represent our best estimates at this time. 40 80 120 160 200 40 80 120 160 200 40 80 120 160 200 Chief Executive's Unit Financial Services Implementation of new financial ledger system - Oracle Fusion Project 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 Executive Director - Douglas Hendry Education The demand for ASN support in Argyll and Bute has continued to grow with a significant increase in, and early identification of children and young people presenting with complex additional support needs, including mental health difficulties. It is anticipated that growth continues over the next 5 years however the extent of this growth is difficult to determine. Scottish Government statistics show that the number of pupils identified with ASN has increased markedly since 2010 and there continue to be year on year increases. These increases are likely due to continued improvements in recording and the introduction of the additional need types 'Child plans' and ‘Other’ in 2011. Scottish Government statistical datasets show that the percentage of school roll in mainstream schools of pupils with ASN has increased by approximately 3% year on year. Within many authorities, this means increased numbers of children accessing specialist provision. 0 0 198 198 198 0 75 206 206 206 0 145 444 444 444 Executive Director - Douglas Hendry Education The SEEMiS group, provider of the Council's Education Management Information System, recently reviewed their long term financial plan and refreshed it to cover the period 2021/22 to 2025/26. As a result of this exercise there were implications on Membership fees with a cost pressure on the Education service arising from financial year 2023/24. Indicative membership fees were provided for financial years 2021/22 to 2022/23 and these have been factored in accordingly. 9 11 13 16 16 9 11 13 16 16 9 11 13 16 16 Executive Director - Douglas Hendry Education The Council has had a requirement to deliver 1140 hours of Early Learning and Childcare from August 2021. The Council has been notified that the ring fenced funding will be reduced by £1.124m from 2022-23. Also, as part of the 1140 expansion programme, the Scottish Government 'Funding Follows the Child' guidance, requires local authorities to set a rate locally that is paid to funded providers in the private and third sectors, including childminders, to deliver the funded entitlement that allows them to deliver a high quality ELC experience for all children. This rate should be sustainable and reflect national policy priorities, including funding to enable payment of the real Living Wage to all childcare workers delivering the funded entitlement and have a margin for re-investment built in. The service has worked hard to mitigate the effects of this and has reduced expenditure as far as possible. However there remains a funding gap, the service are able to cover the over spend for 2022-23 from carry forwards so the cost pressure is requested from 2023-24 onwards. The service will continually review their plans looking for efficiencies where possible. 342 327 327 327 327 342 327 327 327 327 342 327 327 327 327 Executive Director - Douglas Hendry Legal and Regulatory Services Estimated cost (to be borne by the Council) of carrying out local Government elections in May 2027 (and in financial year 2027/28). Operating approx. 100 polling stations and carrying out poll and count for 11 Multi member wards – requiring 11 separate counts 0 0 0 0 250 0 0 0 0 300 0 0 0 0 350 Executive Director - Kirsty Flanagan HR Costs for a project team for a new HR system & Backfill . This is a total new system build. 50 -50 -50 -50 -50 100 -50 -50 -50 -50 150 -50 -50 -50 -50 Best Case Mid Range Scenario Worst Case APPENDIX 3
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COUNCIL COST AND DEMAND PRESSURES 2023-24 to 2027-28 Department Service Cost/Demand Pressure 2023-24 £,000 2024-25 £,000 2025-26 £,000 2026-27 £,000 2027-28 £,000 2023-24 £,000 2024-25 £,000 2025-26 £,000 2026-27 £,000 2027-28 £,000 2023-24 £,000 2024-25 £,000 2025-26 £,000 2026-27 £,000 2027-28 £,000 Best Case Mid Range Scenario Worst Case APPENDIX 3 Executive Director - Kirsty Flanagan Waste Additional costs derived from the current waste model. Note that the treatment of waste going forward has not been fully costed due to uncertainty as to how the council will deal with the Bio Municipal Waste ban and the Deposit Return Scheme. Pressure has increased due to an updated waste model. 7 25 78 (91) (91) 7 25 78 (91) (91) 7 25 78 (91) (91) Executive Director - Kirsty Flanagan Waste Achieving compliance with ban on biodegradable municipal waste in 2025. This is the estimated revenue costs from potential scenarios, remaining in or coming out of the current waste PPP contract. Coming out of the Waste PPP contract would create an additional one-off cost. There are also capital cost implications that are not included within these estimates. Due to the complexity of the model, estimates are subject to change. 0 200 800 800 0 0 400 1,600 1,150 0 0 875 3,500 1,500 0 Executive Director - Kirsty Flanagan Planning Local development plan will require to be done under the new Planning legislation which is a revised process from the current one and will have a 10 year life. The new process has 2 stages where there is likely to be a cost pressure - a gate check followed by an examination some time later. 0 50 0 50 0 0 50 0 50 0 0 50 0 50 0 Executive Director - Kirsty Flanagan Housing Rightsize budget for House Loans which is a historic budget which has simply been rolled forward year on year 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 Executive Director - Kirsty Flanagan Parking Loss in income at Glen Loin Car park, Arrochar due to end of lease and responsibility for car park returning to owners, Luss Estates 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 Executive Director - Kirsty Flanagan IT Increased bandwidth for schools to allow digital transformation to support the move to online learning 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 Executive Director - Kirsty Flanagan Roads Increased cost of Salt for Winter Maintenance, average useage of 15,000 tonnes of salt over the winter period would equate to £163k of additional costs. 147 147 147 147 147 163 163 163 163 163 179 179 179 179 179 Executive Director - Kirsty Flanagan Roads Change at 1 April 2022 to stop the use of Red Diesel in certain vehicles has resulted in an unavoidable increas in fuel costs in Roads and Infrastructure. 78 78 78 78 78 78 78 78 78 78 78 78 78 78 78 Council Wide Council Wide Rightsize budget for Council insurances which is a historic budget that requires to be increased in line with the current insurance costs. 414 414 414 414 414 414 414 414 414 414 414 414 414 414 414 Council Wide Council Wide General provision for unidentified Cost and Demand Pressures 0 0 0 0 0 250 500 750 1,000 1,250 500 1,000 1,500 2,000 2,500 TOTAL 1,182 1,377 2,220 2,144 1,584 1,498 2,168 3,794 3,518 2,908 1,814 3,229 6,698 5,122 4,462
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SOCIAL WORK COST AND DEMAND PRESSURES - 2023-24 to 2025-26 APPENDIX 4 Service Cost/Demand Pressure 2023-24 £000 2024-25 £000 2025-26 £000 2023-24 £000 2024-25 £000 2025-26 £000 2023-24 £000 2024-25 £000 2025-26 £000 All Social Work Estimated Pay inflation reflecting a best case of 2%, mid range of 3.5% in 2023/24 then 2% thereafter and worst case of 5%. 631 1,274 1,930 1,104 1,757 2,423 1,577 3,232 4,970 All Social Work Estimated Pay increments, best case is that 50% of the incremental changes based on 2022/23 are absorbed and in the mid-range and worst case, the increase is in line with the increase in 2022/23. 52 103 155 103 206 309 103 206 309 All Social Work Non-pay inflation, best and worst case based on unavoidable/inescapable inflation and worst case. 3,014 5,982 9,110 3,385 6,764 10,346 3,756 7,524 11,541 All Social Work Non-pay inflation impact of payroll inflation on NHS posts which are recharged to Social Work. 96 196 302 105 217 334 105 217 334 Adult Care Younger Adults Demand Growth (Excluding Physical Disability): There has been continuing increase in demand for care and support services for profoundly disabled younger adults (ie under 65) whose parents have historically provided care but are no longer able to. The best case assumes a 1% increase in spending reflecting the limited service capacity in the area, the mid-range reflects 2% growth and the worst case reflects 3% growth. 170 342 516 341 689 1,044 511 1,038 1,582 Adult Care Younger Adults Demand Growth - Physical Disability: There has been continuing increase in demand for care and support services for profoundly disabled younger adults (ie under 65) whose parents have historically provided care but are no longer able to. The best case assumes a 1% increase in spending reflecting the limited service capacity in the area, the mid-range reflects 2% growth and the worst case reflects 3% growth. 35 71 107 71 143 217 106 215 328 Adult Services Learning Disability Budget Adjustment - The Learning Disability Supported Living budget is carrying a recurring unbudgeted commitment of circa £743k which is contributing to the recurring overspend on the Social Work budget. To address this situation, it is proposed to realign the budget over the three year period from 2023/24 to 2025/26 whilst also reviewing cases and redesigning services. The adjustment will be reviewed annually to reflect spending reductions delivered as well as any changes to funding and practice resulting from the implementation of the Independent Review of Adult Social Care. 248 495 743 248 495 743 248 495 743 Adult Services Physical Disability Budget Adjustment - The Physical Disability budget is carrying a recurring unbudgeted commitment of circa £89k which is contributing to the recurring overspend on the Social Work budget. To address this situation, it is proposed to realign the budget over the three year period from 2023/24 to 2025/26 whilst also reviewing cases and redesigning services. The adjustment will be reviewed annually to reflect spending reductions delivered as well as any changes to funding and practice resulting from the implementation of the Independent Review of Adult Social Care. 30 60 89 30 60 89 30 60 89 Best Case Mid Range Worst Case
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Service Cost/Demand Pressure 2023-24 £000 2024-25 £000 2025-26 £000 2023-24 £000 2024-25 £000 2025-26 £000 2023-24 £000 2024-25 £000 2025-26 £000 Best Case Mid Range Worst Case Adult Services Mental Health Budget Adjustment - The Mental Health budget is carrying a recurring unbudgeted commitment of circa £197k which is contributing to the recurring overspend on the Social Work budget. To address this situation, it is proposed to realign the budget over the three year period from 2023/24 to 2025/26 whilst also reviewing cases and redesigning services. The adjustment will be reviewed annually to reflect spending reductions delivered as well as any changes to funding and practice resulting from the implementation of the Independent Review of Adult Social Care and any additional funding provided to address mental health issues as a consequence of the COVID pandemic. 66 131 197 66 131 197 66 131 197 Children and Families Continuing Care demand for Looked After young people who are cared for by the HSCP. The best case scenario is that the expected additional demand can be funded from within existing resources as a result of planned improvements to the service delivery model (eg shift away form high cost external residential care to local foster and kinship care), the mid case reflects £250k per annum and the worst case reflects £500k per annum. 0 0 0 250 500 750 500 1,000 1,500 All Social Work Allowance for unknown cost and demand pressures which could arise. The best case assumes unknown pressures totalling £250k per annum, the mid range £500k per annum and the worst case £750k per annum. 250 500 750 500 1,000 1,500 750 1,500 2,250 TOTAL COST AND DEMAND PRESSURES 4,592 9,154 13,899 6,203 11,962 17,952 7,752 15,618 23,843