Budget Outlook 2023-24 to 2027-28
Argyll and Bute Council · 16 June 2022
Back to Policy and Resources Committee — 16 June 2022 and its agenda
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 16 JUNE 2022 BUDGET OUTLOOK 2023-24 TO 2027-28 1. EXECUTIVE SUMMARY 1.1 This report summarises the budget outlook covering the period 2023-24 to 2027-28 taking into consideration the budget decisions taken at the Council Budget meeting held on 24 February 2022. This is the first outlook of the financial year and rolls forward previous estimates as well as updating some estimates and also extends the budget outlook out to 2027-28. The assumptions will continue to be updated and refined as the year progresses. 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 to full Council on 24 February 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 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 The starting point for the 2023-24 budget is the approved budget for 2022-23 as agreed at Council on 24 February 2022 with the following updates: Adjustment relating to additional funding in the finance order that has been reduced by an assumption for future years. Increase in the Council Tax Growth percentage for 2023-24. Increase to non-pay inflation Small adjustments to the cost and demand pressures 1.6 The assumptions in respect of employee costs for Council services are as follows: Pay award for 2023-24 to 2027-28 of between 2% in the best and mid- range scenarios and 5% within the worst case scenario. It is acknowledged that as the pay award has not yet been agreed it could differ from this estimate and at this stage we are recognising that possibility as a financial risk. Increments between £0.345m and £0.690m with mid-range £0.690m. 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
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the worst case scenario. 1.8 There are a number of cost and demand pressures for Council services built into each scenario: Universal Credit – HB Admin grant Oracle Financial Ledger Replacement ASN Support SEEMiS Group – Education Management System Removal of charge for milk in schools Cashless Catering Local Government Election New HR System Project Team Waste Impact of BMW Ban Local Development Plan House Loans Loss of Parking Income Increased Bandwidth in Schools. 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 £43.566m with a gap of £9.203m 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 2% and 4% (3% 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.
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Proposed increase to Council Tax (3% in all scenarios). 1.14 In the mid-range scenario, the budget gap estimated over the five year period 2023-24 to 2027-28 is £32.275m with a gap of £6.891m in 2023-24. 1.15 The budget gap in the best case scenario over the five years is £21.160m with a gap of £4.337m in 2023-24 and in the worst case scenario, the budget gap over the five years is £75.256m with a gap of £15.082m in 2023-24. A summary of all three scenarios is included within Appendix 1. 1.16 Given the significant budget gap over the next five years it is proposed that a cross party Budget Working Group similar to what was in place for both the 2021-22 and 2022-23 budgets, is established and for the group to begin discussions in August 2022 to allow sufficient time to address the financial challenges ahead. 1.17 It is recommended that the Policy and Resources Committee: a) Consider the current estimated budget outlook position for the period 2023-24 to 2027-28. b) Agree to the establishment of a cross party Budget Working Group with a composition of six administration Members, three opposition Members and two Trade Union representatives and seek nominations for these positions.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 16 JUNE 2022 BUDGET OUTLOOK 2023-24 TO 2027-28 2. INTRODUCTION 2.1 This report summarises the budget outlook covering the period 2023-24 to 2027-28 taking into consideration the budget decisions taken at the Council Budget meeting held on 24 February 2022. This is the first outlook of the financial year and rolls forward previous estimates as well as updating some estimates and also extends the budget outlook out to 2027-28. The assumptions will continue to be updated and refined as the year progresses. 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: a) Consider the current estimated budget outlook position for the period 2023-24 to 2027-28. b) Agree to the establishment of a cross party Budget Working Group with a composition of six administration Members, three opposition Members and two Trade Union representatives and seek nominations for these positions. 4. DETAIL 4.1 Funding Scottish Government Finance Settlement 4.1.1 On 9 December 2021, the Cabinet Secretary for Finance and Economy launched a consultation on the Scottish Government’s first multi-year Resource Spending Review since 2011. The spending review was due to set out the spending plans for the remainder of the parliamentary term 2023-24 to 2026-27 and it was hoped that there would be enough transparency and detail as to provide the Council with more certainty on the funding over the next four years. At the time of writing, the spending review has just been published and unfortunately it’s at a much higher level than anticipated and doesn’t give sufficient detail on future years funding.
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4.1.2 When I considered the future funding assumptions as part of the budget in February, I had reflected on the UK Spending Review published in October 2021. The Scottish Parliament Information Centre (SPICE) analysis of the UK Budget highlighted that the total (unadjusted) Scottish block grant will increase from £36.7 billion (excluding COVID funding) in 2021-22 to £41.8 billion by 2024-25. However, as the Table below shows, this is very much front loaded, with a big real terms increase in 2022-23 (+7.7%), followed by two years of the Scottish Budget declining, slightly, in real terms. UK Spending Review – October 2021 Year Cash Terms Real Terms £billion % change £billion % change 2021-22 36.7 36.7 2022-23 40.6 10.6 39.5 7.7 2023-24 41.2 1.5 39.3 -0.7 2024-25 41.8 1.5 39.1 -0.4 While the Treasury published ‘Block Grant’ figures are notoriously difficult to translate into Scottish Budget terms, as a significant number of other factors are involved, and it is also not known how the Scottish Government will allocate their block grant to priorities, it still provides some guidance as to future funding prospects. 4.1.3 The updated spending envelope figures contained in the spending review show a small increase to the Total budget with Local Government remaining as flat cash until 2026-27. The Government has chosen to prioritise Health and Social Care and Social Security spending, which received 90% of the increase in the resource spending budget from 2022-23 to 2025-26. Whilst this is disappointing, it is not different to many other spending areas that have been identified as a priority in the past, for example, Education and Skills is flat cash through to 2025-26. Scottish Resource Spending Review – May 2022 Year Scotland Local Government £billion % change £billion % change 2022-23 41.8 10.6 2023-24 43.3 3.6 10.6 0.0 2024-25 44.4 2.5 10.6 0.0 2025-26 45.6 2.7 10.6 0.0 2026-27 47.5 4.2 10.7 0.9 What was confirmed in the spending review was that the £120m Scotland wide (our share £2.146m) announced on 27 January 2022 as part of the Stage 1 Budget Bill has been baselined. The figures for Local Government noted in the table above are at portfolio level (Level 2) and do not include any transfers to Local Government from other portfolios in-year. It is likely that we will not know that detail until the budget is announced in December.
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4.1.4 The table at paragraph 4.1.2 shows that there was an increase to the Scottish block of 10.6% in 2022-23, however, our general revenue grant was virtually flat cash. Future year increases are much reduced and from the table in paragraph 4.1.3, for Local Government it is expected to be flat cash up to 2025-26. The Scottish Government are due to release further detail via COSLA that might help to analyse the estimates further but at this stage the funding assumptions as outlined as part of the budget pack in February 2022 still remain and these will be reviewed when more information becomes available. The previous funding assumption was based on a range of between a 0.5% reduction (best case) and 1.5% (worst case) with a mid-range reduction of 1.0%. 4.1.5 When the budget was set on 24 February 2022, the funding as published in the provisional settlement was £207.515m with an additional £2.146m announced as part of Stage 1 of the budget process (£120m Scotland wide) on 27 January 2022. When the Finance Order was published on 2 March 2022, an additional £6.315m had been distributed to Argyll and Bute Council for Discretionary Housing payments, Scottish Child Bridging Payments, Removal of Curriculum and Music Tuition Charges, Free School Meals Expansion and school holidays and Health and Social Care. This funding was linked to additional policy commitments that had a matching increase to our expenditure budget and therefore no bottom line impact. 4.1.6 When the budget was set on 24 February 2022, the 2021-22 settlement for Teachers had not been agreed. As part of the negotiations, the Cabinet Secretary for Education and Skills wrote to COSLA on 9 December 2021 to confirm that “the Scottish Government was prepared to make a financial contribution towards the recurring costs in 2022-23 associated with the proposed revised pay offer to teachers for 2021-22”. At the time, the exact level of additional financial support was not known but both the recurring cost and level of income was calculated at £0.370m. It has now been confirmed that the all Scotland funding is £32.8m of which we expect to get 1.58%, £0.518m. This amount is due to be paid within 2022-23 and will then form part of the base budget that will be subject to the assumption of future funding. An adjustment to the base budget is also required increasing the base by £0.121m. 4.1.7 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 Council Tax 4.1.8 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
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Council on 24 February 2022. 4.1.9 During most of 2021-22 council tax growth of 0.25% was assumed in the mid- range scenario. An assessment was carried out in December 2021 and the growth was much better than estimated therefore as part of the 2022-23 budget a growth of 1.5% was built in to 2022-23, with the growth dropping back down to 0.5% in future years. This position has been further reviewed and it is estimated 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 now being pushed back to 2024-25. This will continue to be monitored on an ongoing basis and any required adjustments will be reported throughout the year. 4.1.10 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. 4.1.11 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 The 2022-23 budget approved by Council on 24 February 2022 was £262.812m. 4.2.2 For future years, there are adjustments required to the base budget from decisions by Council on 24 February 2022 and other adjustments as noted in the table below: 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
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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 Revised Base Budget 271,234 271,250 271,259 271,268 271,277 4.3 Employee Cost Changes Pay Award 4.3.1 The pay award for 2022-23 has still to be agreed and this may have an impact on the base budget if the pay award is greater than the estimate built into the current year’s budget, which was 2%. 4.3.2 In March 2022, COSLA Leaders agreed to make an undifferentiated offer of a 2% uplift to all bargaining groups on the basis of parity for all which has been both a key concern and agreed position for the past number of years. All Unions have rejected this initial offer and negotiations are ongoing. 4.3.3 The COSLA remuneration advisory group, made up of advisors from the Society of Local Authority Chief Executives (SOLACE), The Directors of Finance and the Society of Personnel and Development Scotland (SPDS) has noted the constraints on Local Government funding, with two thirds of Councils having budgeted for a pay increase of 2% or less. The 2% increase is deemed to be affordable, hence why that is the assumption that has been built into the mid- range scenario. 4.3.4 For future years, the pay assumption remains at 2% in both the mid-range and the best case, reflecting that 2% is deemed to be affordable but it is not likely that the pay award will be less than this. For scenario purposes, 5% has been built into the worst case. There remains a significant risk that the pay award agreed for 2022-23 and beyond could be higher. Every 1% over and above what is budgeted would add an additional pressure of circa £1.5m. Increments 4.3.5 The cost of employee increments for 2022-23 was £0.690m. There remains a fairly regular turnover of staff within posts and when this happens the cost of increments can, in some cases, be absorbed by the budget provision for the previous post holder, who may have been at the top of the spinal column point for the grade. This is shown in adjustments to the employee base budget. 4.3.6 In terms of the budget outlook it has been assumed that for future years, the best case is assumed to be half of the previous year cost, for mid-range and worst case, assumes equal to the cost in 2022-23. 4.3.7 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
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paragraph 4.6.3. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 2027-28 £000 Pay Award 3,000 6,061 9,182 12,366 15,613 Increments 690 1,380 2,070 2,760 3,450 Total Employee Cost Changes 3,690 7,441 11,252 15,126 19,063 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 When the 2022-23 budget was set in February, the indicative inflation estimates from 2023-24 were based on a similar level of inflation to the 2022-23 estimate, however, it was noted that this would be reviewed for the first budget outlook presented to the new Council as it was likely that there would be further increases to inflation, which is indeed the case. In addition, in terms of utilities, some of the contracts for 2022-23 were forward purchased and therefore the level of inflation was not going to be felt within 2022-23. 4.4.3 Officers have now undertaken a review of areas of non-pay inflation of significant value and volatility. 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). 4.4.4 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. 4.4.5 The table below summarises the non-pay inflation increases in the mid-range scenario for Council services 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.
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Inflation Category 2023-24 Previous estimates £000 2023-24 Updated estimates £000 Increase £000 Utilities - Electricity, Gas, Oil, Water 245 1,177 932 Street Lighting Electricity 32 116 84 Vehicle Fuel 62 62 0 Central Repairs - Outside Contractors 57 57 0 Waste PPP/Landfill Tax 455 502 47 NPDO/HUB Schools 651 1,024 373 Community Pool Subsidies 53 60 7 Residential Schools 84 91 7 Pre-Primary Partner Providers 86 86 0 ICT 123 123 0 Catering Purchases and Milk 310 309 (1) Contingency for unidentified/insufficient inflation estimate 250 250 Total 2,158 3,857 1,699 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 6,187 8,661 11,287 14,078 Total Non-Pay Inflation 6,187 8,661 11,287 14,078 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 budget meeting on 24 February 2022 the following changes have been made to the cost and demand pressures: New – Oracle Financial Ledger System Replacement New – Cost of Local Government Elections in 2027-28. Amended – Increased SEEMiS pressure for the Education Management System Amended – Profiling of Local Development Plan cost pressure. 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
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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 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 Allowance for pressures in future years 250 500 750 1,000 1,250 Total Cost and Demand Pressures 843 1,513 3,139 2,863 2,253 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.
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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. 2023-24 £000 2024-25 £000 2025-26 £000 Pay Inflation 1,335 2,671 4,033 Pay Increments 103 206 309 Non-Pay Inflation 3,373 6,674 10,158 Care Services for Younger Adults 417 843 1,278 Adult Services - Supported Living 344 686 1,029 Continuing Care for Looked After Children 250 500 750 Kintyre Care Centre 750 750 750 Unknown Cost and Demand Pressures 500 1,000 1,500 Total Cost Increase estimates for Social Work 7,072 13,330 19,807 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 271,234 271,250 271,259 271,268 271,277 Employee Cost Changes 3,690 7,441 11,252 15,126 19,063 Non-Pay Inflation 3,857 6,187 8,661 11,287 14,078 Cost and Demand Pressures 843 1,513 3,139 2,863 2,253 Total Estimated Expenditure 279,624 286,391 294,311 300,544 306,671 Estimated Funding 270,421 268,558 266,718 264,900 263,105 Estimated Budget Surplus / (Gap) Cumulative (9,203) (17,833) (27,593) (35,644) (43,566) 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. For the budget outlook a range of between 2% (worst case) and 4% (best case) with a mid-range of 3%. The Council may consider, that in light
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of the increasing inflation we are experiencing on many cost areas, that it would be appropriate to increase the fees and charges inflation to a higher level. 4.8.2 A number of policy options were agreed at the Council meeting on 24 February 2022 that impacted on 2023-24 and beyond. These are now factored into the budget outlook, reducing the budget gap. 4.8.3 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. 4.8.4 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. 4.8.5 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 356 722 1,099 1,488 1,888 Management/Operational Savings February 2021 20 20 20 20 20 Policy Savings February 2021 128 128 128 128 128 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 Total Measures to Balance the Budget 2,312 4,448 6,653 8,934 11,291 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 (9,203) (17,833) (27,593) (35,644) (43,566) Savings Measures 2,312 4,448 6,653 8,934 11,291
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Estimated Budget Surplus / (Gap) Cumulative (6,891) (13,385) (20,940) (26,710) (32,275) Estimated Budget Surplus / (Gap) In Year (6,891) (6,494) (7,555) (5,770) (5,565) 4.9.2 In the mid-range scenario, the budget gap estimated over the five year period 2023-24 to 2027-28 is £32.275m with a gap of £6.891m in 2023-24. 4.9.3 The budget gap in the best case scenario over the five years is £21.160m with a gap of £4.337m in 2023-24 and in the worst case scenario, the budget gap over the five years is £75.256m with a gap of £15.082m in 2023-24. A summary of all three scenarios is included within Appendix 1. 4.9.4 The changes from the previous anticipated outlook to 2026-27 (as noted at the budget meeting on 24 February 2022) are summarised in the table below. Note that the budget meeting report was not extended to 2027-28 which is why the table below only extends to 2026-27. 2023-24 £000 2024-25 £000 2025-26 £000 2026-27 £000 Previously reported budget surplus / (gap) Cumulative (7,774) (13,911) (21,166) (26,236) Additional Funding in the Finance Order that has been reduced by assumption for future years (63) (126) (188) (249) £120m additional Scottish Government Funding baselined as part of Spending Review 2,125 2,104 2,083 2,062 Increase in Council Tax Growth in 2023-24 570 607 644 683 Council Tax calculation adjustment (24) (58) (106) (173) Increase to Non-Pay Inflation (1,699) (1,871) (2,186) (2,655) Increase to Cost Pressures (49) (149) (48) (151) Additional funding for teachers pay award 143 138 133 128 Adjustment to base for teachers pay award (121) (121) (121) (121) Minor Rounding adjustments 1 2 15 2 Revised Budget Surplus / (Gap) Cumulative (6,891) (13,385) (20,940) (26,710) 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
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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 is proposed that a similar group is established to support the 2023-24 budget approach and for the group to begin discussions in August 2022 to allow sufficient time to address the financial challenges ahead. 5. CONCLUSION 5.1 In the mid-range scenario, the budget gap estimated over the five year period 2023-24 to 2027-28 is £32.275m with a gap of £6.891m 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 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. Both will be kept under close review and the budget outlook updated as and when further information becomes available. 5.3 It is proposed that a cross party BWG is established to provide scrutiny on the identification of savings options with early engagement with services users and stakeholders to help inform and develop savings options within the financial envelope. 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
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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 2 June 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, Interim 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 - 17 JUNE 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 2,107 2,123 2,132 2,141 2,150 2,107 2,123 2,132 2,141 2,150 2,107 2,123 2,132 2,141 2,150 Revised Base Budget 271,234 271,250 271,259 271,268 271,277 271,234 271,250 271,259 271,268 271,277 271,234 271,250 271,259 271,268 271,277 Pay Award 2,978 6,016 9,114 12,274 15,497 2,978 6,016 9,114 12,274 15,497 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 3,690 7,441 11,252 15,126 19,063 8,112 16,665 25,563 34,873 44,612 Non-Pay Inflation - Council Services 3,476 5,650 7,948 10,377 12,946 3,857 6,187 8,661 11,287 14,078 5,838 9,925 14,177 18,606 23,226 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 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 543 738 1,581 1,505 945 843 1,513 3,139 2,863 2,253 1,143 2,558 6,027 4,451 3,791 Total Estimated Expenditure PRIOR to measures to balance the budget 278,553 284,367 290,960 296,828 302,414 279,624 286,391 294,311 300,544 306,671 286,327 300,398 317,026 329,198 342,906 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 (6,776) (13,244) (20,483) (26,989) (33,205) (9,203) (17,833) (27,593) (35,644) (43,566) (17,266) (34,396) (54,035) (69,171) (85,794) Measures to Balance the Budget: Fees and Charges 475 963 1,465 1,984 2,517 356 722 1,099 1,488 1,888 237 481 733 992 1,259 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 Total Measures to Balance the Budget 2,439 4,718 7,075 9,517 12,045 2,312 4,448 6,653 8,934 11,291 2,184 4,177 6,231 8,351 10,538 Budget Surplus / (Gap) Cumulative AFTER measures to balance the budget (4,337) (8,526) (13,408) (17,472) (21,160) (6,891) (13,385) (20,940) (26,710) (32,275) (15,082) (30,219) (47,804) (60,820) (75,256) Budget Surplus / (Gap) In Year AFTER measures to balance the budget (4,337) (4,189) (4,881) (4,064) (3,688) (6,891) (6,494) (7,555) (5,770) (5,565) (15,082) (15,137) (17,586) (13,016) (14,436) 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% 484,544 Council Wide Gas Due to current market condition for gas 75% increase mid range, with a 0.5% tolerance for best and worst case. 75.00% 371,229 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. 6.20% 36,366 Council Wide Vehicle Fuel Historic rate carried forward from last year - will be reviewed during 2022-23 4.97% 62,000 Council Wide Central Repairs - Outside Contractors Historic rate carried forward from last year - will be reviewed during 2022-23 3.00% 57,000 Council Wide Contingency for unidentified/insufficient inflation estimate £250k built in to mid-range and £500k built in to worst case scenario 250,000 1,546,411 Education Pre-Primary Partner Provider Uplift Historic rate carried forward from last year - will be reviewed during 2022-23 2.50% 86,000 Education External School Placements Based on prior year uplifts 8.00% 90,590 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% 308,543 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 April 2022 with a 0.5% tolerance in the best and worst case scenarios. 8.43% 46,673 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. 75.00% 119,481 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. 6.20% 21,738 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 1,569,194 Customer and Support Services ICT Historic rate carried forward from last year - will be reviewed during 2022-23 15.00% 123,000 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 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% 116,305 741,119 3,856,724 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 Removal of 10p charge for milk in Primary Schools from August 2021. Council agreed to remove this charge from August 2021 to promote the implementation of the Healthy Eating in Schools Regulations and the roll out of free school meal to all Primary pupils by August 2022. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Executive Director - Douglas Hendry Education The existing cashless catering solution in 9 x secondary schools requires upgrading or replacing as a result of hardware obsolescence and software reaching end of life and contract end in Jan 2022. This solution is a red risk on the ICT GAMP and is no longer PSN or Cyberessentials Plus compliant. Local authorities across the UK have rapidly transformed their cashless catering and payment solutions during the pandemic to reflect the trends for online payments, pre-order self service, and deliver a safer, more efficient service. These trends are reflected in the supplier marketplace with new solutions now available for online self service payments and school meal selection with market leaders providing end to end solutions handling all school fund types in one integrated income management solution. This will reduce cash handling and allow school catering to prepare meals to order. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 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 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 - 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 - Douglas Hendry Procurement In February 2019 the Council agreed a £250k procurement policy saving to be delivered through an increased focus on contract and demand management. This saving was dependent on the number and type of contracts being tendered for which have the potential to achieve revenue savings through the procurement process. It has proved harder to achieve than was first anticipated and this saving has been removed. As this saving had already been built into future budgets a cost pressure is required to reverse it. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 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 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 Housing Temporary Accommodation for the homeless has had a history of demand led overspending. The budget is in need of rightsizing. Costs include property maintenance, maintenance and replacement of furniture, property rental costs less benefit payments and the cost of voids which would include Council Tax and utilities and loss of benefit payments. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Council Wide Council Wide Rightsize budget for Apprenticeship Levy which is a historic budget which has simply rolled forward year on year. Apprenticeship Levy is charged at a rate of 0.5% of an employer's paybill but the budget has not been increased in line with salary budget increases 0 0 0 0 0 0 0 0 0 0 0 0 0 0 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 543 738 1,581 1,505 945 843 1,513 3,139 2,863 2,253 1,143 2,558 6,027 4,451 3,791
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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 1%, mid range of 2% and worst case of 3%. 668 1,336 2,011 1,335 2,671 4,033 1,342 2,685 4,068 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. 2,925 5,737 8,687 3,296 6,518 9,919 3,666 7,277 11,109 All Social Work Non-pay inflation impact of payroll inflation on NHS posts which are recharged to Social Work. 77 156 239 77 156 239 77 156 239 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. 172 345 520 343 694 1,052 515 1,046 1,594 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. 37 74 112 74 149 226 110 224 341 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 Adult Services Kintyre Care Centre - Potential cost pressure as a result of potential transfer of KCC facility to HSCP Management. 750 750 750 750 750 750 900 900 900 TOTAL COST AND DEMAND PRESSURES 5,274 9,687 14,253 7,072 13,330 19,807 8,307 15,680 23,339