Transcript Newcastle City Council 2015-16 budget

Newcastle City Council
2015-16 budget
Financial context
Introduction
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Original MTFP covering 2013/14 to 2015/16 included a
‘budget gap’ of £108m – £37m / £35m / £36m
2013/14 outturn £1.5m (i.e. 0.5% of net budget) under
budget and 2014/15 outturn projected to be £0.5m (i.e. 0.2%
of net budget) under budget
New MTFP covering 2015/16 to 2017/18 includes a ‘budget
gap’ of £90m – £40m / £30m / £20m
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‘Budget gap’
120
The three year
‘budget gap’ of
£90m is made
up of a
combination of
funding
changes and
unfunded cost
pressures
100
80
£241m over
seven years
60
40
£151m gap
2010-15
20
£90m gap for
2015-18
0
2011-12
2012-13
2013-14
2014-15
2015-16
(20)
(40)
(60)
(80)
(100)
(120)
(140)
Cost pressures
Funding cuts
2016-17
2017-18
£245m over
seven years
Cost pressures
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Increasing demand for services – e.g. increased
number older people
Impact of legislative / regulatory changes – e.g.
landfill tax increases
Pay and price increases – increases in pay and other
staff related costs (e.g. pay award / pension costs) and
general and specific inflation (e.g. utilities / PFI
contracts)
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Change in spending power
Funding changes
Updated following Local Government Finance
Settlement
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Revenue support grant to reduce from £98.4m to
£70.4m – a reduction of £28.0m or 28.5% – partly offset by small increases in council tax and business rates
tax base
Other specific grants such as housing benefit subsidy
admin grant and education services grant will also be
reduced
We are facing a higher level of funding reductions than
the national average
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Our spending power
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Our revenue spending power is higher than other parts
of the country because of higher needs
For example, 101 looked after children per 10,000
population compared with 24 per 10,000 population in
Wokingham
Our level of grant funding is higher because of our
relatively low council tax base
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Funding system
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Ministers have previously quoted the significant difference in
spending power between Newcastle and Wokingham as a
sign of the fairness of their grant settlements
However, the new funding system is fundamentally flawed,
and will result in the spending power figures being closed
and then reversed – despite the much higher spending
requirement in Newcastle
Our modelling indicates that Newcastle’s total spending
power per dwelling will fall below Wokingham’s in 2019/20.
However, if ring-fenced public health money and the new
health / better care funding is excluded, the gap in funding
for core statutory services will be closed in 2017/18
Future spending power profile
Cost / benefit to Newcastle of changes
The Grant cuts to Newcastle could be significantly reduced if the
three things that we have highlighted were changed – by over
£6m next year and by almost £12m in 2015/16.
If Council Taxbase Equalisation is Restored
If Rates Safety Net is not Held Back
If New Homes Bonus Topslice is Equitable
2014/15 2015/16
£m
£m
3.6
8.4
0.9
0.4
2.1
3.0
6.6
11.8
The cost to the people of Newcastle is significant in terms of
service and job loss and the economic loss of money being taken
out of our local economy.
Budget implications for VCS
• Continued to protect investment in the Newcastle Fund
• Previous higher allocations to help manage consequences
of government ending specific grant programmes
• No reduction to Newcastle Fund in 2015-16
• £501,476 already committed for 2016-17 in rounds 4 and 5
• Total funding for 2016-17 to be reviewed – likely to reduce
at same level as local authority reduction in funding
• Detailed summary of current VCS spend presented to
VSLG: circa £55m
Key questions
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Are our proposals clear and easy to understand?
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What consequences or impact do you think there might be
as a result of the proposals?
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What do you think could be done to reduce any negative
consequences or impacts of the proposals?
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How fair and reasonable do you think the proposals are
given that the council needs to save £40 million next year?
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Do you think that there are other ways the council could
make the savings set out in any of the proposals? If so, how
do you think the council should make the savings?
Next steps
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31 January 2015 – Consultation closes
23 February 2015 – Cabinet consider results of
consultation and recommends revised budget proposals
to City Council
4 March 2015 – City Council agrees budget