Transcript Document

2014/15 Revenue Budget and
Medium Term Financial
Strategy – Corporate Overview
Jane West – Executive Director of
Finance & Corporate Governance
1
How much cash do we get from Central
Government in 2014/15 (excluding DSG)
• Figures not known when producing Select
Committee papers.
• Provisional figures circulated in July 2013.
• Current modelling assumes 2014/15 grant loss
of £14m (10% cash – 12.5% real terms).
• 2013 Autumn Statement appears to have a
neutral impact on 2014/15.
2
Local Business Rates Retention Scheme
• 2014/15 is the second year of the business rates
retention scheme.
• The system is complex and has many moving parts.
• Final guidance not yet issued on how the scheme will
operate in 2014/15.
• A major concern for LBHF is that £140m of rating
appeals are outstanding. Some go back to 2005.
• £20m of appeals still relate to Westfield (average
reduction 28%).
3
2014/15 – Initial Modelling
Start Up Funding
Allocation (A)
Split of Start Up
Funding:
Revenue Support
Grant (B)
Retained Business
Rates (C )
£m
120.0 Business Rates for LBHF
Businesses (D)
£m
193.0
Split of Baseline:
65.0 Government (50%) (E)
96.5
55.0 GLA (20%) (F)
38.6
LBHF (30%) (G)
Tariff Payable to
Government
Continued…
57.9
3.0
4
2014/15 – Initial Modelling
Continued
£m
£m
Target
Business Rates for LBHF
Businesses (D)
£m
Forecast
Loss
193.0
178.0
(15.0)
Government (50%) (E)
96.5
89.0
(7.5)
GLA (20%) (F)
LBHF (30%) (G)
38.6
57.9
35.6
53.4
(3.0)
(4.5)
£m
Safety
Net
Split of Baseline:
4.0
5
Business Rates Retention –
Concerns (1)
• Authorities gain 30% of collections in excess of the
baseline (£193m in illustration) and bear 30% of any
shortfall.
• Allowance for the impact of rateable value appeals
means that LBHF is £15m short of the £193m target.
The gross loss to LBHF is £4.5m (30% of £15m).
• A safety net applies that restricts the LBHF share of any
loss to £4m per annum.
Continued….
6
Business Rates Retention –
Concerns (2)
…Continued.
• The actual level and timing of appeals is
uncertain. By assuming LBHF will qualify for
the safety net it has adopted a prudent
position.
• Figures will need to take account of the recent
announcement that the business rates
multiplier will increase by 2%.
7
Savings Identified 2014/15 to 2016/17
(£M)
30.0
27.7
25.0
25.7
20.0
15.0
18.2
10.0
5.0
0.0
2014/15
2015/16
2016/17
8
Hammersmith and Fulham Budget Gap
(£M)
Budget Gap Before Identified Savings
Budget Gap after Identified Savings
60.0
50.0
50.5
40.0
40.8
30.0
20.0
10.0
0.0
18.2
0
2014/15
15.0
2015/16
22.8
2016/17
9
Budget Assumptions
• Pay Inflation – 1% increase
• Price Inflation - Only where there are contract agreements
• Fees & Charges – Increased in line with RPI (3.3% August)
• Pension - Net saving of £0.357m in the Employers
Contribution.
• Council Tax reduction of 3% in 2014/15
10
1.5
Centrally Managed
Budgets
0.5
Transport & Technical
Services
Regeneration & Housing
Finance & Corporate
Services
Environment, Leisure &
Residents Services
1.0
Childrens' Services
0.5
Adult Social Care
Growth Proposals 2014/15 (£M)
2.0
1.4
1.5
0.5
0.2
0.0 0.0
0.0
11
2.0
Government
Related
Other
0.5
Other Public
Bodies
1.0
Increased
Demand for
Services
Reasons for Budget Growth 2014/15
(£M)
1.8
1.5
1.5
0.7
0.1
0.0
12
-
2.4
0.8
Transformation
Savings
2.7
Centrally
Managed Budgets
4.0
Transport &
Technical
Services
0.1
Regeneration &
Housing
2.8
Finance &
Corporate
Services
1.0
Libraries
2.0
Environment,
Leisure &
Residents…
3.0
Childrens'
Services
5.0
Adult Social Care
Identified Savings 2014/15 (£M)
4.7
2.7
1.1
0.9
13
2014/15 MTFS Savings (£M)
People
Transformation
Portfolio, £0.5M,
3%
Tri-Borough/
Bi-Borough, £4M,
24%
Reconfiguration/
Rationalisation of
Services, £3M,
17%
Transforming
Business
Portfolio, £1M, 5%
Debt Reduction
Strategy, £1M
7%
Commercials'n /
Income, £ 2M 11%
Staffing /
Productivity, £2M ,
11%
Procurement/
Market Testing,
£1M, 4%
Commission'g,
£3M, 18%
14
Budget Risks/Balances/Earmarked
Reserves
• 2014/15 Budget Risks - £14.6m
• General Balance – Budget provides for an
increase from £18m to £19.1m.
• Earmarked Reserves at close of 2012/13 £59m
15
Council Debt 1996-2016 (£M)
£176
£169
£142
£133
£99
£79
£79
£68
£48
1996
2004
2006
2010
2012
2013
2014
2015
2016
16
Band D Council Tax – 2006/07 to
2014/15 (£)
1200
H&F
1000
917
890
863
800
London Average
837
812
812
782
758
600
735
400
200
0
2006
2007
2008
2009
London Average
2010
2011
2012
H&F
2013
2014
17
Council Tax Reduction
• The 2014/15 Band D charge of £735.16 is the
lowest since 1999/2000.
• The Band D reduction from 2006/07 is £181.81
• The cash terms reduction from 2006/07 is 20%.
• The real terms reduction from 2006/07 is 39%.
18
LBHF Efficiencies 2006/07 – 2016/17
(£M)
250.0
179.7
Cumulative Value (£ms)
200.0
212.1
157.1
150.0
116.7
100.0
138.9
94.0
67.3
50.0
0.0
12.3
26.7
41.9
54.0
Year
19
Impact of Local Government Finance
Settlement and Other Changes
• Local Government Finance Settlement
published 18th December.
• Net improvement in LBHF for 2014/15 of
£1.1m.
• Main reason for increase is more New Homes
Bonus Grant.
• Extra funding likely to be needed to meet cost
increases for Concessionary Fares and review
of Managed Services.
20
Finance & Corporate Services
Estimates 2014-17
Jane West
28th January 2014
FCS Approach to Finding Efficiencies
• Further Tri and Bi borough working
•
•
Already in place for areas such as Treasury, Pensions, Insurance, Innovation &
Change, Design team, Legal, Social Fund and several Directors’ roles
Further integration planned for Legal, HR, ICT, Managed Services,
Procurement, Revenues & Benefits and Customer Services under the Triborough Corporate Review
• Greater use of self-service for external and
internal customers, eg. Smart HR, WCFM and Managed
Services internally; H&F Direct’s push on self service via the web and Post Office
• Transformational programmes to reduce costs,
eg. Agilisys debt collection and tri borough business intelligence
FCS Efficiencies To Date
• Between 2009/10 and 2013/14 FCS have
delivered savings of nearly £10m
• Further efficiencies of £2.4m planned for
2014/15
• A further £2m of efficiencies already identified
for 2015/16
FCS 2014/15 Estimates (by %)
Finance
HR
IT & Procurement
19%
21%
Communications, Policy &
Performance
9%
16%
15%
Executive Services
9%
4%
4%
2%
1%
Innovation & Change
H&F Direct
Actuarial Revaluation of Pension
Fund
Tri Borough (Managed Services)
Transforming Business
FCS 2014/15 Estimates (by value)
DIVISION
EFFICIENCY (£k)
Finance
510
HR
225
IT & Procurement
88
Communications, Policy & Performance
52
Innovation & Change
210
Executive Services
25
H&F Direct
110
Actuarial Revaluation of Pension Fund
357
Tri Borough (Managed Services)
379
Transforming Business
450
TOTAL
2,406
QUESTIONS
26