CABINET

CABINET
Meeting date: 16th September 2010
From:
Deputy Leader, Corporate Director – Resources,
Corporate Director – Organisational
Development
BUDGET 2010/11: RESPONSE TO GRANT CHANGES
PART A - RECOMMENDATION OF CABINET MEMBER
1.0
EXECUTIVE SUMMARY
1.1
Following the election of a new Government in May 2010,
announcements have been made in respect of reductions in grants in
2010/11. This report sets out proposals to deliver those grant
reductions.
1.2
In addition, a number of announcements have been made since that
date as government departments determine the implications of new
policy direction and in year departmental reductions.
1.3
In summary, reductions in grants identified to date are as follows:
Revenue Capital
£M
£M
Revenue - Area Based Grant
Capital - Transport Capital Programme
1.710
Capital - Children’s Services Capital Programme
2.542
Total Grant Reductions to Date
Total Revenue and Capital Reductions
1.4
3.678
3.678
4.252
7.930
Announcements have also been made in respect of withdrawing the
funding for:

The County’s Building Schools for the Future Programme,
amounts to £62m

Reductions of North West Development funding of £6m

Changes to the transition arrangements for 16-19 Education
and Training.

Reductions in the Local Area Agreement performance award
grant Local Public Sector Agreement Grant of 50%.
1.5
In formulating these proposals the Chairpersons of Local Committee
and Scrutiny Management Board and Children’s and Young People
and Environment Advisory Panels have been consulted.
1.6
In addition, the new Government’s emergency budget on 22nd June
2010 outlined broad targets to deliver reductions in spending by
Government Departments of 25% over the coming years. The report
sets out headlines from the emergency budget and outlines initial
steps in terms of staff recruitment to prepare the Council for the
pressures it will face in 2011/12 and beyond.
2.0 STRATEGIC PLANNING AND EQUALITY IMPLICATIONS
2.1
This report links to the Improving Performance theme of the Council
Plan as effective management of financial resources is a prerequisite for making informed decisions when planning and
delivering Council services.
2.2
Children’s Services have undertaken an Equality Impact Assessment
on all of the above proposed savings and we are confident that they
will have either no or minimal impact. The Impact Assessment also
included the Rurality Dimension.
3.0 RECOMMENDATION
Members are asked to:
3.1
Agree to make reductions to undertake the activities as set out in
para 4.5 in respect of Area Based Grant reductions (totalling
£3.678M) and Appendix B which sets out reductions in respect of
Children’s Services Area Based Grants, which accounts for £3.124M
of the ABG reduction.
3.2
Agree the deductions to the Children’s Services Capital Programme
set out in Appendix C, totalling £2.542M and implications as set out
in Appendix D.
3.3
Agree the breakdown of the Transport Capital Programme set out in
Appendix E, and agree the proposed reductions in transport capital
spending totalling £1.710M as set out in Appendix F
3.4
Note the implications of the other announcements received to date
(Section 5).
3.5
Note the steps taken in the light of the emergency budget
announcements.
Stewart Young, Deputy Leader
Part B – Advice of Corporate Director – Resources
4.0 BACKGROUND
4.1
The new government has made it clear that one of its most urgent
priorities is to tackle the UK‟s structural budget deficit in order to restore
confidence in the economy and support long term recovery.
Interim Announcements
4.2
On 24th May, the Chancellor of the Exchequer announced the first step in
tackling the deficit, setting out how the government intended to save over
£6.2 billion from spending in 2010/11. Included in the savings were £1.2
billion to be delivered from local government.
4.3
On 10th June the Secretary of State for Communities and Local
Government announced the detail of how the £1.2 billion revenue
reductions would be allocated to local government. The reductions related
to Cumbria arise from the Area Based Grant (ABG). The figures are set
out below:
(Revenue) Area Based Grant Reductions 2010/11
Supporting
People Admin
Road Safety
revenue
Home Office
Services total
Dept. for
Education
Total
Total
ABG
reductions
£m
£m
£m
£m
£m
(0.246)
(0.255)
(0.053)
(3.124)
(3.678)
4.4
The ABG originated from a number of specific grants, before becoming a
consolidated non ring fenced grant. It can be spent on any area that the
Council determines, although there is pressure from individual government
departments to spend it on the original specific grant areas. Cumbria has
continued to use ABG to fund the original areas of the specific grants.
Revenue Reductions
4.5
In summary the reductions and their impact is as follows:
4.5.1 Supporting People (£0.246m) this is a cut in the specific grant the
purpose of which was to fund the administration and general management
staff required to run the £10m of frontline Supporting People Grant. Cuts in
this area had been anticipated and the Directorate had already been
working towards alternative service provision / mainstreaming in this area.
The Adults and Local Services Directorate have indicated that they will
deal with the loss of this grant, £246k, by utilising the main Supporting
People Grant of £10m. There will be no impact upon staff numbers.
4.5.2 Environment Road Safety (£0.255m) this is a partial cut in the £0.956m
which the County administer on behalf of Cumbria Road Safety
partnership, and equates to a 26.6% cut in total grant in this area. There
have been under spends in this area in previous years, therefore there is
potential to absorb some of this. The Council administers the grant on
behalf of the partners, which include Police, Highways and Magistrates
Courts. The staff impact will be felt by the Police Authority and relates to
staffing of the Camera Vans and the Ticketing Office. The Courts use
additional staff to manage the increase in ticketing. The aim of the grant is
to reduce those killed and seriously injured on the roads. There is a
positive relationship between safety camera activity and a reduction in the
numbers of people killed and seriously injured. The Cumbria Road Safety
Partnership strongly opposes any reduction in revenue expenditure. It is
envisaged that the reduction in grant will impact on staffing resources
within partner organisations and the number of road safety vans will
decrease.
4.5.3 Home Office (£0.053m) This reduction is from the Safer and Stronger
Communities Fund (SSCF) and will impact on Crime and Disorder
Reduction Partnership and other countywide community safety activity, for
example work with persistent offenders and people with drug and alcohol
problems.
4.5.4 Children’s Services (£3.124M). The breakdown of the grants that
comprise the Department for Education ABG is set out at Appendix A. The
reduction announced by the Government has not been linked to any of the
specific grant areas, only to the overall total.
4.5.5 Appendix B sets out the recommended areas where activity funded from
ABG can be reduced and the impact this will have. Work to determine the
full impact of these reductions across all activities is continuing. These
areas have been colour coded to indicate the risk associated with the
implementation or risk to delivery. The initial implications are that this
could lead to a reduction in establishment of 7 posts. This will be dealt
with using the Council‟s “Management of Change” policies, including the
use of redeployment and, if necessary, redundancy.
Children’s Services Capital Programme Reductions
4.5.6 The government have to date clawed back £2.542m capital funding for
Children‟s Services projects. This comprises of 50% of the current year
funding for the extended schools grant, harnessing technology grant and
the youth capital fund. Additionally funding has been cut from the 14-19
Diploma service for IT expenditure. Details of all Children‟s Services
capital projects including those with funding reductions are detailed in
Appendix C of this report. Appendix D sets out the implications of these
reductions.
4.5.7 In other Capital grant areas the current spending/commitment is being
reviewed and likely to lead to further announcements over coming months.
Transport Capital Programme Reductions
4.5.8 In addition to revenue reductions, capital reductions were announced,
related to funding for transport:
Transport (Capital) Grant Reduction 2010/11
Cumbria
Integrated
Transport
Block
Capital
Detrunking
PRN
Network
Funding
Road Safety
Capital Grant
TOTAL
REDUCTIONS
£'m
£'m
£'m
£'m
£'m
(1.300)
(0.130)
(0.070)
(0.210)
(1.710)
4.5.9 In addition to the above, it is important to note that the announcement
specifically excludes “Department of Transport – Major Projects, Smaller
Grants”. The aim is to move away from small bid based & reward grants
that are expensive to administer. Local Authorities are awaiting
confirmation of the impact of reductions totalling £10 million in respect of
these grants.
4.5.10 Appendix E sets out the allocation of the Transport Capital Programme
between different projects funded from government highways allocations.
Works in relation to the Principal Roads schemes and Bridges and
Structures, have this year been prioritised using a value management
approach in line with the Highways Systems thinking work, as set out at
County Council in February.
4.5.11 The proposal for meeting these reductions is also set out in Appendix E,
with a commentary of the impact in Appendix F. The proposal allocates
the reductions on a pro-rata basis, after allowing for the specific Road
Safety grant, between the central Integrated Transport block and Local
Committee Annual Package of Measures.
Local Area Agreement Grant
4.5.12 In addition to those areas set out above, announcements were made in
respect of reductions in Local Area Agreement (LAA) grant. The
announcement set out that:




Areas with LAAs that ran from 2006-2009 have already submitted their
claims and these were paid in the last financial year. No further claims
from these areas will be accepted but it is planned to pay 50% of the
value of any targets likely to be achieved where data to support a claim
was not available before Dec 2009.
Areas with LAAs that ran from 2007-2010 should submit their claims as
usual. It is planned to pay 50% of what‟s claimed and 50% of the value
of any targets where data is not available but the target is likely to be
achieved.
There are a number of 2006-09 LPSA claims outstanding and these
will be treated in the same way as the LAA areas.
As this grant is claimed in two instalments, over the course of two
financial years, the changes have sought to ensure that no area will
receive less than they would have been expecting as a first instalment
claim.
4.5.13 Discussions had been ongoing with partner organisations about the use of
these grants to improve Community Strategy outcomes going forward.
Although no commitment had yet been made to use this grant, the
implications of these reductions will thus be felt outside the Council in our
partner organisations as much of this funding is used for joint working
initiatives.
Emergency Budget
4.5.14 The Chancellor‟s emergency budget on the 22nd June set out wide ranging
provisions in relation to the economy, taxation, welfare, pensions, banking
and energy and climate change. The key elements that impact upon the
County relate to:


Non-protected government departments will have an average of 25%
deducted from their budgets over the next 4 years.
Government will work with local authorities to freeze council Tax for
one year in 2011/12 if authorities work to keep spending to a minimum.



The terms under which authorities will be compensated for a
commitment to freeze or reduce Council Tax will be outlined in “due
course”.
Public sector pay (central government) will be frozen for 2 years for
anyone earning £21,000 or more. The 1.7m lowest paid workers will
receive a flat £250 pay rise.
The Comprehensive Spending Review will be presented on 20 October
2010.
There will be no further reductions in capital spending totals above the
50% reduction announced in the previous government plans.
4.5.15 At this stage it is not clear how and to what extent the reductions in the
spending totals for the government departments will feed through to Local
Government, and thus to Cumbria. What is certain is that reductions are
likely to impact significantly upon the resources available for the next and
subsequent years. The Chancellor set out he would “challenge local
government to consider fundamental changes in the way they provide vital
services”.
5.0
Other Announcements
North West Development Agency
5.1
Government has announced its intention to abolish the NWDA along with
other Regional Development Agencies (RDA), and replace them with
Local Enterprise Partnerships (LEPs). In parallel, the Government has
reduced the RDA Single Programme budget in 2010/11 as part of national
budget cuts, requiring the NWDA to find savings of £52m in year. Initially
all uncommitted NWDA budgets were withdrawn with the estimated impact
on the Council in year being a reduction of circa £6m, these are projects
planned to be delivered via West Lakes Renaissance. NWDA have now
advised that if sufficient savings above £52m are identified then sub
regions may be able to negotiate the reintroduction of costs for key
projects.
5.2
The NWDA also provides support to the Council for „core costs‟ totalling
£2.2m, these are essentially for staffing with overhead costs such as
accommodation planned to be charged to projects. The NWDA confirmed
recently that the Core Cost budget will have to contain overhead costs in
2010/11 effectively giving rise to a £0.4m in year pressure. Finally the
NWDA has confirmed that it will not provide a Core Cost budget in
2011/12. The information from Government about funds available for
Economic Development beyond 2010/11 is changing constantly, what is
clear is that the funds will be significantly less than in the current year.
5.3
The Environment Directorate management team has been working closely
with the NWDA and has commenced a consultation period with staff to
ensure the Council‟s financial exposure is managed.
5.4
The potential to develop a Local Enterprise Partnership (discussed
elsewhere on today‟s Agenda) may provide an opportunity for the
retention of economic development expertise and skills within the Council,
subject to Council HR „Management of Change‟ policies.
Building Schools for the Future
5.5
In June, the Government announced its decision to withdraw the Building
Schools for the Future programme. The first tier to impact onto Cumbria
would have provided access to funding of £62m to rebuild and renovate
schools in the west of the County.
5.6
The Council had approved £1.0m of revenue and £1.0m of capital funding
in 2010/11 to support the BSF programme and to date, revenue costs of
£110,000 have been incurred. A further £155,000 had been agreed with
schools to fund preparation for the Building Schools for the Future
programme. Schools have been requested to provide details of how this
funding has been committed. Including expenditure in previous years a
total of £355,000 has been spent to the end of June excluding the
amounts agreed with schools.
5.7
Any future use of resources no longer required for Building Schools for the
Future, would need to be in accordance with the budget and policy
framework and will be kept in the Council‟s central contingency until
required.
16-19 Education and Training
5.8
On 20th July, the Secretary of State announced a simpler system for 16-19
Education and Training. In the announcement, the Secretary of State
reaffirmed the strategic role of local authorities as champions of young
people‟s learning - as well as for all education - and in particular their
responsibilities for meeting the needs of young people by influencing and
shaping learning provision through 14-19 partnerships and by identifying
gaps, enabling new provision and developing the market.
5.9
The new approach removes the requirement for regional planning groups
and sub regional groups and a simplification of the funding process by
switching to a system whereby providers are for the most part funded on
the basis of their previous year‟s activity – or „lagged pupil funding‟. This
will remove the need for detailed planning by either local authorities or the
YPLA.
5.10
The YPLA will now directly fund general FE and Sixth Form Colleges and
other providers for the 16-19 provision, rather than funds being directed
through local authorities. Apprenticeships will however continue to be
funded by the National Apprenticeship Service.
5.11
In practical terms this change will cut out the need for Local Authorities to
fund and to hold financial audit and assurance functions for 16-19 and
removes the need for local authorities to manage funding agreements with
16-19 providers. Local Authorities will however continue to fund
maintained schools for their sixth form provision.
5.12
A number of staff transferred to the County Council from LSC in April.
Funding for these staff was to be covered by a special purpose Grant. We
await clarification as to whether the grant will continue.
6.0 RECRUITMENT AND VACANCY MANAGEMENT
6.1
Whilst the Council provides a wide variety of services through a number of
different approaches, one of its key costs relates to staffing. There is
already a corporate framework of Resourcing Management operating
across each directorate, where vacant posts are reviewed and assessed
by Corporate Directors and DMT‟s against service needs and budget
implications. In addition to this the Councils policy on recruitment was
changed in 2009 to only use external recruitment where internal
recruitment methods have failed to attract the necessary candidate. These
existing arrangements have been key to being able to deliver a balanced
budget for 2009/10.
6.2
As announced at full Council in June, in light of the significant budgetary
challenges the Authority is expected to be facing, further steps are now to
be put into place to tighten the current arrangements and to move to only
recruit new staff externally where the post/need is deemed to be essential.
This will preserve the Council‟s ability to provide the services required and
will properly protect the employment of existing staff, wherever possible,
from the implications of budget restrictions such as workforce reductions
and potential redundancy.
6.3
The management of change procedures are intended to provide a fair
means of handling change that affects the County Council's workforce. In
situations of restructure, reorganisation or redundancy, the Council would
look in the first instance to redeploy employees into suitable alternative
roles. Supporting the redeployment of employees at risk of redundancy
will aim to retain talent and knowledge within the Council. All employees
at risk of redundancy within the Council would automatically be placed
onto the redeployment register at the earliest possible opportunity and the
Council will work to ensure that all reasonable alternatives are exhausted
prior to redundancy.
6.4
Furthermore, the Chief Executive with the Corporate Management Team
in line with the Council‟s wishes will ensure that recruitment is made to
essential posts only.
6.5
The first test that will have to be satisfied in every circumstance is whether
the service could be provided in a different way and/or the duties could be
carried out in different ways, before there is any consideration of
recruitment. Options such as additional hours, acting-up arrangements,
secondments, redeployment, banks/pools, workstart etc. are expected to
have been considered and used to exhaustion in every circumstance. If
external recruitment is deemed to be necessary then there will be a further
consideration as to whether it will be on a fixed-term or a permanent basis.
6.6
Revised and new arrangements will also be put in place to help ensure
that where necessary staff are developed and trained to be able to take on
additional duties and/or cover vacant posts internally, for example through
our existing redeployment procedure and/or acting up arrangements. This
may require the re-allocation of existing training budgets and expenditure.
The Council‟s Workforce Plan already advocates the need to develop a
more flexible workforce – these new restrictions both illustrate the reason
for this as well as give an opportunity to achieve this more extensively.
6.7
It is proposed that the recommended more rigorous approach to our
existing resource management process – and the positive reasons for
their introduction - is communicated to all staff and Trade Unions to
provide further clarity in relation to the Council‟s approach to the
implications of the budget restrictions. The matter will be scheduled as a
key agenda item for the next Corporate JCG meeting with the Trade
Unions, and work will be carried out with the communications team to help
ensure all staff and managers are aware of the revised arrangements, and
the reasons for their introduction.
7.0 RESOURCE AND VALUE FOR MONEY IMPLICATIONS
7.1
The resource and value for money considerations are set out in the body
of the report.
8.0 CONSULTATION WITH SCRUTINY AND LOCAL COMMITTEE
CHAIRS
8.1.
In preparing the budget reduction proposals, the Chairpersons of the Local
Committees were consulted on 29th July, and at its meeting of 16th August
Scrutiny Management Board considered the grant reduction proposals.
SMB referred the matter to the Scrutiny Advisory Boards for Environment
and Economy and the Children and Young People for further
consideration, draft minutes of these meetings are attached in Appendix G
The comments of this consideration of the Children and Young People‟s
Advisory Board will be reported verbally to this meeting.
9.0 LEGAL IMPLICATIONS
9.1
The Council has a number of statutory posts. There is a legal obligation
upon the Council to ensure that any such posts are in place at all times
and any decision to not replace a statutory post would likely place the
Council in breach of the relevant legislation. The criteria developed to
define what constitutes an essential post needs to ensure that statutory
posts will be able to be filled.
9.2
Cuts in grants may have a knock on effect on the Council‟s ability to
continue to fulfil its legal obligations contained in ongoing contracts.
Corporate directors need to be alert to the impact that cuts may have on
ongoing Council contracts attributable to their Directorate and manage the
consequences accordingly (paragraph 2.5.4. of the Council Financial
Regulations).
9.3
An appropriate period of public consultation should be allowed for by the
Council before any cuts are implemented.
10.0 OPTIONS
10.1
Cabinet could agree to the proposed changes resulting from the
reductions in grant.
10.2
Cabinet could amend the proposed changes.
11.0 CONCLUSION
11.1
The report sets out action to meet the in year reductions in grant arising
from early government announcements, and steps to manage staff
recruitment in the light of announcements made in the emergency budget
on 22nd June and the potential impact on the Council next year.
D. Wood
Corporate Director - Resources
Jim Savege
Corporate Director Organisational Development
August 2010
APPENDICES
Appendix A: Area Base Grant - Department of Education Reductions
Appendix B: Proposed Reductions Arising From Children's Services ABG
Grant
Appendix C: Children’s Services Capital Grant Reductions
Appendix D: Impact of Children’s Services Capital Grant Reductions
Appendix E: Options For Reductions Arising From Transport Capital Grant
Reductions
Appendix F: Impact Of Transport Grant Reduction Options
Appendix G (i): Minutes from Leadership and Local Committee Chairs
Group
Appendix G (ii): Minutes from Scrutiny Management Board Meeting
Appendix G (iii): Minutes from Environment and Economy Advisory Board
Appendix G (iiii): Minutes from Children’s and Young People Advisory
Board
Electoral Division(s):
Countywide
Executive Decision
Yes
*
Key Decision
Yes
*
If a Key Decision, is the proposal published in the current Forward Plan?
Yes
Is the decision exempt from call-in on grounds of urgency?
No*
If exempt from call-in, has the agreement of the Chair of the relevant
Overview and Scrutiny Committee been sought or obtained?
Has this matter been considered by Overview and Scrutiny?
If so, give details below.
N/A*
Yes
Has an environmental or sustainability impact assessment been
undertaken?
N/A*
Has an equality impact assessment been undertaken?
N/A*
PREVIOUS RELEVANT COUNCIL OR EXECUTIVE DECISIONS
No previous relevant decisions
CONSIDERATION BY OVERVIEW AND SCRUTINY
Considered by Scrutiny Management Board (16th August 2010)
Considered by Children and Young People Scrutiny Advisory Board (7th
September 2010)
Considered by Environment and Economy Scrutiny Board (informal meeting of
26 August 2010).
BACKGROUND PAPERS
None
RESPONSIBLE CABINET MEMBER
Stewart Young, Deputy Leader
REPORT AUTHORS
Diane Wood, Corporate Director Resources
Kate McLaughlin-Flynn, Assistant Director - Finance
Jim Savege, Corporate Director Organisational Development
APPENDIX A
AREA BASE GRANT: Department of Education Reductions
AREA BASED GRANTS - DEPT for EDUCATION
2009/10
Grant
Original
2010/11
Grant
£000
£000
£000
School Development Grant (LA Retained Element)
2,225
2,225
Extended Schools - Start Up
2,035
837
Primary National Strategy : Central Co-ordination
296
296
Secondary National Strategy : Central Co-ordination
274
274
Secondary Behaviour and Attendance : Central Co-ordination
126
126
School Improvement Partners
333
333
Education Health Partners
153
153
School Travel Advisors
97
97
Choice Advisors
41
41
School Intervention
223
223
Flexible 14 to 19 Partnership Funding
151
149
48
48
General Duty on Sustainable Travel To School
Extended Rights for Free Travel (and FCR allocation)
Reduction
392
552
Connexions
4,218
4,136
Children's Fund
1,027
1,027
Positive Activities for Young People
586
761
Teenage Pregnancy
Children's Social Care Workforce
290
121
290
119
Care Matters
Revised
2010/11
Grant
£000
346
394
Child Death Review Processes
49
51
Child Trust Fund (wef Nov 08)
10
12
13,040
12,143
-3,124
9,019
648
674
0
674
90
90
0
90
480
513
0
513
1,218
1,277
0
1,277
14,258
13,420
-3,124
10,296
TOTAL AREA BASE GRANT - DEPT FOR EDUCATION
AREA BASED GRANTS - OTHER DEPARTMENTS
CAMHS
Substance Misuse
Carers Grant
Total Area Based Grants