Draft Budget Proposals for Geoff Dobson – Head of Strategic Finance 15 December 2010 Resources, Finance and Performance Scrutiny Committee

Update on the Economy Our Turnover Financial Context Budget Strategy Draft Cash Limits Summary of Identified Savings Key Questions for the Committee Capital Programme Directorate approach to draft savings proposals Menu for Today

Key Economic Trends 2010/112011/122012/132013/142014/152015/16 GDP Growth1.2% (1.8%) 2.3% (2.1%) 2.8% (2.6%) 2.9%2.7% Public Sector Net Borrowing (PSND) £149bn£116bn£89bn£60bn£37bn£20bn Net Borrowing as %age of GDP10.1%7.5%5.5%3.5%2.1%1.1%

Gross Domestic Product (GDP) Projections

Reductions in Public Spending

Public Sector Net Borrowing Sources: Bank of England November Inflation Report.

Total Resources of the Council £1.1bn

Total Spending by Directorate £1.1bn

Summary by Type of Spending £700m

Council Tax (Band D) for County Councils

Local Government Provisional Finance Settlement Key Messages (1) 2 year settlement – toughest ever and front loaded Formula Grant for £185.2m a reduction of £27m (12.7%) Complex distributional changes in areas of social care and concessionary fares Reductions due to academies Transitional grant – linked to spending power no more than -8.9% reduction Damping arrangements – banded

Local Government Provisional Finance Settlement Key Messages (2) Our plans assumed a loss of grant of broadly £27m together with cost pressures of £14.7m Further analysis of the settlement being undertaken Our savings proposals total over £40 million (£42.6m) to bridge this budget gap Money for social care from the NHS of £8.8m on top of the grant settlement – further details awaited Provisional grant for £169m a further reduction of £16m (8.6%) A second two year settlement is expected based on a new distributional model

Formula Grant Reductions for Counties

25% Reduction in Formula Grant and Area Based Grant (ABG) (together with forecast spending pressures)

New Homes Bonus Business Increase Bonus Scheme Retained locally raised business rates Tax Increment Finance Renewable Energy Projects Local Government Resource Review Review of Local Government Finance including Incentives

New Strategic Direction (NSD) Make savings quickly as part of Medium Term Strategy Reflecting priorities of Suffolk Story Money for Capital Financing commitments Reductions in Specific Grant Abolition of Area Based Grant and reductions in ring fencing Identify potential income sources Budget Strategy

Cash Limits and Savings Targets

Categorisation of Savings

Estimated Potential Loss of Posts

Schools Funding Pupil premium is £420 per pupil, for all claiming free school meals. This may not be enough to improve outcomes as less than £3m for Suffolk Dedicated Schools Grant cash frozen Minimum Funding Guarantee is -1.5%, no school will lose more than this Schools delegated capital reduced by two thirds

Key Questions for the Committee to consider In Relation to Budget Setting Is this process process for making decisions about budget clear? Has there been clear information about the financial constraints and the scale of the savings that need to be made? In view of the Committee, does the process for allocating cash limits reflect the Council’s priorities?

Where the Capital Money of £141m is coming from

…. And what the capital money is being spent on

Capital Programme National reductions of about 45% Ongoing commitments New starts? Affordability

Local Transport Settlement – (1) Note All Capital Grant funded and non ring fenced Distribution by needs based formula

Local Transport Settlement – (2) Local sustainable transport fund National total £560m (£350m revenue and £210m capital) Profile is: £m Major Projects (£1.5bn over 4 years) Regional Growth Fund (£1.4bn) – DoT contributed a third to this funding

Directorate Approaches to Draft Savings Key Questions for the Committee to consider in relation to the draft savings schedules:

Reducing the Running Costs of the Council (£20m)

Remodelling Services (£5.7m)

Remodelling Services/cuts to Services (£6.8m)

Cuts to Services (£7.6m)

Divestment of Services

Any Questions?