1. Budget Scrutiny 26 th November 2015 Geoff Dobson Director of Resource Management

2. Briefing on Spending Review and Autumn Statement 26 th November 2015 Geoff Dobson Director of Resource Management

3. Headlines for Local Government The Spending Review sets out plans for the local government spending measure, which is made up of the Local Government DEL and locally financed expenditure, as the table below shows The Local Government Departmental Expenditure Limit (LG DEL) will reduce from £11.5bn in 2015-16 to £5.4bn in 2019- 20; a 53% cash decrease. Revenue Support Grant is included within the LG DEL. Local Government £ billion 2015-162016-172017-182018-192019-20 Local Government DEL 11.5 9.6 7.4 6.1 5.4 Locally Financed Expenditure 28.8 29.0 31.5 33.6 35.1 Local Government Spending 40.3 38.6 38.9 39.7 40.5 Year-on-year change to DEL Funding (% cash)-17%-23%-18%-11%

4. Revenue Support Grant As previously announced, Revenue Support Grant (RSG) will be phased out entirely by 2019-20. DCLG will publish a consultation ‘shortly’ on changes to the local government finance system to ‘rebalance support including to those authorities with social care responsibilities’. This consultation will ‘pave the way for the implementation of 100% business rate retention’ and will assess the main income streams available to local government, including council tax and business rates.

5. New Homes Bonus Details of reforms to the New Homes Bonus (NHB) will be set out as part of the provisional local government finance settlement consultation in December. The Government’s preferred options will lead to savings in the grant of at least £800m, ‘which can be used for social care’. The proposals for changes to the NHB will include reforms ‘sharpening the incentive to reward communities for additional homes’ and reducing the length of bonus payments for new homes from 6 years to 4 years. The announcement in December will include proposals to introduce a floor in NHB Grant ‘to ensure that no authority loses out disproportionately’ as a result of the changes.

6. Health & Social Care The Spending Review sets out plans to create an integrated health and social care system by 2020, with every area to have a plan for integration agreed in 2017, for implementation by 2020. However, ‘the government will not impose how the NHS and local government deliver this this’.

7. Adult Social Care Funding Additional funding from the new social care precept and the Better Care Fund will mean ‘local government has access to the funding it needs to increase social care spending in real terms by the end of the Parliament’. The Better Care Fund will continue and funding will be increased from 2017, and will reach £1.5bn by 2019-20; this additional funding will be made available to local government. The increase in funding for social care is described as a £3.5bn investment; however this assumes all councils raise additional income from the social care precept. This will support Councils to continue to focus on core services and to increase the prices they pay for care including to cover the costs of the national living wage.

8. Disabled Facilities Grant The Spending Review includes over £500m by 2019-20 for the Disabled Facilities Grant. The grant is currently part of the Better Care Fund and is worth £220m in 2015-16. The increased level of funding will enable around 85,000 home adaptations in 2019-20, which is expected to prevent 8,500 people that year from needing to move to residential care.

9. Care Act In July 2015 the Government announced a delay in the introduction of the cap on care costs system until April 2020. The Spending Review reiterates the commitment that the cap on reasonable care costs and extension of means tested support will be introduced and funded from April 2020. Local authorities will receive funding in 2019-20 ‘to cover the costs of local authorities preparing for these changes’.

10. Education and Children Services (1) Free Childcare Free childcare for working parents of 3-4 year olds will be doubled from 15 to 30 hours per week from September 2017. An increase of £1bn in funding per year by 2019-20 to support the extension of free childcare places for 2, 3 and 4 year-olds will be made available. Capital funding of at least £50m will be made available to create additional places in nurseries. Over £300m a year will be made available to increase the average hourly rate paid to childcare providers. Dedicated Schools Grant The per-pupil rate for the Dedicated Schools Grant will be protected in cash terms and the pupil premium will be maintained at current rates.

11. Education and Children Services (2) Education Services Grant The Education Services Grant will be reduced by around £600m, including phasing out the additional funding schools receive through the grant. A number of statutory duties on local authorities in relation to schools will be removed and ‘the local authority role in running schools’ will be reduced. A consultation on policy and funding proposals will be published in 2016. 16 to 19 Funding The current national base rate per student for 16 to 19 year olds in school sixth forms, sixth form colleges and further education colleges will be protected in cash terms for the Spending Review period. Sixth Form Colleges will be able to become academies, allowing them to recover their non-business VAT costs.

12. Education and Children Services (3) Schools Capital Capital funding of £23bn will be made available over the Spending Review period to support the creation of 600,000 school places, the opening of 500 new free schools, and the rebuilding and refurbishing over 500 schools, as well as addressing essential maintenance needs. Schools Funding Formula A new funding system for schools will be introduced from 2017- 18. A detailed consultation on the specifics of the proposed new system will be published in early 2016. The new national funding formula will include elements for schools, high needs and early years, ‘so that funding is transparently and fairly linked to children’s needs’.

13. Public Health Public health funding for local authorities will be reduced ‘delivering average annual real-terms savings of 3.9% over the next 5 years’. The ringfence on public health spending will be maintained in 2016-17 and 2017-18. As outlined above, the Government will ‘consult on options to fully fund local authorities’ public health spending from their retained business rates receipts, ‘as part of the move towards 100% business rate retention’.

14. Capital Assets Local authorities will be able use 100% of receipts from selling capital assets (excluding the Right to Buy) to fund ‘the revenue costs of reform projects’. Further details will be published. The ‘Right to Contest’ will be strengthened. Local communities will be able to challenge use of land and property that is actually in use by local authorities, as well as under-used or empty property. A consultation will be published on a requirement for councils to record details of their land and property assets in a consistent way on the Government’s electronic Property Information Management System (e- PIMS), as part of its Transparency Code. Funding of £31m for the One Public Estate programme will be made available to support local authorities ‘to design more efficient asset management strategies’. Support will be provided for councils to dispose of local authority sites which could be used for housing.

15. Transport Provides £475m over the next 5 years to fund large local transport projects enabling local areas to bid for funding for projects that would be to expensive to pay for by themselves e.g. Lowestoft Third River Crossing and Ipswich Wet Dock Crossing. Provides £250m over the next 5 years to tackle pot holes.

16. Other Announcements No cuts to the Police budget and flexibility to increase the Council Tax by 2% (supplementary?) Extra £600m for Mental Health Funding New Enterprise Zones in Suffolk (Ipswich, Stowmarket, Lowestoft, Bury St Edmunds)

17. Business Rates Retention The Spending Review confirmed the announcements on 100% rates retention made by the Chancellor in October, including an end to a national multiplier and the ability for city mayors to increase the multiplier. DCLG will consult ‘in 2016’ on additional responsibilities to be given to local authorities as part of 100% rates retention. Business Rates The doubling of small business rate relief (SBRR) will be extended a further year to April 2017. The overall business rates review will report at Budget 2016.

18. Council Tax A new ‘social care precept’ will be introduced; upper-tier local authorities will be able to increase council tax levels by up to 2% specifically to fund adult social care. Upper-tier authorities will be given this ‘additional 2% flexibility on their current council tax referendum threshold’. As such, the 2% social care increase will be in addition to the referendum limit, which has yet to be announced, but is expected to be 2%.

19. Local Government Pay and Pensions Senior Officers Pay The Government will publish ‘new guidance to local authorities to encourage them to rein in excessive salaries and do more to drive efficiencies for local taxpayers’. Local Government Pension Scheme Reforms In October 2015, the Chancellor announced that LGPS funds would be expected to pool assets to create up to six ‘British Wealth Funds’, each including at least £25bn of assets. DCLG has now published guidance on the criteria Local Government Pension Scheme (LGPS) funds are expected to meet when developing proposals for pooling assets. DCLG has also published a consultation on proposals to revoke and replace the regulations that currently govern the management and investment of LGPS funds. The reforms are intended to increase the diversity of investments and implement the reforms on pooling assets.

20. Tables from Scrutiny Paper follow

21. Table 1: Expected Level of Funding 2016-20

22. Table 2: Forecast Budget Gap 2016-20

23. Chart 1: Forecast Budget Gap

24. Table 3: Council’s Reserves

25. Table 4: Draft Capital Programme (1)

26. Table 4: Draft Capital Programme (2)

27. Table 4: Draft Capital Programme (3)

28. Table 5: 2016-18 Savings Proposals

29. Table 5: 2016-18 Other Savings

30. Table 6: ACS

31. Table 7: CYP

32. Table 8: Public Health & Protection

33. Table 9: Resource Management

34. Table 10 Corporate & Capital Financing

35. Budget Timetable Budget ConsultationNovember 2015 to December 2015 Comprehensive Spending Review and Autumn Statement25 November 2015 Budget Scrutiny Committee26 November 2015 Local Government Provisional Finance Settlementw/c 14 December 2015 Final Local Govt. Finance Settlement for 2015-16End January 2016 Cabinet – Recommends Budget/Council Tax26 January 2016 Council agrees Budget and Council Tax11 February 2016

36. Thank You