1. www.hertsdirect.org Local Government Finance Settlement and Integrated Planning Process Mike Parsons Overview & Scrutiny Committee 3 February 2012

2. www.hertsdirect.org Finance Settlement 2012/13 - Headlines 2 nd year of 2 year settlement – figures unchanged from previous announcement No change to formula methodology from 2011/12 Further council tax freeze grant for 2012/13 (but unlike the 2011/12 grant, this is one-off) New distributional system planned from 2013/14 (Bill published just before Christmas)

3. www.hertsdirect.org Baseline Adjustments - Academy & Free School adjustment for local authority central services -No change to previously announced adjustments for 2011/12 or 2012/13 -Entirely new methodology proposed from 2013/14

4. www.hertsdirect.org Hertfordshire’s Figures 2012/13 - Formula Grant 2011/12 Actual Formula Grant £200.7m - Baseline adjustments £ 2.4m = 2011/12 Baseline £198.3m 2012/13 Raw Formula Grant £162.0m + Damping £ 15.7m = Comparative Formula Grant£177.7m (-10.4%) + Freeze Grant 2011/12£ 12.6m = 2012/13 Formula Grant£190.3m comprising £3.6m RSG + £186.7m NNDR

5. www.hertsdirect.org Hertfordshire’s Figures 2012/13 - Other significant grants Council Tax Freeze Grant 12/13 £12.6m [one-off] Early Intervention Grant £37.0m –additional £1.4m for targeted 2 year olds Learning Disability Grant £38.4m NHS Social Care Funding £10.6m New Homes Bonus £2.0m

6. www.hertsdirect.org Revenue Spending Power Calculated by Government as –Council tax requirement (2011/12) –Formula grant (adjusted) –Specific grants (where available) –NHS funding for Social Care 2011/12 Adjusted estimate£791.5m 2012/13 Estimate £773.4m Change -£18.1m or -2.3%

7. www.hertsdirect.org Conclusions Formula grant as expected; other grants little changed from 2011/12 Great uncertainty from 2013/14 onwards, with anticipated new grant methodology (business rates, council tax benefit, school central services) and transfer of functions (public health) IPP needs to reflect reduced grant funding and pressures –Inflation, inc. energy –Demography, numbers and complexity –Legislation, e.g. landfill tax, carbon commitment –Other, e.g. capital financing

8. www.hertsdirect.org Revenue Pressures 2012/13 Inflation: £ 3.9m –Pay 0%; electricity 10%-26%; gas 17.7%- 17.8% business rates 5.6% … Demography: £9.3m –Learning Disability £5.3m; – Older People £2.9m; –Physical Disability £0.6m; –Mental Health £0.4m

9. www.hertsdirect.org Revenue Pressures 2012/13 Legislation: £ 2.6m –e.g. Landfill Tax £2.2m Capital Financing & Contingency: -£17.7m –reduction mainly due to reduced borrowing Previous Policy Decisions:-£1.5m Other: £ 1.1m NB only major items shown; totals include some negative items

10. www.hertsdirect.org Revenue Savings 2012/13 Previously delivered 2011/12£88.5m Further savings identified* 2012/13£38.2m = Total savings£126.7m *still to be delivered …

11. www.hertsdirect.org Revenue Savings 2012/13 Significant areas already subject to member process, including: –Home to school Transport - £2.9M –Street Lighting - £0.7M –Libraries Hours - £1.5M –SMS - £1.4M

12. www.hertsdirect.org Other Revenue Savings 2012/13 LEAN reviews in HCS Transfers to Serco Standards & School Effectiveness CLA strategy Careers – shift to schools Enablement MH services review Preventative and voluntary services review Highways, property & HR resourcing procurements Delayering and structural changes – inc SMB Terms & Conditions Day Crewing (F&R)

13. www.hertsdirect.org Looking ahead … 2013/14 2014/15 £m £m Identified146151 Gap - 33 Total146184 Figures for 2013/14 and 2014/15 will depend on changes to grant distribution system Assumes Council Tax freeze in all years –assumption only: decision will be required when setting budget in future years

14. Transformation Savings by Work Stream Work Stream 14/15 £m WS 1: Simplifying the Customer Journey3.9 WS 2: Children's Services Transformation32.3 WS 3: Promoting independence, personalisation and early intervention 27.8 WS 4: Localism & Engagement0.4 WS 5: Enhanced commissioning and procurement33.5 WS 6: Best Use of Assets11.2 WS 7: Organisational Design & Delivery11.9 WS 8: Working for HCC Sub-total Efficiency Savings 8.7 129.7[85%] WS 9: Right level of publicly financed services21.4 Total identified savings151.1

15. www.hertsdirect.org Value for Money / Benchmarking Detailed work undertaken – starting to see impact of transformation in some areas Analysis will inform search for the further £33m savings required for 2014/15 Next slide is 2009/10 CIPFA VFM analysis … the following slide is provisional and unverified 2010/11 version [note some data is clearly incorrect – e.g. Fire, Early Years]

16. www.hertsdirect.org Value for Money Early Years BS, Welfare and Inclusion School Improvement Highway Maintenance Adults<65 with LD Public Transport Planning and admissionsSpecial Educational Needs Children's Social Care Road Safety Old People's Social Care Waste Disposal Libraries Fire Service Adults<65 with MHN High Cost Percentile Performance Percentile

17. Provisional and unverified VFM 2010/11 Adults<65 with LD Adults<65 with PD Early Years Fire Libraries School Improvement School Planning & Admissions Special Educational Needs Street Lighting Adult Education Public Transport BS, Welfare & Inclusion Children's Social Care Road Safety Waste Disposal Adults<65 with MHNs Highways Maintenance Older Peoples Social Care 0 10 20 30 40 50 60 70 80 90 100 0102030405060708090100 Relative Cost (%) Relative Performance (%) Source: Cipfa VFM Toolkit 2010/11. Significant changes from 2009/10 content and methodology noted. Further work being undertaken to analyse and verify the information, particularly for Fire and Early Years areas.

18. www.hertsdirect.org Capital Programme 2012/13 - 2015/16 Proposed programme based on following principles –Major schemes in existing programme preserved but Stevenage Fire Station now refurbishment, rather than new build Croxley Rail updated for latest figures; and Vehicle replacement programme reviewed –Continuation of current levels of funding for highways maintenance –New schemes only where funded principally from grant or s106 e.g. Broadband, Fire Station improvements –Where possible grant used to substitute for prudential borrowing, and so reduce debt

19. www.hertsdirect.org Prudential borrowing & debt One-off investment of £37.5m revenue funding (including the 2012/13 council tax freeze grant) to support 2012/13 capital programme Significantly reducing need for prudential borrowing (which would otherwise have been required to fund the programme) and so reduces cost of debt in future years

20. www.hertsdirect.org Schools Budget Funding per pupil (including mainstreamed grants) frozen at 2011/12 cash level Minimum Funding Guarantee (MFG) for schools - set at -1.5% of their 2011/12 per pupil funding, before pupil premium Pupil premium grant - additional to DSG and increased for 2012/13 to £600 per pupil entitled to free school meals* and Children Looked After (£250 for Service Children) *now includes those who have been in receipt at any time in previous 6 years

21. www.hertsdirect.org Reserves Contingency 2012/13 £3.1m General Fund balance – recommended increase in minimum prudent level to 3% (from 2.5%) of net revenue budget (=£24m) plus Specific Reserves for particular purposes (the largest individual reserve being accumulated school balances)

22. www.hertsdirect.org Outstanding information Final government formula grant settlement (though no changes expected) Some further minor grant announcements from government departments Lee Valley Park and Environment Agency levies

23. www.hertsdirect.org Timetable Service Cabinet Panels 31 January – 7 February Overview & Scrutiny 3 and 8 February P&R Cabinet Panel 10 February Cabinet 20 February [final] Council 21 February

24. www.hertsdirect.org Questions