SDCT WORKSHOP SPENDING PRESSURES AND INCOME OPPORTUNITIES

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SDCT WORKSHOPSPENDING PRESSURES AND INCOME
OPPORTUNITIES

• John Turnbull
• Director of Finance
• Epsom and Ewell Borough Council

cipfa conference 2008
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CSR 2007 THE GOOD, THE BAD AND THE UGLY
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QUICK RUN THROUGH FORMULA GRANT

•  
• Average Change in Formula Grant 2008/09  
• Shire Counties 5.60
• Met Districts 4.10
• Shire Districts 1.70

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DISTRIBUTION OF THE FORMULA GRANT INCREASE FOR
2008/09
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POST CSR OUTLOOK FOR NEXT 3 YEARS

• AVERAGE FORMULA GRANT CHANGE
• 2008/09 1.7
• 2009/10 1.4
• 2010/11 1.3
• FLOOR
• 2008/09 1.0
• 2009/10 0.5
• 2010/11 0.5

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SoDCTs ASSESSMENT OF SHORT AND MEDIUM TERM
FINANCIAL FORECASTS

• Most districts are facing serious financial
  difficulties in the medium-to-long term, with
  declining or no balances to draw on and limited
  capacity for capital investment
• Members need to be reminded of their
  responsibility to ensure that their budgets are
  robust and balanced
• Population growth is inadequately reflected in
  the Formula Grant, and this will only get worse
  in the coming years
• HRAs are becoming a serious problem for those
  districts that have one
• Districts are constantly seeking new sources of
  income, whilst at the same time existing income
  streams are under threat (e.g. car parking)

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MAIN BUDGET PRESSURES

• AREAS WHERE BETTER INTELLIGENCE NEEDED IN
  FINANCIAL PLANS
• AREAS FOR LOBBYING
• AREAS FOR POLICY REVIEW
• STRAW POLL MAY 2008 .

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TOP 5 BUDGET PRESSURES SPENDING

• Pay
• Market pressures above inflation, Pensions,
  Single status / job evaluation
• Prices
• Energy costs, Contract renewals (incl. refuse,
  transport, sports leisure centres)
• Waste Management
• More properties/new rounds, Recycling
  initiatives, Waste disposal costs
• Concessionary Fares
• Special Grant shortfall on national scheme
• Planning
• LDF

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TOP 5 BUDGET PRESSURES - INCOME

• Formula Grant
• Local Land Charges
• Switch from full to personal searches, housing
  market, new charging guidance
• Capital Receipts
• Value of land reduced, less buyers of surplus
  land
• Commercial Rents
• Risks / losses due to economy, financial
  pressures on other public sector providers
• Car Parks
• Losses in some areas due to retail down-turn

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SOME OTHER SPECIFIC ISSUES

• Pressures on Districts corporate core audit
  inspection, efficiencies, governance
• Homelessness costs monitor impact of housing
  market changes
• VAT Partial Exemption VAT planning
• Land Drainage following floods clearing
  watercourses, higher public awareness
• HRA negative subsidy

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SOME QUOTES

• Waste weve been asked for xxx k as the
  contractor says recycling is a lot higher than
  they anticipated and they need more crews
• Receipts the collapse of the commercial
  property market has really hurt us re a
  replacement sports centre. We were hoping to
  realise capital receipts of XX m and this now
  looks like XX m. - is it possible to have a 50m
  Olympic paddling pool?
• Energy Efficiency Local politicians have some
  challenging views on this issue to the pay back
  on the XXX ground source heat pump at our soon
  to be finished pavilion was a mere 312 years

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SOME INCOME OPPORTUNITIES

• Car Park Income new successful shopping centre,
  advertising in car parks / roundabouts, increased
  recovery on new charging policies
• Rent Income freeing up space to let, managed
  rent reviews
• Waste Collection green waste subscription,
  recycling credits
• Licensing increased revenue

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SOME OTHER OPPORTUNITIES

• Planning Fee income, Section 106, Tariffs,
• Local Land Charges Private Search Fees
• Cemeteries Charges for burials
• Partnership Working Joint procurement e.g. on
  waste collection, Buckinghamshire pathfinder
  enhanced two tier working
• Energy Investment in efficiency measures
• Specific Grants incl. HPDG, Con Fares, LABGI,
  PSA Reward, ABG

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Positively Charged

• Audit Commission publication January 2008
• Maximising the benefits of local public sector
  charges
• E.g. Surrey Districts commissioning a review of
  charging policies

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HPDG

• The housing and planning delivery grant is a new
  510m fund to incentivise improved housing
  delivery, including more effective planning, to
  better address local needs.
• Funding stepped over 3 years
• Planning element based on performance including
  local plans
• Housing element an incentive grant for housing
  delivery

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HPDG Issues for Financial Planning

• Possible to estimate income based on planning
  criteria and housing delivery (actual and
  forecasts)
• Housing element risk due to economy
• Housing element depends on eligibility of others
• Impact on redistribution with down-turn in
  housing
• Advisers Report SoDCT agenda March 2008
• http//www.socdct.co.uk/wp-content/uploads/2008/03
  /item-0921-housing-and-planning-development-grant.
  doc

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LABGI

• Final Distribution for 2007/08 still to be
  Settled
• No Grant For 2008/09
• Oct. 2007 Issues Paper Building better
  incentives for local economic growth reforms to
  the Local authority Business Growth Incentives
  scheme
• John Healey statement April 2008 this is the
  final year of the 3 year LABGI scheme and my
  priority now is reform, with the aim of making it
  a permanent feature of the council funding
  system. I plan to publish proposals for
  consultation later this year

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SPECIAL GRANT CONCESSIONARY FARES

• 3 year provisional figures
• LG representatives pressing for review based on
  first year actual costs
• Please track data on costs vs. grant
• SoDCT will collect available data later in the
  year for DCLG and Minister meeting
• Individual Districts may also want to model the
  financial impact if responsibility shifted
  (unravelling formula grant as well as special
  grant)

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PSA AND ABG

• Rewards in 2008/09
• Monitor impact on future service commitments
• How does this fit in with your finance plans?

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Consultation and Lobbying

• HPDG
• More information expected from DCLG
• Can mechanism for distribution manage the credit
  crunch impact
• LABGI
• Consultation due
• A more effective system for encouraging /
  rewarding growth?
• Planning fees
• 23 increase still not at cost recovery
• Concessionary fares
• Compare special grant to actual costs
• Aim to providing workable solutions and case
  studies

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LGA Budget Survey

• The LGA will shortly be circulating a budget
  survey to all councils.
• The information provided will help shape the
  LGAs work on the next spending review.
• They are in the process of developing a strategy
  for the next spending review and setting up
  service working groups.
• If you have any queries, please contact
  ellie.greenwood_at_lga.gov.uk