Budget Book for 2008/09

This page provides information about the Wrexham County Borough Council budget book for 2008/09, which includes revenue spending proposals of each of the services of the County Borough Council for the financial year.

• Production of 2009/2010 Revenue Budget

Copies of the detailed budget book are available in your local library.

The following information provides a summary of the 2008/2009 budget:

1. The local authority budget planning process in Wrexham, as elsewhere, requires an early view to be taken about the Council’s budget prospects based on national economic indicators and government planning totals for local authority spending.

2. To support the drive for service performance improvement it has been recognised by the Council that there is a need to integrate corporate and financial/budget planning.  The budget planning process for 2008/09 was agreed in June 2007 and following a review of the Council’s financial prospects in July 2007, service departments were asked to identify service savings of 4% (schools 1%) and to provide details of any anticipated “exceptional” pressures.

3. The medium term financial plans were developed using the following parameters:

• An assumed cash spending increase of 2.5% (revised to 2.75% following announcement of the final settlement) in 2008-09, followed by cash increases of 3.6% in 2009-10 and 2010-11.

• Estimated inflation assumptions:
  • Teachers’ pay award of 2.45% for 2008-09, 2.36% for 2009-10 and 2.3% for 2010-11 and added to this the changes in cost of teachers’ pay scales.
  • Non-teachers’ pay award of 2.45% for 2008-09, and 2.3% 2009-10 and 2010-11.
  • Price increases of around 2% for all three years.

The overall inflation allocation remains the same as planned in June 2007.

• That the unhypothecated performance incentive grant (PIG) and deprivation grant will be received in all three years. Members should note that the PIG grant is likely to be replaced by the Welsh Assembly Government (WAG) with an Improvement Agreement with variable payment levels dependant on performance.

• That there is sufficient provision for the PFI Waste project based on the estimated costs at this time.

4. The three year budget plans have been used as a basis for calculating the prudential indicators as described later in the report. The medium term financial plan will need to be reviewed on a periodic basis.

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Review of the Current Year 2007/2008

5. The budget for the year was cash limited at £ 187,890,807.

6. The budget has been closely monitored and controlled during the year in accordance with the procedures approved by Council. A number of service pressures and increased costs have had to be covered during the year by compensating savings being found to keep within the approved cash limited budget totals. However, a break even position is anticipated at year end.

7. All budgets will continue to be carefully scrutinised in accordance with the agreed procedures and the actual outturn will be reported in the summer. In accordance with the rules of cash limited budgeting, any over or underspending may be carried forward to 2008/09.

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Assembly’s Revenue Settlement

8. The grant allocation for individual authorities is dependant on the standard spending assessment (SSA) formula. For 2008/09 there were phased changes to the formula, the most significant were in the areas of Learning Disabilities Strategy Grant, Road Maintenance, Children and Young Persons PSS, Economic Development and Early Years Grant.

9. The WAG announced its provisional revenue settlement details for local authorities on 14 November 2007. The provisional settlement gave local authorities on average a 2.3% grant increase, which fell far short of local authorities’ expectations.  Representations were made by the Welsh Local Government Association (WLGA) and local authorities regarding the poor provisional settlement. WAG announced its final revenue settlement for 2008/09 on 22 January 2008 and although it contained an additional £4.7 million to ensure that all local authorities received an increase in grant funding of at least 2%, disappointingly, it contained only a minor increase in revenue support grant mainly as a consequence of further provision for the childcare element of Cymorth grant and the transfer of responsibility for stray dogs from police authorities.

10. The Local Government Finance Act 1992 gives the Minister for Social Justice and Local Government, power to limit or cap the budget requirement of any local authority, which he considers to be excessive. The Minster has made no announcement relating to assumptions about the Council’s spending level for 2008/09. He has indicated that council tax should not increase by more than 5%. The Council’s standard spending assessment, the notional assessment for grant distribution purposes of the Council’s need to spend on its services, totalled £192,936,469.

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2008/09 Budget

11. The budget for next year as outlined on page (vii) has been built up in accordance with the framework agreed by Council. The budget in the current year (i.e. the cash limited budget amended for virement) has been adjusted for functional changes, the cost of inflation, unavoidable commitments, service pressures and savings.

12. The total net revenue expenditure is estimated at £193,877,142. Page (vii) also demonstrates the Council’s budget requirement at £192,198,638. It represents an increase of £5,148,894  (2.75%) of the current year’s adjusted budget requirement.

13. It is a requirement of the Local Government Act 2003 that I should report to members on the robustness of the estimates made for the purpose of calculating the net budget requirement. I should therefore draw your attention to a number of key risk areas that I have identified in the budget and how these may be managed.  These are outlined on page 23.  Issues relating to these key risks will be reported to members during the forthcoming year as necessary as part of the budget monitoring and control procedures.

14. The School Budget Forum and employee Trade Unions have been consulted on the budget and their response has been supportive.

Reserves and Balances

15. A local authority requires a prudent level of working balances to maintain adequate cash flow, especially during the first part of the financial year prior to the receipt of council tax income, and to meet unforeseen expenditure.

16. During the last budget cycle members approved that an annual contribution of £500k is made to balances as part of budget setting. There are no planned contributions to balances for 2008/09. However, I am satisfied that the level of balances and reserves is adequate for the forthcoming financial year and the authority’s medium term financial strategy.

17. There is still uncertainty in the budget relating to teachers and non teachers pay award which have yet to be settled.

18. An analysis of the Council’s key estimated earmarked reserves and balances for the year ahead is as follows:

19. The estimated balances at 1 April 2008 in the table above are based on the best estimates available at the time of writing the report. The movement in the Council Fund balance includes the reported position in the current year (CFPO/05/08).  The reported position will change following the closure of the 2007-08 accounts and will be reported to members as part of the outturn report after the end of the financial year. Of the £681k in year planned movement on service reserves none will be used to fund recurrent expenditure.

20. The above analysis does not assume any use of general balances for back pay liabilities following the Single Status and Equal Pay review.  If these or any other liabilities exceeded the earmarked allocations then clearly these general balances would be called on.

Income

21. Revenue Income Support Grant – the County Borough’s share of the final Revenue Support Grant has been set at £115,886,298.

22. Business Rates – The Assembly has set the business rate poundage for 2008/09 at 46.6p in the £. The County Borough’s share of national non-domestic rate income in 2008/09 is £34,528,013.      

23. Performance Incentive Grant – This grant has been distributed to all local authorities on the basis of current standard spending assessments and this Council’s share is £1,276,806.

24. Deprivation Grant – The WAG has distributed £22 million to all local authorities by reference to an index of multiple deprivation and the County Borough has been allocated £321,698.

25. In total the Council will receive general grants from the WAG of £152,012,815.

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Council Tax

26. After taking account of the general grants and contribution from balances, the balance of net expenditure totalling £41,864,327 remains to be funded by council taxpayers.

27. It is proposed to charge as a special expense part of the cost of footway lighting to the four community areas within the town (£3.83 at band D).

28. After adjusting for special expenses of £60,767 the balance to be found as general expenses from council taxpayers is £41,803,560.

29. The council tax base calculation was agreed by the Executive Board on 20 November 2007 for 2008/09, as 51,351 band D equivalent properties after allowing for:

• band reductions for the disabled
• exempt properties
• single occupier discounts
• double discounts on unoccupied properties
• factors to reflect the relative charge at different bands
• the estimated collection rate
• contributions in lieu from Ministry of Defence

The overall tax base is built up from the same calculations for each of the 34 community areas and the “band D equivalents” are shown on page (viii).

30. Dividing the balance of net expenditure (£41,803,560) by the tax base of 51,351 will give a £814.08 charge to be borne by a full-paying household whose home is valued at band D. For band A property the charge is six ninths of this figure through to band I properties where the charge is twenty one ninths of the band D figure. In many cases these figures will be adjusted for disabled and other discounts and, of course, for council tax benefit.

Prudential Indicators

32. The Chartered Institute of Public Finance and Accountancy (CIPFA) Prudential Code of Practice requires the Council to adopt indicators, which demonstrate that the Council’s capital plans are affordable, prudent and sustainable.  The prudential indicators are outlined on page 24.

Conclusion

33. The Assembly’s financial settlement for 2008/09 only provides the capacity for the Council to set a budget which includes unavoidable commitments and limited service spending pressures.  However, every effort has again been made to protect social care services and schools during the preparation of the budget.

34. The Local Government Act 2003 requires the Council to monitor its budget and to take appropriate action.  The budget will therefore require close monitoring and control during the year and the financial position will need to be kept continuously under review.

35. Finally, I remain very grateful to all Members and Officers for their assistance, cooperation and hard work in helping to prepare this budget.

M S Owen
Chief Finance and Performance Officer

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Best Value Accounting Code of Practice

1. The cash limited budgets in column (i) on page (vii) have been recast to comply with the Best Value Code of Practice (BVACOP). This has a particular impact on central costs and support services.

2. Both central and departmental support costs have had to be fully recharged to the services which they support. This is reflected in the addition of column (j) on page (vii) in the body of the budget pages.

3. It should be noted that Legal, Human Resources, Property Design, Finance & Performance and Information Systems are fully recharged and show net budgets of nil.

4. As part of the Code, the central costs have been re-arranged into:

• Corporate and Democratic Core (including Democratic Representation & Management and Corporate Management)
• Non Distributed Costs (including Past Service Costs and costs associated with unused shares of IT facilities)
• Central Services to the Public (including Council Tax collection costs, Coroners, Electoral Registration etc.)
• Other Operating Income & Expenditure (including levies from other bodies and capital financing).

5. Obviously, these are extremely significant changes but the underlying spending power of services remains exactly as approved by Council. One of the primary purposes of the change is to permit greater inter-authority comparability in the future.

6. During 2006/07 the Children and Young Peoples Service was formed from merging the Education Department with elements from Social Services and Leisure, Libraries and Culture.  The service is split into three areas, Learning and Achievement, Prevention and Inclusion and Safeguarding and Support.  The Education, Social Services and Leisure, Libraries and Culture budget sheets are shown on pages 20 – 22.

2008/09 Revenue Budget

This document is available to download in the following format:

2008/09 Revenue Budget - PDF format 6Kb

Council Tax Information 2008/2009

This document is available to download in the following format:

Council Tax Information 2008/09 - PDF format 4Kb

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