Bath & North East Somerset Council - Government Budget Savings

Government Budget Savings

Update - 11.11.10:
Future reforms of Council to be discussed

Following the Council Cabinet paper discussed on 3^rd November 2010, wide ranging proposals to reform the structure and the way in which services are delivered by Bath & North East Somerset Council will be discussed at a full Council meeting on Tuesday 16^th November 2010. Amongst many other aspects, the proposals recommend a reduction of Senior Management resulting in annual savings of £2 million.

What challenges need addressing?

The proposals seek to further prepare the Council to address a range of challenges:

To become even more financially efficient in light of the combined impact of the Coalition Government Spending Review – a reduction of 28% revenue funding over four years and average 45% capital - and significant cost pressures it will have to meet;
Evolving from a service provider to enabler across many existing services, in line with Coalition Government proposals for an extension of Academies and the new requirements on the NHS as regards provider services which will affect the local Council/ NHS partnership;
Working more closely with local communities so that services are delivered more consistently according to how people live their lives – for example a person living with a long-term disability may need support from housing team staff, receive NHS treatment, and access to local transport services across different organisations and different staff.

What are the proposed changes?

The organisational structure of the Council will significantly change and will be divided into different elements that will meet these challenges.

There will be a Core Organisation responsible for commissioning of services, supporting communities to develop the skills to address their own needs and respond locally, and ensuring that statutory regulatory and safeguarding responsibilities, like licensing and looking after children in care, are fulfilled – all alongside our local partners.

A Customer Services function will become the major public face of the Council between the community and public sector. The intention for members of the public to make contact with the Council and, in the future, the public sector through a range of methods, like web, telephone, and face to face, amongst others that will be directed to a single place where services can be co-ordinated.

Service Delivery Units deliver the services commissioned by the Core Organisation. These are Schools Academies, Community Schools, Children’s Social Care Provider, Health & Adult Social Care Provider (with NHS), Property Delivery Vehicle, and other Service Providers and they will focus upon the efficient and effective delivery of services. They could be part of the Council, another public sector organisation, private sector, voluntary sector, not-for-profit organisation or be a partnership.

The Council is familiar with partnership working with a range of other Councils (such as within the West of England Partnership), public sector organisations (such as the Police and NHS), voluntary and community sector groups, and the private sector to deliver a high quality of local services to our community.

More details on the proposed can be found within the report.

What will be the effect on the public?

Local people will continue to receive the local services that they need from the public sector. However, the Council’s role will increasingly shift from being a direct provider to an enabler of services. It will work even closer alongside its partners, local communities, voluntary groups, and the private sector.

As a result of the proposals there will be financial benefits resulting from improved service and management efficiencies of at least £8 million per annum. For example the proposals suggest a reduction of Directors and senior managers resulting in annual savings of £2 million. These benefits will free-up more money to mitigate the impact on frontline services resulting from the Coalition Government Spending Review and service pressures.

The proposals also provide the opportunity to deliver the communities priorities. For example, the Property Delivery Vehicle Service Provider will support the economic regeneration of the area by maximising the overall return on Council assets, including generating significant capital receipts of up to £100 million over the next five years to invest in the public realm, local infrastructure, and other capital investment projects, alongside Government funding and developer contributions.

Next Steps

The recommendations for the future of Council that propose to implement the changes in the report will be debated at full Council on November 16^th 2010.

A further report at a future date will be considered by Council to include proposals for future political leadership in light of options in the anticipated Localism Bill likely to be published this autumn.

Update - 27.10.10:
Government Spending Review: response to be discussed at Cabinet

The Bath & North East Somerset Council Cabinet’s suggested approach to tackling the implications of the Coalition Government Spending Review 2010 was published today.

On November 3^rd 2010, the Cabinet will discuss proposals that could see a five year £100 million generation of funding from partnering the Council’s commercial estate to invest into the public realm, local infrastructure and other capital investment projects, a £2 million saving on senior management costs by 2013/14, and an emphasis on the Council becoming less of a hands-on, direct provider of services to becoming an enabler alongside partners and local communities.

National financial context

Sound financial management over the years means we are in a better position to face the severe national economic position than most other councils.

The combined impact of the Coalition Government’s Comprehensive Spending Review – a reduction of 28% in revenue funding over four years for local government - and significant cost pressures we will have to meet, means the money the Council has available to support day-to-day services will reduce by at least £30 million per annum at the end of the four year period. Coalition Government funding for capital projects, such as roads and schools, will also be significantly reduced - by an average 45%.

The challenges that lie ahead will require more than maximising efficiencies – they will require the Council to prioritise further its services asking whether a service is necessary, is being delivered at the right level or in the right way, or can be done differently.

Cabinet proposed strategy – Financial management

Councillor Malcolm Hanney (Conservative, Chew Valley North), Cabinet Member for Resources, said, “The Coalition Government reductions were in line with our forecast and our service plans have been anticipating the scale of the cuts. Bath & North East Somerset Council is well placed to deal with the significant financial challenges ahead after delivering consistently balanced budgets over many years, a strong financial reserves position, high levels of efficiency savings and lower than national average levels of Council Tax, although that does not mean difficult decisions will not need to be made.”

Following confirmation from Government that a Council Tax freeze will be fully funded, the Cabinet will consider a proposal for a 0% increase in 2011/12 in recognition of the tight financial position of many households.

The Cabinet’s strategic steer in response to the Coalition Government plans and public sector finances proposes adopting a management structure which reflects the need to move forward while maintaining a high standard of service to local people. It expects that senior management costs should be reduced by at least £2 million by 2013/14.

Cabinet proposed strategy – Evolving from service provider to enabler

Consistent with the Coalition Government’s proposals for an extension of Academies and the effect on the local education authority, and the new requirements on the NHS as regards provider services which will affect the local Council/ NHS partnership, the Council’s role will increasingly shift from being a direct provider to an enabler of services and working even closer alongside its partners, local communities, voluntary groups, and the private sector.

The reform of the Youth Service is an example of this principle where Council resources will increasingly be targeted at vulnerable individuals and groups, rather than universal for all. Communities will be supported to take over and manage local youth centres and projects.

Councillor Malcolm Hanney said, “The Council will continue to evolve in its role from being a direct provider of services to an enabler of the community. These changes are consistent with the Coalition Government’s legislation and an approach the Council is familiar with, for example the management of our leisure centres which is in a partnership with Aquaterra, our IT and HR services in a partnership with Mouchel, transferring our housing to Somer Community Housing Trust, and launching the Future Bath Plus and Bath Tourism Plus partnerships with the business sector.”

The Council conducts partnership working with a range of other Councils (within the West of England Partnership), public sector organisations (such as the Police and NHS), voluntary and community sector groups (commissioned service providers), and the private sector to deliver a high quality of local services to our community. These partnerships will be increasingly important to ensure the commissioning, the delivery, the quality and the cost effectiveness of our services are the best possible within the available and reducing resources.

Cabinet proposed strategy – Economic regeneration

Recognising the need to progress economic regeneration further across the district the Council will look to maximise the overall return on Council assets, including generating significant capital receipts of up to £100 million over the next five years to invest in the public realm, local infrastructure, and other capital investment projects, alongside Government funding and developer contributions.

The overriding principle is that the Council’s Commercial Estate will be enhanced by investment in these projects so the Commercial Estate will become worth significantly more in the future through attracting and retaining businesses and residents than the ‘do nothing’ option.

The Economic Strategy, developed by the Sustainable Growth Alliance and endorsed by the Council in March 2010, identifies the potential for attracting, retaining and growing the area’s high value added businesses and recognises the strong ties between business and the fact the success or otherwise of the Commercial Estate largely depends on generating business growth.

Councillor Hanney said, “The Council cannot wait for a national economic recovery before investing for future growth. The proposed contribution that will benefit communities district-wide will be aimed at maintaining and increasing the value of our Commercial Estate while we help ensure sustainable growth for local people, local businesses and local communities.”

The full document can be found at: www.bathnes.gov.uk/cabinetcsrstrategy

Next Steps

The proposed strategy will be debated by the Cabinet at a public meeting on Wednesday November 3^rd.

Further information about the Government Spending Review can be found on its webpage www.bathnes.gov.uk/budgetsavings

Update - 25.10.10:
Effect of Comprehensive Spending Review

Following the Coalition Government Comprehensive Spending Review announced on October 20^th 2010, Bath & North East Somerset Council has undertaken further analysis.

Sound financial management over the years means we are in a better position to face the severe national economic position than many other councils. The Council has correctly anticipated the main aspects of the Spending Review, planning for up to 30% reductions in funding over the next four years.

Local Government Grant Settlement

The national settlement will be cut by 7% per year every year for four years. The Council has a revenue budget (excluding ring fenced schools spending) of £250 million of which £80 million is received from the Government. The combined impact of the Spending Review and significant cost pressures we will have to meet from our budget on some services, and especially the impact of an increasingly elderly population on social care services, is likely to reduce the money the Council has available each year to support day-to-day services by at least £30 million at the end of the period. This impact is what the Council expected and has been planning for.

We await further detail from the Coalition Government about the impact on the Council of the grant funding formula because, as in previous years, we may not be given the share that we are entitled to according to the Government’s own calculations. Historically the Council has been heavily penalised by the damping of our entitlement (a £2.5 million reduction last year) - in other words, the protection by the Government of other local authorities who should be getting less on a needs basis than they currently are. This issue is of prime concern.

The Council will be pressing the Coalition Government to ensure we get a fair deal for our local residents given that we are one of the lowest funded unitary authorities in the country.

Effect on frontline Council services

The main impact on the level of frontline services in 2011/12, over and above what has already been announced, will be limited because we have already taken difficult decisions to implement efficiency savings and a re-design of some services which will regrettably include at least 300 job losses over the Spending Review period.

However, capital funding from Government to councils will reduce by 45% over the Spending Review period and will impact on the Council. This will mean funding for new schools and existing school building improvements being significantly reduced. Transport schemes have taken less of a cut and we expect further announcements on the future of these next week.

In preparation for 2012/13 and 2013/14 there will need to be even greater prioritisation and redesign of services to meet the challenge of a significantly reduced grant settlement.

Other key headlines of the Coalition Government review that will impact on the Council are:

There are significant demands being placed on all local authorities with a growing elderly population. The Coalition Government has recognised this and an additional £530 million will be allocated nationally in 2011/12 rising to £1 billion by 2013/14 to support personal social services. This will be distributed through the local government grant settlement and is a welcome contribution towards the growth of an increasingly elderly population. However, this is only one-third of the amount the Local Government Association thinks is required. A similar amount of funding has been provided to support joint working between the NHS and local councils – this will be allocated to the NHS but will support our Health & Wellbeing Partnership arrangements.
Funding given directly to schools is protected, including maintaining existing buildings. This includes the funding for a pupil premium, although details about how this will impact individual schools are unclear. The funding protection does not apply to other local authority-run education services. The Coalition Government is introducing the extension of 15 hours free childcare a week to all disadvantaged 2 year olds.
The Coalition Government have increased the cost of borrowing for Council funded capital schemes by an average of 1%. This could have a significant impact on the future of these schemes because this may increase future borrowing costs by over fifth.

Council Tax and Benefit administration

The Spending Review included an announcement of financial support for Councils who freeze their Council Tax for next year at the current level (i.e. a zero increase). In light of this, the Cabinet financial strategy paper being considered on November 3rd 2010 will provide for a recommendation of a 0% Council Tax increase in 2011/12.

Local councils are to be given greater discretion from 2013/14 for targeting Council Tax benefits according to local priorities. However, the Coalition Government announced a reduction in expenditure on Council Tax benefit by 10% in 2013/14. This presents a significant challenge for all local councils when they take on the responsibility for this.

Our approach to addressing the challenges of the Spending Review

We have been planning for and anticipating these reductions for sometime and the impact will be reduced by the Council’s sound financial management over the years.

However, additional duties, like discretion on Council Tax Benefit, could place an additional burden on the cost of delivering services. We are looking at the full implications of the Spending Review and continue to assess the detail contained within the documents.

It is important that we press our case for capital and infrastructure funding highlighting the need for regeneration and economic growth in Bath and North East Somerset and the West of England area and its importance in terms of overall national economic growth.

Next Steps

The Council awaits further announcements from other Government Departments that will provide greater clarity surrounding the headline announcements in the Spending Review. We do not expect details of our final grant settlement until early December 2010.

From October 26^th 2010, the Council will be inviting local residents and businesses to give their views on the Council’s spending priorities in 2011/12 through a consultation that can be accessed at www.bathnes.gov.uk/budget2011 and at Council Connect Offices in Bath, Keynsham, and Midsomer Norton. There will be other opportunities for residents, community groups, and businesses to have their say about the 2011/12 budget at various stages of this financial year.

The Council Cabinet will be considering a report by the Cabinet Member for Resources that develops a strategy in response to Coalition Government plans and public sector finances on November 3^rd 2010. The Council will be considering the full implications of the Spending Review on our budget plans during public Overview and Scrutiny Panel meetings from November onwards. This process culminates in the annual budget meeting in February 2011/12.

The Council will be keeping everyone informed of developments over the coming months through its webpage www.bathnes.gov.uk/budgetsavings and the local media.

Update - 20.10.10:

Following the announcement of the Coalition Government’s four-year plan for public spending set out in the Comprehensive Spending Review (CSR), Bath & North East Somerset Council is assessing what this will mean for services provided by the Council.

First impressions are that the CSR is largely in line with the scale of cuts that we have been expecting and preparing for. Sound financial management over the years by this Council does mean that we are in a better position to face the severe national economic position than many others.

We will issue a more comprehensive statement after we have had time to consider the initial impacts. However, as with all these announcements, the devil is in the detail, which we have yet to receive, so a full picture may not emerge for several weeks. Indeed, we will probably not have the final grant numbers from the Coalition Government until December.

Our particular concern will be the impact on the Council in terms of the overall Coalition Government funding through the grant funding formula. Historically the Council has been heavily penalised by the damping of the Council's entitlement (a £2.5 million reduction last year) - in other words, the protection by the Government of other local authorities who should be getting less on a needs basis than they currently are.

It is our understanding that Council Tax is to be frozen next year across local government and that Government will be funding this. We will be awaiting further announcements from various Government departments.

Information on the Coalition Government budget savings prior to today and implications for the Council can be found at www.bathnes.gov.uk/budgetsavings

Update: 9.9.10:

The tables below relate to savings required for the current financial year (2010-11). This includes impacts due to a £1.8m cut in our main Government grant, as well as implications from changes and cuts to national organisations and programmes.

Please click here for Policy Implications

This document will be updated as further details become available.

In-year savings: Revenue funding

Changes in Children’s Services this year

The key priority for Children’s Services is to make sure that we continue to support the most vulnerable children and young people to give them the best chances in life and services will be prioritised in line with this.

Consultation on these changes has already taken place with schools, charities and other key stakeholders. The Council will also be meeting with Community Groups in September to help plan the best way forward.

1. As a result of reductions to Area Based Grant

Service

Details

Funding loss

Connexions

Funding to Learning Partnerships West (formally Connexions) has been reduced. There will be extensive redundancies affecting the whole the region as all four Local Authorities are reducing spending by 30%. The service will continue but will focus on supporting the most vulnerable children and young people.

£50,000

Support for schools- National strategies

Curriculum support we provide to all schools will cease. Our priority will be to be to support schools to meet the needs of the most vulnerable pupils.

Schools will get less support from the local authority and will have to work to develop their collaborative working to support each other.

£118,600

Extended Services

Council support to schools to provide extended services such as positive activities for children and linking schools to other support services will end. Responsibility for extended services will now lie with schools.

£25,000

Teenage pregnancy

The Teenage Pregnancy Grant will no longer be able to provide a sexual health youth worker. Work to keep number of teenage pregnancies low will continue through our work in the Teenage Pregnancy Partnership and to young people directly who attend youth hubs provided by the Council’s Youth Service.

£20,000

Care Matters Grant

The Care Matters Grant is part of a national programme to improve outcomes for children in care and young people moving on from care.

Whilst the grant is being reduced, the Council is committed to supporting children and young people in care and those leaving care and we have a statutory duty to do this. As with other services, we will prioritise support for the most vulnerable.

£23,000

Extended Right to Free Travel Grant & sustainable travel

This resource supports the extension of rights to free travel for pupils from deprived backgrounds. The full budget has not been used and this is where savings in this area will be made. These savings will not impact on the legislative rights of parents to access free transport and will therefore not affect eligible pupils. Whilst the Government has reduced the grant, it has not reduced the entitlement for pupils to receive support and as such any pupil who is entitled to receive this grant will be unaffected by these cuts.

£63,000

Children’s Fund

Children’s fund contracts to be reduced include the anti-bullying contract with Off the Record, the Friends Programme provided by Community Health and Social care services and participation projects delivered by the children’s society

£35,400

Play Rangers

Reduction in play services run by Play rangers.

£10,700

Child Death Review

Bath & North East Somerset Council is one of four local authorities that contributes funds to the West of England Child Death Review Panel. Although Bath & North East Somerset Council will reduce its contribution, the operation of the panel will not be affected. The Council will continue to provide significant support to the panel through staff time.

£4,000

Choice Advisors

Choice advisors support to parents and carers in making choices regarding the schooling of children. This service will continue.

£10,000

Positive Activities Fund

The positive activities fund supports 13-19 year olds, not in education, employment or training, by providing activities which help them to talk about positive choices for their future. This includes CV writing, interview advice and information about further education. The reduction in funding will mean that the activities programme is shorter. The most vulnerable young people will continue to receive support through other programmes carried out by the Council’s Youth Service.

£20,000

Substance Misuse

Savings have been made to the overall substance misuse project as a result of a project underspend. This does not affect the contract with Project 28.

£5,800

Carers Grants

There are no reduction to any services funded thorough carers grant. Saving have been made by using funds not spent by the Aiming High for Disabled Children fund.

This grant supports all carers, including young carers.

£20,000

Total

£405,500

2. As a result of reductions to Revenue Based Specific Grant

Service

Details

Funding loss

Play Pathfinder Revenue grant cut by 50%).

Play Pathfinder funding was awarded to the Council following an application to the DCFS (now DFE) for both capital and revenue funding to alter/rebuild 28 play parks and one Adventure Play Park. The revenue was to support the development and use of the parks and Adventure Play Park.

The Play Pathfinder revenue grant has been cut by 50%. This will impact on the evaluation of the Play Pathfinder project and staffing. The impact on voluntary sector partners will be kept to a minimum but there are some cuts to direct provision. Other play work has also been affected through the reduction in Children’s fund Area Based Grant.

£70,000

Total

£70,000

3. As a result of reductions to Savings from capital grants

In addition to cuts to the Area Based Grant provided by Government, capital grants from the government have also been cut.

Service

Details

Funding loss

Harnessing Technology Grant

For IT connections and hardware for schools,

£295,000

Diploma Capital Grant

For capital works in schools and colleges for students to follow the new 14-19 Diplomas

£660,000

Youth Bank Capital Grant

For third sector building and equipment improvements

£40,000

Local Delivery Capital Grant and Extended Services Capital

Small adaptations to local facilities to enable multi agency working and to allow better public access

£140,000

Total

£1,135,000

Service Cuts this year – Highways

Highways will have to make savings of £0.6m this year. Importantly there will be no impact on highway maintenance with savings made through reductions to local transport projects. A Single member decision on where savings will come from will be made in August.

Service

Details

Funding Loss

Local Transport Plan including additional funding for the A4.

25% reduction which will impact on some local transport projects.

£600,000

Total

£600,000

Other Area Based Grants

Although the majority of the cuts fall in Children’s Services and Highways, other services areas are also affected by the reduction in the Governments Area Based Grant.

Service

Details

Funding Loss

Supporting People

The cut will affect the administration of the programme, which helps people to set up a home and live independently.

£135,000

Community Safety

The Home Office Grant used to fund Community Safety initiatives in partnership with the Police and others has been reduced.

£18,000

Road Safety Grant

The grant to fund road safety projects has been reduced.

£65,000

Total

£218,000

Other revenue grant funding reductions

Service

Details

Funding Loss

Free Swimming

This cut will end free swimming for people over 60 as of 31 July.

£37,000

Local Authority Business Growth Incentive Scheme

This scheme enables councils to offer grants to encourage local business growth.

£185,000

Local Area Agreement Reward Grant –

This was new money for this year calculated on our performance against targets in the Local Area Agreement. The government announcement cuts by 50% the amount we would have received.

Estimate £500,000

Total

£722,000

Other in year capital funding reductions

Service

Details

Funding Loss

Road Safety

100% grant for Road Safety schemes

£50,000

Total

£50,000

Note: the above figures (in this table) are the ‘in year’ 2010/11 figures but the total annual amounts are as stated in the main text – the difference of £392,000 relates to the Children’s services figures and converts these figures to full year amounts rather than part year amounts. This difference is having to be absorbed by the Council in 2010/11 as a result of the late notification of the cuts, but will need to be considered as part of the budget setting process for 2011/12.

This means the full impact on idividual services in 2010/11 is as shown in the table. The impact in future years Children’s Services will be greater by £392,000 unless other changes are made as part of the Council’s annual budget process.

All information on cuts to Council Services will be regularly updated on the Council’s website www.bathnes.gov.uk/budgetsavings.

Government Emergency Budget, 22 June 2010: Headlines

The following table lists impacts from the Government’s 22 June Budget.

No

National Budget Announcement

Start Date

Comments

1

Overall Headline Public Spending

Further £17bn of cuts by 2014/15 over previous Labour plans, increasing cuts from £44bn to £61bn. Unprotected Central Government Departments (ie excluding Health and Overseas Aid) average rate of cuts is 25% by 2014/15 increased from 20%.

Structural Deficit will be removed by 2015/16 and is planned to be cleared one year earlier.

UK’s borrowing will fall to 1.1% of GDP within 5 years from 10.1%;

Public Sector net debt to fall to 67% of GDP by 2015/16, compared with increases proposed by previous government

Most of the deficit recovery will come from spending cuts, 77% from savings while 23% will come from tax rises

April 2011

Specific impacts on Local Government won’t be clear until individual central Government department spending levels are set out in the Spending Review which will be announced on 20th October 2010.

Protection reaffirmed for Health and Overseas Aid. This affects in particular our partnership with Health and integrated health and social care services, although Health still have substantial management cost savings targets.

The average real cut to other central Government departments will be 25% over the four years c6% per annum.

Government also reviewing spending pressures in education and defence as part of spending review and these areas may be partially protected. This further protection will increase the impact on other services and impact of up to 30% has been indicated.

2.

Inflation

Economic forecasts that CPI (Consumer Price Index) will be 2.7% at the end of 2010 before returning to target of 2% in medium term.

N/A

Could be pressure on certain spending areas if inflation remains elevated for longer periods than forecast.

Services that buy in external services will need to review the impact carefully.

3.

Council Tax

Freeze in 2011/12 for one year in partnership with Local Authorities (details of the support still to be announced)

April 2011

At 2.5% the reduction in income from a Council Tax freeze is c£2m.

There is no detail of any funding for those LA’s that freeze Council Tax but the phrase “working in partnership with Local Government” is indicates at least partial funding.

4.

Public Sector Pensions:
Former Labour cabinet minister John Hutton has agreed to head a commission looking into the future of public sector pensions.

The commission is set to produce an interim report by September with a full set of recommendations for next year's Budget - recommendations which seem set to lead to increased contributions for scheme members.

?

B&NES Council contributions being reviewed as part of 3 year actuarial review. Initial signs are that most of the budgeted increases may not be required.

Detail of Government review awaited and could affect employee contributions in the short term and will be likely to involve significant reform of the scheme to save money in the medium term.

Unlike most of the public sector local government pensions are largely backed by investments and the dramatic increases in pensions costs referred to in the press do not apply to LG pensions for most Councils including B&NES.

5.

Public Sector Pay

Freeze for 2011/12 and 2012/13, protection to lowest paid who will receive £250 per annum fixed increase if earning below £21k per annum (national figures this equates to 28% of workforce or 1.7million employees)

The Government also confirms the launch of an independent review of fair pay in the public sector headed by leading economist Will Hutton.

The review will investigate pay scales across the public sector. The review will publish an interim report in Autumn 2010, and a final report in Spring of 2011.

April 2011

LG employees already have pay freeze in current year 2010/11. This is not the case in all parts of the public sector, for example teachers awarded 2.3% with effect from September 2010 as part of final year of 3 year settlement. (Schools are separately funded by Government Dedicated Schools Grant)

6.

National Insurance

Threshold for employers National Insurance Contributions will be increased by £21 per week above inflation (September 2010 RPI).

6 April

2011

Impact to be assessed but will involve some saving to services from reduced NI payments through the increased threshold.

Based on 2,600 FTE (non school staffing) saving £140 each equates to around £360K savings.

7.

VAT:

Increase in standard rate from 17.5% to 20% with effect from 4th January 2011. No change to zero rated items such as food and children’s clothes

4/1/2011

No impact on spending as Council recovers VAT incurred from HMRC;

Decisions will be required in relation to income where VAT forms part of charge; biggest is off-street parking where if charges kept the same income of c£100k would be lost through increased VAT element paid to HMRC.

8.

Insurance Premium Tax

Insurance Premium Tax to increase from 5% to 6%

4/1/2011

The Council Insurance costs will increase with effect from January 2011.

On Insurance Premiums of £1.2m this increase would cost c£11k

9.

Capital Spending:

No further reductions to allocations but individual schemes and proposals will be reviewed to target grants towards those which achieve significant economic benefit and create jobs.

Announced potential asset disposals into the private sector including NATS (Air Traffic) Student Loan Book, TOTE and private capital injection into the Royal Mail.

The position should be a lot clearer by 20th October.

Council’s remain able to borrow provided repayments are affordable.

10.

Housing Benefit:

Will be reduced by £1.8bn by the end of Parliament – introduction of limits on benefit linked to number of bedrooms and other similar restrictions to limit the level of benefit payments.

Council acts as an agent of government in making Housing Benefit payments so assume a net nil impact on benefit and subsidy.

Most of the cost of benefits is met by specific Government Grant.

Medium term Impact on available private sector rented housing uncertain.

Further details of the impact on Local Government generally can be found on the Local Government Association web site www.lga.gov.uk

Contact Details for this page:

Team:

Communications and Marketing

Address:

Guildhall, Bath, BA1 5AW

Phone:

01225 477495

Fax:

Email:

communications_marketing@bathnes.gov.uk

Minicom:

Author:

Communications and Marketing.

Council & Democracy

A to Z

a b c d e f g h i j k l m n o p q r s t u v w x y z

Related Information

NEWS STORY - Impact on Local Services

Service	Details	Funding loss
Connexions	Funding to Learning Partnerships West (formally Connexions) has been reduced. There will be extensive redundancies affecting the whole the region as all four Local Authorities are reducing spending by 30%. The service will continue but will focus on supporting the most vulnerable children and young people.	£50,000
Support for schools- National strategies	Curriculum support we provide to all schools will cease. Our priority will be to be to support schools to meet the needs of the most vulnerable pupils. Schools will get less support from the local authority and will have to work to develop their collaborative working to support each other.	£118,600
Extended Services	Council support to schools to provide extended services such as positive activities for children and linking schools to other support services will end. Responsibility for extended services will now lie with schools.	£25,000
Teenage pregnancy	The Teenage Pregnancy Grant will no longer be able to provide a sexual health youth worker. Work to keep number of teenage pregnancies low will continue through our work in the Teenage Pregnancy Partnership and to young people directly who attend youth hubs provided by the Council’s Youth Service.	£20,000
Care Matters Grant	The Care Matters Grant is part of a national programme to improve outcomes for children in care and young people moving on from care. Whilst the grant is being reduced, the Council is committed to supporting children and young people in care and those leaving care and we have a statutory duty to do this. As with other services, we will prioritise support for the most vulnerable.	£23,000
Extended Right to Free Travel Grant & sustainable travel	This resource supports the extension of rights to free travel for pupils from deprived backgrounds. The full budget has not been used and this is where savings in this area will be made. These savings will not impact on the legislative rights of parents to access free transport and will therefore not affect eligible pupils. Whilst the Government has reduced the grant, it has not reduced the entitlement for pupils to receive support and as such any pupil who is entitled to receive this grant will be unaffected by these cuts.	£63,000
Children’s Fund	Children’s fund contracts to be reduced include the anti-bullying contract with Off the Record, the Friends Programme provided by Community Health and Social care services and participation projects delivered by the children’s society	£35,400
Play Rangers	Reduction in play services run by Play rangers.	£10,700
Child Death Review	Bath & North East Somerset Council is one of four local authorities that contributes funds to the West of England Child Death Review Panel. Although Bath & North East Somerset Council will reduce its contribution, the operation of the panel will not be affected. The Council will continue to provide significant support to the panel through staff time.	£4,000
Choice Advisors	Choice advisors support to parents and carers in making choices regarding the schooling of children. This service will continue.	£10,000
Positive Activities Fund	The positive activities fund supports 13-19 year olds, not in education, employment or training, by providing activities which help them to talk about positive choices for their future. This includes CV writing, interview advice and information about further education. The reduction in funding will mean that the activities programme is shorter. The most vulnerable young people will continue to receive support through other programmes carried out by the Council’s Youth Service.	£20,000
Substance Misuse	Savings have been made to the overall substance misuse project as a result of a project underspend. This does not affect the contract with Project 28.	£5,800
Carers Grants	There are no reduction to any services funded thorough carers grant. Saving have been made by using funds not spent by the Aiming High for Disabled Children fund. This grant supports all carers, including young carers.	£20,000
	Total	£405,500

No	National Budget Announcement	Start Date	Comments
1	Overall Headline Public Spending Further £17bn of cuts by 2014/15 over previous Labour plans, increasing cuts from £44bn to £61bn. Unprotected Central Government Departments (ie excluding Health and Overseas Aid) average rate of cuts is 25% by 2014/15 increased from 20%. Structural Deficit will be removed by 2015/16 and is planned to be cleared one year earlier. UK’s borrowing will fall to 1.1% of GDP within 5 years from 10.1%; Public Sector net debt to fall to 67% of GDP by 2015/16, compared with increases proposed by previous government Most of the deficit recovery will come from spending cuts, 77% from savings while 23% will come from tax rises	April 2011	Specific impacts on Local Government won’t be clear until individual central Government department spending levels are set out in the Spending Review which will be announced on 20th October 2010. Protection reaffirmed for Health and Overseas Aid. This affects in particular our partnership with Health and integrated health and social care services, although Health still have substantial management cost savings targets. The average real cut to other central Government departments will be 25% over the four years c6% per annum. Government also reviewing spending pressures in education and defence as part of spending review and these areas may be partially protected. This further protection will increase the impact on other services and impact of up to 30% has been indicated.
2.	Inflation Economic forecasts that CPI (Consumer Price Index) will be 2.7% at the end of 2010 before returning to target of 2% in medium term.	N/A	Could be pressure on certain spending areas if inflation remains elevated for longer periods than forecast. Services that buy in external services will need to review the impact carefully.
3.	Council Tax Freeze in 2011/12 for one year in partnership with Local Authorities (details of the support still to be announced)	April 2011	At 2.5% the reduction in income from a Council Tax freeze is c£2m. There is no detail of any funding for those LA’s that freeze Council Tax but the phrase “working in partnership with Local Government” is indicates at least partial funding.
4.	Public Sector Pensions: Former Labour cabinet minister John Hutton has agreed to head a commission looking into the future of public sector pensions. The commission is set to produce an interim report by September with a full set of recommendations for next year's Budget - recommendations which seem set to lead to increased contributions for scheme members.	?	B&NES Council contributions being reviewed as part of 3 year actuarial review. Initial signs are that most of the budgeted increases may not be required. Detail of Government review awaited and could affect employee contributions in the short term and will be likely to involve significant reform of the scheme to save money in the medium term. Unlike most of the public sector local government pensions are largely backed by investments and the dramatic increases in pensions costs referred to in the press do not apply to LG pensions for most Councils including B&NES.
5.	Public Sector Pay Freeze for 2011/12 and 2012/13, protection to lowest paid who will receive £250 per annum fixed increase if earning below £21k per annum (national figures this equates to 28% of workforce or 1.7million employees) The Government also confirms the launch of an independent review of fair pay in the public sector headed by leading economist Will Hutton. The review will investigate pay scales across the public sector. The review will publish an interim report in Autumn 2010, and a final report in Spring of 2011.	April 2011	LG employees already have pay freeze in current year 2010/11. This is not the case in all parts of the public sector, for example teachers awarded 2.3% with effect from September 2010 as part of final year of 3 year settlement. (Schools are separately funded by Government Dedicated Schools Grant)
6.	National Insurance Threshold for employers National Insurance Contributions will be increased by £21 per week above inflation (September 2010 RPI).	6 April 2011	Impact to be assessed but will involve some saving to services from reduced NI payments through the increased threshold. Based on 2,600 FTE (non school staffing) saving £140 each equates to around £360K savings.
7.	VAT: Increase in standard rate from 17.5% to 20% with effect from 4th January 2011. No change to zero rated items such as food and children’s clothes	4/1/2011	No impact on spending as Council recovers VAT incurred from HMRC; Decisions will be required in relation to income where VAT forms part of charge; biggest is off-street parking where if charges kept the same income of c£100k would be lost through increased VAT element paid to HMRC.
8.	Insurance Premium Tax Insurance Premium Tax to increase from 5% to 6%	4/1/2011	The Council Insurance costs will increase with effect from January 2011. On Insurance Premiums of £1.2m this increase would cost c£11k
9.	Capital Spending: No further reductions to allocations but individual schemes and proposals will be reviewed to target grants towards those which achieve significant economic benefit and create jobs. Announced potential asset disposals into the private sector including NATS (Air Traffic) Student Loan Book, TOTE and private capital injection into the Royal Mail.		The position should be a lot clearer by 20th October. Council’s remain able to borrow provided repayments are affordable.
10.	Housing Benefit: Will be reduced by £1.8bn by the end of Parliament – introduction of limits on benefit linked to number of bedrooms and other similar restrictions to limit the level of benefit payments.		Council acts as an agent of government in making Housing Benefit payments so assume a net nil impact on benefit and subsidy. Most of the cost of benefits is met by specific Government Grant. Medium term Impact on available private sector rented housing uncertain.