Friday, February 03, 2017

2017/18 Budget proposals

As indicated on Wednesday, we're publishing this morning - a week prior to actual Budget Day - the final draft of our revised budget proposals for 2017/18.

The actual Reports for the Budget debate are now all available on-line via here, along with the Coalition Motion. 

I think the motion (as re-produced below) speaks for itself ... and it will now be debated at the Budget Day Council Meeting, 10am on Thursday 9th February, to be webcast here.

There's just no doubt that, for the whole 18-years I've been a local Councillor, this is the most challenging budget we've ever had to set - I blogged about this being the worst revenue settlement since devolution, in early December, when the Scottish Government announced its draft plans.

And despite last-minute changes, that blogpost, sadly, remains true --- we're still receiving some £27.1million less revenue from the Scottish Government this year, than last, to spend on services.

Of course, I understand this is all a choice the Scottish Government is perfectly entitled to make - but what's so devastatingly galling is that other choices were available, which would have completely negated the need for any year-on-year revenue reduction.

As a Council, on the receiving end of these Government-choices, we'll get on with trying to ensure we deliver services to the very best of our ability, within the finances that are available to us ...

... but please spare me any further spin about this being a reasonable settlement ... it's the complete opposite, and Government Ministers should have the good grace to at least acknowledge that undeniable fact.

I'll now simply replicate the full 'main text' of our final draft motion for 2017/18 below:



Revenue Budget 2017/18, Capital Investment Framework 2017-2022,
Housing Revenue Account 2017-2022 and Budget Framework 2017-2021 

1.                   Introduction

The UK Government remains committed to further years of public sector austerity, far beyond the timescale originally announced in 2010, as the Autumn Statement showed. This is the context for the Capital Coalition budget for 2017-18 which has been substantially shaped by many years of severe financial constraints and rising demand for Council services. 

The Local Government Finance Settlement, announced on 15 December 2016 by the Scottish Government, will result in an overall grant funding reduction for Edinburgh of 5.2% (equivalent to £37.1m) in 2017/18 compared to 2016/17, before factoring in the additional income available from the changes to Council Tax bandings.

When that additional income from the Scottish Government’s changes to Council Tax bandings E-H is included, raising some £16.1m, the reduction falls to 2.9%. This level of reduction is slightly greater than the 2.5% the Council had planned for when the budget framework was reviewed in September last year. The Scottish Government is also making available funding from the Education Attainment Fund and there is additional money for Health and Social Care for the Edinburgh Integrated Joint Board (EIJB) which will help support local services.  The Capital Coalition has included a 3% Council Tax rise in its calculations.

Council notes the Scottish Government’s Budget announcement on Thursday, 2 Feb setting out some  revised figures for local authority revenue and capital funding.  Council welcomes the announcement and notes that any centrally adjusted settlement will be taken into account, as part of the finally agreed 2017/18 local budget, at the Council meeting on 9 February.

There remains, however, a continued need for transformational change and strong financial management if the Council is to achieve a sustainable budget over the medium term. 

2.            Achievements

Despite past and remaining major financial challenges, much has been achieved by the Council. As we approach the end of the current administration’s term in office, with the local government elections on 4 May 2017, this is an appropriate time to reflect on the achievements of the Capital Coalition over the last five years.

Key achievements include:

·         Shifting resources to front-line services, protecting citizens from the full impact of reduced resources.

·         Delivering credible longer-term financial planning. Despite mainly receiving single-year settlements, the Capital Coalition has set a four-year revenue budget framework and has a long-term financial plan in place.

·         Adopting an open and transparent approach to budget setting. We have completely revised the budget process, publishing our draft budget several months in advance and engaging in extensive budget consultation with the public, giving citizens a greater voice than ever in deciding and scrutinising how public money is spent.  In response to feedback from this and previous years’ consultations, the Council has listened and made significant changes.

·         Taking an open and accountable approach to decision-making. We have webcast all Council and Executive Committee meetings live, creating a permanent record of Council debates and decisions which are archived and publicly available for viewing on the Council website.

·         The establishment of a more powerful audit committee – the Governance, Risk and Best Value Committee – which is chaired by the opposition, scrutinises key Council decisions and holds the administration to account.

·         Introduced the Living Wage for all Council staff within nine months of the start of the Capital Coalition’s term in office, benefitting around 2,500 individuals, and achieving accreditation as a Living Wage employer in 2016. The Council also continues to encourage the adoption of the Living Wage by contractors and other businesses in Edinburgh.

·         The establishment of a no compulsory redundancy policy, maintained despite sustained financial challenges.

·         The construction and opening of state-of-the-art Wave 3 schools including the new Portobello and James Gillespie’s High Schools.

·         Over £600m invested in new affordable homes, resulting in 5,234 affordable homes being completed by the Council or in partnership with housing associations on brownfield sites across the city.  £120 million has also been invested in improving the quality of existing homes. This investment has included the delivery of over 14,000 energy efficiency improvements (including heating, new windows and doors and insulation measures) and over 6,500 kitchen and bathroom upgrades.

·         The creation of the Edinburgh Guarantee which has directly supported 2,127 additional young people into jobs and apprenticeships with over 500 employers large and small.

·         A new approach to ensuring that local people are at the heart of Council services through the Localities structure, with more decision-making power being progressively devolved to local areas and people.

·         The use of participatory budgeting in localities, empowering local residents to choose their own budget priorities.

·         Completion of the tram project with the opening of Edinburgh Trams in May 2014.

·         A huge increase in expenditure supporting cycling, amounting to 9% of the transport budget in 2016/17.

·         The largest energy conservation programme undertaken by the Council through the RE:FIT scheme and establishment of an arm’s length energy company “Energy for Edinburgh” which will help to deliver the Sustainable Energy Action Plan, reducing carbon emissions.

·         The completion of the Atria office development, allowing expansion of the Conference Centre, providing much-needed Grade A office space and generating a substantial financial return to the Council, which has allowed the funding of priority capital projects such as the new Meadowbank Sports Centre.

This highlights just some of the achievements of the Capital Coalition. At the beginning of the Coalition’s term of office, in May 2012, the Capital Coalition Agreement set out in an open and transparent manner what it aimed to achieve through 53 pledges.  A report to Council in December 2016 showed that all of these have been achieved or are on track. This demonstrates how much progress has been made, even in this unprecedented and challenging financial climate.

3.            Financial planning and scrutiny

The Council continues to reconcile the combined pressures of increasing, demographic-led demand, rising expectations, inflation and legislative reform with a level of resources that has been steadily reducing in real terms.

Despite these challenges, the Council has:

·         Maintained expenditure within budget for nine successive years;

·         Delivered total annual savings of £130m between 2012/13 and 2015/16, with a further £73m substantially on track for delivery in 2016/17; and

·         Reduced its overall level of borrowing by £100m between March 2014 and March 2016. 

At the same time as the Council has balanced its budget and made these unprecedented savings, service improvements continue to be achieved and successful outcomes delivered.

Audit Scotland has praised the Council’s management of its resources.  Audit Scotland’s 2015/16 Annual Audit Report concluded that the Council’s overall financial management arrangements continue to be effective.  Audit Scotland further stated that the Council’s longer-term financial plans go a substantial way towards addressing the financial challenges in the coming years.

The role of elected members in financial management was also praised in the Audit Scotland report, which noted that members provide an effective level of challenge and questioning of budget holders where significant variances and service performance issues have been identified.

The establishment of the EIJB has been a major change for Health and Social Care finances.  The majority of the Health and Social Care budget is now delegated to the EIJB, however the EIJB Chief Officer has a direct line of responsibility to the Chief Executive and both Councillors and officers are members of the EIJB.  This ensures that the Council retains a critical role in the oversight of the budget.

By setting a balanced budget for 2017/18 and an indicative balanced budget for 2018/19 as part of the longer-term framework, the Capital Coalition continues to demonstrate its commitment to prudent financial planning.

4.            Budget engagement

This year, budget engagement focused on building on the foundations delivered through the Council’s Transformation Programme.   The total number of responses received was 1,983 which compares favourably with previous years given that the period of engagement was slightly shorter at just over seven weeks. The Council will continue to assess how it engages with the public on the budget.  

The success of the campaign builds on previous years’ achievements, including the innovative use of the budget planner in 2014, which generated the highest-ever response rate for a UK city using this approach.  As a direct result of last year’s consultation, numerous changes were made including the removal of the proposal to reduce street crossing patrols, the reinstatement of the night noise team and maintaining music tuition in schools free of charge.

The responses to this year’s engagement will inform the Locality Improvement Plans and the development of the Edinburgh 2050 City Vision.

5.            Capital Investment

The Capital Coalition is committed to investing in the city’s infrastructure and has developed a Capital Investment Programme for the five years from 2017-22 totalling over £420m. This includes over £40m of funding for new projects:

·         £12m on the refurbishment of North Bridge;
·         £12.7m on a new primary school for South Edinburgh;
·         £7.9m contribution to the new Meadowbank Sports Centre;
·         £1.6m for a new care home for older people at Dumbryden;
·         £6.7m to address the costs from rising school rolls; and
·         £2.5m investment in roads and bridges.

In addition to the funding for these new projects, the Council will deliver a programme of capital projects in 2017/18. Some of the key projects include:

·         £16.3m on new schools including Boroughmuir High School, the replacement of St Crispin’s Special School and a new St John’s RC Primary School.   In total, over £100m has been invested in Wave 3 schools over the term of the Capital Coalition;
·         £8.9m on the Water of Leith flood prevention scheme;
·         £18.5m on roads and pavements;
·         £12.5m on street lighting, including £8.7m on upgrading;
·         £2.5m on Leith Walk/Constitution St;
·         £11.1m on property asset management works to ensure our buildings remain fit for purpose; and
·         £34.7m on National Housing Trust delivery of more affordable housing

The Capital Investment Programme also includes £0.6m towards the early design fees for a new secondary school in Craigmillar with delivery of a new facility within a five-year programme.

The Council is part of the bid to the Scottish and UK Governments for the Edinburgh and South East Scotland City Region for a City Region Deal. This aims to secure significant investment in infrastructure, skills and innovation to promote sustainable economic growth and a substantial increase in new, affordable housing.

At its meeting in June last year, Council agreed the priorities for the City Region Deal that form the basis of negotiations with the UK and Scottish Governments. It is expected that a contribution will be required from the City of Edinburgh Council of up to £100m towards a City Region Deal. A further report will be considered by Council in the spring. 

6.            Savings

The Council has undertaken a significant programme of transformation with the aim of placing greater focus on customers and communities whilst getting the best value possible from the resources available. Good examples of savings that have been made without impacting negatively on frontline services are:

·         The reduction in the Council’s debt by around £100m over the last three years, which has contributed to an overall recurring annual revenue saving of £10m over the term of the Coalition
·         The reduction in consultancy costs of 44% since 2011/12 with further reductions planned in 2017/18

The budget for 2016/17 included around £73m of savings and a balanced position for the financial year is forecast.  The budget for 2017/18 includes just over £40m of savings which were approved in previous years as part of the Council’s approach to prudent financial planning. This means that a significant number of the critical decisions for 2017/18 have already been made.

However, with confirmation of the funding from the Scottish Government and the emergence of some additional budgetary pressures during the year, further savings of just over £11m are required. These savings will, in the main, be met through Council-wide measures such as further reductions in agency and consultancy spend. Details of new proposals to deliver these savings have been made available to all political groups within the Council as part of the open and transparent approach to budget-setting.

Identification of these additional savings has enabled the Capital Coalition to address:

·         Residual budget pressures of some £2.893m within Communities and Families, allowing additional revenue to remain in both the fostering service and the adoption service; and

·         Residual budget pressures of some £1.551m within Safer and Stronger Communities, allowing additional revenue to remain in both CCTV provision and homelessness services.

In addition, scrutiny of officer proposals for plans previously agreed in principle has reduced the overall level of saving within the Library Service by over £1m (rejecting some 36% of the initial proposal), allowing all current facilities to remain open.  Any impact on library usage will now be carefully monitored and kept under review.

7.            Risks and Challenges

The Capital Coalition’s proposals have been developed in the context of the risks and challenges set out in the Acting Executive Director of Resources’ report included within the supporting papers for today’s meeting. 

8.            Future Budget Development

Council agrees to:

·         Continue with implementation of the Transformation Programme.
·         Continue to work with partners to secure funding for a City Deal for the Edinburgh and South East Scotland City Region and set aside up to £1m from the Council Priorities Fund to support further development of detailed plans.
·         Continue with the income maximisation work stream, with the Chief Executive reporting back progress to Council by June 2017.
·         Commission a review by the Chief Executive on a range of Community Safety initiatives, including the Council’s support to Police Scotland and the modernisation of the Council’s CCTV system, reporting back to Council.

9.            Conclusions

Council notes:

·         Items 4.1 (b) and 4.2 by the Acting Executive Director of Resources setting out the Revenue and Capital Budget framework
·         Item 4.1 (c) by the Acting Executive Director of Resources setting out the risks associated with the Revenue Budget framework
·         Item 4.2 (d) by the Executive Director of Place setting out the Housing Revenue Account 2017/22 Budget Strategy

Council therefore approves:

·         The Revenue Budget 2017/18 as set out in the reports
·         A band ‘D’ Council Tax of £1,204.07
·         The Council Tax and Rating resolution set out in Annex 2 to this motion
·         The 2017/22 Capital Budget as set out in the report by the Acting Executive Director of Resources, with the addition of the new projects set out in Annex 3
·         The removal of the Council Tax discount for Second Homes as set out in item 4.4 by the Acting Executive Director of Resources
·         The schedule of charges for Council services as set out in Annex 4 to this motion
·         The prudential indicators as set out in Annex 5 to this motion

·         The recommendation by the Executive Director of Place to increase rents by 2% and the outline five-year Housing Revenue Account Capital Programme for 2017/22


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