BUDGET 2008/09 AND BUDGET PROSPECTS 2008-12

FOREWORD

INTRODUCTION

In preparing the Budget for 2008/09, the Council circulated its proposals and consulted with Town and Parish Councils, trade union representatives of its employees and the local business community through the South Cheshire Chamber. The Consultation Draft Budget was also placed on the Council’s website, enabling consultation with the wider community.

At its meeting on 27 February 2008, the Council approved budgets for its General Revenue Account services in 2008/09 and a Capital Programme. The Budget Book sets out in detail the various elements, as follows:

Section A - General Revenue Account estimates (pages colour coded by Portfolio)

Section B - General Fund and Earmarked Reserves (Yellow page)

Section C – Capital Programme (Cream pages)

Section D - Scale of Fees and Charges (Purple pages)

Section E - Service Strategies – Base Budget Growth and One-off Special Items (White pages)

In summary, the Budget provides for continued service delivery and development in line with the Council’s policies and plans. The Revenue Budget is balanced by a Council Tax of £145.39 for the year for a Band D property.

The following paragraphs give supporting information and describe matters that the Council considered in determining its Budget and setting the Council Tax for 2008/09.

LOCAL GOVERNMENT FINANCE SETTLEMENT

On 24 January 2008, the Minister of State for Local Government confirmed proposals for the first three-year settlement for local government, covering 2008/09, 2009/10 and 2010/11.

The Government’s Formula Grant distribution system has resulted in a Grant of £9.538m for 2008/09. This provides a 1.6% increase, when compared to the adjusted 2007/08 amount (i.e. on a like-for-like basis, in the Government’s terms), or rather £211,000 in cash terms – a 2.3% increase.

The table below sets out the data for Crewe & Nantwich, for 2008/09:

*  The Government’s “Adjusted” 2007/08 Formula Grant figure includes some £50,000 in Waste Performance and Efficiency Grant; this was actually received as a capital grant for the year, via the Local Area Agreement

The Council’s Revenue Strategy had included in its Medium Term Financial Projections assumptions in respect of Formula Grant, based upon modest 2.5% increases each year. The three-year settlement figures may be compared with our projections, as follows:

The figures show a potential shortfall in external funding, compared to hoped-for inflationary increases, totalling some £458,000, over the period.

Area-Based Grant

In addition to Formula Grant, however, there is now a separate stream of non ring-fenced financial support. Grouped together under the heading of Area-Based Grant (ABG), various Government Departments are allocating grants based upon specific policy criteria. Data for Crewe & Nantwich shows the following allocations, for 2008/09 and provisionally the next two years:

This grant is being awarded on the basis of “community cohesion” policy criteria. As indicated above, it is a general grant available for corporate financing of the Budget, as a whole. However, it is recommended that the money be directed to cohesion activities and with that in mind, a related bid has been included in the base budget growth list (see below).

REVISED BUDGET 2007/08 AND BUDGET 2008/09

Revised Budget 2007/08

With respect to the Revised Budget for the current year, 2007/08, the expected transfer to balances is some £184,000. This is an improvement in position, compared with original budgets for the year.

This is mainly due to the achievement of higher investment receipts, the realisation of efficiency gains and lower pay budget expenditure, despite rises in the costs of concessionary fares (supporting the free bus travel arrangements) and waste collection (due to the rising number of properties).

The estimated General Fund balance at 31 March 2008 is £2.07m.

Budget 2008/09

The Budget for 2008/09 has been prepared using appropriate estimates of inflation and is balanced by a Council Tax increase of 2.75%. The position is better than expected in previous Medium Term Projections, for similar reasons to those described above for 2007/08.

COUNCIL TAX SETTING FOR 2008/09

As well as the Budget and Grant Settlement, other factors that influence the Borough's Council Tax are described below, in addition to elements that make up the total Council Tax.

Tax Base

The Council Tax Base for 2008/09 of 41,029.6 was set by Council on 28 November 2007; this represents an increase of 1.2%.

The Tax Base includes 87.5 Band D equivalent properties as a result of the policy in respect of second homes taxation, which commenced on 1 April 2007 and is expected to continue, in accordance with an agreement between Cheshire authorities, to provide funding for Safer Communities work, principally via local Crime & Disorder Reduction Partnerships (CDRPs).

Collection Fund

There will not be any Collection Fund surplus to share with the major precepting authorities, in 2008/09.

Precepts and Council Taxes

In addition to supporting Borough Council budgetary needs, the Council must set a Council Tax that meets the requirements of other precepting authorities. The budgets of Cheshire County Council, Cheshire Police Authority and Cheshire Fire Authority were set in February and the Council was also informed of Parish Precepts.

The effects on Council Tax levels of the Borough’s budget and precepts from Cheshire County Council, Cheshire Police Authority and Cheshire Fire Authority are shown on page XIII following this Foreword. Page XIV sets out the Parish Precepts levied and the additional amounts of Council Tax they represent for Band D properties and page XV shows aggregate Council Taxes for all areas of the Borough.

CAPITAL PROGRAMME

The Capital Programme is included as Section C (cream pages). It shows capital budgets and means of financing, in respect of projects for the period 2007-2012.

FEES AND CHARGES

The budget estimates incorporate income figures based on the Scale of Fees and Charges shown in Section D.

Most price changes are broadly in line with inflation, or are intended to have the effect of achieving an inflationary increase, sustaining income levels in a particular Service area, overall.

Regarding the increase in car parking charges from August 2008, this has the effect of improving base budget income for the medium term and also provides an opportunity for car parking infrastructure investment in 2008/09.

BUDGET SETTING FOR 2008/09 AND BUDGET SUSTAINABILITY IN THE MEDIUM TERM

To fully appreciate the implications for setting the Budget and Council Tax, decision making needs to be set into the context of the medium term, as noted in the Revenue Strategy. The latest Medium Term Financial Projections are shown on page XI. Whilst budget variances as outlined have improved the overall position for 2008/09 and the following few years, the medium term remains challenging.

Despite increasing assumptions on investment interest and the realisation of some efficiency savings, service pressures described above and real terms reductions in Formula Grant have offset such gains. This means that budget reductions/ savings will continue to be required in future years.

Efficiency Savings

Our aim is to continue to ensure future financial sustainability by achieving further budget efficiency savings – and several areas of search have been identified for progression in 2008/09.

Indeed the Government’s 2007 Comprehensive Spending Review has set a target of achieving at least 3% net cash-releasing value for money gains per annum over 2008/09 to 2010/11; this will require efficiency savings in excess of £500,000 per year, for Crewe & Nantwich.

Base Budget Changes and One-Off Special Items

There are a number of important budget items from Strategies and Service Plans; these are shown in Section E of the Budget Book (white pages towards the end of the document).

Each requirement has been scored in accordance with the Revenue Strategy's assessment framework and highest priority items are shown first. Requirements are split between Base Budget Changes ("permanent" growth) and One-Offs (special items for particular years).

SUMMARY

The Budget provides for continued service delivery and development in line with the Council’s policies and plans. The 2008/09 Revenue Budget is balanced by a Council Tax of £145.39 for the year, for a Band D property, an increase of 2.75%, or rather, £3.89 for the year.

A medium term strategy has been set of maintaining annual increases in Council Tax of no more than the rate of inflation and of developing further efficiency gains to ensure the Council continues to maintain a sustainable budget position.

Local Government Reorganisation

It is apparent that proposals to create two unitary councils, Cheshire East and Cheshire West & Chester (replacing the existing seven authorities), are likely to be taken forward.

In this event, there will be significant activity within Crewe & Nantwich, working with colleagues from the other District Councils and the County Council, to bring about a smooth transition to the new structures, effective from 1 April 2009. Our share of costs associated with the implementation will be met from reserves and existing budgets.

Jennifer Cross

Executive Director (Treasury & Corporate Support)

March 2008