Overview & Scrutiny Presentation November 2019
Agenda - Spending Round 2019 Announcement - Hounslow’s Saving & Transformation Programme - Hounslow’s Current MTFS Position - Proposed Next Steps
Spending Round 2019 Announcement ➢ Nationally, £2.9bn increase in Core Spending power (6% increase on 2019/20), assumes a 4% increase in Council Tax is applied. ➢ National increase of £700m in High Needs Block funding within the Dedicated Schools Grant (within an overall increase in schools funding of £2.6 billion). ➢ c£4.3m for Hounslow, however, anticipate budget pressure £7.1m for 2019/20 and c£4m for 2020/21. ➢ Nationally, £1 billion for specific grants for adult & children’s social care, confirmation that existing grants such as Winter Pressures and Social Care Support Grant will continue. ➢ Increase in Public Health grant (in line inflation). ➢ Most ‘pilot pools’, business rates retention pilot scheme, including the London pilot pool will be discontinued for 2020/21. ➢ Leaders across London agreed to continue with pooling arrangement. ➢ Reverting back to the current retention model, 67% rather than 75% ➢ Other national funding reforms such as full business rates retention and the fairer funding review have been postponed to 2021/22.
Ongoing Risks • Difficult to plan medium term as financial picture may change ❖ One year settlement only ❖ Business rates retention scheme details unknown ❖ Fair funding review impact unknown ❖ Specific grants continuation unknown ❖ Impact of Brexit unknown
Our Income Sources Income Sources 2019/20 (£m) National revenues • 38% in govt grants Council tax 14.8 0.9 Local revenues Business rates • 16% in Fees, charges, 44.9 7.3 sales and rents 110.0 Government grants • 46% local taxes Other grants and • 29% council tax contributions • 17% business rates Sales, fees and charges 135.0 63.7 Rents Interest
Background - MTFS (Nov 2018) ➢ MTFS Nov 2018 outlined a savings requirement of £28.7m over the three year period - profiled as £5.8m in 2019/20, £23.3m by 2020/21 and £28.7m by 2021/22. ➢ A council tax increase, along with other revisions in funding between MTFS and budget setting enabled Hounslow to set a balanced budget for 2019/20. ➢ The gap for 2020/21 and beyond is to be filled by a mix of savings, efficiencies and improved effectiveness managed through a single transformation programme. ➢ A savings programme started soon after the MTFS. Savings have been proposed by CLT in consultation with their Lead Members.
Savings & Transformation - #1 Hounslow • Our approach to transformation will be based on: – Addressing the financial challenge by looking at our “whole organisation” – Focusing on the performance and efficiency of services and making sure every penny counts by a series of systematic reviews – Addressing the culture, behaviours, values and focus of our workforce – Using technology to drive efficiency and better value – Focussing on customer improvements – but rebalancing the “deal” between residents and the Council – Becoming more entrepreneurial and constantly looking for better (and less expensive) ways of doing things
Savings & Transformation - #1 Hounslow Our transformation will need to span the entire organisation and: Increase Make better use performance and of data and insight efficiency to assess impact Focus resources on priority areas Simplify Manage demand processes and for council systems services Ensure long-term sustainability of key services
Savings & Transformation - #1 Hounslow Four core financial parts to Four core financial parts to transformation transformation MTFS-based Proposals put Savings that can Immediate forward through the savings be delivered savings MTFS process - through BAU To be agreed subject to Cabinet & activity – some ‘ just crack on ’ Group agreement in through Cabinet approval by spring and summer Cabinet Member 2019 Future Council More wide-ranging Process of proposals that work reviewing services Agreed by Cabinet Regular strategic across the entire to ensure efficiency Members reviews and effectiveness – organisation (and, in some cases, beyond) - an ongoing process Cross-cutting Service-specific approval from Cabinet across the life of the transformation reviews Members following administration Group consultation 9
Savings & Transformation - #1 Hounslow The #1Hounslow reform programme will:- ➢ Initially carry out service specific reviews in certain business areas e.g. children’s, customer services & digital. ➢ Will develop a programme of other service specific reviews over the medium term ➢ Will review cross cutting programmes, to commence 2020/21. In addition, the programme will:- ➢ Ensure that current and future saving proposals are reviewed in context of efficiency and effectiveness reviews and vice versa. ➢ Ensure there is a agreed framework for monitoring the progress against agreed savings proposals. ➢ Ensure savings are being delivered. 10
Savings & Transformation - Process Identification – Spring 2019 Summer 2019 Directors have identified Autumn 2019 £45m of savings options Establish which savings to provide Members with Testing & consultation on “choice”. should be explored further, savings options to in the context of Cabinet commence. Formal Some of these we would agreeing which budgets to process via Scrutiny do anyway so Directors rebase. culminating in Autumn will work with Lead MTFS Members to progress these immediately.
Savings & Transformation - Process September 2019 Internal Consultation: October / November 2019 • Equalities Impact Consultation - Overview & April 2019 to March 2020 Assessment Scrutiny • Consultation Savings delivery through Requirements assessed single transformation team • Labour Group Council Report formally monitored, owned and approves Medium Term supported by CLT with Financial Strategy. Lead Member involvement. Finalise delivery plans for savings including Delivery monitoring to milestones and outcomes occur. Good governance to deliver against. & accountability is key
Savings & Transformation – To date Rebasing ➢ Base budgets rebased – see October monitoring report to cabinet Savings ➢ Please refer to template pack. Tranche 1 savings ➢ Deemed as straight forward, deliverable savings. ➢ Some require policy change and consultations. ➢ Many would be activity we would undertake anyway. Tranche 2 savings ➢ Should be considered in context of recent rebasing ➢ Savings deemed deliverable without significantly affecting services. ➢ Some carry risk in delivery / timescales for delivery. ➢ May require policy changes and consultations.
MTFS Assumptions Funding ➢ Business rates income reduced to reflect current retention model Expenditure ➢ No Base Budget Growth – Further rebasing and growth/savings proposals will fall out of the #1Hounslow programme. ➢ Contractual & Pay Inflation only ➢ Need to manage spend to budget – Contingency against certain pressures only over medium term – Assumes no other financial pressures arising ➢ Assumes approval & delivery of savings proposals ➢ Excludes at present, the cost of borrowing associated with funding future capital programme. ➢ Increase in PWLB interest rates on borrowing will increase costs
MTFS Projections (Draft) MTFS Projections (@ 10 Oct 2019/20 2020/21 2021/22 2022/23 2019) (£m) (£m) (£m) (£m) Directorate Revenue Budgets (Net) 179.8 179.8 179.8 179.8 Corporate Items (Net) (6.0) 8.0 15.1 22.1 Funding (173.8) (173.7) (174.5) (175.1) Net Total (Budget Gap) 0.0 14.1 20.4 26.8 Savings Programme 0.0 (6.0) (8.0) (8.5) Remaining Budget Gap 0.0 8.1 12.4 18.3 Annual Remaining Budget Gap 0.0 8.1 4.3 5.9 ➢ Cumulative gap of £26.8m over the medium term, reduced to £18.3m if all savings proposals are approved. ➢ Remaining budget gap of £8.1m in 2020/21, with further savings of £4.3m and £5.9m required in 2021/22 and 2022/23.
Next Steps Agree how to close the “gap” ➢ Directors currently considering which savings can be brought forward (reviewing the timing of delivery). ➢ Further savings from the £45m list are big projects & will take time to deliver or are very unattractive. ➢ Most future savings will be developed out of #1Hounslow transformation Approval of savings proposals
Savings Summary Savings Total (£k) Children’s & Adults 2,901 Adults 1,745 Commissioning 200 Education & Early Intervention 502 Specialist Services 174 Environment, Culture and Customer Services 1,926 Communications 7 Culture 130 Environment 50 Facilties Management 185 Parking 300 Vehicle Fleet Management 770 Waste 484
Savings Summary Savings Total (£k) Finance & Resources 2,035 Commercial Property 600 Finance 717 Information Technology 275 Other 443 Planning, Housing and Communities 1,637 Communities 1,067 Planning 570
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