Overview & Scrutiny Presentation November 2019 Agenda - - - PowerPoint PPT Presentation

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

National revenues

• 38% in govt grants

Local revenues

• 16% in Fees, charges,

sales and rents

• 46% local taxes
• 29% council tax
• 17% business

rates 110.0 63.7 135.0 7.3 44.9 14.8 0.9

Income Sources 2019/20 (£m)

Council tax Business rates Government grants Other grants and contributions Sales, fees and charges 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

• rganisation”

– 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 performance and efficiency Focus resources

• n priority areas

Make better use

• f data and insight

to assess impact Simplify processes and systems Ensure long-term sustainability of key services Manage demand for council services

Four core financial parts to transformation

Immediate savings ‘just crack on’ MTFS-based savings To be agreed through Cabinet Agreed by Cabinet Members Cross-cutting transformation Regular strategic reviews Service-specific reviews Future Council

Proposals put forward through the MTFS process - subject to Cabinet & Group agreement in spring and summer 2019 Savings that can be delivered through BAU activity – some approval by Cabinet Member More wide-ranging proposals that work across the entire

• rganisation (and, in

some cases, beyond) - approval from Cabinet Members following Group consultation Process of reviewing services to ensure efficiency and effectiveness – an ongoing process across the life of the administration 9

Four core financial parts to transformation

Savings & Transformation - #1 Hounslow

10

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.

Savings & Transformation - Process

Identification – Spring 2019

Directors have identified £45m of savings options to provide Members with “choice”. Some of these we would do anyway so Directors will work with Lead Members to progress these immediately.

Summer 2019

Establish which savings should be explored further, in the context of Cabinet agreeing which budgets to rebase.

Autumn 2019

Testing & consultation on savings options to

• commence. Formal

process via Scrutiny culminating in Autumn MTFS

Savings & Transformation - Process

September 2019

Internal Consultation:

• Equalities Impact

Assessment

• Consultation

Requirements assessed

• Labour Group

October / November 2019

Consultation - Overview & Scrutiny Council Report formally approves Medium Term Financial Strategy. Finalise delivery plans for savings including milestones and outcomes to deliver against.

April 2019 to March 2020

Savings delivery through single transformation team monitored, owned and supported by CLT with Lead Member involvement. Delivery monitoring to

• ccur. Good governance

& 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)

➢ 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.

MTFS Projections (@ 10 Oct 2019) 2019/20 (£m) 2020/21 (£m) 2021/22 (£m) 2022/23 (£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

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

Council Tax

➢ Hounslow achieved 10 years of no Council Tax rises up until 2016 but then rises occurred in 2017/18, 2018/19 and 2019/20 as the Council struggled to protect its services. ➢ MTFS projections presented currently assume 0% Council Tax rise but there remains a savings gap that needs to be addressed for 2020/21 and beyond. ➢ The Government has announced it will allow a maximum of a 4% rise without a borough-wide referendum; ▪ up to 2% general rise and ▪ 2% precept to be taken to protect Adult Social Care Services

Council Tax

Council Tax Increase Zero Increase 1% 2% (e.g. ASC precept

• nly)

3% (e.g. 2% ASC precept + 1% general increase) 4% (e.g. 2% ASC precept + 2% general increase) Hounslow share of Band D Council Tax bill (£) £1,226.03 £1,238.29 £1,250.55 £1,262.81 £1,275.07 Resources Raised (£m) 105.1 106.1 107.2 108.2 109.3 Current MTFS assumptions (£m) 105.1 105.1 105.1 105.1 105.1 Additional Resources Raised (£m) 1.0 2.1 3.1 4.2

Questions