Strategic Finance Presentation to Chief Executives 9 May 2012 Sue McGonigal Chief Executive (Thanet...

Strategic Finance

Presentation to Chief Executives 9 May 2012

Sue McGonigalChief Executive (Thanet District Council)

Julie Gibbs Assistant Director – Finance (Gravesham Borough Council)

Key Aim

“Develop a medium term financial strategy that will make Kent more

resilient to loss of RSG and promote more efficiency through joined up approaches to service planning,

commissioning and delivery”

Or in other words...

How can we work together more effectively and improve overall

financial planning

Scoping Actions

• Review Current Financial Practices• Total Place View of Financial Pressures/Savings• Innovative Solutions• Asset Review and Rationalisation• Income Generation• Shared Services• Alternative Delivery• Decommissioning Services

Context 

Mid-2010 Population Gross Spend Income Net Spend 

Ashford 115.5  £90.2m  £77.9m £12.3m 

Canterbury 153.2 £99.0m  £79.7m  £19.3m 

Dartford 94.6  £46.8m £41.7m  £5.1m 

Dover 106.9 £68.2m  £54.0m  £14.2m 

Gravesham 99.6  £78.7m  £67.4m £11.3m 

Maidstone 149.8 £92.8m  £72.8m  £20.0m 

Sevenoaks 114.1 £51.0m   £37.2m £13.8m 

Shepway 101.2  £99.2m £79.5m  £19.7m 

Swale 133.4 £73.2m  £57.4m  £15.8m 

Thanet 132.2 £153.3m  £133.2m  £20.1m 

Tonbridge and Malling 118.8 £70.9m  £56.9m  £14.0m 

Tunbridge Wells 108.2 £67.0m  £55.0m  £12m 

Kent County Council 1427.5 £2,177.2m  £1,272.9m  £904.3m 

Kent Police Authority 1427.5 £317.6m  £42.9m  £274.7m 

Kent & Medway Fire & Rescue Authority 1427.5 £79.7m  £7.5m  £72.2m 

Medium Term Financial Planning

• Most Councils 3,4 or 5 year

• Sevenoaks 10 year

• Govt Settlement– Supposedly 3 year, but no news on 2013/14– Next CSR early...next summer?

MTFP Assumptions

Formula Grant - 0% to real terms reductions

Council Tax - no increase over MTFP...how realistic?

Tax base - historic growth 0.7% to 1%...trend is slowing?

Pay award -1%p.a. for 2013/14 & 2014/15 per Govt policy

New Homes Bonus - growth in line with tax base but varied assumptions around its use

Financial Resilience

Substantial balances and reserves held across Kent – £136m in general balances (inc £52m schools)

– £235m in earmarked reserves

Approach to balances – 2% of Gross Revenue Expenditure – 2% to 10% Net Revenue Expenditure – Typically for districts £1.25m to £2m

New Homes Bonus

2011/12 £6.9m Kent£7.9m K&M

2012/13 £14.2m Kent £16.5m K&M

Variable use– base budget contribution– taken to balances– used to fund specific initiatives

Putting on the Pressure

All authorities face similar issues:

• Increasing spending demands– Inflation– Demography– Central Government demands increasing

• Reducing income– Govt grants – Reduced demand for fee raising services– Increasing arrears & bad debts

More for less....a lot less

• Formula Grant Reduction – £72m (Kent) £84m (K&M) for 2011/12– £47m (Kent) £54m (K&M) for 2012/13

• Forecast Reductions– £30m for 2013/14– £50m for 2014/15– £50m for 2015/16

Wholesale changes to funding....both how and what

• Localising Support for Council Tax

• Retention of National Domestic Rates

• Universal Credit

• Cuts in Administrative Grant for Housing Benefit / Council Tax Benefit

• Greater flexibility to raise taxes locally– CIL, TIF, s106

‘Local’ choices

Potential changes to Council Tax:

• Discounts

£1m disallowed on Second Homes

• Exemptions

£10m excluded on 6 month empty

£1.3m excluded on 12 month empty

£0.5m excluded on repossession

• Single Person Discount £65M

Finding solutions

• Review

• Generate

• Share

• Co-operate

• Reduce

• Stop

The need to innovate

How can authorities help each other?

• Greater collaboration on areas of common interest e.g. preceptors contribute to improving Council Tax collection

• Partnership sharing of risks e.g. Local Authority Mortgage Scheme

• Remove duplication e.g. financial assessment of social care clients

Asset Review and Rationalisation

• Gains already made...– Gateways– Swale deep dive– Co-located Multi Agency Teams – ICT systems

• Plenty of opportunities still out there...– Adult Ed centres used approx 17% of the time– Fire retained stations?

Income Generation

• Generate new income streams–Review charging for discretionary services–Maximisation of Government Grants–Sponsorship

• Maximise recovery levels–Examination of level of write-offs –Fixed penalty notices, parking notices etc

Savings

• Short to Medium term– Staffing structures– Opportunistic cuts to discretionary spend– Few service cuts – Outsourcing– Service transformation

• Longer term– Focus on reducing demand – Re-set & manage expectations

Alternative Delivery Models

Alternative models:• Joint Ventures• Trusts• Community groups • Collaborative

agreements• Shared services

Benefits:• Tax efficiencies• Access to grants• Private sector partners• Cultural differences• Equal footings• Community

engagement

Shared Services

• What is being shared

• Who are the partners

• What is working

• What isn’t working

• What is saving money

...but at what cost?

Strategic collaboration

• Joint procurement

• Pooling of resources– common infrastructure– Joint initiatives

• Reducing cross-authority competition

Decommissioning Services

• Few examples and many reversed– CCTV– What others?

Way Forward

• Drill down into “specific” areas to feedback to Joint Kent Chiefs

• What involvement the Kent Forum?

• Produce a simple and regular “Kent Financial Statement”?