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2014/15 Revenue Budget and Medium Term Financial Strategy – Corporate Overview Jane West – Executive Director of Finance & Corporate Governance 1.

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Presentation on theme: "2014/15 Revenue Budget and Medium Term Financial Strategy – Corporate Overview Jane West – Executive Director of Finance & Corporate Governance 1."— Presentation transcript:

1 2014/15 Revenue Budget and Medium Term Financial Strategy – Corporate Overview Jane West – Executive Director of Finance & Corporate Governance 1

2 Figures not known when producing Select Committee papers. Provisional figures circulated in July Current modelling assumes 2014/15 grant loss of £14m (10% cash – 12.5% real terms) Autumn Statement appears to have a neutral impact on 2014/15. How much cash do we get from Central Government in 2014/15 (excluding DSG) 2

3 Local Business Rates Retention Scheme 2014/15 is the second year of the business rates retention scheme. The system is complex and has many moving parts. Final guidance not yet issued on how the scheme will operate in 2014/15. A major concern for LBHF is that £140m of rating appeals are outstanding. Some go back to £20m of appeals still relate to Westfield (average reduction 28%). 3

4 2014/15 – Initial Modelling £m Start Up Funding Allocation (A) 120.0Business Rates for LBHF Businesses (D) Split of Start Up Funding: Split of Baseline: Revenue Support Grant (B) 65.0Government (50%) (E)96.5 Retained Business Rates (C ) 55.0GLA (20%) (F)38.6 LBHF (30%) (G)57.9 Tariff Payable to Government 3.0 Continued… 4

5 2014/15 – Initial Modelling Continued £m TargetForecastLossSafety Net Business Rates for LBHF Businesses (D) (15.0) Split of Baseline: Government (50%) (E) (7.5) GLA (20%) (F) (3.0) LBHF (30%) (G) (4.5)4.0 5

6 Business Rates Retention – Concerns (1) Authorities gain 30% of collections in excess of the baseline (£193m in illustration) and bear 30% of any shortfall. Allowance for the impact of rateable value appeals means that LBHF is £15m short of the £193m target. The gross loss to LBHF is £4.5m (30% of £15m). A safety net applies that restricts the LBHF share of any loss to £4m per annum. Continued…. 6

7 The actual level and timing of appeals is uncertain. By assuming LBHF will qualify for the safety net it has adopted a prudent position. Figures will need to take account of the recent announcement that the business rates multiplier will increase by 2%. Business Rates Retention – Concerns (2) …Continued. 7

8 Savings Identified 2014/15 to 2016/17 (£M) 8

9 Hammersmith and Fulham Budget Gap (£M) 9

10 Pay Inflation – 1% increase Price Inflation - Only where there are contract agreements Fees & Charges – Increased in line with RPI (3.3% August) Pension - Net saving of £0.357m in the Employers Contribution. Council Tax reduction of 3% in 2014/15 Budget Assumptions 10

11 Growth Proposals 2014/15 (£M) 11

12 Reasons for Budget Growth 2014/15 (£M) 12

13 Identified Savings 2014/15 (£M) 13

14 2014/15 MTFS Savings (£M) 14

15 Budget Risks/Balances/Earmarked Reserves 2014/15 Budget Risks - £14.6m General Balance – Budget provides for an increase from £18m to £19.1m. Earmarked Reserves at close of 2012/13 - £59m 15

16 Council Debt (£M) 16

17 Band D Council Tax – 2006/07 to 2014/15 (£) 17

18 The 2014/15 Band D charge of £ is the lowest since 1999/2000. The Band D reduction from 2006/07 is £ The cash terms reduction from 2006/07 is 20%. The real terms reduction from 2006/07 is 39%. Council Tax Reduction 18

19 LBHF Efficiencies 2006/07 – 2016/17 (£M) 19

20 Impact of Local Government Finance Settlement and Other Changes Local Government Finance Settlement published 18 th December. Net improvement in LBHF for 2014/15 of £1.1m. Main reason for increase is more New Homes Bonus Grant. Extra funding likely to be needed to meet cost increases for Concessionary Fares and review of Managed Services. 20

21 Finance & Corporate Services Estimates Jane West 28 th January 2014

22 FCS Approach to Finding Efficiencies Further Tri and Bi borough working Already in place for areas such as Treasury, Pensions, Insurance, Innovation & Change, Design team, Legal, Social Fund and several Directors’ roles Further integration planned for Legal, HR, ICT, Managed Services, Procurement, Revenues & Benefits and Customer Services under the Tri- borough Corporate Review Greater use of self-service for external and internal customers, eg. Smart HR, WCFM and Managed Services internally; H&F Direct’s push on self service via the web and Post Office Transformational programmes to reduce costs, eg. Agilisys debt collection and tri borough business intelligence

23 FCS Efficiencies To Date Between 2009/10 and 2013/14 FCS have delivered savings of nearly £10m Further efficiencies of £2.4m planned for 2014/15 A further £2m of efficiencies already identified for 2015/16

24 FCS 2014/15 Estimates (by %)

25 FCS 2014/15 Estimates (by value) DIVISIONEFFICIENCY (£k) Finance510 HR225 IT & Procurement88 Communications, Policy & Performance52 Innovation & Change210 Executive Services25 H&F Direct110 Actuarial Revaluation of Pension Fund357 Tri Borough (Managed Services)379 Transforming Business450 TOTAL2,406

26 QUESTIONS 26


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