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Agenda Item No AGENDA ITEM NO.: Originator: G. W. Fennell Tel: 247 4235 REPORT OF DIRECTOR OF CORPORATE SERVICES REPORT TO EXECUTIVE BOARD DATE : 11th FEBRUARY 2005 SUBJECT : REVENUE SUPPORT GRANT AND FORMULA SPENDING SHARE 2005/06 Electoral Wards Affected : Specific Implications For : Ethnic Minorities Women Disabled People Executive Yes Eligible for Call In 3 Not eligible for Call In Board (details contained in the report) Decision 1.0 INTRODUCTION 1.1 The Government announced the final Revenue Support Grant Settlement (RSG) for 2005/06 on 27th January 2005 together with the actual Formula Spending Shares (FSS) for that year. This report outlines the final position, comparing the settlement with the consultation figures that were issued on 2nd December 2004 and reported to the Executive Board on 15th December 2004. 2.0 NATIONAL POSITION 2.1 The table below compares the final totals for 2005/06 to the 2004/05 adjusted totals. 2004/05 2005/06 2005/06 VARIANCE Adjusted Consultation Final ’ M ’ M ’ M ’ M % (i) FORMULA SPENDING PLANS Total Assumed Spending (TAS) 75,159 79,577 79,598 4,439 5.9 (ii) AGGREGATE EXTERNAL FINANCE Revenue Support Grant (RSG) 27,315 26,711 26,726 -589 -2.2 Special & Specific Grants 14,279 15,406 15,418 1,139 8.0 TOTAL GRANTS 41,594 42,117 42,144 550 1.3 BUSINESS RATES 15,000 18,000 18,000 3,000 20.0 TOTAL AEF 56,594 60,117 60,144 3,550 6.3 (iii) TOTAL FORMULA SPENDING (TFS) 60,880 64,171 64,180 3,300 5.4 2.2 As can be seen from the table, TAS, RSG, Specific Grants and TFS (FSS) have all increased by small amounts since consultation. The FSS increase relates mainly to updated pupil numbers. The trend of increasing specific grants at a higher rate than the increase in FSS or RSG has continued for 2005/06 with an increase of 8.0% from 2004/05. PDF created with FinePrint pdfFactory trial version http://www.fineprint.com 2.3 The floor for Education/PSS authorities for 2005/06 has been set at 4.0%. Police have been given a floor of 3.75% and fire authorities and shire districts a floor of 2.5%. 3.0 LOCAL POSITION 3.1 For 2005/06, as in 2004/05, Leeds is above the floor. The RSG for authorities in this position is scaled back to help pay for the floor and Leeds loses ’ 554k for this reason. 3.2 Overall Formula Grant support (RSG and NNDR) for Leeds for 2005/06 will be ’ 592.478m compared with ’ 592.386m at consultation, an increase of ’ 92k. That is due to the use of the final FSS and tax base figures. Leeds“ overall grant increase from the adjusted 2004/05 base is ’ 28.047m (5.0%). 3.2 The actual FSS for Leeds is ’ 707k lower than at consultation. This is mainly accounted for by a ’ 676k reduction in Capital Financing FSS because the final settlement uses updated supported borrowing figures and revised scaling factors. In addition Education FSS has reduced by ’ 31k due to changes in unit costs and scaling factors. The following table shows the percentage movement between the final 2005/06 FSS and the final adjusted FSS for 2004/05. 2004/05 2005/06 2005/06 Variance Adjusted FSS at Final FSS between FSS Consul- years tation ’ m ’ m ’ m % Education 362.988 381.417 381.386 5.1 Social Services 184.219 194.342 194.342 5.5 Highways and Maintenance 27.727 28.137 28.137 1.5 Other Services 154.768 157.600 157.600 1.8 Capital Financing 42.745 49.961 49.285 15.3 TOTAL 772.448 811.457 810.750 5.0 3.3 For metropolitan districts as a whole there is an extra ’ 7.0m in Formula Grant (RSG and NNDR) compared with consultation. The total grant increase (RSG + NNDR) for Leeds is 5.0% which compares to the national average of 5.6%. 3.4 In addition to the figures announced for 2005/06, the Government have also confirmed the amendments to 2003/04 Formula Grant arising from corrections to 2001 census population figures for some authorities. It has been confirmed that Leeds will have to pay back ’ 1.267m as a result of this. 4.0 RECOMMENDATIONS 4.1 Members are requested to note the contents of this report. PDF created with FinePrint pdfFactory trial version http://www.fineprint.com AGENDA 6(b)(i) ITEM NO.: Originator: A.T.GAY Tel: 74226 REPORT OF THE DIRECTOR OF CORPORATE SERVICES REPORT TO EXECUTIVE BOARD DATE : 11TH FEBRUARY 2005 SUBJECT: REVENUE BUDGET 2005/06 Electoral Wards Affected: Specific Implications For : Ethnic Minorities Women Disabled People Executive Eligible for Call In Not eligible for Call In x Board (details contained in the report) Decision 1 INTRODUCTION 1.1. This report sets out the Council“s budget for 2005/06 following detailed consideration of service requirements and taking account of the Local Government Finance settlement. 1.2. This report seeks approval from the Executive Board to recommend to Council that the City Council“s Revenue Budget for 2005/06 be approved at ’ 803.9m. This budget equates to a spending level of ’ 3,549 per Band D property based on a taxbase of 226,508 equivalent Band D properties. This results in a Band D Council Tax of ’ 929.74 which represents an increase of 4.25% for the Leeds element above the Council Tax for 2004/05. 1.3. Detailed budget proposals for each service are set out in the departmental budget documents attached to this report. This information will be consolidated into the Annual Financial Plan and the Budget Book; ¨ The Annual Financial Plan - This document will bring together the revenue budget, capital programme and performance indicators for 2005/06 providing a clear link between spending plans and performance, at departmental level. The relevant summary information and individual departmental financial plans for the 2005/06 revenue budget are attached to this report. ¨ The Budget Book - This is intended for budgetary control purposes and contains an analysis of each department's expenditure at both Functional Heading (objective) and Budget Heading level (subjective). Copies of this document are available to members on request and via the intranet. PDF created with FinePrint pdfFactory trial version http://www.fineprint.com 1.4. In accordance with the Council“s Policy and Budget Framework, decisions as to the Council“s budget and Council Tax are reserved to Council. As such the purpose of this report is to propose a budget to Council, and thus the decisions recommended by this report are not eligible for call in. 2. BUDGET PRINCIPLES 2.1. All departmental estimates have been prepared at outturn prices and make allowances for known and estimated pay and price increases. 2.2. Contingency provisions have been included in the General Fund (see paragraph 7.5) and within the Local Schools Budget. These provisions are for items not foreseen and for items where there is a risk of variation during the year. In the case of the schools contingency, this would include adjustments required in the application of formula funding, significant increases in pupil numbers, additional statements of Special Education Needs or exceptional in year cost increases. 2.3. The estimates have been prepared in accordance with proper accounting practice. As in previous years, the Authority is required to comply fully with accounting standard FRS 17 - Retirement Benefits. This means that the pension costs shown in service accounts are required to be the current service cost rather than the amounts actually paid out in relation to pensions during the year. An additional amendment to the calculation of current service costs for 2005/06 is the use of market dependent rates for discounting pension liabilities, rather than the Government“s actuary rate. This amendment to accounting practice has produced a significant increase in the current service costs charged to Departments. There is no impact on Council Tax levels as the effect of the FRS 17 adjustment is reversed by a contribution from the Pensions Reserve. 3. 2004/05 LATEST ESTIMATE 3.1 The 2004/05 budget was set as follows ’ m Departmental Spending 760.5 Use of Reserves 2.3 Net Revenue Expenditure 758.2 Reserves - Estimated 31/3/04 9.7 - Budgeted usage in 2004/05 2.3 - Estimated 31/3/05 7.4 3.2 As members will be aware, a number of significant spending pressures were experienced during 2003/04, most notably within the Social Services department. In order to protect the level of the Council“s reserves, a number of one off sources of PDF created with FinePrint pdfFactory trial version http://www.fineprint.com2 funding and other actions were identified, with the result that General Fund Reserves as at 31st March 2004 stood at ’ 9.6m. In this context the Council“s external auditor, in the report on the 2003/04 Audit, recommended that the Council finalise its policy on the level of reserves and consider whether the level of General Fund reserves is sufficient to meet future expected demands. 3.3 Many of the pressures that occurred in the 2003/04 accounts have also impacted upon the management of the budget in 2004/05. Budgetary control is an ongoing process operating at various levels throughout the Council. 3.4 As reported to Members in November in the half year financial health report, there have been a number of specific cost pressures in the current year largely offset by one-off savings and income achieved in the year.
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