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Appendix 2a
BLACKPOOL COUNCIL
JOINT REPORT
of the
ASSISTANT DIRECTOR PERFORMANCE AND FINANCE
AND CHIEF FINANCIAL OFFICER
to the
EXECUTIVE
on
30TH JANUARY 2008
MEDIUM-TERM FINANCIAL STRATEGY 2008/09 – 2012/13
1.
Purpose
This Medium-term Financial Strategy (MTFS) sets out the assumptions about the
financial resources likely to be available to deliver the Council’s objectives over the next 5
years within the context of national and local constraints, though with Government
funding not defined beyond 2010/11 the projections do become increasingly uncertain
beyond 3 years.
The intent is to describe how the Council plans to structure and manage its finances in
order that:
 services are resourced in line with Council priorities
 council tax is maintained as low as possible
 resources are maximised
 delivery of value for money is embedded in all activities
 financial standing reflects the levels of business and risk
 capital freedoms are optimised
 risks are identified and mitigated where possible.
a) The key plans which aim to deliver these objectives are:
Service-related Plans:

the Sustainable Community Strategy

Corporate plans such as the Corporate
Performance Plan, Local Area Agreement,
Health Inequalities Action Plan, Workforce
Development Plan

individual service and business plans
Capital and Asset-related Plans:

Capital Investment Strategy

Asset Management and Disposal Plans

Blackpool Task Force Action Plan

Office Accommodation Strategy

Housing Intervention Strategy
b) The key enablers to deliver the MTFS are:
Budget Strategy:

annual Revenue and Capital Budgets

3-year schools’ budgets

Treasury Management and Investment
Strategies

fees and charges policies

External Funding Code of Practice
Financial Management:

Annual (Internal and External) Audit Plans

Corporate Risk Management Strategy

Procurement Strategy

Financial Regulations
The revised Comprehensive Performance Assessment methodology in 2008 and
currently-under-consultation Comprehensive Area Assessment in 2009 emphasise the
importance of strengthening financial management - KPMG’s draft Audit and Inspection
Plan 2007/08 sees the Medium-term Financial Plan (MTFP) as “the key financial
management document that underpins the Corporate Plan and with the requirement for
efficiency savings this places greater emphasis on financial management.” Clear links
between the MTFP and performance management frameworks and community planning
documents are recognised as the means for the Council to realise its strategic objectives
and visions. This MTFS incorporates a summary 5-year MTFP covering the financial
years 2008/09 – 2012/13.
2.
Context
The Council’s existing MTFS covering the 5-year period, 2005/06 – 2009/10, has been
subject to change in 2007 as a result of 2 significant events: i) the local election in May
returned a change in political leadership; and ii) the Comprehensive Spending Review
(CSR) and Pre-Budget Report announced in October outlined the Government’s
spending plans over the 3-year period 2008/09 – 2010/11 and for the first time provided
definitive annual Formula Grant settlements to local authorities that offer predictability and
stability over a full 3-year CSR period.
The CSR was accompanied by a further review of the Government’s Formula Grant
funding methodology and although local government’s overall share of public expenditure
within the CSR was described by the Local Government Association as “the worst in a
decade”, Blackpool Council’s Provisional Settlement was nonetheless encouraging with
the 17th highest % gain of the 149 upper tier authorities. This resulted from a further
unwinding of the floor safety net for ‘losing’ authorities, the removal of the separate
Personal Social Services sub-floors and a growing population. Despite this, Blackpool’s
distance from ‘target’ grant in 2008/09 is £6.9m (or 8.3%) so it can continue to expect
real-term Settlement growth over the medium term in order that its full entitlement is
eventually reached. In addition, Blackpool’s current demographic profile has generated
increases in other specific grants such as the Working Neighbourhoods Fund.
A new Dedicated Schools Grant (DSG) was established in 2006/07 from Formula Grant
for the direct funding of schools. Although the CSR continues to support real growth
investment in DSG per pupil (+4.6% in 2008/09), Blackpool’s reducing pupil rolls
estimated at 500 in 2008/09 are likely to translate to lower relative levels of increase in
the funding of the Local Education Authority and centrally-funded services that will require
the consultation and agreement of the Schools Forum in order to continue to provide
support for some existing services.
The Council’s plans for the regeneration of Blackpool by means of the Task Force Action
Plan are progressing. The establishment of the ReBlackpool Urban Regeneration
Company in 2005 are taking these forward and involve very significant capital schemes
with potential revenue budget consequences. It is very important that these schemes
move forward, but also that the financial consequences are properly understood and
planned. It has been agreed that the business plans of ReBlackpool will inform the
Council’s budget process that will itself encompass both revenue and capital in an aligned
process.
The Council’s 2007/08 revenue budget has been used as the basis for forecasting the
following 5 years. The available evidence shows that the 2007/08 budget provides a
reasonable base for current service levels to be maintained or improved, though notable
demand-led exceptions are being addressed separately as part of the budget review
and/or performance efficiency review processes.
The Council’s forecast outturn level of working balances of £4.8m as at month 8 still falls
slightly below the target level of £5.0m, itself based upon historic levels, demands and
prevailing risks. Local Authority Accounting Panel guidance on Reserves and Balances
(LAAP55) requires the Assistant Director Performance & Finance to assess the adequacy
of reserves and advise Members in determining their appropriate level and utilisation.
This 5-year strategy seeks to re-establish and sustain reserves at that appropriate level.
3.
Key Elements of Strategy
3.1
Services Are Resourced In Line with Council Priorities
The Council and its strategic partners set out their key objectives for the next 15 years in
their Sustainable Community Strategy and the Council reflects these over the next 3
years in its Corporate Performance Plan. These translate through service plans into
individual service business plans.
With effect from 2003 each service business plan has incorporated a financial summary
highlighting the resource implications of what is proposed in order that information can be
fed into/from the annual budget round. This will provide an explicit linkage between
agreed plans and budgets. Experience has shown the necessity for business plans to
reflect budget realities rather than service aspirations and for the plans not to become
bidding documents. These plans are also required to include a statement on how each
service will meet its allocated budget savings target.
Resources will only be allocated in accordance with the Council’s stated priorities within
its Corporate Performance Plan. All bids for additional resources, whether revenue or
capital, will be tested in relation to their fit with corporate goals & priorities and against
their likelihood for delivering explicit outputs and outcomes. It is proposed that the existing
strategy of requiring non-priority services to seek and deliver efficiency savings each year
will continue. This will enable the reallocation of resources to higher priorities. In addition,
as part of the Council’s Overview & Scrutiny and Service Efficiency Review processes,
historic budget allocations will continuously be reviewed in the context of the Council’s
changing priorities and needs whilst the Audit Committee will maintain its performance
management role in regard to financial targets and performance indicators.
3.2.
Council Tax Is Maintained As Low As Possible
Council tax contributes 27% towards the net revenue budget of Blackpool Council and the
Council’s current council tax level is amongst the lowest in the North West. The Council
aims to maintain service levels and target improvements whilst keeping council tax as
affordable as possible for its residents. Although it is acknowledged that the easiest
means of raising service quality and performance in the key areas identified by the
Council is by raising council tax above inflation, the Government has publicly stated that
“it expects increases to be substantially below 5%” and will invoke capping measures
should this be exceeded. Therefore, council tax alone cannot be used to meet pressures
for service developments and other options are necessary.
3.3
Resources Are Maximised
(a) External Funding
Every opportunity will be sought to attract additional external funding from a range of
sources:
consultations on Formula Grant Settlement and specific grants are researched and
actively lobbied through the range of available networks and local politicians to
improve the Council’s relative allocations

growth in the general economy as regeneration gets underway will provide additional
funding from the Government’s replacement for the Local Authority Business Growth
Incentive (LABGI) scheme and the proposed supplementary business rate

the Masterplan will deliver significant capital investment but also present opportunities
to create new revenue streams in specific departments such as Planning, Leisure,
Culture and Car Parking

the Area Based Grant (successor to the Local Area Agreement) offers some
additional funding, freedoms & flexibilities and an opportunity for improved efficiency the Council was successful in becoming a second phase LAA authority in 2006/07
which involved the alignment & pooling of budgets (£17.3m of Area Based Grant in
2008/09) with other public sector agencies and which brings with it additional funding
of Pump Priming Grant and a potential Performance Reward Grant

bidding for external resources to central Government departments, EU funds,
Heritage Lottery Fund, Arts Fund, Sports Council, etc., is supported subject to levels
of matched funding, future mainstreaming and other revenue consequences.
(b) The policy on fees and charges will continue to require increases greater than
inflation where it can be achieved without detriment to service demand.
(c) Expanding trading and charging under new powers is an opportunity still being
actively explored - although national take-up has been poor, the number of publicpublic partnerships / shared services between Blackpool Council and other local
authorities, eg. Fylde, Chorley, Bury and Rochdale, is growing in importance.
(d) Income and Debt Management will be actively pursued to maintain Blackpool’s track
record in areas such as the collection of council tax, Housing rents, NNDR and sundry
debt, supported by a new Corporate Debt Team.
3.4
Delivery of Value for Money is Embedded in All Activities
The ODPM paper Delivering Efficiency in Local Services based upon the Gershon Report
charged local authorities with delivering efficiency gains of 2.5% per annum over the 3
years, 2005/06 – 2007/08. CSR 2007 has raised the bar by setting an ambitious target for
cash-releasing efficiency savings of 3.0% across the public sector (equivalent to £4.9bn
in local government) to be achieved through business process improvements &
collaboration, smarter procurement and better asset management. Thus, efficiency
savings and service improvements will continue to be an explicit part of day-to-day
management and an integral element of service and business plans.
The process is already in place on a targeted basis, though the incentive for all managers
to release monies from their operations needs to be maintained by their adherence to the
existing cash limited budgeting regime. This includes the ongoing review of staffing levels
across the Council following significant growth since 2000 and the policy over the 3-year
period, 2006/07 – 2008/09, has been to build explicit staffing savings targets of 2%, 3%
and 2% respectively into budget plans. The Council’s Performance Review Team, which
has taken over the value for money role from Internal Audit, will continue its service
reviews and contribute to the efficiency agenda by achieving stretched targets for
releasing cashable savings. The Council’s Performance Efficiency Group monitors the
delivery of all efficiency savings against plan on a monthly basis.
Despite this retrenchment of resource, the Council is 1 of only 13 local authorities in
England that has been assessed by the Audit Commission as “improving strongly” in its
service performance in last year’s Direction of Travel Statement.
3.5
Financial Standing Reflects the Levels of Business and Risk
A high proportion of the Council’s revenue budget is funded by above-average grant
funding with inherent risk of clawback and seasonal fees and charges income.
Furthermore, a number of its services are demand-led which is not readily containable.
The Assistant Director Performance and Finance, supported by KPMG who have
identified in their first Audit and Inspection Plan the significant business risks that the
Council faces, deems that the minimum requirement for unallocated reserves continues
to be £5m. Although the latest forecast is £4.8m, experience suggests that this target is
not beyond reach by the end of this financial year.
3.6
Capital Freedoms are Optimised
The move to a prudential basis for capital spending required the alignment of capital
budgeting with the revenue budget cycle. The thrust of the Prudential Code that capital
spending is determined by business need, affordability and sustainability rather than
allocation requires a holistic approach to the Council’s budgets. The Council has been
active in using the opportunity offered by Prudential borrowing, in particular for schemes
such as the repairs to footways where there is a good prospect of savings on tripping
claims. This is expected to continue, especially for maintenance of the general public
infrastructure where specific borrowing approvals do not exist. This requires the allocation
of revenue funding to finance the prudential borrowing required and assumptions have
been made of the likely cost of this over the next 5 years in the forward strategy.
3.7
Risks Are Identified and Mitigated where Possible
Appendix 2b lists the significant financial risks which the Council needs to manage over
the next 5 years together with an assessment of their potential impact and how the
options may be mitigated and managed.
4.
The Way Forward
The above elements form the basis of a 5-year MTFP and need to be viewed as longterm objectives which are embedded in the formulation of the annual revenue budget,
starting with the next cycle in 2008/09. A projection of the possible spending and
available resources for 2008/09 – 2012/13 is provided below. This makes several
assumptions, most significantly that existing and new statutory obligations must of
necessity be considered as a first call on the Council’s revenue budget, that regeneration
plans are delivered within earmarked resources and that the impact of the Pay Review in
2008/09 is met from further efficiency savings. The revenue implications of the Council’s
capital programme 2008/09 – 2010/11 are built into the baseline revenue estimates and
new commitments will also be explicitly considered as part of the capital bidding process
and new project management framework. This financial plan shows net budget growth of
17% over the 5-year period and should allow Blackpool Council to remain within the
Government’s capping limit of 5% for annual increases in council tax. The attainment of
the strategy over this timeframe then needs to be monitored against clear milestones &
targets and reviewed annually in the light of the previous year’s revenue outturn.
Net Revenue Budget b/f
Inflation and Technical Adjustments
Efficiency Savings
Known Liabilities
Specific Developments
Contributions to/(from) Working Balances
Net Revenue Budget c/f
Working Balances
Summary Medium-term Financial Projection
2008/09
£000
120,353
6,142
(3,428)
2,941
4,889
130,897
2009/10
£000
130,897
2,680
(2,160)
1,869
4,075
137,361
2010/11
£000
137,361
2,750
(690)
3,469
781
143,671
2011/12
£000
143,671
2,820
(6,850)
3,333
5,422
148,396
2012/13
£000
148,396
2,890
897
1,124
153,307
4,820
>5,000
>5,000
>5,000
>5,000
It is important to develop the engagement and participation of the local community in the
budget process and it is proposed to continue to consult on the key elements of the
Council’s budget with the public at Area Forums and via the Your Blackpool newspaper &
the Council’s website in order that issues raised can be fed back to the Council before the
revenue budget is finalised. In addition, the existing consultation arrangements with the
local business community need to be revitalised - this is increasingly important given the
Government’s proposals for the introduction of supplementary business rates and the
opportunities that this may afford Blackpool. In future, consultation with key partners, eg.
Health and the Police, in developing strategy will be an essential part of the Local Area
Agreement process.
5.
Summary and Recommendation
Based upon the assumptions made within this MTFS the Council is likely to be able to
remain within the Government’s capping limit of 5% for annual increases in council tax
and achieve its target of £5.0m for working balances. However, this will require the
Council to contain demand-led service pressures such as in Adult Social Care Services
and Waste Disposal; to maintain tight financial management of regeneration projects &
their revenue consequences; and to continue to deliver the challenging efficiency savings
targets set by Government and by itself.
The Executive is asked to approve the Council’s Medium-term Financial Strategy for the
5-year period 2008/09 – 2012/13.
A Pollock
Assistant Director Performance & Finance
S Thompson
Chief Financial Officer