MEDIUM TERM FINANCIAL PLAN

Transcription

1 ( MEDIUM TERM FINANCIAL PLAN Councillor Councillor Mark Alun Pritchard Jenkins Lead Lead Member: Member Governance, for Finance & Corporate Asset Support, Finance & Planning. Mark Owen Head of Finance

2 Medium Term Financial Plan Introduction This Medium Term Financial Plan (MTFP) sets out the Council s strategic approach to the management of its finances and outlines some of the financial issues that will face the Council over the next three years. The delivery of the strategy is dependent on the resources made available through Government settlements and on the success of the Council in realigning resources to its aims and priorities. Each year there is a requirement to prepare an annual budget and set the council tax.the MTFP will be updated each year as part of the annual budget planning cycle. Members will be kept informed of the developments to the MTFP through the Executive Board and Member Workshops over the summer and autumn period as departments consider cost and savings and/or efficiency options as part of the annual budget planning cycle. Principles of the Medium Term Financial Plan The MTFP for 215/16 to 217/18 is underpinned by the following core principles: 1. The MTFP recognises that the overall level of funding from the Welsh Government will continue to decline for the foreseeable future and that the Council may not be able to resource current levels of service delivery. 2. The MTFP identifies the level of savings that will be required to ensure that the Council budget is balanced, whilst minimising the impact on front line services. 3. The MTFP recognises that the Council will need to maintain general reserves at reasonable levels to cover unforeseen expenditure. The Council will aim to balance its revenue budget over the period of the MTFP. Economic factors National economic circumstance and the public sector funding position set out in the 214 Autumn Statement means that the Council will continue to be placed under considerable financial strain over the course of this planning period and beyond. The MTFP takes into consideration the implications of the following: Interest Rates Price Index Demographic allocations Unemployment rates Interest Rates Interest rates are of particular importance to the Council, in that they affect its performance on investments and borrowing. The base rate has remained at.5% since March 29 and is not expected to increase for the foreseeable future.

3 Inflation The Bank of England s MPC has a Consumer Price Index (CPI) target of 2%. The CPI for November 214 was 1.%. The medium term financial plan currently makes provision for inflation and pay awards as follows; Inflation: The budget plans assume no general inflation, however the MTFP allows for 2% on energy, 2.5% for the Private Finance Initiative, 2% for residential fees and 3% for the Council tax reduction scheme. Pay Awards: Agreement has now been reached on rates of pay applicable from 1 January 215. The pay award will be applied in two stages Stage 1 will include a one off-non consolidated payment in the December 214 salary and Stage 2 will take effect from 1 January 215 to March 216; the increases in pay will be in the range of 2.2% (Spinal Column Points 11 to 6) to 7.93% for those on spinal column point 6. Demographic Allocations In revising the Medium Term Financial Plan, work has been undertaken on the impact of demographic change on the demand for, and cost of adult social care and student numbers. Provision of 5k has been made for this in the financial plan. Unemployment The latest National Statistics produced by the Office for National Statistics (ONS) were for the period November 214. The ILO unemployment rate in Wales was 6.6% which was.6 percentage points above the UK rate in July to September 214, and the highest of the UK nations; Figure 1. Wrexham s ILO unemployment rate as at June 214 was 5.4%, with the number of ILO Unemployed being 1,93. Unemployment increases are likely that to lead to an increase in the number of Housing Benefit claims made, the majority of Housing Benefits paid, is reclaimed through subsidy arrangements with the Department of Work and Pensions, so there could be a small impact upon the authority if 1% subsidy was not paid in all cases. If these cases also claimed Council Tax Reduction Scheme, there would be a financial implication on the authority as the funding provided is an annual grant based upon prior years of expenditure and caseload. Figure 1: ILO unemployment rates for UK nations, seasonally adjusted. (The ILO unemployment rate is the number of ILO unemployed people as a percentage of the economically active population -this includes people who are in employment and those who are defined as ILO unemployed).

4 Local Government Funding The funding for the Council comes from a number of sources. The largest component of funding comes from the Welsh Government through grants that can be used by the Council for any purpose for which it has it has responsibility. The largest single grant the Council receives is the Revenue Support Grant (RSG). The Welsh Government also provides funding to local government in the form of hypothecated grants-through a range of specific grants. These grants can only be used for the specific purposes for which they are provided and tend to be in support of Welsh Government priorities. Council Tax The Council Tax system requires local householders to contribute directly to the cost of local services. The Council Tax is calculated after having taken into account the expenditure needs of the Council and its ability to fund this from charges for services, General Government Grants, the use of reserves and other grant streams. The amount of council tax paid by local residents is based on the value of the property they live in. The amount of council tax paid by local residents is determined by the band their property is in. The collection rate for 215/16 is estimated at 98.4% and the tax base at 52,797. National Non Domestic Rates (NNDR) National Non Domestic Rates (NNDR) or Business rates are collected by the Council and are paid over to the Government. The business rates are pooled by central government and then redistributed to the Council as part of the annual formula grant settlement.

5 The Chancellor s Autumn Statement 214 included the devolution of Business rates to Wales; this means that the Welsh Government will have full control over the system of Business rates from April 215. Identifying and optimising income opportunities The Council s Executive Board approved the Fees and Charges Framework in 211. The Fees and Charges Framework requires each department to review each year as part of the budget process its discretionary fees and charges. No assumptions in terms of inflation have been made with respect to fees and charges within the figures included as part of the MTFP, however service managers will be expected to develop these in line with the Fees and Charges Framework and will need to consider all options for income generation in the context of the challenging financial period facing the Council. Each Head of Department is required to consider if services currently provided free should be subject to a charge or if good reasons exist for maintaining a free service. Furthermore, each Head of Department is responsible for setting charges in their respective service area and for ensuring that the rates at which charges are set achieve full cost recovery. Managers are encouraged to explore and exploit new business opportunities available to them, through diversification of services, expansion of partnership workings and to take a more rigorous approach on existing ways of working. The Chancellor s Autumn Statement 214 The UK public finances are on track to be in surplus by 218/19, despite upward revisions to borrowing forecasts for this year and next, Chancellor George Osborne said in his Autumn Statement on the 3 December 214. The Chancellor also reiterated that the government was committed to reducing departmental spending in the first two years of the next Parliament to ensure that the surplus is delivered. 'Our control of public sector pay these past four years has delivered 12bn of savings. By continuing to restrain public sector pay we expect to deliver commensurate savings in the next Parliament until we have dealt with the deficit,' he added. The Office of Budget Responsibility (OBR) in its Economic and Fiscal Outlook (December 214) estimates that the structural deficit is still large, thus it is unlikely that the deficit will go away just through growth, this implies more cuts are likely to remain for the foreseeable future.

6 Measures announced in the autumn statement Arlingclose Ltd in their Economic Update (3December 214) on the Autumn Statement 214, detailed the following impact on Local Authorities Housing: Housing Benefit fraud and error local authority incentive scheme: New financial rewards will be paid to local authorities that reduce the amount of money lost through fraud and error in Housing Benefit. Underused public land: An increased ambition for public sector land for up to 15, homes between 215 and 22. Compulsory Purchase regime: publishing proposals for consultation at Budget 215 on making the regime clearer, faster and fairer, with the aim of bringing forward more brownfield land for development. Planning : Section 16: Taking steps to speed up section 16 negotiations, including revised guidance, consulting on a faster process for reaching agreement, considering how timescales for agreement could be introduced, and improving transparency on the use of section 16 funds. Publishing new data on local authorities performance in meeting their statutory duty to process smaller planning applications within 8 weeks. Licensing: Proposals to work with local authorities and businesses on a simplification programme for local licensing, with an expectation that by 218 every local authority will offer a single online application process where businesses only need register their details once. Other Measures in the autumn statement include: Abolishing Employer National Insurance contributions for apprentices under the age of 25. Full devolution of business rates which will increase the autonomy and accountability of the Welsh Government. The Employment Allowance which provides employers with a reduction of up to 2, on their National Insurance contributions bill will be extended from April 215 to include individuals employing care and support workers for themselves or a member of their family. Up-and-coming firms who are first time exporters will get new support through a 2m fund that is available to businesses including Welsh firms. Wales Finance and Government Business Minister Jane Hutt responded to the UK Government s Autumn Statement by saying that: This is the first Autumn Statement for many years that has increased investment in public services, and I am glad that the UK Government is finally replicating the approach already embedded in the Welsh Government s budget strategy by investing in public services. This additional 113.2m goes a small way towards redressing the damage that the deep cuts in public service provision has done to people in Wales and across the UK, but our budget is still 9% less in real terms now than it was in 21-11

7 There are important steps towards the devolution of tax to Wales. I am pleased that the Autumn Statement confirms we have secured a fair deal on Non Domestic Rates and the first Tax forecasts for Wales are an important next step in our preparations for the devolution of tax powers for Wales.. Whilst there is positive news in the Autumn Statement, much work is still to be done to deliver a fair and sustainable funding settlement for Wales. For Wales the Autumn Statement means that: In the total revenue increase will be 1.3 million revenue. In the total revenue increase will be million, and the total capital increase will be 8.8 million [of which 2.3 million is for Financial Transactions] Local public services must be prioritised as austerity continues With the Chancellor s Autumn Statement signalling public sector austerity will extend through into the next Parliament, local councils are calling for local public services to be protected in Wales. Today s statement reveals that UK Government targets on the national debt will take longer to be reached, meaning further public spending cuts are expected to follow in the future. Faced with a 9million budget shortfall by 218, and with the cost of proposed local government reform estimated to be as much as 268million, council leaders believe further cuts will see many of Wales most valued public services begin to disappear. Cllr Aaron Shotton (Flintshire), WLGA Deputy Leader and Spokesperson for Finance said: Local government in Wales will be subject to a 4.3% or 218 million reduction in its funding for next year alone, and with austerity set to continue well into the future we face the very stark reality of vital local services beginning to fail as they become starved of a realistic level of funding. The challenge that WCBC faces Given the cuts in funding that the Council is faced with we have no choice but to make radical decisions about the range and level of services that we provide. Savings of this magnitude cannot be made by tinkering with what we currently do; WCBC will be a smaller and very different organisation in three years time. Whilst we will continue to strive to improve certain services, some of the services that we currently offer will stop, some will be provided at a reduce standard and others will be provided by other people. The services that the Council currently offers are provided and enabled by over 6, members of staff but we are faced with making at least 45m savings over the next three years and a significant proportion of these savings will have to be made from staff costs. As the largest employer in the County Borough we realise the effect this could have, and will work to mitigate the impact it will have on the local economy, but we have no choice. Staffing numbers have already started to reduce, but as the Council reshapes services and continues to become a more efficient organisation the scale and speed of these reductions will have to increase in order to address the funding cuts we face. Recognising that there is not one single project or one single activity that will deliver the value of savings required and the efficiencies needed, the Council will be taking a package

8 approach to reshaping services. The projects arising from this approach will be managed through a change programme. We will continue to take fundamental decisions about reprioritising and refocusing services, ceasing some services altogether, considering alternative models of service delivery, working more effectively and efficiently with existing and new partners and eliminating waste. Our reshaping work also focuses us on improving services as well as enabling delivery at a lower cost and ensuring that we are a resilient organisation that is well-placed to tackle future challenges. Our conversation with the public, our staff and partners continues to take place to explain the detail of our approach. We are calling it a conversation because it s not just about the Council giving out information - we are genuinely seeking to have a dialogue with the public over the next few years on how the shape and delivery of public services will change and evolve. As part of this conversation we will continue to consider how we can enable individuals and communities to co-operate and help themselves. The appointment of PWC as the Council s Reshaping Services Partner is designed to help the authority identify improved ways of working to achieve savings in line with the Council's shape principles; Customer resolution at the first point of contact: Focus on quality service delivery or managing contracts: Minimise transactional activity and engage appropriate support services. The Revenue Budget Process 215/16 The budget process is mainly organised through All Member Workshops and Executive Board meetings, in addition Scrutiny Chairs are able to challenge specific savings and pressures. The process allows for consultation with residents, Wrexham Schools Budget Forum and other key stakeholders about the proposals. The Executive Board agreed the 215/16 Budget planning process on 8 April 214 (HF/23/14) and at an all member budget workshop on 1 April Members were informed of an estimated budget shortfall of at least 45m over the next three years of which 8.2m related to the 215/16 financial year. Following correspondence from the Minister for Local Government and Business during the summer, suggesting that authorities should plan for a reduction in grant funding up to 4.5%, the budget shortfall was revised to 45m over the next three years. 215/16 Budget Consultation On 5 August 214 members of the Executive Board (HF/41/14) considered savings amounting to ( 12.2m. During September and October the package of draft proposals went out for public consultation. The proposals were presented in a booklet called Difficult Decisions and this was available online on the Council s website. In addition, to the savings proposals the consultation also considered whether council tax should increase by 4% or 5% which would result in additional income of 4k and 8k respectively. The results of the consultation were considered at an all Member Budget workshop on 25 November 214. There was strong opposition to the following areas: a) Reduction in planned highways maintenance ( 17k) 7% of people disagreed, 24% agreed b) Council tax rise of 5% ( 8k) 58% disagreed, 37% agreed c) Car Parking charges at country parks ( 1k) 52% of people disagreed, 43% agreed

9 As a consequence saving proposals a) and c) above have been excluded from the savings proposals. Unavoidable Commitments The Pensions Act 214 The Pensions Act 214 legislated for the single-tier reforms of state pension system, introducing a new flat rate pension system for people reaching State Pension age from April 216 onwards. The effect of the Government s move to simplify the State pension system, and introduce a single tier State pension, is that contracting out will be abolished from 6 April 216. This will have a financial impact on all public sector employers. The end of contracting out will have cost and administrative implications, the largest of which will be the need to start paying the standard rate of National Insurance contributions. This will mean an increase for each contracted-out employee of 3.4% of relevant earnings. In order to fund the move to a single-tier state pension it estimated that this will cost the Council 2.3m from 216/17. Teachers Pension Schemes From April 215 a new Teachers' Pension Scheme will come into force in England and Wales. The new scheme will provide pension benefits calculated on a career average basis. Employers Contributions to the Teachers Pension Scheme are to increase from 14.1% to 16.4% on 1st September 215. Following a consultation process the Department for Education have recently announced a further change also to come into effect from the same date. A new administration charge is to be introduced payable by Scheme employers as part of the employer contribution rate. The administration charge is to be.8%, to be added to the employer contribution rate, which will mean that the employer contribution rate is to rise to 16.48% from 1 September 215. It is estimated that these changes will cost the Council 92k per annum. Final Settlement 215/16 On the 1 December 214, The Minister for Public Services announced details of the Final Local Government Finance Settlement for In announcing the details of the Final Settlement 215/16, the Minister said that he had considered the responses to the consultation on the Provisional Settlement and did not identify any matters which required a change of approach to for the Final Settlement. Within the Settlement, Unhypothecated revenue funding for amounts to 4.125billion slightly higher than the amount announced in October 214.The funding represents a decrease of 3.4% ( 145 million) from 214/15, after adjustments Final Settlement Wrexham The Key Summary Table below shows that funding in Wrexham has decreased by 2.8% after adjusting for transfers. Wales as a whole has seen a fall of 3.4%.

10 Key Summary Table Dataset ( ) ( ) Increase ( ) % Increase Rank (% increase) AEF Overall Aggregate External Finance AEF per capita ( ) AEF adjus ted for trans fers 175,391 1, ,491 17,513 1,216 17,513-4, , % -3.7% -2.8% Capital Settlement General Capital Grant Unhypothecated Capital Support Total General Capital Funding 2,13 3,455 5,558 2,131 3,53 5, % 1.4% 1.4% Wrexham has 1,216 of funding per capita, compared to the Wales average of 1,323 and the year on year change ranks 18 th out of all the Unitary Authorities. Aggregate External Finance = Revenue Support Grant + National Non-Domestic Rates. The per capita calculation for is based on the 211- based 214 population projections. The per capita calculation for is based on the 211- based 215 population projections. The rank is based on the % difference for each authority Wrexham s Settlement reflects movements in formula indicators like population projections, pupil numbers, children in out of work families and claimant counts. See table below- Changes in Key Datasets : Changes in Key Datasets % Dataset Final Final Difference Rank Population - Projections 138,95 14,197.9% 2 Pupil Numbers - Nursery and Primary 11,641 11,97 2.3% 5 Pupil Numbers - Secondary in year groups ,255 6,128-2.% 3 Free School Meals - Primary 1,936 2,8 3.7% 1 Free School Meals - Secondary 1, % 16 Children in out of work families 5,9 6,2 5.1% 8 Total IS/ JSA/ PC claimants - Under 65 7,153 6,655-7.% 2 Total IS/ JSA/ PC claimants ,761 5, % 1 Total IS/ JSA/ PC claimants 12,941 12, % 2 SDA & DLA claimants 6,149 6,51-1.6% 4

11 MEDIUM TERM FINANCIAL PLAN 215/16 The Council is required by law to set its budget in advance of a financial year so as to enable the Council Tax to be set. The MTFP sets out the Council s strategic approach to the management of its finances and presents indicative budgets and Council Tax levels for the medium term. It covers the General Fund Revenue Account, and includes grant funded projects. The MTFP sets out the forecast of the funding from the Welsh Government for the period 215/16. It also sets out the required level of funding from Council tax. The Council s MTFP has therefore been reviewed and updated to reflect known pressures, as well as to reflect new developments. See Table 1. Table 1: 3% 3.5% 4.% 4.5% 5.% 214/15 Council Tax at band D /16 Council Tax at band D ,1.26 1,6.1 1,1.93 1,15.77 Annual Increase Additional Income Raised: Gross 255, ,75 766,84 1,21,622 Less : inflation provision for Council (52,457) (14,914) (157,371) (29,828) Tax Reduction scheme budget * Net Income Raised 23,8 46,161 68, ,794 *does not include impact of increase in caseload In developing the above MTFP the following key influences and assumptions have been considered: Table 2: Planning Assumptions for Available Resources Council Tax increase Grant Funding (All Wales Average) 215/16 216/17 217/18 3.% 3.% 3.% -2.8% -4.5% -4.5% Inflation Assumptions: Teaching and non-teaching pay award General Price increases Fuel and Energy increases Specific Grant Income 2.2% (from 1 January 215) % 2.% % 1.5% 1.5% 5.% % 2.% 2.% 5.% %

12 The following table represent the resources projections and the level of savings that will be required in future years: Table 3 Medium Term Financial Forecast 215/16 to 217/18 1. Assumed Council Tax increase 2. Tax Base 3. Council Tax Band D 4. Assumed Council Tax Income 5. RSG and NDR (incl. Council Tax Funding) Add Transfer of Grants into RSG 6. Adjusted 214/15 RSG and NDR 7. Outcome Agreement Grant 8. Total Funding Available (4+6+7) 9.Assumed (decrease) / increase in budget Less: 1.) Inflation (incl. fire service levy) Budget 214/15 3.% 52, ,812,685 Budget 215/16 3.% 52, ,67,987 Estimated Budget 216/17 3.% 52,797 1, ,186,89 Estimated Budget 217/18 3.% 52,797 1, ,811,79 175,27,71 125,96 175,332,86 1,313,25 17,512, ,839, ,511, ,458, ,12, ,25, ,323,41 ( 5,371,667) (4,338,177) (6,94,962) (5,72,156) ( 2,549,958) (4,88,63) (5,161,798) (6,81,934) 11.) Unavoidable commitments/service Pressures Capital financing costs/investment income ( 2,) ( 2,) ( 2,) Demography/ School protection ( 166,773) ( 5,) ( 5,) ( 5,) PFI ( 1,,) ( 31,) Non teachers pension ( 1,45,) ( 814,495) ( 926,932) ( 983,839) Teachers Pension ( 526,121) ( 375,81) NI consequence of final salary scheme ( 2,263,735) ceasing to contract out from April 216 Adjustment to transfers of grants 318,877 ( 73,394) Income Shortfall ( 411,) Increase in Fire Service Levy ( 57,847) ( 2,856,85) ( 2,462,51) ( 4,266,468) ( 1,653,648) 12. Add: Savings Proposals 1,777,71 11,68, (Shortfall)/Headroom (Sum (9:13)) 15,523,228 14,166,738

13 Capital Programme Despite the financial challenges the Council faces, it is still committed to supporting economic growth of the County Borough and encouraging job creation through a programme of capital investment.. The Executive Board at its meeting on the 21 October 214 (HF/52/14) reviewed the capital programme. The total capital expenditure in 214/15 is estimated to be 27,239k. This is 1,34k more than the total approved by the Executive Board at its meeting on 8 July 214 (HF/37/14). Appendix 1 provides a summary of expenditure by service, the financing of that expenditure and the variance between the revised programme and the previously approved position. The Capital Programme is fully funded by borrowing supported by the Welsh Government, grants and contributions, capital receipts and prudential borrowing 21 st Century Schools The Welsh Government aims to provide all local authorities with the opportunity to review the environment in which education is currently delivered and to work towards providing the right school in the right place through a 21 st Century Schools Programme of long term capital investment across Wales. The Council wants to ensure that a learning environment of the highest standard is experienced by pupils across the Borough and is committed to pursuing a policy of building and refurbishing schools to high environmental standards. The Head of Lifelong Learning headed a team of officers at a meeting with the Welsh Government 21 st Century Schools staff in Llandudno Junction and received confirmation that Wrexham s 21st Century Schools Band A programme had been approved. For Projects over 5million (Hafod y Wern County Primary School) this approval (and grant payments) is subject to completion of a full business cases to HM Treasury standards. Approval of projects under 5million (all other Band A projects) is subject to submission of Business Justification case. The Capital Programme includes details of the proposed spend and phasing over financial years form 215/16 to 218/19 of the five Band A 21 st Century Schools Projects see table 4 below: Table 4: Rolling Four Year Capital Programme 215/16-218/19-LifeLong Learning Planned Programme 215/16 Planned Programme 216/17 Planned Programme 217/18 Planned Programme 218/19 21 st Century Capital Programme: Hafod y Wern Primary 2,448,911 95,493 Gwenfro Primary 2,376,435 2,219,757 59,767 Penycae Primary 392,921 1,61,31 2,131,178 49,534 Flexible Learning Zone (Town Centre 1,, 319,835 Secondary) Gwersylt Primary 86,198 2,385,8 1,445,31 Total 5,218,267 5,785,758 4,895,788 1,494,844

14 HRAS The single most significant event that will influence the Council s borrowing activity in financial year is an agreement between Welsh Government and the UK Treasury that will allow the eleven Authorities in Wales with council housing stock to exit from the Housing Revenue Account Subsidy System (HRAS) and become self-financing from April 215. The legislative provisions for the above are included in the Wales Bill which is currently proceeding through the UK parliament, but given that the timescales for the Bill remain unclear the actual indebtedness limits will be set out in a voluntary agreement that all Local Housing Authorities in Wales will be required to sign; the recommendation that Wrexham County Borough Council agree to signing the agreement was passed by the Executive Board HHPPE/96/14 on 11 November 214. The agreement has two parts, firstly authorities will be required to buy their way out of the current HRA subsidy system with a payment of a one off settlement payment to the UK Treasury, and secondly Authorities will be subject to a cap on HRA debt. Currently the indicative settlement figure for Wrexham County Borough Council is 174m; this figure is reflected in both the increased CFR for the HRA and the Council s external borrowing figure. The increasing CFR also reflects the requirement within the HRA for additional borrowing to progress toward the achievement of the Welsh Quality Housing Standard. Welsh Government General Capital Funding The 215/16 final capital settlement was announced by the Welsh Government on 1 December 214.The final settlement for General Capital Funding is 5,634k which is 76k higher than the indicative allocation for 215/16 given with the final settlement for 214/15 in December 213.

15 The Councils Reserves Policy Reserves are an essential part of good financial management. They help local authorities to cope with unpredictable financial pressures and plan for future spending commitments. Sections 32 and 43 of the Local Government Finance Act 1992 require local authorities to consider the level of reserves when setting a budget requirement. Section 25 of the Local Government Act 23 requires the Head of Finance (Section 151 Officer) to report formally on the adequacy of proposed reserves when setting a budget requirement. There is no specified minimum or maximum level of reserves that an authority should hold; it is the responsibility of the Head of Finance to advise the Council about the level of reserves and to ensure that there are key protocols for their establishment and use. External auditors will confirm that there are no material uncertainties about going concern. Why councils have to hold reserves The Council may hold reserves for the following reasons: Future funding gap-the risk that due to the economic conditions, that are likely to be further real terms reductions in levels of revenue support grant and reductions in specific grants. Reduced capital receipts and planning related income. Increased demand on services which can lead to departmental overspends. Lower than expected income for example, from investments or council tax Uninsured losses from hard to predict events for example, storms, floods, terrorism. Uninsured legal liabilities for example, personal injury claims. Inability to deliver planned savings. Organisational restructuring for example, redundancy and pension costs. Long-term contract costs for example, waste management. Repair or replacement of assets for example, buildings, vehicles and IT equipment. Types of Reserves 1. General Fund Balance The Councils General Fund Balance as at 31 March 214 was 7.1million. Over the past three financial years the Council has underspent its budget by approximately 3.2million (excluding schools and HRA) with the amounts being carried forward in to General Balances. Although the General Fund Balance is not held for any specific purpose, the balance takes into account that the Council may encounter unexpected short term problems such as those listed below: Emergency Expenditure The Council needs to budget for a certain amount of emergency expenditure, because relief under the Emergency Financial Assistance Scheme (formerly the Bellwin Scheme) is paid only when expenditure goes beyond a certain level. Before being eligible for grant under the scheme the Council is required to have spent.2% of its budget requirement. Once the expenditure goes beyond this, the scheme will fund 85% of emergency expenditure above

16 the threshold. It is therefore prudent for the Council to make recurrent provision in line with the threshold set. (PVT) Insurance Cost Council Tax Collection Rate The Council may due to the economic conditions suffer a loss of income in terms of the amount of council tax receipts it collects during the year. The current assumptions (215/16) in the MTFP assume a collection rate of 98.4%. Historically this Council has collected Council tax receipts in excess of the target. However, if it failed to meet the target set it would have a shortfall in income. Pension Costs As the Council sets up different service delivery models as part of the Reshaping agenda, which may have TUPE implications; these could result in the Council having to make payments on the set up of the new arrangements. Counter party/credit risk There is always a possibility that other parties might fail to pay amounts due to the Council. Currently, the Council has a policy of not lending more than 5million to one institution. Market risk/interest rate: There is the possibility of financial loss to the Council as a result of changes in such measures as interest rate movements, in so far as that the interest rate realised is below the rate predicted at the budgets setting stage, although current rates are at a historically low.

17 2. Earmarked General Fund Reserves Earmarked reserves represent amounts that are generally built up over a period time which are earmarked for specific items of expenditure to meet known or anticipated liabilities or project costs. The Council s cash limited budgeting system contains provision for carry forward arrangements at year end. Subject to members approval, a service or department which underspends its cash limited budget can normally carry forward the underspending, up to a maximum of 5% of the department s cash limited budget, to the following year. The Council, when establishing an earmarked reserve sets out the following criteria; The reason/purpose of the reserve. How and when the reserve can be used. The procedures for the management and control of the reserve. The level of earmarked reserves is reviewed as part the annual budget preparation. Any amendments to earmarked reserves are reported to the Executive Committee. The table below details the earmarked reserves that were held by the Council as at 31 March 214. Table 5: WCBC Earmarked General Fund Reserves Actual balance at 1 April 213 Type of Reserve ' School Balances 1,695 Service Reserves 1,653 Legal Liabilities Reserve 222 Winter Maintenance Reserve 3 ITEC Reserve 518 Invest To Save Reserve 361 Local Development Plan Reserve 56 Early Voluntary Retirement Reserve (EVR) 94 Transitional EVR Reserve 443 Reshaping Services Reserve Capital Reserve 7 Repairs and Maintenance Reserve 15 Insurance Reserve 1,529 Waste Strategy Reserve 95 Pontcysyllte Aqueduct 1 IT Development 42 Pay Review 5,283 Cremation Plant Replacement Reserve 23 Section 16/278 Reserve 543 Customer Access 249 North Wales Regional Transformation 27 Office Accommodation Reserve 16 Carbon Emission Reserve 167 Miscellaneous 35 Grant Reserves 3,768 Actual balance at 1 April 214 ' 1,841 2, , 1,913 1, , ,93 18,123 18,64

18 3. Housing Revenue Account The Housing Revenue Account Balance reflects the statutory obligation to maintain a revenue account for local authority council housing provision in accordance with Part VI of the Local Government and Housing Act It contains the balance of income and expenditure as defined by the 1989 Act that is available to fund future expenditure in connection with the Council s landlord function or (where in deficit) that is required to be recovered from tenants in future years. As at 31 March 214, the balance on this account was 7.9million. It is expected that that this will XXXXX to 6million(PS). 4. Earmarked HRA Reserves The HRA earmarked capital reserve ( 3.6m) is used for HRA capital programme slippage. A substantial part of the capital programme is financed from CERA contributions from the HRA. The reserve is used to ensure HRA balances shown in the balance sheet not include any future capital expenditure commitments and therefore accurately reflect the financial position of the HRA. The Housing Repairs Reserve as at 31 March 214 was 3.6m and this will be used for XXXXXX.(PS) 5. Capital Receipts Reserves The Capital Receipts Reserve holds the proceeds from the disposal of land or other assets, which are restricted by statute from being used other than to fund new capital expenditure or to be set aside to finance historical capital expenditure. The balance as at 31 March 214 was 15.3million; this shows the resources that have yet to be applied for these purposes during the year. Capital receipts from asset sales are a valuable source of capital financing; therefore it is important to reinvest a proportion of these proceeds for either revenue return or for investment in other assets that, over time, will increase in value and form part of future years capital financing. As such, a percentage of all strategic asset capital receipts should be ear-marked for reinvestment, either for investment to produce future financing sources financing or to create a revenue income stream. 6. Capital Grants unapplied The capital grants unapplied reserve represents the amount of capital grants receivable, which are then applied to finance capital expenditure. There are generally no conditions or restrictions imposed on these; the balance as at 31 March 214 was 1.2million, Managing Risk If the council is to comply with the guidelines suggested by CIPFA s (July 214) LAAP Bulletin 99 on Local Authority Reserves and Balances which state that in order to assess the adequacy of unallocated general reserves Head of Finances should take account the strategic, operational and financial risks facing the authority Reserve and levels of reserves must be considered in the context of risk. The Council manages these risks by: Undertaking a risk assessment of each of the savings proposals put forward as part of the budget setting cycle.

19 Setting aside earmarked usable reserves to try and cope with risk i.e. to meet known or predicted liabilities- on a single and multi-year basis. Counter party/credit risk is managed by the Council by ensuring that investments are placed with Money Market funds and Banks and Building Societies of sufficiently high credit quality as set out in the Treasury Management Strategy. Deposits are not made with banks and financial institutions unless they are rated independently with a minimum rating of A-/ A3 / A- Fitch/Moody's/S&P. The Council has a policy that no more than 5million in total can be invested for a period longer than one year. The Council's Treasury Management Strategy aims to mitigate Market/Interest rate risk by setting an upper limit of 3% on external debt that can be subject to variable interest rates. Establishing a new reserve New reserves may be created at any time, but must be approved by the Executive Board. The Executive Board, following advice from the Head of Finance, must be satisfied of the following criterion: Purpose-the reason for creating the reserve should be clearly stated. Usage-there should be a clear statement of how and when the reserve can be used. Basis of transactions delegated authority for approval of expenditure from the reserve. That setting up the reserve complies with the latest version of the Code of Practice on Local Authority Accounting in the United Kingdom. Contributions to and from reserves shall be included in the Council s accounts, which are approved by the Audit Committee. That there is a process for review to ensure continuing relevance and adequacy.

20 Control of Reserves shall involve: Management and control a member of Management Team must have responsibility for the reserve, although day to day management of the reserve may be delegated to a specific officer. An annual review of the relevance and adequacy of reserves, as part of the annual budget report. Quarterly budget monitoring of the Council s overall revenue position to assess the potential extent of the use of general reserves in any year. Withdrawal from reserves must be approved by Full Council either as part of the budget process or subsequent report during the financial year.

21 Capital Programme 214/15-218/19 Appendix 1 Original Programme 214/15 Expenditure at Outturn Prices Revised Forecast 214/15 Variance (Over/-Under) Planned Programme 215/16 Planned Programme 216/17 Planned Programme 217/18 Planned Programme 218/19 Corporate Schemes 4,5,6 Assets & Economic Development 2,936,853 Lifelong Learning 7,215,382 Community Well-being & Development 57,389 Environment 5,392,851 Adult Social Care 25, Private Sector Housing & Public Protection 5,851,718 To be Allocated 5,25,49 3,368,547 7,5,369 57,389 5,595,694 35, 5,116,74 749, , ,987 22,843 1, -735,13 3,261,747 7,87,743 1,544,29 25, 7,887,526 1,328,146 6,265,758 1,425, 25, 6,592,176 58, 5, 575, 5,375,788 1,325, 6, 1,33, 1,35, 1,974,844 1,375, 25, 1,4, Total Capital Programme 26,24,253 27,238,752 1,34,5 2,31,225 15,919,8 9,228,788 6,34,844 Financing Borrowing Unhypothecated Supported Borrowing 3,455, 3,455, 3,455, 3,42, 3,498, 3,472,422 Unsupported Borrowing 2,9, 2,919,945 19,945 WG Invest to Save Schemes 272, 272, Salix 324,85 331,787 7,73 Local Government Borrowing Initiative 3,78,152 3,78,152 1,262, ,328 Total Borrowing 1,659,236 1,686,884 27,648 4,717,988 3,981,328 3,498, 3,472,422

22 Grants & Contributions Original Revised Variance Planned Planned Planned Planned Programme Forecast (Over/-Under) Programme Programme Programme Programme 214/15 214/15 215/16 216/17 217/18 218/19 General Capital Grant 2,13, 2,13, 2,13, 2,85, 2,85, 2,85, Transport Grant 1,232,575 1,232,575 SBIG/21st Century Schools programme 1,443,175 1,443,175 1,354,477 2,331,551 2,477, ,422 Vibrant and Viable Places Regeneration Grant 1,496,2 1,456,2-4, 4,944,2 4,153,6 Flying Start Grant 32,367 32,367 Heritage Lottery Fund 247,61 247,61 215,8 49,746 ERDF/WEFO 155,46 155,46 Other WG grants 253, , ,698 Housing Renewal Area Grant 851, , , ,926 Other Contributions 2,32,584 2,632, , , ,5 Total Grants & Contributions 1,136,722 1,769, ,276 1,225,945 1,161,873 4,562,635 2,832,422 Usable Capital Receipts Applied 5,48,295 5,781, ,576 5,87,292 1,775,879 1,168,153 Total 26,24,253 27,238,752 1,34,5 2,31,225 15,919,8 9,228,788 6,34,844 Shortfall / Surplus in Funding ( - ) Total Capital Programme 26,24,253 27,238,752 1,34,5 2,31,225 15,919,8 9,228,788 6,34,844