Revenue Budget 2006/07 - Executive Summary

SPECIAL MEETING OF SHEFFIELD CITY COUNCIL – 3RD MARCH 2006

REVENUE BUDGET 2006/07

EXECUTIVE SUMMARY

1. The aim of the Council’s Financial Strategy is to “provide a medium term framework which will support the City Council in building a robust, stable and integrated financial plan over the coming years, where expenditure and ways of providing services are constructively challenged and monitored to ensure that Council business is undertaken in the most effective and efficient way. The Strategy recognises and identifies the financial risks facing the Council and actively seeks to manage and mitigate them”.

2. The Council has been - and still is – tackling a huge change agenda from a very tight financial position. Previous capital spending decisions have resulted in a high level of interest payments. In addition, the Council historically receives a lower level of Government Revenue Support Grant for our mainstream services than similar metropolitan councils. However, the Council’s Financial Strategy has led to significant progress in improving the Council’s financial stability.

3. The 2006/07 budget has been more difficult than the last few years. Government funding for non-school services has increased at a much lower rate (2.2%) than last year. Above inflation cost increases in our services outstrip this grant increase - energy and fuel costs have increased massively and service specific demand and cost pressures, particularly in adult and children's social care services, have been well above 2%. This has meant that the level of efficiencies and savings that have had to be found this year has been greater and the scope to increase investment in priority services more limited.

4. Despite this, the budget does contain over extra £5.6 million to meet to cover cost pressures over 2%, new duties and demand pressures in key services. Savings elsewhere in the budget have funded this. This has been achieved without significant reductions in key service areas. Balancing the budget has also required a council tax rise for city council services of 4.6% (lower than last year’s 4.75%)

5. The key points in the 2006/07 budget are:

an increase in the schools budget of 5.7% (equating to a 7% per pupil increase);
an additional £3.1m above inflation in Neighbourhoods and Community Care Directorate services;
an additional £1.5m above inflation in Children’s and Young Peoples Directorate services;
an additional £1.1m above inflation in Development Environment and Leisure Directorate services;
a further £500k for the further roll out of the “cleaner, greener, safer” initiative to improve street cleaning and street scene ;
£400k to fund the “Safer Neighbourhood” policing teams;
support for Sheffield International Venues to invest in the city’s sporting facilities;
a capital investment programme of over £1.1billion over the next 3 years, including investment in improving council housing, regeneration of the city centre and neighbourhoods, new and refurbished schools through both the Private Finance Initiative and direct investment, some highways improvements (including continuation of the £50million plus Inner Relief Road) and investment in parks and environmental improvements.

6. The budget has also been made difficult by the financial irregularities discovered in the South Yorkshire Trading Standards Service. The impact of this will be met from reserves, avoiding an impact on services or the council tax. This will require us to review our finances during the final months of 2005/06 to ensure that we can replenish reserves to a prudent level.

7. Despite this problem, the Council’s financial position, although always challenging, is still much improved. This year we scored highly in the Audit Commission’s external audit assessment of our ‘use of resources’. This year’s management letter from the external audit said, “…the Council currently achieves good value for money and understands the cost implications when making decisions as well as considering the impact on users. Members prioritise spending in line with corporate priorities and monitor performance to ensure improved services are delivered.”