Aberdeen City Council set to discuss 2016-17 budgets

17 February 2016

Aberdeen City Council today publishes its General Fund Revenue budget for 2016-17 alongside the Non-Housing Capital Programme for 2016-21. The proposals will be discussed at a meeting of the Full Council on 25 February 2016.

The full report can be accessed from the following link:-

http://committees.aberdeencity.gov.uk/ieListDocuments.aspx?CId=122&MId=3801&Ver=4

Communications staff are available to respond to queries of a factual nature.

The report recommends that Council sets the revenue budget for 2016-17 as well as approving the £0.5billion Non-Housing Capital programme and recommends elected members consider:

agreeing the conditions of the financial settlement from the Scottish Government (in so far it is within the council's legal powers to do so) including freezing Council Tax for a ninth year;

transferring funds to the tourism body Visit Aberdeenshire;

approving the use of reserves which includes a Risk Fund and un-earmarked reserves;

approving funding for the new Integration Joint Board delivering health and social care services in the city; and

that a report is prepared for the Finance Policy and Resources committee on the financial implications of the projects agreed in the City Region Deal Heads of Terms.

The budget is recommended for approval by Council in the context of the Scottish Government's financial settlement which was published on 16 December 2015.

It should be noted that the financial settlement provides Local Authorities with details of the revenue and capital funding for 2016-17 only and further information is unlikely to be available until after the next Comprehensive Spending Review later this year.

The settlement details for the Council show a reduction in General Revenue Grant of £8.7 million from the 2015/16 figure. The value of the Non Distributed Rates (NDR) received from the Scottish Government is also reduced by £1.6 million bringing the total reduction in funding from the Scottish Government to just over £10.3 million which is partly offset through the increased council tax base by £2.4 million.

Deficit and savings

Combining this net movement with the reduction in funding mentioned in paragraph 3.3 of the report, it can be seen that the identified position for 2016/17 is a shortfall, or deficit, in the budget of £2.403 million.

A number of possible options were developed in November 2015 to allow elected members to determine how they would wish to meet the shortfall.The total savings identified are in excess of the required shortfall to provide options on how the funding gap will be met and therefore not all options have to be implemented.

Capital

Given that Council has not received any indication on the likely level of funding beyond 2016/17, the Non-Housing Capital Programme has broadly been held within the limits set out in 2015/16 for future years until such time as further information is available and it is felt prudent to examine the affordability of any longer term capital planning.

In setting the General Fund budget, it is assumed that a gross funding envelope of approximately £516million will be provided for capital investment over the life of the 5 Year Business Plan.The £0.5bn capital programme includes funding for projects such as the new AECC and the three council Energy from Waste facility.

A number of projects are entering the final construction phase and will be operational this year.These include:-

•The Museum Collection Centre, providing new display and storage areas for the Council's art collections;

•The Third Don Crossing, connecting Bridge of Don and Tillydrone, and creating a key piece of city transport infrastructure in support of the Aberdeen Western Peripheral Route;

•The extension and refurbishment of Greenbrae Primary for the creation of additional nursery and primary school places within the city;

•Completion of the new Rosehill House, creating a one-stop learning disability facility, and bringing together Council and health staff in support of the integrated social care agenda.

Projects which are expected to make significant progress in construction over the next financial year include:

•The Aberdeen Western Peripheral Route;

•The A96 Park & Choose facility and Dyce Drive link road, in support of the new transport network created by the AWPR;

•The new Altens East waste complex and depot, in support of the Council's Zero Waste Strategy, in preparation for the ban on sending waste to landfill in 2021;

•The redevelopment of the Art Gallery, creating additional gallery space to enhance the cultural heart of Aberdeen

•The new Centre of Excellence for provision of a single integrated "all through" school for children with severe and additional support needs.

Reserves

As reported and agreed at Finance & Resources Committee on 4 October 2012, the Council has continued to set aside £11.3million as non-earmarked General Fund reserves, with the express intention of ensuring that it can deal with unexpected and unplanned expenditure should the need arise.

In line with this approved strategy officers continue to monitor and examine the opportunities and need for increasing the level of working balances.The report also shows at Appendix 4 several options for the removal of earmarked reserves as well as increasing the Risk Fund to provide a mitigation mechanism should any unforeseen circumstances arise in year.

ENDS

Notes to editors

1.In preparing an initial draft budget position for 2016/17, the Council's Corporate Management Team (CMT) began with an analysis of the 2015/16 budgetary position. This review analysed and remodelled the cost pressures which had already been identified for 2016/17, such as contractual obligations and staffing costs. The process also identified new growth which would be required during 2016/17, such as changes to National Insurance contracting out arrangements. The results of this in-depth review are shown in Appendix 1.

2.The report outlines that the Council continues to operate with a small underspend for the year, currently estimated to be around £3.2million, which represents approximately 0.4% of the gross budget for the year.This is considerably lower than previous years but is in line with expectations as services have been absorbing cost pressures within existing budgets over recent years.