Agenda item

            The Director of Finance and Resources submitted for the Committee’s consideration the undernoted report:

 

“Relevant Background Information and Purpose of Report

 

      Members will recall that at the November meeting of the Strategic Policy and Resources Committee, the following process was agreed for setting the district rate and agreeing the estimates for 2010/11.

 

 

The purpose of this report is to:

 

·         update Members on Department Committees discussions on the revenue estimates;

·         agree the domestic and business district rate for 2010/11;

·         agree the key messages associated with the setting of the rate; and,

·         agree a way forward in terms of forward financial planning in the organisation.

 

Key Issues

 

      A. Rates Update

 

      The table below summarises the decisions already made by the Strategic Policy and Resources Committee in relation to the estimates and the district rate for 2010/11 at its meetings on 11 December 2009 and 8 January 2010.

 

(i) Departmental Estimates

 

      At the Strategic Policy and Resources Committee on 8 January Members agreed the cash limits for committees as follows:

 

            Strategic Policy and Resources               £28,501,263

            Health and Environmental Services        £43,057,644

            Parks and Leisure                                      £30,792,206

            Development                                              £22,743,507

            Town Planning                                                   £27,710

 

      The decision to agree the cash limits also included approval for efficiencies for 2010/11 totalling £2,001,969 and led to an increase in the district rate of some 0.59% arising from departmental estimates.

 

      Since the last Strategic and Policy Resources Committee, each department committee has considered and agreed its revenue estimates in terms of the above cash limits.

 

      (ii) City Investment Strategy

 

      At the Strategic Policy and Resources Committee on 11 December 2009, Members agreed to an additional £1m of funding for the City Investment Strategy.

 

      (iii) Current Capital Programme

 

      At the Strategic Policy and Resources Committee on 8 January 2010, Members agreed to increase capital financing by £1.67m in order to cover current capital programme commitments. In addition, it was agreed on 11 December 2009 that a maximum of £1.0m of the investment in reserves may be redeployed to finance new capital commitments, when capital plans are agreed.

 

      (iv) Reserves

 

      At the Strategic Policy and Resources Committee on 11 December 2009, Members agreed to set aside £2.5m as a contribution from the rates to reserves along with a further £2m from the voluntary redundancy exercise and the efficiency programme, with a maximum of £1m of this to be potentially invested in the capital programme when capital plans are agreed.

 

      (v) Thematic Budget

 

      The allocation of the thematic budget for 2010/11 has been agreed by Members as follows:

 

            Older People                                                      £82,000

            Health & Well Being                                        £100,000

            Safer City                                                          £140,000

            Better Care for the Environment                    £78,000

            Children and Young People                          £100,000

 

      B. Setting of the District Rate 2010/11

 

      Based on the decisions outlined above Members are requested to agree a district rate increase of 7.81% for 2010/11. Based on the Estimated Penny Rate Product of £4,888,730 provided by LPS this means that the domestic district rate for 2010/11 is recommended to be 0.2929p and the non-domestic rate to be 25.5849p.

 

      The table below summarises the impact of this increase on ratepayers by property type.

 

Implications For Ratepayers

 

PROPERTY		Ave Capital Value	Increase in
		/NAV	Rate Bill
Domestic Properties		£	£
Terrace House		86,425	18.32
3-Bed Semi-Detached House		132,173	28.02
4-Bed Detached House		293,843	62.29
Apartment		83,379	17.68
Average Capital Value		115,000	24.38
Non-Domestic Properties
Office Property		12,728	235.47
Retail Property		10,247	189.57

 

      C. Key Messages

 

      The Head of Corporate Communications has drafted a set of key messages to accompany the rate announcement. He recommends that it is vital that there are no more than four overall key messages that Members should focus on.

 

      It is recommended that these should be:

 

      Overall position

 

      The overall effect on rates bills this year for our citizens will be an increase of 3.35 per cent – which works out at around £2 per month (£24) per year for the average domestic ratepayer.

 

      The council’s district rate increase is 7.81 per cent but as the regional rate has remained at zero the overall effect is 3.35 per cent.

 

      Efficiency

 

      BelfastCity Council recognises that every citizen and business is facing huge financial pressures given the current economic climate and we remain committed to providing value for money services.

 

      To that end, we have achieved efficiencies of £7 million by March this year and have set a target for a further £2 million by the end of 2010/11, bringing the total to £9 million. Further efficiencies will continue to be identified in future years.

 

      These efficiencies have been achieved without affecting frontline services, which we continue to maintain and improve

 

      Reserves

 

      The major part of the increase (5.3 per cent) is due to the need to build up reserves in readiness for the Local Government Finance Bill which will formalise the need to maintain reserves. We are also responding to the advice of the local government auditor who has indicated that our reserves should be higher compared to the forecasted level of just over £4m by the end of March 2010.

 

      Building up reserves will place the council on a much sounder financial footing to deal with future economic uncertainties including any downturn in rates income, unplanned expenditure and implications of the review of local government.

 

      Investment in the City

 

      We recognise times are hard for in these economically stringent times but believe people want investment in facilities and services to be maintained and improved.

 

      We are developing a City Investment Fund of £30 million to invest across the city in new landmark facilities. We are currently investing around £13m in the Titanic Signature Project, the Connswater Greenway Project and the new Lyric and MAC Theatres. This has assisted towards a total investment of £153m in these projects.

 

      Further details of the key messages are provided at Appendix One.

 

      D. Way Forward

 

      The current rate setting process has been challenging for both Members and officers as the organisation has to deal with operating in a difficult financial environment. The impact of the economic downturn will continue to hit hard and further reductions in public sector spending are inevitable because of the need to rebalance national debt. This means that BelfastCity Council must continue to improve both its short term and medium term financial planning. The following areas are of particular importance:

 

·         Maximise collectable rates income – a report will be brought to the Strategic Policy and Resources Committee in March which will recommend a number of key performance indicators to be used by Members to better hold LPS to account for their performance based on the Memorandum of Understanding which has already been agreed between the two organisations.

 

·         Efficiency – the organisation needs to further develop its approach to efficiency which both reduces costs and improves value for money in the delivery of both back office and front line services. This will require tough decisions to be made about changing how the organisation works and developing collaborative efficiency projects with other areas of the public sector in Belfast. Further engagement is planned with the Budget and Transformation Panel on the efficiency programme and a more detailed report is planned to be presented to the Strategic Policy and Resources Committee in March.

 

·         Further integrate financial planning with business planning - so that Members can make more informed decisions about the allocation of resources to priorities.

 

·         Future financial planning – given the economic environment it is vital that Belfast City Council has a sound medium term financial plan and the ability to forecast future spending commitments and anticipated income streams. Work on future financial planning is intended to be carried out with the Budget and Transformation Panel in the first instance including consideration of a target for future rates increases.

 

Recommendations

 

      Members are requested to note the contents of the report and agree:

 

1.      A district rate increase of 7.81% for 2010/11. Based on the Estimated Penny Rate Product of £4,888,730 provided by LPS this means that the domestic district rate for 2010/11 is recommended to be 0.2929p and the non-domestic rate to be 25.5849p.

 

2.      The key messages associated with the rates increase as outlined in section C and detailed in Appendix One of this report.

 

3.      The proposed way forward and the planned engagement with the Budget and Transformation Panel and Strategic Policy and Resources Committee.”

 

            The Committee discussed the need for the ongoing challenge of Departmental budgets and greater clarity regarding the prioritisation of resources to outcomes and noted that the process to consider the Council’s expenditure for future financial years had already commenced with a number of meetings of the Budget and Transformation Panel having been arranged.

 

Accordingly, It was

 

      Resolved – That the Council be recommended to approve the expenditure contained within the Departmental Estimates and further to this that the following District Rate be fixed to meet the estimated expenditure of the several Committee’s of the Council for the financial year commencing 1st April, 2010:

 

      Non-Domestic Rate          -           25.5849 pence

      Domestic Rate                  -           0.2929 pence

 

            The Committee approved also the key messages associated with the rates increase and the proposed way forward in relation to the rate setting process.