Appendix 2

Financial Plan Review: Technical Annex

This paper provides additional background information on the Council's Financial Plan.

1. Summary of "Base Plan"

2. Financial Plan Pressures - current working list (these have not been "agreed")

3. Use & Reconciliation of General Fund balances - position statement

4. Various scenarios of level of grant versus Council Tax at different spending pressure levels - to illustrate the range of uncertainty affecting the Council

Financial Plan Pressures

We are aware of significant potential spending pressures for next year and beyond, including:

· Cost pressures, including pay, staff pensions and residential care fees - in excess of £5 million

Residential nursing fees may rise following an independent review - a small increase of £20 a week will add £1m to the budget.

The recently agreed APTC pay award will add another £750k to forecast costs and it is also expected that teachers pay will add another £500k more to current budgets.

The contribution that the authority will be expected to make to teachers pensions (as set by a Government actuary) is expected to rise by £2.5m.

Any increase in the Fire Pay award in excess of the 3% allowed in the plan and not funded by government grant will add to this total.

· Costs arising from government legislation and regulations - around £2.5 million

The increase in employers' National Insurance contributions set by the Chancellor in his last budget will cost £400k

The impact of potential penalties due to delayed discharge of patients from hospital could mean penalties of up to £500,000..

The impact of fairer charging regulations from the government may lead to a loss of income from charges for home care by £160k

New regulations such as health and safety in cemeteries, the introduction of processing of tax credits by local authorities, asset management planning requirements, land registration requirements, changes to concessionary fares regulations, requirements to change political structures, e government, higher set standards may all increase costs for every local authority.

· Lost income from government grants - around £2.5 million

There are proposals for the transfer of many social services functions both to and away from Local Authorities, such as the transfer of free nursing care. A 10% loss on transfer would be a loss of £600k, and a larger variation is possible.

Withdrawal and/or transfer of grant support from the government to the SSA for education, such as infant class sizes and post 16-budget support grant. Potential loss of £750k.

· Demographic pressures, economic factors and internal cost pressures - around £1.5 million

Increasing home care is required because of our ageing population £400k.

Increasing numbers of pupils in schools and pupils requiring statements of special educational needs £200k.

Falling interest rates mean we earn less interest on cash we have in the bank. This interest subsidises service spending £200k.

Growth in income on our commercial property is dependent on rent reviews and is currently increasing at a rate of less than inflation £500k.

· Internal Spending Pressures

There are a variety of internal spending pressures, the most significant of which are:

Pressures on office accommodation budgets due to delayed office moves, rising staff numbers - up to £400k

Listed building fee income - no legislative power to charge £100k

Use and Reconciliation of General Fund Balances