To consider the update report “Strategic and Resource Planning 2015-16” presented to Cabinet on 23^rd July 2014 (contained in the OSC agenda pack for information) and to receive an oral presentation from Mr Chris Holme, Acting Corporate Director Resources, with a focus on progress in 2015/16, and future challenges/opportunities.

Chris Holme (Acting Corporate Director Resources):

·           Introduced the report, which provided information on:

• 2014/15 Budget context.
• A review of assumptions on 2015/16 LBTH Budget position.
• Revision of the current Strategic Plan to reflect the Budget set in March and manifesto commitments of the Mayor elected in May.
• Current Government funding context and associated work to update MTFP to 2018/19.

·           Also gave a detailed presentation (PowerPoint slides Tabled, a copy of which would be interleaved with the minutes), which focused on the following points:

o   National context and Key challenges: Continuing Government austerity, macro-economic factors, ongoing welfare reform, demographic and Legislative driven demand for services, significant capital investment needs.

o   Implications for LBTH: £28million of savings 2015/16, Significant Budget gaps in 2016/17, 2017/18 & 2018/19 totalling £120-140million over the MTFP.

o   Testing LBTH MTFP assumptions particularly on RSG reductions

o   Progress to date on 2015/16 savings

o   Future options: Work to be undertaken to identify future savings.

Councillor Alibor Choudhury, Cabinet Member for Resources, was also in attendance for this item.

A discussion followed which focused on clarification being sought and given on the following points:-

·           The solutions being identified by Officers and Cabinet Member for Resources to the significant Budget challenges facing the Authority? Following a clear mandate to identify savings that met existing requirements of the Executive for leaner service delivery, smarter working, better asset usage, income optimisation and improved procurement, 100 saving options had been identified which could deliver savings of £32million for 2015/16. These would be the subject of consultation in the autumn and a report for Cabinet consideration in November setting out the core savings options, together with the outcome of consultation and equality impact assessment. A further report in January to set out the other savings options. Officers were confident the November report would enable delivery of £20million savings, a healthy reserve balance and a further £14million to be delivered in 2016/17. Beyond that transformational change was required and this was currently the subject of much Officer consideration with a strategic services review to follow examining all services in context of:

o   Harnessing economic growth and alternative investment

o   Shifting focus more to preventative services

o   Redesign processes to optimise technical advances and continue to reduce transaction costs

o   Alternative delivery models where clear savings are achievable without impacting service provision

o   Maximising the use of assets and identifying opportunities for disposal

o   Optimising income generation

o   Workforce efficiency through both increased productivity and further consolidation 

It was important to emphasise the Administration’s priorities in considering the Budget: providing support to those impacted by welfare reform, young people the elderly and vulnerable who were struggling to cope with Government austerity. There were a range of savings options and it was important to consult with anyone impacted by these; and the November Cabinet report would set out the outcome together with a direction of travel to meeting savings requirements.

·           Whether the 100 savings options to deliver £32million of savings would be the subject of consultation in the autumn. The impact on service users would need to be comprehensively assessed, however some non-impacting proposals could be presented to Cabinet without consultation Eg:

o  Significant additional income from a review of discounts including that for students accommodation, and an audit of properties was underway for this. Neighbouring authorities generated an additional £500k from this and LBTH could deliver this for 5000 students.

o  The Authority was no longer just the collection agent for NNDR and could optimise income from this; a re-assessment of rateable properties was underway.

·           Consideration that the Authority was now in the year after investment in prevention to yield savings should have taken place. Invest to save should take place when more funding was available to yield savings when less funding was available. The emphasis on prevention has always existed and this was just being stepped up in an effort to further reduce demand on services.

·           Consideration that consultation with service users on budget proposals did not preclude the necessity for a political dialogue with political groups not part of the Administration, to discuss the proposals and the scale of Budget challenges. The Administration intended to have a Council-wide cross party seminar setting out the Administration’s position and what action it was taking to address Budget challenges. The Cabinet Member for Resources would be pleased to engage with other political groups going forward; and in particular hold a broader discussion on larger issues with the Leader of the Labour Group and Shadow Lead Member for Resources with a view to minimising the impact on services for local residents.

·           How did Tower Hamlets compare with neighbouring boroughs in terms of Budgetary circumstances and related approach? All other London boroughs were working to similar assumptions for Budget planning. Those with the highest levels of RSG would be those facing the largest savings requirements. LBTH was in similar circumstances to Newham and Hackney but had higher levels of economic growth and reserves to mitigate the impact.

·           With regard to NNDR it appeared Officers were looking for more people to charge, when a more positive approach would be to stimulate economic growth i.e. invest to grow the rateable base. There was an Economic Growth Officer Group looking at ways to reassess the model for/ increase the economic base. However it was the Planning Function which determined the capacity for commercial and housing growth. The Administration intended that town centres should be developed to expand business capacity. It was hoped the Whitechapel Vision would deliver in this field too.

·           Whether the Employment Options Scheme and workforce efficiency/ delayering referred to would result in employee redundancies, and what budget saving might be achieved. A similar initiative was underway to the Voluntary Redundancy process undertaken in 2010. All staff had been written to regarding consideration of options for flexible working, flexible retirement and voluntary redundancy. This was necessary to identify options to reduce the workforce and achieve cost effectiveness/ greater productivity, without an adverse impact on frontline services. The outcome would be a reduction in workforce headcount but it was hoped deletion of vacancies and the uptake of the above options could avoid compulsory redundancies. In approximate terms the loss of 100 people would save £3.5million gross.

·           Given the Administration’s priorities in considering the Budget, to support those impacted by welfare reform, young people the elderly and vulnerable, were there any services/ teams of staff to be protected from redundancies or other funding reductions? There was a legal obligation to write to all staff regarding voluntary redundancy and flexible retirement or working options. It was also important to gauge the feelings of impacted staff as a service might be able to maintain productivity with fewer staff.  However the Administration would endeavour to protect services for these cohorts of people and also endeavour to ensure services impacted were not those delivering to the public.

·           Consideration that given the functions of the HR Committee, it should be informed of savings expectations to impact on staff, so it could ensure a fair and proper process. The process of gauging staff views was also a matter for it to oversee. This appeared to be a further example of decisions being made without proper accountability. Clarification sought as to the Budget outcomes the Executive expected from this process. The process was not secret and the HOPS was managing it. The Cabinet Member for Resources had not set a budget parameter on savings to be delivered from the Employment Options scheme, but the Administration had been clear it would prefer savings which did not impact on services. Without staff consultation and consideration of required staffing levels for each service, it was inappropriate to set such targets.

·           What was the deadline for staff responses?  This had already passed and service heads and service managers were currently examining the responses and evaluating which reductions could be sustained without impacting service provision. Proposals would be drawn up for Staffside consultation by end of September and where services were impacted EQIAs undertaken. Difficult decisions would be needed before November to allow notification of staff redundancy, if any, by December and to achieve savings by end of March.

·           When would the Mayor’s initial tranche of Budget proposals be published; also when and how was it intended that the OSC be consulted? Initial tranche of Budget proposals were likely to be presented to OSC before November, or once the Cabinet decisions were made in accordance with the normal governance requirements. It was hoped all Members would be involved as part of the Budget consultation.

·           The Chair commented that it was preferable for the OSC to be consulted in advance of Cabinet decisions being made and proposed accordingly that the Budget proposals be submitted to the OSC on 30 September, as there was no meeting in October. The Cabinet Member for Resources undertook to endeavour to work to this timescale, although he couldn’t guarantee that it would be met; however the OSC would be consulted on the initial tranche of Budget proposals before Cabinet considered them in November.

The Chair Moved and it was:-

Resolved

That the contents of the report and presentation be noted.

Action by:

Chris Holme (Acting Corporate Director Resources)