Treasurer's report and financial plan for 2009-2011


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Treasurer's report and financial plan for 2009-2011

  1. 1. LIVERPOOL CITY COUNCIL Medium Term Financial Plan (MTFP) 2009/10 – 2011/12 (CT/04/09) Report of the City Treasurer (Robert Corbett) Robert Corbett (City Treasurer) Tel: 225 2347 1
  2. 2. MEDIUM TERM FINANCIAL PLAN 2009/10 – 2011/12 CONTENTS PAGE Purpose and Scope 6 Council Vision and Priorities 7 New Governance and Management Arrangements 8 The Medium Term Financial Plan Process 8 The Financial Background 9 • The Recession and Pressures on Local Authority Finances 9 • Population Trends 12 • Deprivation and Specific Grants 15 • Government General Grant Support 16 • Efficiency Guidelines 17 • Financial Standing 18 Budget 2009/10 and Future Financial Forecasts 19 Financial Strategy 24 • Council Tax Strategy 24 • Council Spending 25 • Value for Money Service Reviews 26 • Removal of Grant Floor Protection 27 Efficiency Agenda 27 The Capital Plan 28 Challenges and Risks 29 Contingencies, General Balances and Reserves 30 Conclusion 31 Abbreviations 32 Annexes A Corporate Service and Financial Planning Cycle B. Budget Framework 2009/10 – 2011/12 C. Financial Summary Model 2009/10 – 2013/14 D. VFM Service Review Programme E. Government Grants F. Reserves G. MTFP Risks 2
  3. 3. Appendices Appendix 1 Capital Strategy Appendix 2 Asset Management Plan Appendix 3 Capital Programme Appendix 4 Treasury Management Strategy 3
  4. 4. MEDIUM TERM FINANCIAL PLAN (MTFP) EXECUTIVE SUMMARY • The MTFP for 2009/10 to 2011/12 has been undertaken against a background of the following significant issues: o A world wide recession. o Continuing decline in the city’s population. o Continuing comparative deprivation and level of specific grants. o Continuing reduction in the level of government grant support through the Total Formula Grant (TFG) arrangements. o A requirement to achieve 3% cash related efficiencies each year. o Improving the council’s financial standing. • The Council’s 2009/10 Budget and financial forecasts for 2010/11 and 2011/12 provide for net revenue spending of £482.1m, increasing to £533.4m. The key financial features for 2009/10 are: o £13.7m in efficiency savings o £4.8m in growth items o £4.4m in service reductions • The and forecasts also contain provision for a range of initiatives to further the achievement of the Council’s aims and priorities which are summarised in this MTFP. • Spending on services is forecast to increase by on average 3.5% per year, before taking into account efficiency savings. • With the government likely to continue to reduce Total Formula Grant support the council will maintain council tax increases at 3.9% to maintain overall available funding of net expenditure at around 2% increase per year. • With spending increasing at 3.5% and available funding increasing at only 2% there is a fundamental financing gap that the Council needs a strategy to address. • Part of that financing gap can be addressed by using approximately half of the required annual 3% efficiency savings, however there is a net gap remaining in future years. • This net gap arises because the Council’s core expenditure has regularly exceeded the available funding from government grant and council tax income. As a result, the Council has by necessity relied upon a range of special finance measures, usually a series of one off arrangements, to fund core ongoing spending. Although significant improvement has remained in recent years to reduce the reliance on such measures, the 2009/10 budget did rely upon special sources of funding totalling £9.5m. This means that the Council needs to reduce its core spending by £5.8m in 2010/11 and by a further and additional £3.7m in 2011/12. 4
  5. 5. • To achieve the required efficiency savings and the required reductions in core spending, the Council has developed a service efficiency programme and a service delivery review programme. These reviews will be undertaken during 2009/10 to produce the savings required in future years. • It is considered that the government will at some point remove the grant floor protection arrangements with effect from either 2014/15 (likely) or with effect from 2011/12 (possible). The effect would be a reduction in grant support of either £8m or £6.6m respectively that will require the Council to reduce its core base level of spending accordingly. The Council will plan on the basis of the considered likely implementation as it will allow authorities, like Liverpool, a 3 year planning period to reduce its spending level. • The Council will deliver 3% cash related efficiency savings each year. Half will be used to contribute to reducing core levels of spending and the other half will be used to reinvest in services to allow the Council to achieve its Aims and Priorities. • Planned capital investment as summarised in the Capital Programme is directed towards the achievement of the Council’s Aims and Priorities • In respect of local sources of capital finance: o The Council will continue to only provide for revenue contributions in relation to specific initiatives where it is prudent and affordable. o The Council will continue to seek best value from the disposal of its assets and manage spending within available resources, especially during the period of recession and downturn in the value of properties. • Since 2004 when the concept of unsupported borrowing was instigated, the Council has undertaken or committed in total £209.7m in unsupported borrowing towards a range of regeneration initiatives. The ongoing revenue costs of such borrowing will be approximately £11m each year which represents approximately 6% of council tax income. The future potential use of additional unsupported borrowing will therefore be carefully considered against the principles of being prudent, affordable and sustainable and future initiatives will need to demonstrate clearly the value for money benefits. • The Budget for 2009/10 provides for the level of balances and reserves recommended by the City Treasurer and the MTFP provides for further increases to provide prudent cover for operational risks and uncertainties. • The primary future uncertainties relating to this MTFP are that: o The recession has a more significant impact upon the Council’s financial position than anticipated. o The government makes decisions as part of the Comprehensive Spending Review for 2010 that results in material reductions in grant support above those anticipated in this review. 5
  6. 6. MEDIUM TERM FINANCIAL PLAN (MTFP) PURPOSE AND SCOPE The MTFP is a central strand in the Council’s Corporate Planning Framework. It therefore closely supports the Sustainable Communities Strategy, Local Area Agreement and the Council’s Corporate Plan. The MTFP is intended to provide a robust, consistent and sustainable approach to establishing and maintaining a stable and prudent financial basis on which improvement and transformation of the Council’s services can progress. The MTFP is the process which links the Council’s vision and priorities with its financial budgets and shows how the Council’s finances will be structured and managed to ensure that this fits with, and supports, the priorities of the Council and its partners. Each year there is the short-term requirement to prepare an annual budget and set the Council Tax. The achievement of the long-term Council’s objectives however, with the planning of new initiatives, capital developments and the allocation of resources in response to changing service needs, requires service and financial planning to be undertaken over more than one year. The MTFP therefore looks to take into account the longer term implications of the following: • forecast the impact of demographic and other changes on service demands; • model alternative policies or proposals; • forecast future resource levels on both revenue and capital; • relate service demands and priorities to likely resource availability; • provide a framework within which priorities can be determined; • provide a financial framework within which business planning can proceed effectively. In addition to the council’s annual budget the following are the major strategy documents in support of the MTFP – all of which are identified as appendices: • Capital Strategy • Corporate Asset Management Plan • Capital Programme Summary • Treasury Management Strategy 6
  7. 7. COUNCIL VISION AND PRIORITIES The Council’s long-term aims and priorities are embodied in the Council’s Corporate Plan and are aligned with the Liverpool Area Agreement and the Sustainable Communities Strategy, illustrating the Council’s strong commitment to working with partners. The Council’s long-term aims and priorities are: Grow the City's Economy • Make Liverpool a first choice for investment and growth by working with the private, not for profit and public sectors quickly and effectively with an emphasis on quality of infrastructure. • Promote enterprise, attract investment through developing the city's co-ordination and offer across the city region to provide scale, connectivity and sustainability of its economy. • Increase business density and gross value added (GVA) beyond national levels for city regions to deliver an environment which provides opportunity, employment and well-being for our citizens, business and investors. • Exploit the city's wider cultural advantage to attract and retain visitors, workers and residents. Empower Our Residents • Ensure safeguarding and inclusion of the most needy and excluded groups in the city, providing equality and real opportunity for improvement and enhanced quality of life. • Confront barriers to employment and training through lack of access, deprivation, discrimination and poor health to ensure provision of a highly skilled workforce. • Developing first rate education and training from early years and further position Liverpool as a prime destination for postgraduate retention. Develop Our Communities • Increase peoples' sense of influence in decisions affecting their lives and communities through an open, fair and accountable neighbourhood-driven processes. • Challenge crime and antisocial behaviour safeguarding young people from becoming perpetrators or victims. • Provide sustainable communities through access to decent homes and best practice in environment management including, recycling, street cleansing and environmental enforcement against dereliction and environmental detractors. The Council’s medium term financial planning is driven by these aims and priorities as expressed in corporate and business plans. In addition, greater integration of business and financial planning across both revenue and capital budgets provides for the optimum allocation of available resources to deliver corporate priorities. 7
  8. 8. NEW GOVERNANCE AND MANAGEMENT ARRANGEMENTS To ensure that the efforts of the Council are focused on the delivery of its corporate aims and priorities, governance and management arrangements have been reshaped so that: • two named executive members and an executive director are responsible for progress against each of the Council’s three aims; • the work of the select committees are more aligned with the corporate aims and priorities, executive member responsibilities and the strategic partnership boards; • the management of Council services has been restructured into 78 distinct business units, grouped in relation to the Council’s three aims to achieve closer focus of business activity on corporate priorities; • business unit plans and budgets are developed and presented in relation to that closer focus on aims and priorities; • an integrated performance reporting system is developed with lead executive directors reporting monthly on key actions and performance achieved together with finance, risk and value for money information in relation to each of the corporate aims; and • corporate capacity to support business units in delivery of corporate aims has been improved as a result of the weaknesses identified in the recent corporate assessment being addressed. THE MEDIUM TERM FINANCIAL PLAN PROCESS The MTFP process is an essential element of the Council’s corporate planning process, providing for the integration of business and financial planning within the over-arching framework of the Corporate Plan. The approach is designed to ensure that: • a forward looking financial forecast influences and optimises the development of business plans; • service plans identify the financial and other resource implications of proposed developments; • forecasts facilitate the allocation and/or re-allocation of resources over time to address changing community needs and Council Business Units and financial plans can address key risks to budgets and service delivery. The MTFP is undertaken within an annual corporate service and financial planning cycle, summarised diagrammatically in Annexe A. THE FINANCIAL BACKGROUND 8
  9. 9. The MTFP for 2009/10 to 2011/12 has been undertaken against a background of the following significant issues: a. A world wide recession. b. Continuing decline in the city’s population. c. Continuing comparative deprivation and level of specific grants. d. Continuing reduction in the level of government grant support through the Total Formula Grant (TFG) arrangements. e. A requirement to achieve 3% cash related efficiencies each year. f. Improving the council’s financial standing. The Recession and Pressures on Local Authority Finances The following commentary on the recession has been drawn from the following documents: • CIPFA – Dealing with Recession (January 09) • LCC - Liverpool Economic Health Check (January 09) Gross Domestic Product (GDP) Whilst the national economy as measured by GDP grew by 0.7% in 2008 overall, it contracted by 0.6% in the third quarter and fell by a further 1.5% between October and December 2008, the steepest drop since 1980. Two negative quarters means the UK is now in recession. Estimates vary considerably as to how long the economy may take to recover but it is generally considered that the downturn will last for at least the 3 year planning period of this MTFP. The following are some of the key indicators that the Council will need to react to over the coming period. Inflation The consumer price index (CPI) peaked at 5.2% over the 12 months to September 2008 but fell back to 4.1% in November and 3.1% in December. The retail price index (RPI) which includes housing costs fell even more dramatically to 0.9%. Inflation is expected to continue to fall further and there are concerns that the UK could enter deflation. Deflation would hinder economic recovery as consumers delay making purchases in the hope of further price falls. At January 2009 the bank base rate stood at a historical low of 1%, which will have implications on investment income that local authorities receive. In addition there is perceived to be an increased risk in investing in institutions offering high interest rates after the Icelandic Bank crisis. All these factors mean that there is likely to be a reduction in investment income for local authorities. Conversely reduced interest rates provide an opportunity for investment and local authorities may find borrowing more affordable if they are able to identify any adequate sources of available funds. Employment 9
  10. 10. In the UK in November unemployment rose to 1.92m - the highest figure for more than a decade. This took the unemployment rate up to 6.1%, a rise from 5.2% over the last year - the highest rate since April 1999. The number of people claiming jobseeker's allowance increased in December by 77,900 to 1.16m, the highest figure since 2000. The job seekers allowance claimant count is now showing a significant increase to 6.3%. Over the last twelve months, Liverpool’s rate has increased from 5.1% to 6.3%, an increase of 1.2% which is in excess of both national and regional increases of 0.9% and 1.0% respectively. JSA Claimant Counts Dec 2007 - Dec 2008 7.0 JSA Claimant Counts, Dec 2007 - Dec 2008 6.0 Great Britain 5.0 North West 4.0 Rate 3.0 Liverpool 2.0 Core Cities 1.0 Greater Merseyside 0.0 May-08 Jan-08 Mar-08 Jun-08 Nov-08 Jul-08 Feb-08 Sep-08 Dec-07 Apr-08 Aug-08 Oct-08 Dec-08 Source: ONS Nomis Job vacancies Comparing the number of reported vacancies for the third quarter of 2007 with the same period in 2008, shows a 5.8% decrease for Liverpool, which is significantly better than the 21.4% fall for the North West and 18.7% nationally. In addition, an assessment of live unfilled vacancies (i.e. those vacancies which the employer is actively seeking to fill) show that Liverpool again seems to be experiencing a lower decrease than other areas. Housing Market Average house prices show a continuous monthly decline over 2008, falling by 20% over the year to November 2008. While mortgage approvals declined overall by 52% in 2008, they declined each month from April to November before increasing slightly in December. Housing transactions have declined each month since the start of 2007 – down from 152,000 in January 2007 to 53,000 in November 2008. The Council of Mortgage Lenders predict house sales will half to 700,000 in 2009, compared with 1.6m just 2 years ago. 10
  11. 11. Planning Applications For the period April - December 2008 major planning applications are down by 53% - 95 major applications received compared to an expected 200 (based on 9/12 of 5 year average annual total). While smaller applications are down by 21% - 2,291 received compared to an expected 2,917. Comparing planning applications received in December 2008 with December 2007, major applications are down by 58% - 8 received in December 2008 compared to 19 in December 2007, while smaller applications are down by 6% – 184 received in December 2008 compared to 195 in December 2007. Effect upon the City Council The Council will itself be both directly and indirectly affected by the recession. The Chancellor has indicated that financial settlements for local government are going to “get tougher” from 2010/11 onwards with even more efficiency targets. Councils already have to achieve £4.9bn savings in the 3 years to March 2011. The Chancellor set out in the Pre-Budget Report (PBR) 2008 that a further £5bn of efficiencies across the public sector will need to be required during the remaining period of the current Spending Review period. Local Governments share of this amount is to be announced in April 2009 and 2010/11 financial settlements may be adjusted accordingly. At the same time as grant income may be reducing expenditure is likely to increase because of increased demand for services, including homelessness, benefits and social care. As household incomes reduce there will be pressures over the payment of council tax and other local authority charges. As a result provisions for bad debts are likely to be increased. Evidence of this has already been noticed during 2008 in respect of council tax collection. The fall in property values has affected the affordability of capital programmes with the financing of schemes being reliant on the sales of Council assets. These assets will have fallen in value, with the Land Registry reporting that the fall in property prices for the year to November 2008 was 12.2%. The downturn in the housing market with less new houses being built has also reduced the level of planning fees from applications. Latest Land Registry figures above show a significant decrease in volumes of house sales over the past year (September 2007- September 2008). England & Wales has fallen by 67.9% with the North West showing a decrease of 73.4%. Liverpool at 52.9% has seen the smallest decrease, lower than the regional & national averages and all the major cities. As a result planning fee income was down by 38% in the first 9 months of the financial year compared with the same period a year earlier from £1.98m to £1.22m. 11
  12. 12. City Council Response In response to the recession the Council has established an Economy Review Group lead by the City Treasurer and the Executive Director leading on “growing the economy”. That Group reports to both the Executive Board and the Executive Management Team and is currently evaluating the various effects of the recession on the local economy and the ways that the Council may contribute to alleviating or offsetting its effects locally. The Council is particularly keen to support local businesses that are so crucial to the local economy. Population Trends A key component of the Comprehensive Spending Review (CSR) 2007 which established the grant funding for all Local Authorities is population. The CSR 2007 used the 2004 based Sub National Population Projections, produced by Office of National Statistics (ONS) on which to base future population levels. These population projections are produced every 2 years based on the latest Mid Year Estimate (MYE) of population. The latest of projections are based on the 2006 mid year estimate. These estimates show that Liverpool’s population is continuing to decline albeit on a slower trajectory than previous decades. Although the next CSR, scheduled for completion in November 2010 will use 2008 based population projections, an analysis of the current projections gives the most likely position for the city which has been taken into consideration in its financial and service planning. The graph below shows Liverpool’s population loss between 2001 and 2007 and the future projections to 2017, the period which the next CSR settlement will cover. The projections use the past 5 year trends and due to the recession do not take into account any planned regeneration activity which may alter this trend. They are based on the levels of births, deaths and migration in the city. They represent the best available evidence at this time about likely future population levels. These figures show that Liverpool’s population has fallen and is set to continue to fall over this period. The graph also shows Liverpool’s position vis a vis the average of the other core cities and the national rate of increase. It is clear that Liverpool is on a different trend than the national projections for population increase and also all other core cities which are demonstrating a population increase for this period. 12
  13. 13. Percentage increase/decrease in population based on trend derived from Mid Year Estimates 16.0 14.0 12.0 10.0 8.0 England 6.0 Liverpool % Core City Average 4.0 2.0 0.0 -2.0 -4.0 2004 2005 2006 2009 2011 2012 2013 2014 2016 2017 2002 2003 2007 2008 2010 2015 Liverpool City Council has had concerns over the methodology of the ONS MYE and indeed the conduct of the last Census in 2001. Over the period 2001 – 2007, Liverpool has seen its population initially forecast to decline, then with MYE revisions, the MYE and projections showed modest population increases, then finally the most recent revisions to the MYE methodology revised the city’s population and again showed a decline. The 2011 Census therefore represents a major opportunity for the city to ensure the population count for the city is maximised and is the most accurate count possible. The results of the 2011 census will feed in to and influence future revenue settlements for the Council and indeed partners in the city for the following 10 years. Unlike the Census in 2001, ONS are seeking to engage with Local Authorities in the planning and delivery of the next Census in 2011. The Council therefore have an opportunity to engage with ONS and influence the delivery of the next Census to ensure it is as accurate as possible. This may result in a higher population count or simply confirm the trends which ONS have been producing recently. However either way, the Census will give the city some confidence in the population estimates for future planning. Pupil Numbers Historically there has been a steady decline in the numbers of pupils entering primary schools. Projections show that this trend will continue until 2011. The trends then reverse and increases are expected in 2012/13. Overall trends between 2004 and 2013 are as follows; Primary Schools - 9.69% reduction Secondary Schools -18.26% reduction Sixth Forms 19.41% growth 13
  14. 14. The growth in pupils remaining in schools to gain A-Levels is distorted as historically there have been year on year increases, however in 2009 there is a decline and numbers are not projected to increase back to current levels until 2013. The current economic pressure may affect the decline as pupils choose to study due to reduced opportunities for employment or apprenticeships. Reduced pupil numbers will affect funding from Department of Children’s Schools & Families (DCSF), through reduced dedicated schools grant allocations, which in turn will directly affect decisions on the number of teacher positions required and the challenging decisions re overheads costs. Primary Secondary Year Schools Schools Sixth form All Pupils Reception Total Yr 7 to Total Yr 12 to to Yr 6 Yr 11 only yr 14 only 2004 36,039 28,872 4,512 69,423 2005 34,939 28,359 4,735 68,033 2006 34,220 27,792 4,883 66,895 2007 33,184 26,685 5,199 65,068 2008 32,637 25,858 5,323 63,818 2009 32,115 25,608 5,156 62,879 2010 31,913 25,060 5,076 62,048 2011 31,863 24,685 4,945 61,492 2012 32,208 24,102 4,875 61,185 2013 32,548 23,600 5,388 61,535 Reduction in 000's -3,491 -5,272 876 -7,888 Percentages -9.69% -18.26% 19.41% -11.36% Ageing Population As people live longer and healthier lives the population projections for the age group 60-85+ shows an overall growth of 6.5% between 2009 and 2017. %age Year Overall change Movement 2009 - Age Group 2009 2014 2017 2009-2017 2017 60+ 39,000 42,000 43,100 4,100 10.5% 70+ 30,200 28,900 29,500 - 700 -2.3% 80+ 16,400 17,600 18,600 2,200 13.4% Total 000's 85,600 88,500 91,200 5,600 433,6 432,0 431,60 Total Population 000's 00 00 0 Overall Percentage of Population 19.7% 20.5% 21.1% The increase in the aged population is likely to mean that services relating to supporting individuals to live independently will experience increased demand. The Business Units directly affected will be those offering care packages and equipment, whilst there may be a demand for increased benefits re housing or council tax relief. 14
  15. 15. Pressure on pooled budgets could create issues as criteria for social/health care at the time of an individual being discharged from hospital drive who incurs the charges. This could result in more time being spent on resolving any disputes. However there may be an opportunity to identify services provision which provides an income in the area of leisure and neighbourhood involvement. Deprivation and Specific Grants The latest indices of Deprivation (ID 2007) were published in December 2007, updating and replacing the 2004 version. The ID 2007 is again analysed by Super Output Area (SOA) rather than ward. The indices seek to measure the following; • Income Deprivation; • Employment Deprivation; • Health Deprivation and disability; • Education, Skills and Training Deprivation; • Barriers to Housing, and services; • Living Environment; and • Crime Combined together, these produce the Index of Multiple Deprivation 2007 (IMD 2007). The IMD 2007 shows that Liverpool continues to be the most deprived local authority in England. 28 of the most deprived 100 SOA’s nationally can be found in Liverpool. The index shows that nearly 56% of Liverpool’s residents live in an area that is ranked within the most deprived 10% in the country (68% live in the most deprived 20%). The key measures of income and employment provide an indication of the sheer numbers of people experiencing these types of deprivation. Liverpool is the third and second most deprived local authority respectively on these two measures with 42% of the population classed as income deprived and 57% employment deprived. Partly as a consequence of its deprivation index, the Council receives significant levels of service and specific grants. In 2009/10 the Council is forecasting to receive approximately £223.5m of such grants. Whilst in future years the purpose and targeted initiatives may change, the level of grants support is likely to continue at approximately this level into future years. One of the most significant of these grants will be the Area Based Grant which working with partner organisations will be directed towards the agreed priorities of the sustainable communities programme. Government General Grant Support 15
  16. 16. The government’s general financial support towards local government is the Total Formula Grant (TFG). As identified above, comparative population trends are a key element of the formula mechanism. In 2007 the comprehensive spending review of that year provided local government with a 3 year settlement for the 3 year period of 2008/09 to 2010/11. The year 2009/10 therefore represents the middle year of this 3 year period. The principle behind a 3 year settlement is that it provides a degree of certainty over the level of general financial support from the government enabling local authorities to plan accordingly. Whilst the national average settlement for each of the 3 years was as follows, Liverpool City Council received the minimum level of settlement. National Average Liverpool City Council 2008/09 3.6% 2.00% 2009/10 2.8% 1.75% 2010/11 2.6% 1.5% The principal reason that Liverpool City Council receives only the minimum level of settlement is that as described above, Liverpool’s population is, based upon mid year estimate forecasts, declining compared with an increasing population nationally. As a consequence, the formula grant mechanism would allocate Liverpool a declining grant settlement. However, the government has recognised that local authorities in this position need some form of protection and therefore has introduced a grant floor protection arrangement so that local authorities receive a minimum grant increase each year regardless of the formula mechanism itself. For Liverpool, the value of the floor protection over the 3 year CSR planning period is as follows; 2008/09 £5m 2009/10 £5.9m 2010/11 £6.6m However as part of the CSR 2007 consultation, the government did seek the views of local authorities on options for removing the grant floor protection arrangements. Whilst the government did not immediately withdraw the protection arrangements, the decline in the minimum level of settlement indicates a trend. It is likely therefore that the trend in declining minimum grant support will continue and therefore the Council should anticipate that the next CSR 3 year planning period commencing 2011/12, will provide a reduced level of minimum grant support. That reduced level of support could be a continuation of the current trend of a progressive 0.25% reduction. However, with the anticipated decline in inflation, the government could effectively reduce a cash grant freeze and therefore provide no further increase in grant. This is considered the worse case scenario. Currently for planning purposes this MTFP assumes that the government will continue only with the current progressive reductions. 16
  17. 17. Progressive Worst Case 2011/12 1.25% 0% 2012/13 1.00% 0% 2013/14 0.75% 0% However, the government may in addition give further consideration to the removal of the grant floor protection arrangements completely either in the CSR for 2010 or the CSR for 2013. The implications of this for the Council would be either: • A reduction in the base level of TFG of £6.6m with effect from 2011/12, or • A reduction in the base level of TFG of approximately £8m with effect from 2014/15 It is considered that the most likely of these scenarios is that the government will continue with the decline in the minimum level of grant support as indicated above but advise local authorities in the CSR 2010 that the CSR for 2013 will no longer provide for grant floor protection. This would provide local authorities with 3 years to plan for the reductions in their spending. This MTFP is based upon this key assumption. Following the removal of the floor the Council can then expect to receive only a modest annual increase in its general grant support because the trend in population for Liverpool will continue to be less or against the trend in the national population. For planning purposes at this stage it is assumed that annual inflation will be back around the government’s overall target of 2.5% to 3% and that therefore the City Councils TFG will only increase by 1.5% per year in the CSR period commencing 2014/15; 2014/15 1.5% 2015/16 1.5% 2016/17 1.5% Efficiency Guidelines A further key element of the CSR for 2007 was the government’s expectation that each local authority would be able to generate 3% cash related efficiencies each year. Whilst no specific targets were announced, the government has issued guidance to local authorities on how the value of achieved efficiencies are to be reported as part of the information included with council tax bills. As part of that guidance the government has issued a 2007/08 baseline expenditure figure for each local authority. For Liverpool that 2007/08 baseline is £914.7m and as a result, the assumption is that cash related efficiencies would be produced as follows; 17
  18. 18. Revenue Capital Total each Accumulative Efficiencies Efficiencies year £m £m £m £m 2008/09 15.6 11.8 27.4 27.4 2009/10 16.1 12.2 28.2 55.6 2010/11 16.6 12.5 29.1 84.7 There is no requirement for local authorities to utilise all of these efficiency savings to reduce or limit council tax increases. As such it is available for each local authority to use their efficiency savings as they consider appropriate in respect of the following; • For reinvestment in services for the achievement of national or local priorities • Towards delivering a balanced MTFP • Offsetting an increase in council tax Financial Standing The Council’s financial standing has been a matter of concern for many years. However, in 2001/02 the Council embarked upon a strategy to progressively improve its working balances and reserves to bring about an improvement in its financial standing. The Council’s gross spending can be analysed into distinct areas, each requiring the risk associated with that spending to be managed differently. Schools Based Spending Under the Council’s local management of schools arrangements each school is responsible for its own financial affairs and can retain its own balances. The Department of Children’s Schools & Families (DCSF) has issued guidance to schools advising that balances of between 2% and 8% are considered reasonable. The schools however may hold balances in excess of this guidance for specific projects or issues. However, there are circumstances where due to falling roles in particular, schools are not able to maintain a working balance and may therefore go into deficit. In the majority of such cases, management arrangements can be put in place over time to correct the position but there are occasions were such actions are not likely to be successful and in this situation appropriate reserves need to be established. It is the Council’s policy therefore to establish such reserves to avoid any working balance requirement for these issues. Benefits Spending Local authorities act on behalf of the government in administering benefits arrangements both in respect of housing benefit and council tax benefit. Local authorities receive a 100% grant in respect of these activities, however, any non recovery of overpayments of benefits are costs that fall upon the local authority. It is appropriate therefore for local authorities to establish provisions to cover the eventuality that over payments are not recovered to avoid any working balances requirement for this issue. Grant Funded Expenditure Liverpool receives the second high percentage of grant funded expenditure arising primarily from having as described above the highest level of deprivation. The Council has 18
  19. 19. well established arrangements for the monitoring and controlling of the grant funded expenditure, even where the delivery organisation is other than the Council. Regular risks assessments are undertaken and any potential grant claw-back provided for. In addition, a general risk provision for grant claw-back has been progressively provided for and is expected to be approximately to be £5m at the beginning of 2009/10. The setting aside of these reserves for specific risks reduces the requirement for this issue to be taken into account in the requirement for working balances. Base City Council Spending After taking into account the above categories of spending there is base City Council spending funded from general resources i.e. TFG and council tax income of approximately £500m. The Council has established arrangements for the identification and the provision of specific risks. At the end of 2008/09 it is forecast that there would be £50m of reserves established for the management of risks. The level of working balances therefore is to provide for a degree of financial prudence after taking into account the specific measures identified above. The City Treasurer has assessed that based upon the specific measures being taken and the level of base City Council spending that the minimum level of working balances for 2009/10 should be £15m and that this value should be as a minimum indexed to growth in the City Council’s spending. However, it would be appropriate if additional contributions could be made to working balances so that by 2011/12 working balances totalled at least £20m. In summary the level of balances set out in this MTFP are now more robust and there are processes now embedded within the management arrangements for establishing provisions and reserves for the management of risks. However, further reserves may need to be established to address some of the longer term effects of the recession. BUDGET 2009/10 AND FUTURE FINANCIAL FORECASTS The City Council set its for 2009/10 at its Council meeting on the 28th January 2009 and established the budget framework as set out in Annexe B. The Budget and the future financial forecasts for the Council directly supports the achievement of the Council’s aims and priorities, whilst maintaining its drive to improve service delivery and control costs. During 2009/10 and in subsequent years the Council will continue to work with all its partners to improve the quality of life and “outcomes” for residents. The Council will also further improve the value for money of its spending through various service efficiency gains and service re-profiling. In addition, the 2009/10 Budget makes provision to respond to the implications of the economic downturn, the well above inflation rises in energy costs and to operational and known statutory requirements. However, the government frequently makes new demands on local government for which the financial resources to deliver the new requirements either are distributed as additional specific grants or the additional resources are included within the TFG support. With this 19
  20. 20. latter arrangement, it is not always transparent what value of additional resources are made available and whether such resources are adequate to meet the additional expenditure the local authority will incur. It is important for financial planning purposes that the implications of potential new legislation are taken into account and therefore arrangements are in place to monitor government proposals in the form of Green Papers etc. to ensure that the MTFP will be updated to take into account potential implications. The Council’s 2009/10 Budget provides for net revenue spending of £482.1m. The key financial features are: • £13.7m in efficiency savings • £4.8m in growth items • £4.4m in service reductions The latter two evidence how the Council is focused on achieving its aims by reallocating resources to achieve its objectives. Next year, and over the medium term, despite overall budget pressures the Council will be making £4.8m of additional investment in key services which directly support the achievement of the Council’s 3 aims Before finalising the budget proposals the Council consulted widely on what areas of the Council’s spending most needed improving and what might be the Council’s spending priorities. The feedback from the consultation overall identified the priorities as services towards community safety, highways, the environment and children and young people This budget therefore takes account of this feedback and will enable the Council to take forward its 3 aims through a range of initiatives including the following: Grow the city’s economy by: • Supporting the further development of the Council's cultural strategy, building upon the success of its year as European Capital of Culture, its international profile to encourage inward investment, business relocation, European funding. opportunities, and recognise the positive effect of a forward looking cultural offer on the economic and social development of the city. • Identifying a team of Business Champions in all key Council services, who will be the dedicated contact points to make sure that the city's relationship with the business community is continually improved. • Working through Liverpool Vision to set up a pilot a programme that will help businesses to understand the financial challenges they are likely to face, and to improve their ability to meet challenges and opportunities ahead. • Working with the NWDA to streamline and strengthen Local Enterprise Agencies to make them universally available and easily accessible to hard-pressed entrepreneurs needing hands-on advice. 20
  21. 21. • Working with Liverpool public and private sector partners to implement the outcomes of the very successful recent Skills Summit convened by LCC, and in particular: - to change cultures and harness enthusiasm, passion, ideas and an appetite for business at primary school level; - provide more involvement and greater links between the employers, local businesses and schools/colleges; - to take part in the European Week of SMEs, to encourage small and medium enterprises to reach their full potential; - to encourage the growth of women’s enterprise and economic development through the Council’s support for the International Centre for Women’s Economic Development and Enterprise. • Continuing to promote and facilitate the growth of the commercial district and city centre retail including the regeneration of Islington, Ropewalks and Liverpool One. • Developing an asset rationalisation and investment strategy to help deliver regeneration activity across the city, specifically looking to bring back into use derelict sites such as Stonebridge Cross and the Garden Festival Site. • Promoting and facilitating the redevelopment and regeneration of district and local centres across the city including Great Homer Street, Park Road and Edge Lane. • Working with Peel and Wirral MBC to deliver the New Growth Point Programme recently approved by Government to develop out infrastructure in Northshore / North Liverpool. Develop our communities by: • Further developing the Neighbourhood Management Service through: - continuing the delivery of a programme of energy efficiency improvements to tackle fuel poverty and ensure warm homes assisting 1,944 households since April 2008; - continuing the delivery of the Landlord Accreditation scheme with 54 additional properties accredited since April 2008; - furthering the 119 disabled Adaptations complete since April 2008 with the expectation of delivering over 400 adaptations by the end of the financial year; - Providing loans to households to help them improve their property or buy a new property; - Continued delivery of the highly effective Handyperson service. 21
  22. 22. • Boosting the Anti Social Behaviour service and working more closely with partners including housing associations and the police to identify problems with tenants on the ground at a very early stage. The Council already has successful arrangements with PDG and Riverside and this will be extended to other RSL’s and could include staff being seconded into LASBU. Where the Council is made aware of problems it will send a team into the home to take a closer look and find out if there are more issues that need tackling, eg: truancy, criminality, help finding work and whether they should be part of the Liverpool Family Intervention Programme. • Creating a new Family Intervention Plus programme which the Council intend to work with up to 50 gang members and their families to change their behaviour. The Council has secured £300,000 for this over the next three years and it will be compulsory for people to take part. • Tackling youth crime with an intensive challenging and supportive intervention programme. This is being developed by the Youth Offending Service working with Children’s Services and the Drug and Alcohol Action team. It will put in additional support to break the cycle of bad behaviour for those on the verge of criminal behaviour, and will take punitive action if there is no improvement. • Creating a new integrated Enforcement team to deliver visible changes across neighbourhoods, to tackle the major issues that impact upon local environmental quality particularly around litter, dumping, graffiti, the introduction of a Dog Warden service to provide full 24hr cover 7 days of the week, following transfer of responsibility from the Police Authority to Local Authority and enforcing Section 215 powers on derelict properties to improve the rate at which they are brought back into use. • The clearing of the “green waste” stockpile. • Monitoring Section 106 – providing additional funding for the monitoring officer to ensure existing legal obligations by developers are delivered, and to monitor planning conditions. Empower our residents through: • The development of the Building Schools for the Future programme to provide new and refurbished schools to enhance the learning opportunities available to Liverpool's young people to achieve educational excellence, and new key assets to directly assist the further development of Liverpool neighbourhoods along with continued resource to drive further improvements to the most vulnerable in society by: - Reducing delayed discharge from hospital, increasing speed of assessment, increasing numbers of reviews, increasing numbers of people helped to live at home, increasing number of people supported into employment and training, improving services for carers and increasing number of people accessing services using Direct Payments. 22
  23. 23. - Targeted Youth Support - Over the next year the Council will be increasing the range and number of positive activities for young people on Friday nights and Saturdays, and joining up support around those most at risk of anti-social behaviour through development of 2 integrated youth and alternative education provisions which includes capital improvements of £1.4m, in Anfield and Old Swan. There will be a more co-ordinated approach to school holiday provision joining up SPLASH and Extended Schools, these activities will further increase the numbers of young people actively engaged during school holidays and evenings. - Provide free access to Sport and leisure to all Liverpool’s children and residents who are over 60 years. - Finalise the plans to invest £50m on the redevelopment of Central Library. - Introducing a new and exciting partnership with Croxteth “Communiversity” to extend the role of Croxteth Sports Centre into a community learning resource centre. In the Council’s Year of the Environment the Council will: • Improve through further investment the opportunities for residents and businesses to recycle. • Invest in existing parks and open spaces such as Stanley Park and Sefton Park and bring them to green flag standard, to sit proudly alongside the Council’s other 14 parks with this status. • Continue to improve the physical living conditions of some of the worst private sector owned housing in Liverpool. Providing support to families and older people with rising energy costs and health and safety issues in their homes. To champion a campaign for European funding to be made available for energy efficient homes. • Work closely with local communities to assist them in developing local food produce. • Invest to champion an overall reduction in carbon emissions. • Target the businesses and individuals who flout the law on alcohol and tobacco regulations and will continue to protect the economy and health of the city by protecting it from the counterfeit trade. The Council continues to make annual cost savings and efficiency gains, whilst endeavouring to protect front line service delivery. For the 2009/10 Budget this includes the removal from the establishment of unnecessary vacant posts. Furthermore a series of service reviews for specific areas will be undertaken to deliver further efficiencies and cost reductions. For example, costs will reduce as increasingly quality and effective social care is provided directly in people’s own homes and those in receipt of care are offered the opportunity to purchase the services they believe they require to meet their specific and agreed needs. 23
  24. 24. For 2009/10 the budget envisages a total of £4.4m in service reductions or increased income. A number of these are a direct consequence of the international credit crisis and the knock-on effect on the national economy. For example, the budget proposes savings on the budget for staff processing planning applications, as there has been a marked reduction in the number of applications lodged. The details of the various reductions are set out in Annexe A attached. To deliver this budget requires a council tax increase in 2009/10 of 4.45% and, going forward for financial planning, a council tax strategy of future increases of 3.9%. FINANCIAL STRATEGY The Council’s financial strategy is designed to maintain financial stability and, as far as possible, avoid large unplanned cuts in services or increases in council tax whilst ensuring sufficient resources are available to achieve the Council’s aims and priorities. A robust MTFP has been developed, the objective of which is to ensure that all significant risks are identified and assessed; • constraints on capital and revenue resources are recognised and taken into account; • Council tax increases are maintained at moderate levels; • prudent levels of balances, reserves and contingencies are maintained, consistent with the assessment of risks facing the Council; and • adequate funding has been provided for; - estimated impact of unavoidable inflationary cost pressures - estimated impact of demographic change and service demands where these are unavoidable - legislative change and changes in the Council’s statutory responsibilities - service and business planning targets Council Tax Strategy In developing a council tax strategy the Council has to balance between the needs of service users, who are often some of the most vulnerable people in our society and the burden of the council tax on local council tax payers. With the government placing constraints upon the level of general grant support the burden of financing increasing service demand falls primarily upon the level of council tax. This situation is established by the gearing relationship between variations in spending and variations in council tax levels. As council tax income provides only approximately 35% of the funding of the net budget requirement, it means that a 1% increase in Council spending requires a 3.2% increase in council tax to fund it. 24
  25. 25. This situation has been recognised in recent years and therefore council tax increases have been above the rate of inflation. It is expected that this trend by necessity will continue for the foreseeable future. However the Council has consistently maintained increases within the government’s guidance so none of the increases have been considered “excessive”. The previous MTFP projected future council tax increases at 3.9% and the 2009/10 budget and future forecasts continue with this assumption. At this level the increases in the Council’s general funding resources over the next CSR period would be as set out below and produces an approximate overall increase in funding of around 2% per year. To maintain that level of funding in the following CSR period and assuming that TFG will increase annually by 1.5% requires an annual council tax increase of 3.5%. TFG increases Council Tax Overall funding increases increase 2009/10 1.75% 4.45% 2010/11 1.5% 3.9% 2.3% 2011/12 1.25% 3.9% 2.2% 2012/13 1.0% 3.9% 2.0% 2013/14 0.75% 3.9% 1.9% 2014/15 1.5% 3.5% 2.0% 2015/16 1.5% 3.5% 2.0% 2016/17 1.5% 3.5% 2.0% NB floor protection removed with effect from 2014/15 Council Spending The Budget summary approved by the City Council on the 28 January 2009 showed that forecast spending on services would increase as follows: 2009/10 £500.7m 2010/11 £517.7m 3.4% increase 2011/12 £536.6m 3.6% increase Therefore as spending on services increase by on average 3.5% a year, but overall funding is forecast to increase by an average of only 2% a year, there is a fundamental financing gap that needs a strategy to address. Although spending forecasts for the years 2010/11 and 2011/12 do not take into account any anticipated savings from improving efficiency. It is therefore appropriate to anticipate using half of the required 3% revenue efficiencies identified above to offset the shortfall in funding. This will enable the City Council to utilise the other half of the efficiency saving to reinvest in achievement of its aims and priorities. 25
  26. 26. 2009/10 2010/11 2011/12 2012/13 2013/14 £m £m £m £m £m Net Budget Requirement 482,087 510,822 533,399 552,020 570,454 Forecast Less 1.5% Annual Efficiencies 2010/11 Target -7,766 -7,766 -7,766 -7,766 2011/12 Target -8,049 -8,049 -8,049 2012/13 Target -8,330 -8,330 2013/14 Target -8,622 Adjusted Budget Requirement 482,087 503,056 517,584 527,875 537,687 Forecast Available Financing -482,087 -497,252 -508,090 -518,360 -528,104 Net Gap Remaining Nil 5,804 9,494 9,515 9,583 The table above illustrates, after allowing for annual efficiencies there remains a net gap in future years. This gap arises because the Council’s core expenditure has regularly exceeded the available funding from government grant and council tax income. As a result, the Council has relied upon a range of special finance measures, usually a series of one off arrangements, to fund core ongoing spending. Although a significant improvement in comparison with previous years the 2009/10 budget continues to rely upon special sources of funding of a total value of £9.5m. The Council has however recognised its’ over reliance on the use of special financing measures and the MTFP forecasts for 2010/11and 2011/12 therefore anticipate the progressive non reliance on such measures. However, this means that the Council will need to take the necessary action to reduce its core spending by £5.8m in 2010/11 and by a further and additional £3.7m in 2011/12. Therefore, based upon the assumptions set out in this MTFP, the financial summary position over the next 5 years is as set out in Annexe C and will form the basis for service and financial planning. Value for Money Service Review Programme To achieve the required efficiency savings and the required reductions in core spending, the Council has developed a service efficiency programme and a service delivery review programme. The service areas contributing to these programmes are set out in Annexe D. The appropriate service review process will be undertaken during 2009/10 so that the full cash related savings are available for the financial years 2010/11 and 2011/12. Whist no specific targets have been set for any of the individual reviews the various savings targets required from the two programme areas are considered to be achievable. 26
  27. 27. Removal of Grant Floor Protection As identified above, the removal of the grant floor protection arrangement will require the Council to reduce its base level of spending by approximately £8m with effect from the financial year 2014/15 if the floor was removed as part of the CSR 2013. This £8m would be in addition to the reductions in core spending required for 2010/11 and 2011/12. The financial challenge the Council faces therefore is, in addition to achieving 3% annual efficiencies, to progressively reduce its core and base level spending on services by £17.5m in accordance with the following phasing over the current and following two CSR periods; 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 £m £m £m £m £m £m £m £m Phase1 5.8 5.8 5.8 5.8/ 5.8 5.8 5.8 Phase2 3.7 3.7 3.7 3.7 3.7 3.7 Phase3 8.0 8.0 8.0 However, if the government decided to remove the grant floor protection arrangements with effect from the financial year 2011/12 as part of the CSR 2010, then the phasing profile would be as follows; 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 £m £m £m £m £m £m £m £m Phase1 5.8 5.8 5.8 5.8/ 5.8 5.8 5.8 Phase2 3.7 3.7 3.7 3.7 3.7 3.7 Phase3 6.6 6.6 6.6 6.6 6.6 6.6 For the purposes of financial planning and this MTFP it is considered that the most likely of these scenarios is that the government will continue with the decline in the minimum level of grant support but advise local authorities in the CSR 2010 that the CSR for 2013 will no longer provide for grant protection. This would provide local authorities with the additional three years to plan for the reductions in their base level of spending. EFFICIENCY AGENDA To deliver continuing 3% efficiencies, the following arrangements are established; • the VFM Service Review Programme is set out as Annexe D identifies a range of service efficiency reviews. • Each business unit is formulating a business plan to identify how it will deliver efficiencies over the next 3 years. 27
  28. 28. • The contracting and financing arrangements of proposed capital spending will be evaluated to identify the achieved efficiencies. These arrangements therefore have the following targets; £m VFM Service Reviews – Service Efficiency Programme 16.1 Business Units Business Plans – Efficiency Programme Capital Efficiencies 12.2 THE CAPITAL PLAN The Council’s approach to determining and funding its capital investment programme is set out in the Capital Strategy (Appendix 1). The proposed Capital Programme for the 3 years 2009/10 – 2011/12 is set out in summary form as Appendix 3. The main sources of funding available for the Capital Programme as proposed are as follows: • Supported borrowing • Capital Grants • Other third party contributions • Revenue • Capital Receipts • Unsupported borrowing It is in respect of the latter three of these sources that the council can make decisions upon. Revenue The scope for using revenue resources for capital purposes is limited, given the pressure on the overall revenue budget. However, options may be available for consideration to provide more capital funding where this can be shown to be prudent and affordable. The council strategy in recent years therefore has only been to make provision for revenue contributions in respect of specific initiatives and not to provide for any general revenue contribution. This strategy will continue. Capital Receipts Releasing the resources by the disposal of surplus and non operational assets has been a significant source of capital financing available to the council. However, with the property market currently in decline reliance on capital receipts over the next 3 years as a major source of funding of capital expenditure is inappropriate. The council therefore 28
  29. 29. continues to seek best value from the disposal of its assets and manage spending within available resources. Unsupported Borrowing The recession is having a material impact upon the ability of all local authorities to generate capital resources from the disposal of its surplus assets. In previous years the Council has regularly relied upon significant levels of capital receipts to finance its capital investment. However, in preparing the Capital Programme for 2009/10 to 2011/12 more prudent assumptions have been made. Therefore the only significant source of local capital resources is from the Council committing to unsupported borrowing. The term unsupported borrowing arises because the Council will receive no revenue grant support towards the financing costs of such borrowing. However before committing to any such unsupported borrowing, the City Treasurer must be satisfied that to undertake such borrowing is prudent, affordable and that the financing costs are sustainable within the context of the MTFP. Since 2004 when the concept of unsupported borrowing was instigated, the Council has undertaken or committed in total £220.9m in unsupported borrowing in respect of the following initiatives; £m Kings Dock & ACCL 61.2 Picton Pool 12.9 Cruise Terminal 6.4 St George’s Hall 2.3 Corporate Systems 4.9 Customer Focus Centres 2.2 Playing Fields Initiative 3.0 Equal Pay 60.0 Building Schools for the Future 42.0 General Capital Financing 26.0 The ongoing revenue costs of such borrowing will be approximately £11m for each year which represents approximately 6% of council tax income, The future potential use of unsupported borrowing will therefore be carefully considered against the principles of being prudent, affordable and sustainable and future initiatives will need to demonstrate clearly the value for money benefits. 29
  30. 30. CHALLENGES AND RISKS The assessment of the key challenges and risks that could have implications for the Council’s financial position over the period of the plan is an essential element of the budget process. This is used to inform decisions about the appropriate levels of reserves, contingencies and balances that may be required to maintain a prudent and sustainable financial position. It is therefore important that when amendments are proposed to budget allocations that spending the ongoing implications are prudent, affordable and sustainable. Risks may be categorised in three ways: • where they would be accommodated within existing financial provisions such as Business Unit budgets or earmarked reserves; • where specific risk financing arrangements are in place, such as insurance cover; and • those which need to be taken into account at a corporate level as part of the budget process, including such risks as changes in key budget assumptions. In relation to significant operational risks in Business Unit budgets, these are expected to be managed within the budget resources allocated to Business Units including, where provided, earmarked reserves. In general terms, earmarked reserves are set aside for specific issues that are more likely to occur but where the financial impact and timing is uncertain. Contingencies are used for risks that, should they arise, are more likely to materialise in the budget year. General balances are used, in the main, to cover unknown and unforeseen eventualities and relate to the overall size of the budget and general level of risk. The requirement is that business units will develop action plans to contain, wherever possible, spending pressures that materialise during the financial year with contingencies being called upon only when unavoidable. In relation to the risks related to key revenue budget assumptions, those identified for 2009/10 and in the medium term are listed in Annexe G. CONTINGENCIES, GENERAL BALANCES AND RESERVES Where financial risks cannot be mitigated or dealt with in other ways, it is essential that adequate financial cover is provided in the form of contingencies, reserves or balances. This includes cover for eventualities which are outside the Council’s control. Reserves and balances should however be set at an appropriate level, neither too low, which would put the Council at financial risk, nor too high, which would tie up resources that could be used to deliver Council priorities. Consideration of the appropriate level of reserves and balances is an integral part of the Council’s medium term financial planning. There is no “correct” level of reserves appropriate for the Council. The judgement of the appropriate level flows from the assessment of the strategic, financial and operational risks facing the Council. Financial reserves have an important part to play in the overall management of the Council, not only in covering risk, but also in providing support to the Council to consider more 30
  31. 31. innovative programmes or approaches to service delivery knowing that there is sufficient financial capacity to manage any associated risk. The Council holds a number of earmarked reserves to deal with anticipated risks and to provide for future developments. These are detailed in Annexe F. CONCLUSION The process of developing the MTFP is continuous. The plan will be subject to review, within the corporate service and financial planning cycle, in the period up to July and progress made in putting in place arrangements for rolling it forward for another year. A key area of focus in that process will be the delivery of the efficiency savings that will be needed to meet the Council’s medium term aims objectives and deliver improving value for money services for residents. 31
  32. 32. ABBREVIATIONS CIPFA - Chartered Institute of Public Finance & Accountancy CPI - Consumer Price Index CSR - Comprehensive Spending Review DCSF - Department of Children’s Schools & Families GDP - Gross Domestic Product GVA - Gross Value Added LASBU - Liverpool Anti Social Behaviour Unit LCC - Liverpool City Council MYE - Mid Year Estimate MTFP - Medium Term Financial Plan NWDA - North West Development Agency ONS - Office of National Statistics PBR - Pre-Budget Report PDG - Plus Dane Group RPI - Retail Price Index RSL’s - Registered Social Landlords SPLASH - Council brand name for summer holiday activities SOA’s - Super Output Area SME’s - Small Medium Enterprises TFG - Total Formula Grant 32