STRATEGIC POLICY & RESOURCES COMMITTEE
Subject:
Development of the Council’s Medium Term Financial Plan 2016/17 –
2018/19 and the Rate Setting Process for 2016/17
Date:
21 August 2015
Reporting Officer:
Ronan Cregan; Director of Finance and Resources
Contact Officer:
Mark McBride, Head of Finance and Performance
Is this report restricted?
Yes
No


Is the decision eligible for Call-in?
Yes
No
1.0
Purpose of Report or Summary of main Issues
1.1
This report provides an update on the assessment of the key financial factors which
influence the development of the Council’s Medium Term Financial Plan for 2016/17 2018/19 and to note the timetable for the rate setting process for 2016/17.
2.0
Recommendations
2.1
Members are asked to note the update on the development of the Medium Term Financial
Plan and timetable for the rate setting process for 2016/17.
3.0
Main report
Current Financial Position
3.1
The Council’s Medium Term Financial Term (MTFP) will focus on the financial pressures
arising in the following areas:

External Uncontrollable Costs

OD Programme

Further risk to grant funding streams provided by Central Government

Robustness of the 2015/16 budget allocations for the new Council area and
transferred functions.

Shortfall in funding required for Urban Regeneration and Community Development
functions which will transfer to the Council in 2016/17.

Waste Disposal Costs

Pressures on departmental budgets.

Belfast Agenda priorities

Capital and Revenue consequences of capital investment plans
The MTFP will also include planned efficiencies which will include cost reductions
achieved through the Organisational Development Programme, savings on procurement
contracts and departmental savings.
External Uncontrollable Costs
3.2
External uncontrollable costs include the national pay award, increases in employer’s
pension contributions, utility and vehicle fuel costs and the general inflation impact on
other cost categories. National pay negotiations are still in progress for the 2016/17 pay
award. The continued financial pressure on Councils in England and Wales arising from
cuts to central government grants, together with the Chancellors announcement that public
sector pay settlements should be limited to 1% for the next four years, will influence the
employer’s side position at these national negotiations.
3.3
Given the Chancellor’s announcement on pay awards and the economic forecasts in
relation to other inflation increases, it is estimated that these costs would lead to increased
Uncontrollable Expenditure totalling £1.48m which would represent a 1.033%
increase on the district rate.
Table 1
Estimated 2016/17 Uncontrollable Costs Increases
Cost Category
Estimated
Impact on
Increase
District
Rate
Pay Rise and Pensions (Increase of 1%)
Utility Costs (Increase of 1%)
Vehicle Fuel Costs (Increase of 0.5%)
Other Cost Categories (Increase of 0.5%)
Estimated Uncontrollable Costs Increase
3.4
£1,013k
0.708%
£63k
0.044%
£8k
0.006%
£395k
0.276%
£1,478k
1.033%
As part of the rates setting process for 2016/17, work will continue with departments to
estimate the impact of the other financial pressures. These include:

OD Programme – the potential impact of changes to the organisation’s
structure.

Central Government Grants – There is a high degree of uncertainty about the
current and future budgets and the potential impact on the Council.

The robustness of the 2015/16 budgets for the new Council area and

functions which transferred in 2015/16. – This will involve a review of actual
income and expenditure trends against the 2015/16 budgets for services to the
new boundary areas and the transferred functions of Planning and Off Street
Car Parking.

Transfer of Regeneration and Community Development Functions - There
will be a significant shortfall in funding transferring from the Department for
Social Development (DSD) to the Council for city centre regeneration,
neighbourhood regeneration, neighbourhood renewal, programme support for
the community and voluntary sectors and the maintenance of assets, and in
particular the Lagan Weir.

Waste Disposal Costs - The Council will face significant year on year
increases in waste disposal costs as the arc21 residual waste contract and
interim arrangements become operational.

Pressures on Departmental Budgets – The income and expenditure
assumptions affecting operational budgets at departmental level, which exclude
those external factors referred to in table 1.

Belfast Agenda - Resources to deliver priorities such as Employability and
Skills, Tourism and Events.

Capital Investment – Members have already indicated that they want to
further their capital investment ambitions and there are number of emerging
large scale projects, such as the crematorium and cemetery provision, which
currently are not financed.

Rate Base – Council Officers will continue to work with Land and Property
Services (LPS) and the Institute of Revenues Rating and Valuation (IRRV) in
order to provide assurance on the Estimated Penny Product (EPP) for 2016/17.
3.5
Officers will continue to quantify the financial risks in the above areas and their impact on
the revenue estimates for 2016/17 and the medium term financial plan for 2016/17 –
2018/19 and this will be reported to Committee as part of the Rate Setting timetable
outlined in table 2 below.
Table 2
4.0
Appendices – Documents Attached
4.1
None