Belfast City Council Client Services Committee Minutes 18 January 2005
From Nigov
C3277
Tuesday, 18th January, 2005
Contents |
MEETING OF CLIENT SERVICES COMMITTEE
Members present: Councillor Convery (Chairman); the Deputy Lord Mayor (Councillor O’Donnell); and Councillors D. Browne, M. Browne, W. Browne, Crooks, Crozier, A. Maskey, McCann, McClenaghan, Morgan, O’Neill, Rodgers, E. Smyth, Stoker, Toan and Walsh.
In attendance: Mr. M. Elder, Director of Client Services; Mr. T. Salmon, Director of Corporate Services; Mr. T. Husbands, Managing Director, Belfast Waterfront Hall; Mr. P. Lucas, Head of Recreation and Community Development; Mr. M. Parkinson, Head of Parks and Amenities; and Mr. N. Malcolm, Committee Administrator.
(Councillor W. Browne (Deputy Chairman) in the Chair.)
Minutes
The minutes of the meeting of 7th December, which had been printed and circulated, were taken as read and signed as correct. It was reported that those minutes had been adopted by the Council at its meeting on 5th January, subject to:
(i) the omission of the minute of the Parks and Amenities Sub Committee of 30th November under the heading “Tenancy of Council Properties” which, at the request of Councillor D. Browne, had been taken back to the Committee for further consideration; and
(ii) the omission of the minute of the Community and Leisure Services Sub-Committee of 25th November under the heading “Falls Leisure Centre: Bi-Lingual and Multi-Lingual Signage” which, at the request of Councillor McCann, had been taken back to the Sub-Committee for further consideration.
(Councillor Convery (Chairman) in the Chair.)
Security Measures in the Vicinity of the Royal Courts of Justice and Chichester Street
The Director of Client Services reminded the Committee that for a considerable period it had been expressing its concern that Chichester Street remained closed to traffic, due to the security measures which were in place in the vicinity of the Royal Courts of Justice. He informed the Members that an All-Party deputation would be meeting with the Police Service of Northern Ireland’s District Commander for the South Belfast District Command Unit on 2nd February and with the Lord Chief Justice on 22nd February to discuss this matter.
Noted.
Revenue Estimates 2005/2006
The Committee considered a report which had been prepared by the Director of Corporate Services in relation to the estimates of Revenue Expenditure for the year 2005/2006. A copy of the report is set out hereunder:
“Section 53(2) of the Local Government Act (Northern Ireland) 1972 and Regulation 2 of the Local Government Annual Budget (SR & O 1973 No 130) require that this Council:
a. consider and approve estimates for the year 2005/2006
b. authorise the expenditure included in those estimates and
c. fix the amount estimated to be raised by means of a District Rate.
The Council is also required to make this District Rate not later than 15th February 2005.
A local authority must have a system of financial planning. This system is not just a matter for the Chief Financial Officer, it also involves Members, the Chief Executive and all the other Chief Officers. The objectives of the financial planning system are:
• To help elected Members determine priorities and their timing;
• To forecast the changes in demand for services;
• To show the likely implications of changes in legislation on spending;
• To show the future costs of alternative policies;
• To match demand with likely resources; and
• To provide a framework for programming activities by individual services.
Client Services Committee, C
Tuesday, 18th January, 2005 3279
Although these are relatively straightforward and understandable objectives, financial planning in practice can be a complicated and expert exercise. The most important yearly planning activity is the preparation of the annual budget. However the annual budget is only of limited value as a policy document because it only looks one year ahead. Significant policy changes in local government can rarely be carried out wholly within one year and this is most obvious where capital schemes are involved. Longer term forecasting is therefore essential. It is particularly important to plan over a longer time scale – at least 3 to 5 years ahead - for the likely effects of change e.g. Waste Disposal, Leisure/Community.
It is for this reason that the Council is currently developing a medium term financial plan. Members will understand that the Council is a large diverse business with an annual spend exceeding £100 million. How this budget is spent will affect each and every one of our citizens and all those who visit or work in the city.
It is essential that the people of Belfast understand how the Council is funded and where the money is spent. This will be particularly important over the next few years as local taxation is set to change and rise significantly because of rating reform, the introduction of water charges and the Government’s proposals for increases in the Regional Rate to fund investment in infrastructure projects throughout the public sector.
The Medium Term Financial plan will also allow Members to critically examine resource allocation and planning within the Council on both revenue and capital fronts and consider likely District Rate increases for the next three years. In this way Members, when taking decisions, will be mindful of the medium term financial consequences and the effects that these may have on the District Rate.
The Corporate Plan has become the Council’s principal policy document. It shows in one comprehensive document what is intended to be done in a practical way to implement the Council’s stated policies. It sets out the aims and objectives of the Council and quantifies, where possible, targets to be achieved within a specified period of time. Preparation of the annual budget is one of the most extensive and visible aspects of the Council’s financial management. The annual budget is the financial representation of the Council’s policies. A special effort has been made by the several Departments of Council to more closely align Committee budgets in 2005/2006 with the Corporate Plan and Corporate Objectives.
C Client Services Committee, 3280 Tuesday, 18th January, 2005
Members are reminded that in 2003/2004 the Council put in place a three year Corporate Plan, 2005/2006 is therefore the final year of this plan. Progress reports on implementation of the Corporate Plan will continue to be made periodically to Committee.
In the past the focus of attention in Local Authority budget setting has been on the margins, upon individual items of expenditure within a base budget that would be rolled forward from one year to the next. However as pressures on Councils have grown they have had to face up to some basic decisions about budget priorities. What is the right balance between say Leisure provision and Economic Development, or between front line and support services? Which activities can be scaled down, or abandoned altogether, so that others can continue at an adequate level or grow? Budget setting now involves decisions that can have a dramatic impact upon particular services. There has been much heart searching in the preparation of this year’s budget at both Member and Officer levels.
Several factors have combined to become the driving force behind preparation of the estimates for 2005/2006. These include:-
Government Strategy and Plans
In its recent publication ‘Draft Priorities and Budget - 2005-08’ the Government has summarised its main policies, priorities and budget allocations for the three years ending March 2008. The Government recognises the need for substantial investment in Northern Ireland’s infrastructure in key areas such as health, education, roads, public transport, water and sewerage. From a local taxation perspective the message is abundantly clear. The Regional Rate for households will rise by 9% for each of the next two years followed by a 6% increase in 2007-08. The Plans also take account of water charges which are scheduled to be introduced from 2006.
Whilst those measures will produce additional income they will undoubtedly bring further financial pressures on householders.
Regional Rate increases for business premises will be fixed at 3.3% for each of the next three years.
High Level Guidelines
Over the past few months individual Party groupings have been briefed on the issue of Waste Disposal. Members will be well aware that the Council will face an enormous rise in its spending curve over the next number of years because of Waste Disposal costs.
Client Services Committee, C
Tuesday, 18th January, 2005 3281
Last year I reported that these costs would rise by some £20 million in the next 10 years, with significant step increases around 2006-08 when Dargan Road will close, free tipping will cease to be replaced by a commercial charge and a massive reduction in income will occur. Recent calculations and projections indicate that these costs have not lessened. Landfill Tax continues to increase at levels well above inflation.
Given these financial pressures Members will clearly appreciate why financial planning for Waste Disposal costs must remain the Council’s top priority for the next few years.
The Council’s Waste Disposal Financial Strategy is progressing well and is close to the predictions which have been advised to Committee. Members will recall that under this strategy monies earmarked for future waste disposal costs are being ‘ring fenced’ and productively used until 2006 when Dargan Road will close and new waste plan arrangements will be operational.
In specific terms the Repairs and Maintenance initiative will continue in the sum of £3m. This resource will be targeted once again at front line Council properties in an effort to make a difference at these facilities.
An additional £2m has been earmarked for essential Leisure Centre upgrade work and £400k has been allocated to improve Children’s Playgrounds.
The Council’s Information Age Government Programme which is designed to improve communication with ratepayers and access to services will also receive additional resources.
A ‘fund’ will be established to assist with the celebrations of the centenary of the City Hall in 2006. The Children and Young Peoples Action Plan will receive £100k and further contributions will be made to the Dargan Road Landfill Site Closure Plan.
During party briefings I drew Members attention to the importance of the Council’s Capital Programme and the impact that this could have for future rate increases. Put simply the number of schemes put forward for consideration by the several Council Departments far exceeds the Council’s resources. Prioritising these schemes into a programme which is affordable will not be easy and this is a matter which must be addressed as a matter of urgency. Notwithstanding debt charges arising from the draft Capital Programme will add £4.5m to the Council’s Revenue Budget next year.
C Client Services Committee,
3282 Tuesday, 18th January, 2005
An extra £1.25M has again been set aside for the ‘Cleaner and Brighter Belfast’ key priority. This money will be targeted to include an anti litter campaign, additional cleansing activities and improvements on arterial routes and the city centre.
It is stressed that these amounts highlighted above are ‘ring fenced’ and cannot be transferred to other budget heads without my express recommendation to Committee and Council.
The Policy and Resources (Finance, Administration and Information Systems) Sub Committee having considered all of the above matters noted that an increase of approximately 8% would be realistic as a rate increase for 2005/06.
Client/Contractor Split
During the year Council determined that the Client Contractor Split within the Council should be abolished. A task force has been established to oversee and implement this change which is expected to be substantially completed by 1st April 2005.
Efficiency savings of £320,760 have been achieved through this exercise with more savings expected in the following financial year. These savings have been re-directed towards front line service delivery.
Pay and Pensions
The position on Pay and Pensions is a mixed one. On the positive side a three year pay deal has been agreed at national level at a figure close to inflation.
However following a tri-annual valuation of the Superannuation Fund, the Northern Ireland Local Government Superannuation Committee has advised that employer’s contributions to the fund will rise by 4% next year with additional increases for the following two years. Although this contribution ‘hike’ is disappointing it was not unexpected and must be put in context. For many years the Council has enjoyed a ‘contribution holiday’ with employer’s contributions sitting at 4.6%. Average contributions of similar funds elsewhere in the public sector are of the order of 15% or more. So even with this increase the employer’s contributions rate is still well below the average.
Insurance
The effect of a hardening insurance market first appeared during 2000 and has continued since that time. Initially the Council faced substantial insurance premium increases and restricted terms across all classes of cover.
Client Services Committee, C Tuesday, 18th January, 2005 3283
Through tendering and reviewing the Council’s Risk Management procedures premium increases have been kept to a minimum and indeed have been reduced in one or two areas. e.g. Motor Fleet.
Capital Charges/Depreciation
Since the introduction of Capital Charges in 1999 I have been reminding Members that the application of Capital Charges can often distort the actual operating cost of a facility and this needs to be borne in mind when considering budgets in detail, e.g. although the cost of operating the Waterfront Hall stands at £4,345,000 next year including capital charges and depreciation, the actual cash operating cost is in fact £1,999,000.
Members should be aware of three important matters arising from capital charging.
1. It will have no overall effect on the District Rate to be fixed,
2. Certain service budgets in a transitional year may show dramatic increases or decreases from the previous year, and
3. Capital Charges have reduced considerably this year due to low interest rates.
Projected Out-Turn 2004/2005
Members will know that the Budget for the current year is the subject of continuous monitoring of actual spending and income against estimate. All indications this year to date suggest a high level of confidence that expenditure and income will be contained within the limits determined by Council.
Product of a 1p Rate
The product of a 1p Rate shows a welcome growth next year to a new figure of £4,428,320. Members should be aware however that part of this increase is due to the introduction of rates to vacant properties and the phasing out of industrial de-rating.
General Economic Outlook
On a positive note inflation appears to be holding around 3%. Interest rates also remain low. This will help constrain borrowing costs.
C Client Services Committee,
3284 Tuesday, 18th January, 2005
Client Services Committee
The total Revenue Estimates figure for Client Services Department is £43,732,760 of which £11,221,020 relates to depreciation/capital charges.
A breakdown of the spending for 2005/06 is set out below:
05/06 Net Cost including Capital Charges 05/06 Capital Charge 05/06 Net Cost £ £ £ Recreation & Community Development 20,873,620 5,445,710 15,427,910 Parks and Amenities 16,970,770 3,094,580 13,876,190 Waterfront Hall/Ulster Hall 5,083,690 2,671,550 2,412,140 Events 397,480 9,180 388,300 Corporate and Democratic Costs 407,200 - 407,200 TOTAL 43,732,760 11,221,020 32,511,740
Given the front line service delivery nature of the Client Services Department employee costs represent almost 65% of the total annual expenditure of the Department, net of capital charges. The significant increase in the Employer’s Superannuation Rate during 2005/06 will therefore have a major impact on the Department’s total costs and will add £632,120 to employee costs during 2005/06. The increase in superannuation costs has also led to an increase of £40,000 in service level agreements for central support services during 2005/06. Increases in utility costs and repairs and maintenance costs, mainly relating to recreation and community development facilities, have also resulted in increases of £97,700 and £252,370 respectively during 2005/06. After allowing for the additional costs outlined above, the actual normal increase for 2005/06 is 3.41%.
To ensure compliance with the CIPFA Best Value Accounting Code of Practice, the running costs of Directorate Support have been re-allocated to the sections within the Department and are therefore included in the net costs of each service outlined in the table above.
Client Services Committee, C
Tuesday, 18th January, 2005 3285
Recreation and Community Development
The estimated cost for Recreation and Community Development for 2005/06 is £20,873,620 which includes Capital Charges of £5,445,710, the net cost is £15,427,910.
Consultation is ongoing regarding the transfer of the Beechmount and Ballymacarret Leisure Centres and the full cost of these centres has been included in the estimates for 2005/06. Next years estimates include additional costs of £363,580 for the new Falls Leisure Centre which will open in early 2005. However the additional costs for the new Falls Leisure Centre have been offset by savings of £496,770 arising from the closure of Maysfield Leisure Centre. Support for Sport funding has been increased by £5K to £310K during 2005/06.
Parks and Amenities Section
Following the removal of the Client/Contractor Split from the 1st April 2005, responsibility for the Grounds Maintenance function will transfer to the Director of Client Services. The net cost for Parks and Amenities for 2005/06 is £16,970,770, which includes capital charges of £3,094,580 and includes Grounds Maintenance costs of £7,144,200 transferred from the Contract Services Department.
Support Services previously provided by the Finance and Business Support Section in Contract Services, amounting to £107,000 during 2004/05, will now be provided through the existing Client Directorate Support Unit. The cost reductions arising from this transfer will be reported separately in the overall savings arising from the removal of the Client Contractor Split.
The estimates for 2005/06 also include increased costs of £165,000 for the planned upgrade of playground equipment across various Council outdoor playgrounds. The Easter Weekend is one of the busiest times of the year for the Zoo and normally generates income of around £70,000, however as Easter in 2005 falls in the month of March, and is therefore outside the 2005/06 financial year, the income for the Zoo has been reduced by £70,000 for 2005/06.
Waterfront Hall and Ulster Hall
The implementation of the recommendations arising from the Strategic Review of the Waterfront Hall, including the revised staffing structures and programming policy, will result in estimated savings of £221,160 during 2005/06 and these have been included in 2005/06 estimates resulting in the net costs for the Waterfront Hall, excluding Capital Charges, totalling £1,998,535 for 2005/06.
C Client Services Committee,
3286 Tuesday, 18th January, 2005
As part of the Council’s Building Upgrade Programme, significant essential planned maintenance works will be carried out to the Ulster Hall during the summer of 2005/06. The closure of the Ulster Hall during the period of the works will reduce income by £80,000, however this will be partly offset by savings in response maintenance and overtime costs resulting in a total increase in net costs of £20,000 for 2005/06, which has been included in the estimates.
Events
The net cost of Events of £388,300, includes an additional £50,000 of expenditure which is necessary to support the planned programme of events during 2005/06.
Main Items of Estimated Expenditure 2005/06
Including Capital Charges Excluding Capital Charges £ £ Waterfront Hall 4,345,000 1,999,000 Ulster Hall 738,000 414,000
RECREATION AND COMMUNITY
Support for Voluntary Sector 1,220,000 1,219,000 Playcentres 650,000 540,000 Community Centres 4,827,000 3,922,000 Leisure Centres 13,432,000 9,002,000 Recreation Development 690,000 690,000
PARKS AND AMENITIES
Parks and Open Spaces 5,139,000 5,060,000 Playing Fields/Recreation Grounds 5,899,000 4,123,000 Cemeteries and Crematorium 237,000 137,000 Playgrounds 1,292,000 1,292,000 Conservation and Education 369,000 363,000 Landscape Planning and Development 760,000 760,000 Zoo 2,116,000 1,489,000 Belfast Castle/Malone House 1,157,000 652,000
Client Services Committee, C Tuesday, 18th January, 2005 3287
The estimated total of all Council Expenditure based on Draft Estimates prepared by Chief Officers and submitted to me was considered by the Policy and Resources Committee at its meeting on 7th January 2005. The total as submitted for the Client Services Committee is £43,732,760 and I shall report at your meeting any changes which may be required as a result of a Cash Limit being fixed at a different level to this amount.
Decision Required
Approval of the Estimates as submitted.
CLIENT SERVICES DEPARTMENT
REVENUE ESTIMATES 2005/06
£ £ Estimates 2004/05 39,628,140 Increased Costs SLA's 40,000 Zoo : Loss of Easter Income 70,000 Utility Costs 97,700 Repairs and Maintenance 252,370 Increase in Superannuation 632,120 Increased Capital Charges 1,798,980 2,891,170 Growth Events 50,000 Playground Equipment 165,000 Falls Leisure Centre 363,580 578,580 Cost Reductions Waterfront Hall (221,160) Maysfield (496,770) (717,930)
Normal Increase 1,352,800 ________
Estimate 2005/06 43,732,760
C Client Services Committee, 3288 Tuesday, 18th January, 2005
CLIENT SERVICES DEPARTMENT
Main Items of Estimated Expenditure 2005/06
Inc. Capital Exc. Capital Charges Charges £ £
Waterfront Hall 4,345,000 1,999,000
Ulster Hall 738,000 414,000
RECREATION and COMMUNITY
Support for Voluntary Sector 1,220,000 1,219,000
Playcentres 650,000 540,000
Community Centres 4,827,000 3,922,000
Leisure Centres 13,432,000 9,002,000
Recreation Development 690,000 690,000
PARKS and AMENITIES
Parks and Open Spaces 5,139,000 5,060,000
Playing Fields/Rec. Grounds 5,899,000 4,123,000
Cemeteries and Crematorium 237,000 137,000
Playgrounds 1,292,000 1,292,000
Conservation and Education 369,000 363,000
Landscape Planning and Development 760,000 760,000
Zoo 2,116,000 1,489,000
Belfast Castle/Malone House 1,157,000 652,000”
The Director of Corporate Services reported that the Policy and Resources Committee, at its meeting on 7th January, had agreed that the cash limit for the Client Services Committee for the financial year 2005/2006 be £43,732,760. He outlined the factors which had been taken into consideration during the preparation of the estimates and expressed his concern at the costs which would be incurred during the next
Client Services Committee, C Tuesday, 18th January, 2005 3289
three year period in connection with the proposed Capital Programme. He informed the Members that he would be meeting in the near future with the various Party Groupings represented on the Council regarding the Capital Programme and he undertook to provide a report on the Programme to the Political Parties prior to those meetings.
During discussion, several Members expressed concern that, in recent years, the Parks and Amenities Sub-Committee had assumed responsibility for the maintenance of a number of playgrounds which had been built by community or voluntary groups, whilst the amount of money included in the estimates for such maintenance work had not been increased.
In response, the Director of Corporate Services indicated that an additional £400,000 had been allocated in the next financial year for playgrounds. The Head of Parks and Amenities informed the Committee that, as a result of savings which had been identified within the budget for the Parks and Amenities Section, additional money had been allocated for expenditure in connection with playgrounds in the 2005/2006 financial year.
In answer to a Member’s question, the Head of Parks and Amenities indicated that each burial which took place within Belfast cost the Council £800 more than the amount charged to the deceased person’s family. The Member who had raised the matter reminded the Members that the Sub-Committee, at its meeting on 2nd December, 2003, had considered a proposal from the Revenue Estimates Working Group to increase the charges which were levied by the Council in respect of burials and cremations by 10% each year for the next four years. However, the Sub Committee had agreed that these charges be increased only by one-half per cent over the rate of inflation. He suggested, as the charges levied by the Council in connection with burials were considerably less than those levied by other Local Authorities in Great Britain and did not meet the costs incurred by the Council, that an amount equivalent to the actual costs accruing to the Council be charged.
During discussion in this matter, several Members expressed the view that, as many families in the City could not afford to pay the current burial fees, it would not be reasonable to increase substantially the amount charged for such services.
Several Members were of the opinion that the proposed increase in the rates of 8.18% was too high and that, in order to facilitate a reduction, expenditure should be reduced or charges for services increased.
In response, the Director of Corporate Services indicated that the majority of the rise in the estimates was due to substantial increases in superannuation and salary costs. There were very few other reductions in spending which could be achieved within the Revenue Estimates, unless the proposed Capital Programme was amended.
After further discussion, it was
Moved by Councillor D. Browne, Seconded by Councillor Crozier,
That, in order to reduce the rates increase in the 2005/2006 financial year, burial charges be increased by 10% year-on-year until the amount levied met the costs incurred by the Council.
C Client Services Committee,
3290 Tuesday, 18th January, 2005
On a vote by show of hands, four Members voted for the proposal and nine against and it was accordingly declared lost.
Further Proposal
Moved by Councillor McCann, Seconded by Councillor Morgan,
That the Committee approves the estimates of expenditure for the Client Services Committee, in the sum of £43,732,760, for the 2005/2006 financial year.
On a vote by show of hands, seven Members voted for the proposal and eight against and it was accordingly declared lost.
Further Proposal
Moved by Councillor Stoker, Seconded by Councillor E. Smyth,
That the Committee directs the Director of Client Services and the Director of Corporate Services to achieve savings of £500,000 in the Client Services Department’s Revenue Estimates for the 2005/2006 financial year.
On a vote by show of hands, six Members voted for the proposal and nine against and it was accordingly declared lost.
(Councillor W. Browne (Deputy Chairman) in the Chair.)
Further Proposal
Moved by Councillor D. Browne, Seconded by Councillor Stoker,
That the Committee directs the Director of Client Services and the Director of Corporate Services to achieve savings of £400,000 in the Client Services Department’s Revenue Estimates for the 2005/2006 financial year.
On a vote by show of hands, five Members voted for the proposal and eight against and it was accordingly declared lost.
(Councillor Convery (Chairman) in the Chair.)
Further Proposal
Moved by Councillor Stoker, Seconded by Councillor D. Browne,
That the Revenue Estimates for the Client Services Department for the 2005/2006 financial year be reduced by one-half per cent.
On a vote by show of hands, seven Members voted for the proposal and seven against. There being an equality of votes, the Chairman (Councillor Convery) exercised his second and casting vote against the proposal, which was accordingly declared lost.
During further discussion, the Director of Corporate Services reminded the Committee that the Council was required to strike the District Rate not later than 15th February and that the Policy and Resources Committee would be considering the Revenue Estimates for the Council at its meeting on 21st January. He indicated that, at that meeting, he would, if necessary, inform the Policy and Resources Committee that the Client Services Committee had been unable to agree its Revenue Estimates.
The Director of Client Services sought guidance from the Members as to the savings which they required to be made and indicated that, when that information had been provided, he would submit a report to a future meeting outlining how this could be achieved.
After further discussion, the Committee agreed, as agreement could not be reached on the Revenue Estimates, to adjourn the meeting.
Chairman
