Budget scrutiny committee wednesday 4 th november 2009
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Budget Scrutiny Committee Wednesday, 4 th November, 2009. Topical Issues. Content. Housing subsidy reform Supplementary business rate LABGI BSF PFI Total Place. 1. Housing subsidy reform. CLG Consultation paper July – response 27/10 Key points

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Budget Scrutiny Committee Wednesday, 4 th November, 2009

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Budget scrutiny committee wednesday 4 th november 2009

Budget Scrutiny CommitteeWednesday, 4th November, 2009

Topical Issues


Content

Content

  • Housing subsidy reform

  • Supplementary business rate

  • LABGI

  • BSF

  • PFI

  • Total Place


1 housing subsidy reform

1. Housing subsidy reform

  • CLG Consultation paper July – response 27/10

  • Key points

    - abolish subsidy and replace with redistribution of debt

    - abolish pooling of capital receipts

    - keep HRA but free it of some liabilities

    - 30 year HRA business plan

  • Issues

    - debt treatment – how equalise/premia

    - General Fund vs HRA – debt/landlord costs


2 supplementary business rate

2. Supplementary business rate

  • Legislation passed Sept 09

  • LAs can raise up to a 2p in rate supplementary rate

  • Only use for promoting economic development

  • Must demonstrate additionality

  • Requires consultation and ballot

  • Exemptions for RVs below £50k

  • May include or be additional to BIDs

  • Value to Salford of 2p rate = £2.5m

  • Academic ?


3 local authority business growth incentive scheme labgi

3. Local Authority Business Growth Incentive Scheme (LABGI)

  • Relaunched 2009/10 - £50m nationally, £100m 2010/11

  • Previous scheme 2005/06 – 2007/08

    - rates revenue on new development retained locally

    - much controversy/dissatisfaction – calculation/interpre-tation errors – legal challenge

    - £1bn over 3 years – Salford share £3.7m

  • New scheme 2009/10 - ?

    - rates revenue on new development identified by regional clusters (AGMA) and shared by population

    - Salford £262k 2009/10, £500k ? 2010/11


4 building schools for the future bsf

4. Building Schools for the Future (BSF)

1. KEY FEATURES

  • FBC approved Cabinet 27/10

  • Financial close – Ph 1 due Nov 09, Ph 2 due June 10

  • Establish a Local Education Partnership (LEP)

  • New build for secondary schools + ICT for all secondaries

  • Ph 1 – Walkden, Irlam/Cadishead, ICT

  • Ph 2 – Moorside/Swinton (+ Moorside PS), Oasis Academy, Ambrose Barlow/St Georges, St Patrick’s, All Hallows, Wentworth,

  • Ph 1 ready Sept 11, Ph 2 ready Sept 12

  • ICT operative Sept 10


4 building schools for the future bsf 2 financial implications

CAPITAL FUNDING

Construction costs£182.4m

ICT£ 16.9m

Investment in LEP£ 1.7m

£201.0m

funded by :-

LEP borrowing/equity £141.0m

Capital grant£ 14.9m

Supported borrowing£ 3.5m

Unsupp. Borrowing£ 3.5m

Capital receipts£ 38.1m

£201.0m

REVENUE FUNDING

Per annum

Unitary charge £23.8m

funded by :-

Government grant (for PFI credits) £16.8m

School contributions £ 3.2m

Council contribution £ 3.8m

£23.8m

Council also funds USB financing costs of £ 0.2m

4. Building Schools for the Future (BSF)2. FINANCIAL IMPLICATIONS


4 building schools for the future bsf1

4. Building Schools for the Future (BSF)

3. Risks

  • Interest swap rates

  • Disruption

  • Timing

  • Capital receipts

  • Pupil demand


5 private finance initiative pfi

5. Private Finance Initiative (PFI)

FEATURES

  • Provider – Designs, Builds, Finances, Operates (DBFO)

    - bears long-term risk (typically 25 years)

    - undertakes and finances construction

    - usually owns/maintains assets for life of contract

  • Council – uses and occupies assets

    - pays annual unitary charge for use/occupation - receives annual Gov grant for PFI credits

    - meets any affordability gap

    - monitors service compliance

    - becomes owner of assets at end of contract


6 total place

6. Total Place

  • Purpose – to identify collective spend by public agencies by region and scope for efficiency

  • Cumbria pilot

  • AGMA + Warrington – spend analysis completed

  • Results - total spend £22bn – LAs £8bn, DWP £6bn, PCT £5bn, Univs £0.8bn, Police £0.7bn

    - by type – Benefits £7.2bn, Health £4.8bn, Education £4bn, Care £1.5bn, Planning /Housing £1.2bn, Safety £1.2bn

    - spend per head – highest – Mcr/Salford £8,100 - lowest – Stockport £5,700

  • Next Steps - “deep dive analysis” – Under 5s provision


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