HEREFORDSHIRE Council is breathing a little easier with what it expected out of the provisional local government finance settlement for 2015/16.

An initial reading of what’s on offer indicates a settlement broadly in line with reduction assumptions the council made in its existing budget plans.

Work gets underway on interpreting the settlement’s small print with the council having already identified a need for significant cuts.

Responding to the settlement, deputy leader of Herefordshire Council, Cllr Patricia Morgan said:

“We were planning for a tough settlement this year and that is what the government has delivered. We will set our budget for the year at Council in February.

The council will have to make further reductions in spending next year because demand on our services will increase as our funding reduces.

We will continue to focus on our priorities of protecting vulnerable children and adults and boosting jobs, wages and homes.“

Cabinet will consider the council’s budget proposal on 22nd January 2015.

Full council will consider and approve the council’s budget on 6th February 2015.

The Hereford Times has reported the council as  looking to boost budget reserves in the expectation of deeper cuts going into an election year.

Today (Thurs), Whitehall confirmed local government spending settlements for 2015/16 - essentially the funding grants accounting for much of a council's budget.

The government has already warned councils that they face an average cut in spending power of 1.8 per cent.

That was before the chancellor's autumn statement and its commitment to further "austerity" and a subsequent report by the Office for Budget Responsibility projecting a fall in government spending to just 35% of GDP.

Behind the scenes at Herefordshire Council there was an expectation is of having to cut deeper than initially planned over 2015/16 while trying to keep council tax below a level that would trigger a referendum.

The initial indications from the settlement have eased those fears slightly, though more cuts are coming.

Latest projections have the council's general reserves rising to £5.5 million by the end of the current financial year.

That is equivalent to 3 per cent of the net budget requirement of £4.4 million.

The council says this sum offers "more resilience"  heading into 2015/16.

However, those same projections still steer the council towards break even by the end of this financial year as spending pressures in social services are balanced by savings in corporate budgets.

Figures for October show little shift in the book balancing first marked in August.

But the overspend in perpetually pressured adult and wellbeing is edging ever closer to £1 million.

General reserves, though, are expected to rise to £5.5 million  by the year’s end as an offset to further cuts coming over the 2015/16 financial year.

The council budget includes £1.6 million set aside for anticipated overspend in 2013/14 that could be used to ease unforeseen pressures.

This sum would otherwise be used to raise reserve levels and has not been factored in to present spending projections.

Capital spending is forecast at £95 million, £8 million more than originally budgeted.

A significant addition since the last report is £800,000 relating to corporate accommodation funded by borrowing financed through vacated properties and savings on their maintenance budgets.

A break down by directorate shows:

Adult and wellbeing

The 2014/15 savings target was £5.5 million of which 44 per cent has been delivered.

An overspend against budget of £974,000 by the year’s end is forecast.

This compares to a forecast overspend of £962k that was previously reported to

Cabinet.

The forecast overspend within adult social care client groups continues to rise particularly in residential and nursing as a result of pressures in the hospital system.

But this has been partially offset by a continued reduction in the forecast spend  on domiciliary care.

The client forecast assumes that any further  demand pressures will be managed and that new services such as reablement and telecare that were introduced in July will have an impact on managing growth.

Children’s wellbeing

The savings target for 2014/15 was £2.5 million, 60 per cent has been delivered.

The latest forecast predicts an overspend against budget of  £472,000 by the year’s end, an improvement of £12,000 since August.

Continuing cost pressures presented by children in care and the use of agency staff costs means that mitigating savings have stopped any further overspend.

Though there are no new residential placements, there is little spare  capacity within the council’s in-house fostering service.

Despite significant efforts to reduce the use of independent foster agency placements there  has been an increase of seven placements with independent agencies since August costing an additional £139,000.

The Herefordshire Intensive Placement Support Service has now been commissioned with a specific remit to reduce costs and improve outcomes in this area.

The first intake of newly qualified social workers have completed their initial 12 months and moved into posts.

But the commitment to keep caseloads at a  manageable level has meant that there is still a reliance on long term agency staff with a number being extended until the end of the financial year.

However, the recruitment of permanent staff continues and a new regional approach to agency recruitment should start in January.

Economy, communities and corporate

The savings target for 2014/15 was £7.3 million, 89 per cent has been delivered.

The projected underspend is £242,000, a minor improvement  on the August position of £17,000.

Fourteen major planning applications brought £747,000 in fees in excess of the income budget, an increase of £237,000 from the August position.

There is a net revenue pressure of £174,000 in relation to the Master’s House project in Ledbury.

This spend is required to meet grant conditions of the Heritage Lottery funding for the project.

Outstanding insurance liabilities have been externally re-assessed with a recommendation that the council increases the sum set aside in its insurance reserve.

This, as well as costs associated with the re-tender of the contract, gives an overspend of  £250,000 built into the base 2015/16 budget.

There are risks emerging in the property maintenance budgets marked for management within the overall directorate budget.

Earmarked reserves and contingency budgets have been set aside for in-year pressures.

The £2 million budgeted for ”change management”  is forecast to underspend by £1 million due to less than forecast redundancy costs falling in year.

In October, the revenue contingency budget  of £700,000 was committed to additional grass cutting, Colwall Primary School’s temporary accommodation and  adults transitions.