Balancing the budget for councils is a tricky task against a difficult backdrop - Carl Les
I say each time we agree on an annual budget for the council at the relevant council meeting, that “the work on the next one starts tomorrow”. Perhaps a little of an exaggeration to make a point, but the discussion we had at the executive committee on Tuesday last week, was the culmination of very many weeks of work, and hours of discussion.
It doesn’t sit in isolation, our present performance including trends provides the operational and financial context for it, especially in the demand-driven services like childrens’ and adults’ care, and of course we never know the amount of government contribution we will receive until just before we take our final decisions. And it must be said that Tuesday’s debate ended with a recommendation to our full council meeting in February. It will be up to the council to accept and agree the budget, or propose amendments, and already there is talk of some, no doubt asking for more spending rather than more saving. Whatever amendment is proposed, it must by law achieve a balanced budget.
As I say, the budget doesn’t sit in isolation. This year’s context is that this is a three year settlement which brings some welcome certainty rather than annual settlements previously, although if it’s poor it’s poor for longer; we are still suffering from the loss of Rural Support Grant, that element of government support that was designed specifically to recognise the fact that services in a rural area cost more to deliver; the Fair Funding Review has continued that approach with rurality losing out to deprivation (both important elements on the same spectrum of financial need which should not be in competition, in my opinion); like most other organisations we have to face increased costs following the consequences of the increase in the Minimum Wage, and National Insurance increases, in our workforce and those of our suppliers; our “core spending power”, ie the cash that government calculates we need to do the things we have to do has increased, but only on the assumption that we will increase council tax by the maximum allowed before any referendum limit. Each 1 per cent of council tax produces £5m of cash, so any percentage reduction reduces our core spending power by such an amount.
We recognise the impact that increases in council tax have on families and single people – after all we are all CT payers ourselves. If any of my colleagues were in arrears, by law they are not allowed to vote. We are proposing that the average size house in NY (the nationwide Band D house) will pay almost £100 extra, but we appreciate that brings the total to over £2,000, and we know many houses are above the average. Those fortunate enough to own a second home will also be paying a significant premium as we seek to address the issue of an imbalance in the supply of affordable homes, and we are still the only council in England to put all this revenue stream towards housing initiatives. We propose maintaining financial support to those most in financial need through no change to the Council Tax Reduction Scheme, or the Household Support Fund, the NY Local Assistance Fund, and supporting Citizens Advice and our own Income Maximisation Team.
Against this bleak outlook there is some little light in that the government has indicated they will address the Special Educational Needs crisis that is crippling any council with such responsibilities, including in our case, as the largest geographical county with the sparsest spread of schools, our home to school transport costs, where this budget line in particular is now well over £50m and still rising.
This has led to unpopular savings decisions where the financial burden of parental choice has been placed on the parents concerned rather than the council taxpayer. Based on present rationales, I think it’s unlikely that this government will address rural home to school transport costs in general, although there may be some SEND support.
Other savings we are making are less unpopular, and we are pleased that these are in the ‘back office’ rather than front line services. How fortunate, and right, that we did local government reorganisation (LGR) at the same time as we pursued devolution, that holy grail of local government, getting decision-making nearer to county hall than Whitehall.
The LGR dividend of £68m to date has helped considerably, but we are still facing an annual shortfall of £17m, rising to an estimated £25m by 2028. We propose to fill this gap by the use of reserves, prudently garnered over a number of years, but reserves can only be used once. Our chief finance officer has agreed that this is a sound approach, protecting your monies, and we can proceed on that basis.
As I said earlier, these are our considered recommendations.
The approval of the budget alongside the council plan, the roadmap of where we want to get to, and how we will get there, is a decision for all councillors, the people elected to represent their residents.
Coun Carl Les is the leader of North Yorkshire Council.