Sunday 13 November 2011

Brent's 'Bad News' Budget Report

The first report outlining the pressures on the Council budget for 2012-13 and beyond makes for sober reading. There is a projected over-spend for this year of £1.8m which the Council  will try and eliminate without resorting to using its reserves.If it used reserves they would reduce to £8.3m which would be below the Council's target.

In her preamble to the report Labour Council Ann John notes:
The Council has over the last year been forced to take a number of difficult decisions as to which services to support and improve and which to discontinue or limit. There have been some predictable high profile instances where citizens have objected to the curtailment of a service they particularly value. This is understandable; this Administration did not seek election on a platform of massive cuts. However the front-loaded 26% target set by Government over the life of the Spending Review means that major cuts in services are inevitable and as the size of the Council organisation will shrink, the content of what it does will also inevitably be curtailed.
Based on savings being achieved mainly through the 'One Council programme, the containment of 'inescapable growth' through a £5m annual contingency, savings already in the pipeline from previous decisions, and no rise in council tax this would leave a budget gap of:

2012-13 £4.4m
2013-14 £6.4m
2014-15 £22.5m
1015-16 £16.1m

A rise in Council Tax of 2.5% would reduce the gap in subsequent years:

2012-14 £4.4m
2013-14 £1.1m
2014-15 £19.7m
2015-16 £13.1m

The Council receives an annual grant of £2.6m if they do not increase Council Tax and this year only will receive an additional one-off grant of another £2.6m. Given the figures for 2012-13 this raises the possibility of raising Council Tax, even with the loss of £2.6m to protect services. The report warns that a failure to raise Council Tax over a number of years will erode the Council's underlying revenue position i the long term.

The Council expects a reduction in the formula grant received from central government of £13.1m in 2012-13 and a further £13,4m by 2014-15.

The report outlines the pressures on Council finances for 2012-13 these include:
  • Grant reductions for housing benefit administration, social care training and unaccompanied asylum seekers
  • The number of young people transitioning into Adult Social Care
  • Contract prices rises in Environment and Neighbourhood Services
  • Increase in cost of providing temporary accommodation when the housing benefit cap is implemented.
The report notes a further pressure arising from the increased cost of borrowing for capital projects when revenue funding sources are reducing. This means that interest costs are taking up an increasing share of total revenue resources. If the Council decides to reduce borrowing to close the budget gap there would have to be a reduction in the capital programme or the Council would need to find alternative sources of funding, presumably a difficult job in the current economic situation.

There are two further ring-fenced budgets. The report notes that there is potential for the ring-fenced Central Education Budget to lose significant amounts of money as a result of schools converting to academy status. They estimate this as up to £900,000 per secondary school.

The Housing Revenue Account (HRA) grant which provides government subsidy for rents will be phased out in 2012-13 and the HRA will be expected to be self-funding henceforth. There will be a one-off settlement in lieu of an ongoing subsidy of around £185m (to be confirmed) against an annual subsidy of £8.5m. Implementing government policy of convergence of council rents and those of social landlords 'implies a 7% rise' in council rents for 2012-13.

With room for manoeuvre  tight if the Council decides to implement Coalition cuts there is likely to be a rise in the costs of  Council services as well as further cuts in provision.

Cllr John sets out these proposals in her preamble to the report:

  • That by the time of budget in February we bring forward a package of measures, with other public, private and voluntary sector partners to address the acute issues of employment and employability which face so many of our fellow citizens;
  • That we take another look at the services and quality of life that people can expect in their neighbourhoods. It was our 2002-6 Administration that brought in the successful and popular policy of Ward Working; and it is now time to look again at neighbourhoods in a practical and meaningful way and to set out a coherent set of actions which is a Brent rather than Central Government approach to localism;
  • That we concentrate on producing proposals that offers a comprehensive and targeted approach to working with young people and youth;
  • That we pursue vigorously the integration of social care and NHS health services to provide a better, seamless and more focused set of services provided to local people and use the transfer of Public Health to Local Government control to make a reality of a concentration on prevention;
  • That we work even harder to bring forward the regeneration of our Borough and adopt a strategy for our property which makes it integral to the economic renewal of Brent.

There is little space for this on the budget timetable set by the Council but it does include for late December: 'Consultation with residents, businesses, voluntary sector, partner agencies and trade unions on budget proposals'. This could be widened to include the whole community.  In January 2012 members are due to agree the proposals to go to the February Executive so timing is very tight.

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