Derby City Council

Derby City Council Budget: Short on detail to explain £69m cuts.

Although the Council has issued a comprehensive 95 page report entitled “Derby’s 15 Year Vision and Budget Consultation 2015 to 2018” there seems to be some misunderstanding and mis-directed skepticism with the numbers used, publicly. Principally, if the reduction in the Revenue Support Grant (RSG) is £38m why are there cost savings required of £69m?

I have attempted to present a much simplified, but hopefully, more focussed version of the summaries.

The Council report starts from a base of the 2014/15 Budget ( just the controllable element), and provides the details for the 3 years to 2017/18 (2015/16 ; 2016/17 ; 2017/18).

In 2017/18 the Council will have experienced many additional cost pressures, as well as the reduction in the RSG – this is planned to be partly mitigated by Local Tax increases and Cost savings. The headline cost savings are £69m by 2017/18.

COuncil budget

Click to increase size

 

On the basis that the reduction in the RSG is correct, this is only partially offset by increases in local taxes – at levels which are likely to be acceptable. The net effect is that the funding will have decreased over the 3 years of the report by £16m in 2017/18.

There are cost increases amounting to £53m which, when added to the funding reduction of £16m, equates to the required cost reduction of £69m.

1. In a country where inflation is practically zero, then any plan to accept any increases should be seriously questioned. The Director of Finance, Martyn Maples, states “We are pursuing a policy of “managing out” inflation from contracts where that is possible”. The position should be more aggressive – they should not just be “managing out inflation”, but managing out underlying cost, like any commercial organisation. £10.5m is an acceptance of defeat which is inappropriate in this sort of crisis situation. This is unnecessary padding!

2. The reference to the “Base Budget Adjustment” of £10m ( which occurs in 2015/16 and subsequent years) reads as though the budgets for Adult, Health and Housing, and Children and Young People did not fundamentally balance in previous years. “The directorate has in each year aimed to achieve a balanced budget but this has disguised an underlying structural deficit” The base budget adjustment is “in recognition of the recurrent nature of the pressures facing this area of services”.  This is correcting an imbalance that just wasn’t dealt with before – but this affects every year from 2015/16. The report is not transparent on what this actually means and how it was covered in previous years.

3. The report is not clear as to what the “Existing pressures” are, explicitly in the tables. £5m, of the £8m relates to the Corporate Directorate and is simply referred to as “existing corporate pressures”. This is distinguished from New pressures which are specified and are principally around the Better Care Fund and Care Bill.

SUMMARY

There has been a £16m net reduction in funding because of the cuts from Central Government.

Of the £53m cost increase only £15.5.m  (£22m New Pressures less corporate borrowing) is clearly related to specific external issues contained in the reports tables. The rest relate to non-specific cost increases, or corrections from previous years.

As the Council is headlining the £69m cost reductions it doesn’t seem appropriate that the report is only clear on the specific details of 30% of the cost increases. A report should be issued which details and explains 90%+ of the cost increases which is understandable by the majority of the population!

Without this how can the electorate be involved in The Big Conversation?

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