Derby City Council

Banwait’s Budget Illusion and the extra £9m funding

6X4A5246Cllr Banwait has made it his mantra that every cut that has had to be made by the Council was driven solely by the Tory Government Cuts. I’ve commented many times that this is a disingenuous position and the most recent Council documents continue to reinforce my opinion.

Funding

So, have the Tories cut funding to Derby City Council? – Yes!

For 2015/16 – the revised budget funding (declared 3/2/16) is now £228m (the budget for 2015/16 at 18/2/15 was £222m – an increase of £6m) , of which only £45m relates to Government grants. The remainder comes from Business rates, Council Tax, and Other Special Grants. So, only 20% of the Council’s funding comes from the Government grant.

In 2016/17 the £45m (Government grant) will be cut to £35m – a reduction of £10m ( 4.5% of the Council’s total funding). Whilst a large number, it’s  a modest percentage of the overall total. When the Council issued the Consultation document for the 2016/17 budget in December 2015, they were expecting the Government grant to be £32m – so it is actually £3m more than they expected only 2 months ago! The Total Funds into the Council for 2016/17 (per Budget consultation Dec 2015) was expected to be £210m, now in Feb 2016, it has increased to £219man extra £9m. (NB At 18/2/15 the expectation was that the 2016/17 budget would be £207m – now £12m more)

There are large movements in a short space of time!

This most recent increase in funding of £9m comes from:

  • £1m Business Rates
  • £3m from Government support
  • £5m Other Specific Grants.

Again to emphasise, the Council now has £9m more to spend, than it declared in the Budget Consultation document of December 2015.

Looking at the cost pressures for 2016/17:

£3m for inflation – why is the Council allowing any of its costs to increase at all, when oil prices are plummeting, interest rates, and retail price inflation are negligible. Why are they accepting a 1.5% inflation on all Council costs?

£3m for the on-going costs of Job Evaluation. The Equal Pay process is supposed to be resolving incidences of gender-based pay inequality, not a wholesale pay increase. The total Council staff payroll is ~£100m – this amounts to an average 3% pay increase for every member of staff in the Council. How is this acceptable with inflation so low?

£1m – increasing resources in Council HQ departments – “Governance and Risk” , “Customer Services”, “Democratic Services”. These must be discretionary resources increases, and deferred if the Council has such tight budgetary constraints.

Total of £7m of controllable costs that are creating budget pressures that are nothing to do with Tory cuts, but which the Council has chosen to allow to be incurred at the expense of many much needed services.

Conclusion

The Council has £12m more funding in 2016/17 than they planned in the Feb 2015 Budget statement. This level is only £3m (1.5%) less than they planned to spend in 2015/16 as recorded in the same document….despite the Tory Government cuts. So how can all of the Council’s difficult decisions be down to this one reason?

The Council’s budget moves around by millions of pounds quite readily. £9m more income was planned in 2016/17 from December 2015 to February 2016.

And yet, the Council, categorically, cannot fund Voluntary Sector Grants at £0.6m, school crossing patrols of £0.05m, and a myriad of other small but sensitive cuts – numbers that barely feature in the rounding differences of a  £220m budget .  And they have the temerity to state that those cuts are unequivocally tied to Tory budget cuts. Perhaps the £3m wind-fall that the Council received from the Tory Government since December 2015 should be applied to pay for these.

I am not defending the Tory Cuts, I am questioning the legitimacy of using this one excuse as a smokescreen for the many other options that are available. The bare-faced politicking, and poor transparency to the general public, is not in the best interests of the people of Derby

Recommendations

So I would suggest:

  1. The Council should not be accepting any inflation from any supplier, and offering no blanket pay increases to any staff. Staff in many private companies throughout the UK have not had pay increases for years. The Council is a powerful customer – it should make demands on its supply chain.
  1. The Equal Pay review should just be that. Any pay increases that result from this should only be implemented if it corrects a clear gender pay imbalance. It should not be used as a mechanism to pay a range of people more money for the same task.
  1. The Council should defer further resource increases unless they deliver a measurable reduction in costs elsewhere.

These only require diligence in procurement, an equitable view on pay policy, and a moratorium on recruitment – all very practical!

The above would result in savings of ~£5-7m – more than enough to cover those key services that are being cut. 

I look forward to the Council leadership’s response

POSTSCRIPT

All of the above information has been taken directly from 3 documents that are published on the Derby City Council website. Are none of the opposition Councillors reading these documents? Why are they not challenging the Council leadership and de-bunking the unsubstantiated rhetoric that Cllr Banwait repeats at any opportunity.

2 replies »

  1. Pleased to see someone challenging the Council, as the opposition seem too busy point scoring. Not a political point, they’re all useless. Whilst there’s some good points, however, you seem to overestimate the Councils spending power. In terms of key areas of spend they’re not that big, relatively, and cannot simply dictate terms to suppliers as you suggest (and would get short shrift if they tried). As far as smaller suppliers are concerned, many will be local, and as they are local employers the Council has to take a balanced view – which doesn’t mean simply accepting increases. In any event, it is prudent to budget for inflationary increases – that’s not the same as accepting them from suppliers – oil might be down now, but who knows what it will do in next 12 months? The effect of weaker pound will make imports more expensive, so if that continues non-retail inflation could rise (it’s also the Bank of England’s aim to increase inflation) – if they budgeted for “no inflation” as you suggest, that would require unplanned cuts, which would be even worse for public services. Finally, “no blanket increases for Council staff” – it’s not actually a competition between public and private sector to see who’s “hardest” paymaster, but in case you missed it public sector pay has also been frozen – no rises for 3 years, followed by rises capped at 1% for 4 years. Setting aside the executive levels, the majority of Council staff are low paid, so this pay policy really has an impact – as will the Governments mandating National Minimum Wage – in the opposite direction, not a bad thing, obviously, but it rather blows your proposed pay policy out of the water.

    • Adam – thanks for your comment. The pressure of the National Living Wage is accounted for elsewhere in the Budget, which, as you rightly say will be an increase that the Council has to pay. So i have not included that in my numbers. I’m not suggesting that the Council would not accept any inflation but an average 3% across all non-payroll costs seems high when inflation is much lower than that. When this risk provision results in actual cuts to services, rather then balanced with opportunities then there is an issue. My general point to the Council is that there are options if they chose to take them – saying that nothing is possible doesn’t seem entirely valid.

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